Ashok Kamal Capital Builders P. ... vs D.D.A.
2007 Latest Caselaw 2148 Del

JUDGMENT

Anil Kumar, J.

Page 3134

1. This judgment shall dispose of the objections filed by Delhi Development Authority against the award dated 11th May, 1993 of the sole Arbiatrtor, Mr. K.B. Kumar, and the petition for making the award rule of the court.

2. The sole Arbitrator had filed the award dated 11th May, 1993 along with proceedings which was taken on record by order dated 14th January, 1994 and the notice of the filing of the award without process fee was issued to the parties to file objections within time. Pursuant to the notice issued to the parties, the defendant, Delhi Development Authority, filed objections being IA No. 2626/1994 within time.

3. The objector/Delhi Development Authority contended that under claim No. 1, petitioner had claimed an amount of Rs.12,69,705/- for casting continuous lintel bands (CLBs) at each floor at each level. According to the objector, the Arbitrator has awarded payments to be made along with usual running bills and the Arbitrator has not answered the reference which required him to say whether the claim of the claimant is justified, if so, to what extent and he has not indicated as to what amount is payable for the work already executed. The emphasis has been led on the fact that the arbitrator has not disclosed in the award as to how much amount is to be paid under claim number 1 as it has not been quantified and thus the award is non-speaking, incomplete and in-executable award. According to the respondent the Arbitrator ought to have given his finding as to how much work has been executed and as to how much amount is payable.

4. The objector has also objected to the amount awarded under claim No. 2 to the petitioner under which an amount of Rs.2,32,598/- was sought for increase in the JPC rates of steel as compared to those prevailing at the time of tender but the arbitrator has awarded only a part of the amount. According to the objector, JPC used to fix the rate of steel up till 15th January, 1992 and from 16th January, 1992, the steel plants were left to decide the price Page 3135 after the item was de-controlled. The objection of the respondent is that the learned Arbitrator has wholly overlooked and brushed aside the contentions as appearing in the last paragraph at page 5 of the award and first three paragraphs at page 6 of the award and has thus mis-conducted. It is further pleaded that the figure at serial number 3 for Rs. 24,719/- is against the steel procured from 1st September, 1991 to 29th February, 1992 and the steel was de-controlled on 16th February, 1992 and, therefore, the whole of this figures could not be taken into consideration. The award is also challenged on the ground that the Arbitrator has failed to disclose the reason or the basis for allowing 15% of the said figure in favor of the petitioner which is against Clause 29 of the agreement between the parties which required the Arbitrator to give reasons for the award and, therefore, there is an error apparent on the face of the record.

5. The claim of the petitioner under claim No. 1 for casting continuous lintel band (CLB) was for Rs.12,69,705/-. The payable quantity executed was 1/10th for which payment of Rs.1,26,970/- was claimed and for further quantity, it was claimed that as and when the same shall be executed, payments be made at the same rate.

6. For claiming amounts for continuous lintel bands, petitioner contended that it was a lump sum contract and the construction was to be done strictly in accordance with architectural and structural drawings included in the tendered documents which had not envisaged or stipulated provision of continuous lintel bands at any level or at any floor. Since, the respondent had asked for the construction, casting of CLBs which was not part of the architectural and structural drawings, respondents are liable to pay Rs.54,030/- per block for which the petitioner had also written a letter dated 18th April, 1992. The claim of the petitioner for casting continuous lintel bands was passed on the ground that CLBs were to be provided under Item No. 5 (ii) at page 175 of the agreement under the Chapter 'Brief Nomenclature of items corresponding to items of DSR 1985'. The claim was also resisted on the ground that Engineer-in-Charge could bind the contractor to carry out free of charge, all items of work required for completion of the houses in all respects and to make the same habitable and casting of CLBs was to be provided in terms of DDA circular dated 16th December, 1983 to cater to seismic effects for all four storied constructions.

7. The plea of the respondent had been that no extra amounts are admissible for casting CLBs, however, according to the rate analysis, the cost of providing CLBs will only be Rs.17,489/- per block which was revised as Rs.19,226/- per block.

8. Learned Arbitrator has awarded an amount of Rs.19,226/- per block as against the revised claimed rate of Rs.20,855.30 per block as an additional item. For awarding this amount, the Arbitrator took into consideration that the scope of work is clearly defined in the agreement which stipulates that the work is to be done strictly as per the architectural and structural drawings which do not provide for casting of CLBs. The scope of work pertaining to lintels is given in para 10 (ii) at page 156 of the agreement providing for lintels over doors, windows, opening, but continuous lintel Page 3136 bands are nowhere provided. The Arbitrator has held that, in the facts and circumstances, CLB was not intended as a part of lump sum contract but was ordered by the respondent subsequent to entering into the contract. It was also held after considering all the facts and circumstances that the DDA circular dated 19th September, 1983 did not form part of the contract. The Arbitrator specifically inferred that providing continuous lintel bands is not a minor item of work which could be ordered in terms of contractual stipulation on pages 151 and 194 to cater to the ambiguities or items, since the DDA did confirm that all four storied properties in Delhi of DDA has provided for continuous lintels in terms of their own circular and consequently adverse inference was also taken by the learned Arbitrator against the respondent. Regarding nomenclature of items corresponding to items of DSR, 1985, it was held that it was not a convincing ground to ask for CLBs to be provided free of cost. On these grounds, the cost for providing continuous CLBs was quantified at Rs.19,226/- per block and for CLBs to be provided in future, it was held that the payments be made along with usual running bills.

9. The learned Arbitrator has consider the pleas and contentions of the parties and has held that the petitioner is entitled for providing continuous CLBs as an additional item which did not form part of the contract and have also quantified the rate. In the circumstances, the objection of the defendant that the award is non-speaking, incomplete and in-executable cannot be sustained as for the work awarded, the rate had been quantified and rate had also been quantified for the future work to be executed. It is not disputed that the court in deciding the objections raised by a party against an arbitration award has limited jurisdiction and does not have jurisdiction to sit in appeal and examine the correctness of the award on merits with reference to the material produced before the Arbitrator.

10. This court, in the facts and circumstances, cannot sit in appeal over the views of the Arbitrator by re-examining and re-assessing the material. The learned Arbitrator has categorically inferred that CLB was not intended as a part of lump sum contract which fact cannot be denied by the respondent, in the facts and circumstances. Lintels over doors, windows and opening are apparently different from the continuous lintel bands which are no where indicated in this description and consequently it could not be inferred that providing CLBs was an integral part of the lump sum contract. The respondent also failed to confirm that all four-storied DDA houses had been provided with CLBs in terms of their own circular and in case all the house had not been provided with the CLBs, there was nothing to show that providing the continuous lintel bands will form an integral part of the agreement. The award awarding the amount of Rs.19,226/- per block to the petitioner is reasonable in regard to the present facts and circumstances. The court does not have to do re-appraisement of evidence. In Hindustan Iron Co. v. K. Shashikant and Co. the Court held that the award of the Arbitrator ought not to be set aside for the reason that, in the Page 3137 opinion of the Court, the Arbitrator reached wrong conclusions or failed to appreciate the facts. This well settled proposition of law was reiterated in the decision of the Apex Court in Coimbatore District Podu Thozillar Sangam v. Balasubramania Foundary and Ors. where it has been opined that it is only an error of law and not a mistake of fact committed by the arbitrator which can be adjudicated in the application/objection before the Court. If there is no legal proposition either in the award or in any document annexed with the award which is erroneous and the alleged mistakes or alleged errors, are only mistakes of fact and if the award is made fairly, after giving adequate opportunity to the parties to place their grievances in the manner provided by the arbitration agreement, the award is not amenable to corrections of the Court. In Hind Builders v. Union of India the Court cautioned that where two views were possible it could not be predicated that there was an error apparent on the face of the award. In Bijendra Nath Srivastava v. Mayank Srivastava and Ors. the view expressed was that the reasonableness of reasons given by the arbitrator were not open to challenge and that the proper approach would be for the Court to support the award. Similarly, in Hindustan Construction Co. Ltd. v. Governor of Orissa and Ors. it was repeated that the Court cannot re-appreciate the material on the record. In the present facts and circumstances, it cannot be inferred that the award per se is preposterous or absurd. Consequently, the objection of the respondent to the claim No. 1 is rejected.

11. Regarding claim No. 2, which was for a sum of Rs.2,32,598/- for increase in the JPC rate of the steel prevailing at the time of tender, an amount of Rs.36,797.25 only has been awarded. The claim was for the increase in price of steel as announced by JPC from time to time over the prices prevailing at the time of tender. The claim of the petitioner was based on the terms that the steel was neither issued at a fixed price nor any secured advance was paid to the claimant for procuring steel in advance and consequently the price of the steel had to be paid at the prevailing market rate which was also in accordance with the price announced by JPC from time to time as lump sum rate was quoted based on the steel prices prevailing at the time of tendering.

12. The claim of the petitioner was objected to on the ground that the petitioner should be compensated for increase in price only as provided for under escalation Clause 10cc. It was contended that there is no provision in the contract for compensation as the only provision is for reimbursing for taxes or levies imposed in the Statute. And for reimbursing for taxes Page 3138 and levies the increase in the price of the steel as per the price announced by JPC from time to time cannot be for taxes and levies. According to the respondent, JPC was not a statutory body and, therefore, under page 36 and 37 of the contract under item (B1 to B3), the petitioner could not claim enhancement of the price of steel.

13. In contra distinction, the assertion of the petitioner was that intention of the provision in the agreement at pages 36-37 (B (i) to B(iii) was to reimburse the contractor for all increases in the taxes and levies imposed by the Statute. Statutory increases were taken into consideration by JPC while announcing the steel prices which was a Body setup by Government of India for enhancing the steel prices. After de-controlling of the steel prices from 16th January, 1992, this function has now been transferred to Steel Plants and there was no mechanism for the Government to provide for increased taxes and levies except the enhancement done by JPC. Learned Arbitrator concluded that the increase in prices announced by JPC took into account all factors including increased taxes and levies. The Arbitrator concluded that since JPC did not indicate details of all the factors which were considered for increase in steel prices it was not possible to isolate increase in price solely on account of Government taxes and levies. The Arbitrator has taken into consideration these factors and has awarded only an amount of Rs. 36,797.25 out of the amount Rs.2,32,598/- claimed by the petitioner on account of increase in the JPC rate of the steel prevailing at the time of tender, as all the factors responsible for increase in prices which were taken into consideration by the JPC could not be isolated.

14. The objection of the respondent that amount of Rs.24,719/- at item No. 3 which was for the period after 16th February, 1992 when the prices was decontrolled was also taken into consideration by the learned Arbitrator is contrary to the observation of the learned Arbitrator holding that the increase in prices after 16th January, 1992 are not covered to the reference made to the Arbitrator and only three transactions prior to 16th January, 1992 have been considered. While considering the amount payable to the petitioner, the compensation already paid under Clause 10cc was also considered. In the facts and circumstances against the claim of Rs.2,32,598/-, only an amount of Rs.36,797.25 has been awarded. In the circumstances, the objection of the respondent that the learned Arbitrator has not indicated its thought process and the award of amount is against Clause 29 of the agreement is not sustainable as the reasons are there in the award. It is also no more res integra that the reasons vary in its conclusion according to idiosyncrasy of the individual and the times and the circumstances in which he thinks. The Supreme Court in Gujarat Water Supply and Sewerage Board v. Unique Erectors (Gujarat) P. Ltd. and Anr. in para 11 had observed:

11...Reasonableness as such of an award unless the award is per se preposterous or absurd is not a matter for Court to consider. Page 3139 Appraisement of evidence by the arbitrator is ordinarily not a matter for the court. It is difficult to give an exact definition of the word `reasonable'. Reason varies in its conclusions according to the idiosyncrasy of the individual and the times and the circumstances in which he thinks. The word `reasonable' has in law prima facie meaning of reasonable in regard to those circumstances of which the actor, called upon to act reasonably, knows or ought to know.

15. In ; Narain Dass R. Israni v. Union of India it was held that an arbitrator is not required to give a detailed judgment just like a Civil Court. What is expected of the arbitrator is simply this much that he must cull out the trend of his thought process. Hence, where there is no detailed breakup justifying the amounts allowed by the arbitrator, it will not amount to misconduct and on that ground the award given by the arbitrator is not unreasonable and is not liable to be set aside. It had been also observed in Krishna Construction Company v. Delhi Development Authority 1988 (1) Arbitration Law Reports 263 that arbitrator is not required to give any arithmetic computation. Similarly in 1999 (3) Arbitration Law Reports 310 (S.C.); Arosan Enterprises Limited v. Union of India it was held that it is now a well settled principle of law that reappraisal of evidence by the Court is not permissible and as a matter of fact exercise of power by the Court to reappraise the evidence is unknown to a proceeding under Section 30 of the Arbitration Act. In the event of there being no reasons in the award, question of interference of the Court would not arise at all. In the event, however, there are reasons, the interference would still be not available within the jurisdiction of the Court, unless of course, there exist a total perversity in the award or the judgment is based on a wrong proposition of law. In the event, however, two views are possible on a question of law as well, the Court would not be justified in interfering with the award.

16. In the present case the arbitrator has considered the rates of the JPC and the fact that the breakup of various factors for the increase is not given and therefore it is not possible to isolate the increase on account of taxes and levies. The arbitrator has also considered that the JPC was the only body considering the increase in the price of a steel. Taking these factors into consideration an award has been given by the arbitrator awarding a part of the amount claimed. In the circumstances the award cannot be termed perverse so as to be interfered with by this Court. The objection to claim No. 2 by the respondent in the facts and circumstances is not sustainable and is rejected.

17. Against the claim No. 3 for Rs.5.00 lakhs consequent to non-payment of claim No. 1 and 2, no amount has been awarded except an arbitration cost of Rs.20,000/-.

18. No other objection has been argued by the learned Counsel for the respondent nor any other objection has been raised by the respondent. Consequently, the objections to the award dated 11th May, 1993 raised on behalf of respondent are unsustainable and are liable to be rejected.

Page 3140

19. Considering the facts and circumstances, the objections are dismissed and the petition for making the award rule of the court is allowed and the award dated 11th May, 2003 is made rule of the Court. The plaintiff is also awarded pendente lite and future interest at 9% per annum till the date of realization of the decreetal amount. Decree sheet be drawn accordingly.