M.C.D. vs Sh. Jagbir Singh Sharma And Anr.
2007 Latest Caselaw 1773 Del

JUDGMENT

S.N. Aggarwal, J.

1. This is a petition under Section 34 of the Arbitration and Conciliation Act, 1996 filed by the Municipal Corporation of Delhi (hereinafter to be referred as the 'petitioner') for setting aside the arbitral award dated 28.12.2006 passed by the sole Arbitrator Mr. R.P. Gupta in the arbitration case titled Jagbir Singh Sharma v. Municipal Corporation of Delhi.

2. The brief facts of the case giving rise to this petition are as follows:

The respondent No. 1 was awarded the work of 'I/Stg of Pashmi Marg, Vasant Vihar in South Zone SH: Imp to footpath and drainage system' vide work order No. (PR) SZ/TC/2'3-04/7 dated 04.04.2003 for the contractual amount of Rs. 38,70,322/-. Thereafter agreement dated 07.04.2003 was executed between the respondent and the petitioner. In pursuance of the agreement bills were raised on completion of the work done by the respondent.

3. The disputes arose between the parties and in pursuance of order dated 27.10.2005 passed by this Court, Mr. R.P. Gupta was appointed as the sole Arbitrator to decide the disputes between the parties arising out of the aforementioned contract which contained an arbitration clause. The sole Arbitrator after hearing both the parties passed the impugned arbitral award which has been challenged by the petitioner by way of objections under Section 34 of the 1996 Act.

4. The respondent No. 1 had made 5 claims before the Arbitrator and they were as follows:

1. Claim No. 1 for Rs. 36,05,751/- was in respect of work done under the contract in question.

2. Claim No. 2 for Rs. 5,57,906/- was on account of interest @ 18% per annum for delayed payments.

3. Claim No. 3 for Rs. 2,00,871/- was on account of return of security deposit.

4. Claim No. 4 for Rs. 15,065/- was on account of interest @ 18 % per annum on security deposit.

5. Claim No. 5 was for future interest @ 18 % per annum on the total award amount.

5. The learned Counsel appearing on behalf of the respondent has drawn attention of this Court to the proceedings that took place before the sole Arbitrator on 06.06.2006 which is at page 73 of the paper book to show that the counsel for the petitioner (MCD) had admitted before the Arbitrator about the work done by the respondent No. 1 and payment not being made by the MCD for the work done by him. The proceedings that took place before the Arbitrator on 06.06.2006 have also been referred by the sole Arbitrator in his award which is impugned in the present proceedings. The proceedings of 06.06.2006 reads as under:

Sub: Arbitral proceedings, oral/written/documents hearing and written proceedings.

Hearing held on 06.06.2006

Next date on 08.07.2006 at 5:00 PM

Present:- Mr. D.P. Sharma, Advocate for the Claimant and Shri Jagbir Sharma, Claimant.

Mr. V. Gandotra, Advocate and Sh. Zaki Ahmed, A.E. for the Respondent.

Sh. Zaki Ahmed, Assistant Engr., and Sh. V. Gandotra, learned counse, for the respondent submitted that due to minor defects in the work, the payment could not be made to the claimant. Those minor defects, have been removed by the Claimant, and so the payment to the Claimant will be made now. The time of one month, is sought by the Respondent. In view of this, the next date of hearing is fixed on 08.07.2006 at 5:00 PM (R.P. GUPTA) SOLE ARBITRAtor

6. The sole Arbitrator has allowed the claim of the respondent to the full extent of Rs. 36,05,751/- in respect of work done by the respondent No. 1 for the MCD under the contract in question. The petitioner is not aggrieved by the arbitral award in respect of the said claim being claim No. 1. Objections have not been filed by the petitioner against the award made by the Arbitrator in respect of claim No. 1.

7. The learned Arbitrator has allowed claim No. 2 to the tune of Rs. 90,142/- only against Rs. 5,57,906/- claimed by respondent No. 1 on account of interest for delayed payment. The interest for delayed payment has been awarded @ 12% per annum instead of 18 % per annum claimed by the contractor (respondent No. 1). Claim No. 3 for Rs. 2,00,871/- was on account of return of security deposit and this claim has been awarded in full by the sole Arbitrator. Claim No. 4 was allowed only to the extent of Rs. 5,022/- on account of interest on security deposit. Claim No. 5 was on account of interest on claims No. 1 to 4 @ 18% per annum but the learned Arbitrator allowed the interest only in respect of claims No. 1 and 2 and that too @ 12% per annum instead @ 18% per annum claimed by the respondent No. 1 for the period from 16.11.2004 till the date of award.

8. Ms. Smita appearing on behalf of the petitioner has argued that the award in respect of claims No. 2 to 6 are bad and are liable to be set aside because of malafides and bias on the part of the sole Arbitrator. She has further argued that though the petitioner had filed an application under Sections 14 and 16 of the Arbitration and Conciliation Act, 1996 before the Arbitrator requesting him to terminate the arbitration proceedings pending before him but despite that the Arbitrator went on with the proceedings and proceeded to pass the impugned award. This according to her shows malafides on the part of the Arbitrator. There is nothing on record to show that the Arbitrator was bias in any manner or had acted mala fide. It is a matter of record that the petitioner (MCD) had admitted before the Arbitrator that the respondent No. 1 had done work for it under the contract in question and had also admitted that the payment in respect of work done was not made to him. When the petitioner has admitted claim No. 1, the award on claims No. 2 to 5 which was either on account of interest on the principal amount or interest on withholding of security deposit were the off shoots of award on claim No. 1. Since the petitioner has illegally withheld the payment of the respondent No. 1, the Arbitrator was fully justified in awarding interest on delayed payment. There is no error much less error apparent on the face of the award which may require interference in the arbitral award by this Court. The learned Counsel for the petitioner says that the award on claim No. 6 which pertain to the costs of the arbitration proceedings amounting to Rs. 40,000/- is highly exorbitant and should be reduced by this Court. The matter regarding award of costs of the proceedings was absolutely within the discretion of the learned Arbitrator and this Court does not find any reason to interfere in the discretion of the Arbitrator in that regard. Even the award with regard to claim No. 6 is also upheld.

9. In view of the above, I find no merit in the objections against the arbitral award filed on behalf of the petitioner. This petition is therefore dismissed but in the circumstances without any order as to costs.