Praveen Kumar Gupta vs Dda
2008 Latest Caselaw 1397 Del

61
*              IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                          Pronounced on 20.08.2008

+                              CS (OS) 179A/1999

         PRAVEEN KUMAR GUPTA.                                ..... PLAINTIFF
                          Through: Mr. Vivekanand, Advocate.

                      versus


         DDA                                                    ..... DEFENDANT
                               Through: Ms. Monica Sharma, Advocate for
                               Ms. Anusuya Salwan, Advocate.


         CORAM:
         HON'BLE MR. JUSTICE S. RAVINDRA BHAT


1.       Whether the Reporters of local papers                   Yes
         may be allowed to see the judgment?
2.       To be referred to Reporter or not?                      Yes
3.       Whether the judgment should be
         reported in the Digest?                                 Yes

Hon'ble Mr. Justice S. Ravindra Bhat (Open Court)
%

1.       The present proceedings concern the legality and validity of an Award dated 26th

December, 1998, published by the Sole Arbitrator Sh. A.Shankaran, retired Additional Director

General of the Central Public Works Department (hereafter referred to as "the Arbitrator").

The Arbitrator was nominated in terms of Clause 25 of the contract entered into by the parties,

on behalf of the Delhi Development Authority, the Objector (hereafter referred to as "the

DDA").


CS (OS) 179A/1999                                                                       Page 1
 2.     Briefly, the facts of this case are that the plaintiff (hereafter referred to as "the

Contractor") bid for the works in question, namely, 3224 HIG Dwelling units in Sector III, IV, V,

VII AND VIII at Rohini (SH) Const. of 128 MIG dwelling units in Sector-V, Pocket A I at Rohini. In

terms of the contract, as officially awarded on 2.3.1983, the stipulated starting date was

12.03.1983. The contractor was to complete the work on or before 11.06.1984 i.e. 15 months

after the date of start. It is not in dispute that the work was not completed within the

stipulated time. However, parties accused each other for the delay. The DDA rescinded the

contract on 27.05.1985. The contractor raised disputes which were referred to arbitration

under Clause 25.

3.     The contractor made 16 claims; (11 main claims and 5 additional claims), the DDA in

turn made 7 counter claims and 3 Additional counter claims. The Arbitrator in the impugned

Award summarized his findings in para 6 which would disclose that as against the contractor's

claim, three were turned down and in respect of the other claims, part of the amounts claimed

were granted. The total amount awarded was Rs.4,67,689/-. The Arbitrator also awarded 12%

interest per annum for the period 27.11.1985 to 26.11.1995. He also awarded interest of 12%

for the period 12.03.1998 to 26.12.1998 and calculated accrued and past and pendente lite

interest amount, at Rs.6,05,657/-. Thus, the total amount awarded is Rs.10,73,350/- with

future interest at 12% per annum. The award of interest was conditional. In case the amount

was paid on or before 28.2.1999, no future interest was payable.             In case any other

circumstances, i.e. if the amount was not paid by that period, future simple interest at 18% per

annum was awarded from 27.12.1998 till date of actual payment.




CS (OS) 179A/1999                                                                          Page 2
 4.     The DDA has filed objections to the Award. It is contended that the Arbitrator's

findings, as regards the absence of justification for recession of the contract cannot be

supported in law. Counsel contends that the arbitrator misread the materials placed before

him in concluding that the recession was unjustified. According to the objections, which were

reiterated by learned counsel, the delay was due to the contractor's fault. It was submitted

that the contention about drawings not being issued is not correct. Counsel submitted that

20% of the period could not be utilized. However, as regards the 80% of the period, the

Contractor was free to carry out the work. It was also contended that the Contractor failed to

manage the work property and under no circumstances could the period, except high monsoon

or such like weather be regarded as hindrances. Other aspects of the Award with regard to

heads of delay found by the Arbitrator were also attacked.

5.     Learned counsel contended that the Award of Rs.98,624/- towards Claim No.1, cost of

work done but withheld, was not justified and is not based on any materials on record. Learned

counsel for the DDA further contended that as the contractor was a defaulter, in terms of

Clauses 2 & 3 of the contract, he could not claim any payment under Clause 10 (c) towards

escalation in labor charges.     Therefore, the Arbitrator acted contrary to the contract in

awarding the sum of Rs.17,388/-. Learned counsel relied upon certain documents being Ex. R-

8, R-16, R-9 and R-3 in this regard.

6.     Learned counsel next attacked the findings of the Arbitrator under Claim No.4 and

submitted that the Contractor had to submit his bills for regular monthly payments; however,

the records disclose that he did not do so. The DDA, therefore, contended that as and when

bills were furnished, payments were released. In these circumstances, the Contractor could not


CS (OS) 179A/1999                                                                      Page 3
 have made a claim on this head. She relied upon the Ex.R-4, a communication written to the

Contractor by the DDA on 17.12.1994. It was, therefore, submitted that the Award to the

extent of Rs.5,896/- is unjustified. Learned counsel contended that the award towards claim

No.8 i.e. differential cost of over weight of steel was not justified in the circumstances of this

case. On this head, the Arbitrator had awarded the sum of Rs.3,00,000/-. Learned counsel

relied upon Clause 12 of the agreement in this regard to say that no claim on this account could

have been entertained by the Contractor. It was also submitted that the value of steel after

additional condition No.12 according to the specification - which were part of the contract- had

not been considered, while awarding the amounts on that head. Learned counsel contended

that the Award of Rs.2,700/- towards retention of T.N.P. at work site is unjustified.

7.     The DDA complains that the award of Rs.29,884/- towards the Additional Claim No.1 i.e.

differential cost of the secured advance withheld by it from the contractor, is not supported in

law. It was submitted that according to the DDA's document Ex. R-18, the Contractor was

entitled only to the sum of Rs.1184/-. Similarly as far as the award of Rs.5,028/- towards

Additional Claim No.2 is concerned, DDA attacked it as contrary to the facts.

8.     Learned counsel next contended that the Arbitrator had held that the contractor was

not responsible for the lapses and, therefore, awarded additional Claim No.3 to the extent of

Rs.64,302/- withheld by way of retained security deposit. These were in two amounts i.e. fixed

deposits of Rs.53000/- and Rs.11302/- as cash. DDA contends that in view of the fact that the

recession was justified and lawful, the security deposit was not refundable to the contractor. It

was also urged that no amount could be awarded in respect of additional Claim no.4 though the

arbitrator awarded Rs.10,000/- for extra work. Learned counsel relied on additional condition


CS (OS) 179A/1999                                                                          Page 4
 No.6 which stated that no payment shall be made to Contractor for damage caused due to rain,

snow falls etc. Learned counsel submitted that findings in regard to the additional claim No.5

were unfounded. It was submitted that the Arbitrator's observations based on entries in the

measurement book and P-46 about dismantling of the brick work etc. were not justified on the

facts of this case. It was lastly argued that the findings towards Claim Nos. 5,6 and 11 made by

the Arbitrator whereby he had awarded the sum of Rs.2,36,867/-, are unsustainable. According

to the DDA, these sums were not payable and it could not be fastened with the liability since

there was no delay in its part in handing over of the site or in performing its part of the

contract. The DDA submitted that under Clauses 1 and 3 of the specifications and conditions of

the contract, at best, the contractor was entitled to seek extension of time but not ask for

additional compensation for the work done during the extended period. Learned counsel relied

upon the pleadings to submit that as a matter of fact, the scheme of contract between the

parties had been grossly mis-interpreted by the Arbitrator. The hindrances and delay, in any

case, did not amount delay so as to invest the Arbitrator with jurisdiction to award any amounts

under these heads. The DDA also challenged award of post award interest as excessive.

9.     Mr. Vivekanand, learned counsel for the plaintiff relied upon the award and contended

generally that the sole arbitrator was a technical person who meticulously considered the

claim, counter claims and the numerous materials placed before him while rendering his

reasoned findings. Counsel urged that in such circumstances, the Court ordinarily defers to the

findings based on evidence and would be slow in interfering with the award unless patent

illegality or perversity in the appreciation of the fact is made out.




CS (OS) 179A/1999                                                                        Page 5
 10.       Learned counsel relied upon the findings on the preliminary issue regarding delay and

contended that the Arbitrator's approach was sound and unexceptional. Learned counsel

relied upon the findings to say that even though the work was to start on 12.3.1983, the parties

had agreed before the Arbitrator the foundation drawings were given to the Contractor on

18.06.1983. Learned counsel also pointed out to other specific findings such as the facts that

the design of foundation, concrete thickness was increased by 3" in August 1983, (para 3.3.2 of

the Award) the findings of escalation of the surplus according to the directions of the DDA

resulted in 900 cu.m. of surplus earth and causing hindrances in the performance of the work

till September 1983 (para 3.3.3 of the Award); delay from respondent in issue of superstructure

structural drawings (para 3.3.4 of the Award) changed in design of brick work in level 1 and

level 2 on 18.8.1983 and several other similar factors. It was contended that all these were

cumulatively taken into account by the Arbitrator when he held that the recession was

unjustified. The contractor submitted that even though the parties had agreed that the date of

the complaint would be 11.6.1994, the 12 factors found by the Arbitrator clearly pointed out to

culpable inaction on the part of the DDA which render the performances within the stipulated

period.

11. It was contended moreover that the DDA was fully aware of its lapses and intentionally

did not issue any letter extending the contract for its duration but just issued a letter of

extension on 29.8.1985 (after issuing the letter of recession dated 27.9.1985). In these

circumstances, the finding regarding illegality of recession, and lack of justification on the one

hand and entitlement of the contract or for the amounts awarded can hardly be characterized

as illegal. It was submitted that the attack to the various findings of the Arbitrator are without

CS (OS) 179A/1999 Page 6 any basis. It was submitted that the objection to the findings on claims 1,2,4,8 and 9 are

unsubstantiated. It was submitted that the materials sought to be relied upon by the DDA were

considered by the arbitrator and discussed in his Award.

12. Learned counsel submitted that the reliance placed, on Additional Condition 12 so far as

the objection to Claim No.8 is concerned and additional Claim No.4 is concerned are without

any substance. These objections too were duly considered by the Arbitrator. The counsel

submitted that the extended period when the contract had to be performed, the contractor

had to be duly compensated. Since the Arbitrator held the recession to be illegal, the

contractor was fully justified in claiming amounts under Clause 10 (C) for escalation of the labor

cost. Similarly, the withholding of 2% from the bills was held to be unjustified by the Arbitrator.

Learned counsel for the contractor also submitted that the findings on additional claim No.3

were fully justified in view of the Arbitrator's determination on the preliminary issue.

13. The above discussion would show that the contract between the parties initially

scheduled to be completed within 15 months of the date of the start i.e. on or before

11.06.1994, was continued by some tacit consent. It was, however, rescinded on 27.05.1995 by

the DDA. The DDA did not dispute that the foundation drawings were furnished to the

contractor on 18.06.1983; before the Court it does not attack findings with regard to the delay

on its part as regards no less than 11 other items. Its attack to the findings on culpable delay

by the DDA are general and vague. No materials were brought to the Court's notice, to submit

that the Arbitrator mis-conducted himself or acted perversely or ignored any material

document. The Court has also considered the award, which a reasoned one. The arbitrator has

listed all the relevant materials and dealt with the question of preliminary findings as regards

CS (OS) 179A/1999 Page 7 the various heads of delay in no less than 10 pages. In these circumstances, findings on the

delay on the part of the DDA in performing its part the agreement, cannot be characterized as

unjustified or amounting to legal misconduct under Sections 30 or 33 of the Indian Arbitration

Act, 1940. The Arbitrator's approach in this regard can hardly be found faulted.

14. It would also be necessary to notice at this stage that curiously the DDA seems to have

issued an extension letter on 29.8.1985 after it issued a recession letter on 27.5.1985. This

extension letter purported to extend the period of contract from 11.6.1994 i.e. ordinarily

agreed for completion, on 26.05.1996 (one day before the actual date of recession). No

attempt was made by the DDA in these proceedings to justify such "retrospective" extension of

a contract which already stood rescinded according to it.

15. So far as the individual findings are concerned, this Court has considered the objections.

The arbitrator awarded the sum of Rs.98,624/- against Claim No.1 as against the sum of

Rs.2,50,000/- claimed. In this regard, he relied upon several documents such as Ex. C-59, Ex. R-

43, notices and inventories admittedly placed before him. Undeniably, this head pertains to

cost of work done but amount withheld in that regard. No fault can bound with the Award on

this score. Similarly, as regards the award of Rs.17,388/- granted under Claim No.2, as against

the sum of Rs.22,000/-, the Arbitrator took into consideration the documents such as Ex.C-1, C-

2, C-54 as well as respondents' documents R-90. He accordingly awarded Rs.17,388/-. This too,

cannot be characterized as illegal being a pure finding of fact.

16. As regards Claim No.4, the DDA's objections on this score are wholly unfounded and

insubstantial. The objection here is that the Contractor never used to furnish the bills within

time. However, no chart or any materials are pressed into service in support of the arguments.

CS (OS) 179A/1999 Page 8 As regards the award for claim No.8, which is the difference in price of steel bars, the DDA

sought to place reliance on additional condition No.12. The arbitrator here observed that the

said stipulation deals with claims for length, shape or size of bars, which cannot be made by the

contractor. However, he concluded that the claim in this case related to deviation from the

rolling standard weight as laid down in the ISI code. In the circumstances, this finding can

hardly be characterized as unreasonable. During the hearing, learned counsel was unable to

support the attack to the finding on Claim No. 8, on any ground whatsoever.

17. Now, as far as findings on additional claims 1 to 4, 5, 6 and 11 are concerned, DDA like in

the case of other findings, was unable to substantiate its objections. The scope of a Court's

jurisdiction under Section 30 and 33 of the Arbitration Act, 1940 to interfere with an Award are

well settled. This jurisdiction of the Court is neither appellate nor revisional. The court cannot

"second guess" the findings of an Arbitrator, who is a nominated and agreed adjudicator by the

parties. The Court has to generally satisfy itself that the approach of the Arbitrator conforms to

the law and that the Award does not disclose any patent or manifest illegality in the findings or

in the application of law. The Supreme Court in its decisions reported as State of Rajasthan vs.

Puri Construction Co. Ltd. and Anr., (1994) 6 SCC 485 and the previous decision in Sudarsan

Trading Co. v. Govt. of Kerala, (1989) 2 SCC 38 ruled that the Court cannot substitute its

evaluation of the conclusions of the law or fact, to hold that the findings of the Arbitrator were

contrary to the bargain between the parties. It is also held that whether any particular amount

was liable to be paid by within the domain of the Arbitrator. The Court, therefore, cannot take

upon itself the burden of saying that what was actually found was contrary to the contract and

as such beyond jurisdiction of the Arbitrator. More importantly it had been held (Puri

CS (OS) 179A/1999 Page 9 Construction Co. Ltd's case) that if a view taken by the Arbitrator on certain amount is a

possible view though not perhaps the only one, the Award still cannot be examined by the

Court; where reasons are furnished the correctness or reasonableness cannot also be subject of

scrutiny.

18. The above approach has been consistently approved, and applied in all several later

judgments of Supreme and has been adopted and applied by various High Courts including this

Court. On an application of the rule enunciated by the Supreme Court in its above decisions and

consistently applied by all Courts, this Court is of the opinion that the findings of the Arbitrator

in the award impugned as regards the claims of the petitioner and to the extent that declined

the counter claims of the respondents, cannot be faulted. They are neither arbitrary nor

contrary to law; they also do not disclose any patent illegality or manifest injustice.

19. Another additional factor is that principle of law is that the Arbitrator does not have to

disclose mathematical precision, in the Award. If the Award shows that application of mind and

a view which is plausible by the Arbitrator, it can be taken as correct. In Delhi Development

Authority v. Bhagat Construction Co. (P) Ltd. and Anr., 2004 (3) Arb. LR 481 (Del) (DB), it was

held that:

"From the above, it would be clear that the Arbitrator who was well versed in the matter before him as a former Director General of CPWD on the basis of his experience took into consideration the various aspects and that is why instead of awarding a sum of Rs. 16 lakhs 50 thousand as claimed by the claimant restricted the said claim to Rs. 3 lakhs 50 thousand. Arbitrator has not to disclose the basis or the mental process for arriving at such figure. Even otherwise Arbitrator when called upon to give a reasoned Award is still not required to write a detailed Judgment as the Judges do. It is sufficient that he has indicated his trend and given outline to indicate the basis on which he has arrived at such figure."

The objections, therefore, are unsustainable, and have to fail.

CS (OS) 179A/1999 Page 10

20. In view of the above findings, the Award has to be made Rule of the Court. However, the

court is mindful of the fact that the arbitrator had not awarded future interest, if the principal

and interest, as awarded were paid within a stipulated date; in case of failure, he directed

payment of 18% future interest. The said rate, in the opinion of the court, cannot be sustained;

accordingly, the petitioner contractor shall be entitled to the post award interest @ 9% from

the date of filing of the present petition till realization. I.A.8017/2000, is, for the above reasons,

dismissed. Suit decreed in the above terms. No costs.

                                                                    S. RAVINDRA BHAT
                                                                       ( JUDGE )
August 20, 2008




CS (OS) 179A/1999                                                                            Page 11