Delhi Development Authority vs M/S Harbans Singh & Sons
2008 Latest Caselaw 1077 Del

*                             HIGH COURT OF DELHI

%                       Date of decision:July   21, 2008

+                       FAO(OS) 2/1993

Delhi Development Authority                                ...Appellant
                                          through
                                          Mr.Bhupesh Narula, Advocate

                              Versus

M/s Harbans Singh & Sons                                     ...Respondent
                                          through
                                          Mr.B.K.Sood with Mr.K.B.Soni,
                                          Mr.Rajesh Kumar, Advocates


Coram :

Hon'ble Mr.Justice Manmohan Sarin
Hon'ble Mr.Justice Manmohan


(1)     Whether reporters of local paper may be
        allowed to see the judgment?

(2)     To be referred to the reporter or not?             Yes

(3)     Whether the judgment should be reported            Yes
        in the Digest ?

Manmohan Sarin, J.

Appellant-DDA has preferred this appeal impugning the judgment

dated 17th September, 1992 passed by the learned Single Judge in Suit

No.2076-A/1990. The learned Single Judge dismissed the objections

filed by the appellant-DDA vide I.A No.11358/1990, against the arbitral

award dated 28th March, 1990. With the dismissal of IA 11358/1990

i.e the objections under sections 30 & 33 of the Arbitration and

Conciliation Act, 1940, the arbitral award dated 28th March, 1990, was

made rule of the court except that the award granting future interest

by the Arbitrator was set aside. The learned Single Judge while making

FAO(OS) 2 of 1993 Page 1 of page 11 the award rule of the court directed payment of interest @ 12% p.a on

the awarded amount in respect of claim nos.1 to 6 from the date of

award till payment. It was further ordered if the awarded amount of

Rs.7,86,245.08 together with interest @ 9% p.a and costs of Rs.5000/-

as awarded by the Arbitrator were paid within two months from 17th

September, 1992, the decree would stand satisfied.

2. Appeal was admitted to hearing on 4th January, 1993. The

Division Bench in CM 2/1993, vide orders dated 15th February, 1993,

directed the appellant-DDA to deposit the decretal amount in the form

of fixed deposit for a period of three years in the name of Registrar,

with interest component to be calculated @ 9% on the award within

eight weeks. The execution of the decree was stayed subject to said

deposit. Appellant accordingly furnished F.D.R in compliance with the

directions given. F.D. was further directed to be renewed for a further

term. On 7th April, 2005, none was present on behalf of the appellant

to press the appeal and the same was dismissed in default and the

amount lying in the Registry was directed to be released to the

respondent. In the event, appellant moved CM 14868/2007 for

restoration of appeal together with an application for condonation of

delay being CM 14869/2007.

3. For the reasons as set out in detail in our order dated 20th

February, 2008, appellant's applications for condonation of delay and

restoration of appeal were allowed and the appeal was restored to its

original number subject to payment of costs of Rs.10000/-.

4. Arguments were heard in appeal on 20th May, 2008 and

judgment reserved. We now proceed to decide the appeal.

FAO(OS) 2 of 1993 Page 2 of page 11 The relevant facts for appreciation of the appellant's contention in

appeal may be noted in brief:-

The offer of the respondent for supply of machine made

door/window, shutters estimated at Rs.50 lacs was accepted vide letter

dated 14th May, 1984 of the Chief Engineer, DDA. An agreement was

entered into between the parties on 16th August, 1984. In terms of the

agreement, shutters were to be supplied to the appellant within eight

weeks from 24th May, 1984 to 23rd January, 1985 at the agreed rates

stipulated in the agreement. The Chief Engineer of the appellant was to

make allocation to its different Divisions. The Executive Engineers of

the concerned Divisions were to confirm the particulars, size and

number of shutters required by them for their respective housing

schemes under the Division. Appellant made nine allocations between

the period from 29th May, 1984 to 18th February, 1986. The second

allocation made on 20th June, 1984 was cancelled on 11th October,

1984. The concerned Executive Engineers of the Division gave

confirmation against eight allocations between 16th June, 1984 to 12th

September, 1986. It was on receiving of confirmation that supplies

had to be made by the respondent. The contract period was to expire

on 23rd January, 1985. The supply on confirmations received on 26th

December, 1984 or thereafter could not be made before the expiry of

the contract on 23rd January, 1985.

5. It has come on record that appellant withheld certain payments

in the absence of extension of time and the respondent, therefore,

applied for grant of provisional extension of time under duress.

Respondent claimed to be entitled to enhanced rate for supplies made

FAO(OS) 2 of 1993 Page 3 of page 11 after the contractual period i.e 23rd January, 1985, claiming that they

were not bound to supply at the contract rate. The claims of the

respondent were disputed by the appellant, resulting in arbitration

clause being invoked. Mr.M.S.Telang was appointed as the sole

arbitrator to adjudicate upon the disputes/claims raised by the

respondent. Respondent raised six claims all on account of escalation

of timber price, seasoning costs and also claiming future interest and

cost of arbitration proceedings. The Arbitrator after perusal of the

pleadings and the evidence produced before him and hearing the

parties, awarded Rs.7,86,245.08 together with future interest @ 12%

and costs of Rs.5000/-. As noted earlier, objections filed were dismissed

by the learned Single Judge vide impugned judgment and the said

judgment is assailed in this appeal.

6. The main contention of Mr.Bhupesh Narula, learned counsel

appearing for the appellant is that as per the arbitration agreement, the

arbitrator was required to give his reasons in respect of the award for

any claim/dispute over Rs.50,000/-. The Arbitrator has singularly

failed to give his reasons for the amounts awarded. Counsel submits

that the Arbitrator has simply given his conclusions without reasons.

There is no reason justifying the quantum of award or indication in the

award as to how the amount awarded had been arrived at. Learned

counsel further contends that respondent has failed to lead any

evidence of the escalated costs or higher amounts being expended by

them in the acquisition of the material and in execution of the contract.

Learned counsel for the appellant referred to the letter dated 18 th

September, 1985, written by the respondent to the appellant wherein

FAO(OS) 2 of 1993 Page 4 of page 11 while noting that due to placement of orders and confirmation of sizes

after the expiry of contract period, delay had occurred. The respondent

was still cooperating with the Department in execution of balance

orders when the market rates had gone up by 25%. Respondent also

sought six months' time as 55% of the work was ordered six to eight

months after the expiry of contract. Respondent also protested against

payment being stopped because of extension of time not having been

applied for. Respondent sought issue of provisional time extension in

the interest of work so that they could resume supply. Learned

counsel for the appellant urges that use of expression by the

respondent that they were cooperating with the respondent, indicated

that they were willing to make the supply on the contracted rates and

were only seeking extension of time. The claim for enhanced rate was

thus an afterthought. Counsel further submitted that the Arbitrator

had erred in ignoring letters of the respondent dated 26.1.1985,

24.2.1986 and 15.12.1986 which showed that due to an accident

having occurred in the factory of the respondent and the non availability

of timber etc., work remained closed Appellant urged that these were

delays attributable to the respondent which were ignored.

7. On the first submission that the basis of amounts awarded not

having been disclosed the award suffered from vice of non giving of

reasons and simply conclusions being given, the appellant places

reliance on Gora Lal Vs. Union of India (2003) 12 SCC 459, College of

Vocational Studies Vs. S.S.Jaitley AIR 1987 Delhi 134. Regarding

ignoring of material documents and resultant misconduct, counsel relied

on Seth Mohanlal Hiralal Vs. State of M.P (2003) 12 SCC 144, Union

FAO(OS) 2 of 1993 Page 5 of page 11 of India Vs. Banwari Lal & Sons (P) Ltd (2004) 5 SCC 304, Ms.Bombay

Ammonia Pvt. Ltd Vs. Union of India AIR 1987 Delhi 148 to urge that

award suffered from non application of mind. Reliance was also placed

on Sathyanarayana Brothers (P) Ltd Vs. T.N.Water Supply & Drainage

Board (2004) 5 SCC 314 to urge that non consideration of relevant

writings and documents deprived a just and fair decision and vitiated

the award.

8. We have heard learned counsel for the parties, carefully perused

the arbitral award, the objections thereto, the impugned judgment and

the grounds of appeal and the submissions made before us. The

learned Single Judge in his judgment and the Arbitrator in the award

have clearly set out the facts which bring out that there was failure on

the part of the appellant to make allocation for the orders to be

executed in time and also delayed confirmation by the concerned

Executive Engineers of the Divisions, who were to confirm their

requirement of particular sizes of doors/window shutters in respect of

different Divisions. The Arbitrator has found that confirmation in

respect of housing scheme of 288 LIG houses was well within

reasonable time. However, confirmation in relation to 160 SFS houses

was sent on 26th December, 1984 which hardly gave one month time

to manufacture and supply thereof. The Arbitrator has found that

effectively only four allocations out of nine were made before 23rd

January, 1985 and confirmation in respect of one and a half of them

was made before the said date. All other allocations and the

confirmations were made in the extended period of contract. In view of

these clear and categorical findings of facts in the award which are

FAO(OS) 2 of 1993 Page 6 of page 11 based and supported by records, it is idle for the appellant to contend

that delay had occasioned on account of respondent, based on two or

three letters written wherein they had intimated the factum of an

accident in their factory and temporary closure flowing therefrom. The

said intimation may have explained the delay that was taking place in

manufacture and supply of the particular consignment in question. The

said letters do not dilute or negate the findings of breach or delay

having been occasioned in the execution of contract on account of

appellant. Moreover, the Arbitrator is the master of facts and law. He

has given clear findings of breach by appellant which cannot be assailed

in these proceedings. The judgments cited by the appellant regarding

non consideration of material documents would not be attracted and do

not advance the appellant's case in these circumstances.

9. This takes us to the second submission regarding the claim of the

respondent for payment at enhanced rates being not admissible under

the agreement and in view of the respondent having themselves applied

for extension of time which was granted without levy of compensation

or damages. The Arbitrator had found on examination of evidence that

the costs of machine made shutters were rising after the agreement

had been entered into. He also found that claimant/respondent applied

for extension of time not under free consent but only under duress and

the threats of withholding of eligible and due payments by the

appellant. Letter dated 18th September, 1985 on which reliance was

placed by the appellant and where the respondent mentioned the

factum of cooperating with the Department in executing the balance

orders, respondent had significantly pointed out that market rates had

FAO(OS) 2 of 1993 Page 7 of page 11 gone up by 25%. Respondent had also protested and described the

appellant's action unjustified in directing the Executive Engineer to stop

payment because extension of time had not been applied for. It was,

in these circumstances, that provisional extension of time was sought

for to resume supplies. The findings of the learned Arbitrator is in

consonance with the basis as unfolded and as noted by us it is a

finding of fact, which is not assailable. Similar is the position with

regard to finding reached by the Arbitrator that appellant committed

breach of the agreement as they failed to make allocations and

confirmation in sizes before the stipulated date and the respondent was

thus entitled to receive suitable compensation.

10. Let us now consider the last contention of the appellant with

regard to award being vitiated by non giving of reasons and only the

conclusions having been given. The learned Single Judge has duly

discussed and noted the decision as in College of Vocational Studies Vs.

S.S.Jaitley (supra). The learned Single Judge has held that the

Arbitrator has given ample reasons for the award of higher rates to the

respondent for the supplies made after the expiry of the stipulated

date of supply i.e 23rd January, 1985. The learned Single observed

that the Arbitrator had not explicitly stated as to how he worked out the

figure awarded by him against each claim. In other words, he had not

given the computation or quantification of the amount awarded. The

learned Single Judge with a view to satisfy his judicial conscience that

Arbitrator had applied his mind in making the award and findings and

conclusions were not arbitrary even went through the exercise to find

out as to how the amount against each of the claims on account of

FAO(OS) 2 of 1993 Page 8 of page 11 price rise of timber, rise in seasoning cost etc had been arrived at by

the Arbitrator. It was demonstrated before the learned Single Judge

that the amounts have been worked out on the basis of rates at which

the appellant had awarded tender on or about the dates of supply made

by the respondent. The Arbitrator's minutes of proceedings dated 8th

November, 1989, 9th January, 1990 and 16th January, 1990 and the

calculation sheets on pages 44 to 50 of the award file were perused by

the learned Single Judge to satisfy himself as to the basis of the award.

This exercise had been duly gone into. The learned Single Judge has

also noted that counsel for the appellant was confronted with this

position who did not dispute the explanation given by the counsel for

the respondent but only insisted that this basis of arriving at the

amount should have been mentioned in the award itself. Perusal of

the award as also the judgment of the learned Single Judge and the

proceedings sheet referred to him, have also been seen by us. We

have no reasons to reach a different conclusion than the one reached

by the learned Single Judge.

11. We may observe that the Arbitrator is required only to indicate his

thought process. As held out in Delhi Development Authority, New

Delhi Vs. M/s Alkaram, New Delhi AIR 1982 Delhi 365 and College of

Vocational Studies Vs. S.S.Jaitely (supra), an Arbitrator is not required

to give the details of his computation and give his mental meanderings.

It is sufficient if his thought process is indicated and the basis for

awarding the amount is disclosed. Reference may also be made to the

judgment of the Supreme Court in Indian Oil Corporation Ltd Vs. Indian

Carbon Ltd AIR 1988 SC 1340 where the court has considered the

FAO(OS) 2 of 1993 Page 9 of page 11 requirement of reasons being given for the award and the nature and

extent of such reasons. The court observed that "Arbitration process

should be quick and that quickness of the decision can always be

ensured by insisting that short intelligible indications of the grounds

should be available to find out the mind of the arbitrator for his action."

The award in the present case meets the said requirements. It would

perhaps help had the learned Arbitrator explicitly stated that the

computations were based on the rates at which the appellant itself had

awarded contracts to others at the relevant period. It would have

obviated the exercise which the learned Single Judge went through to

satisfy his judicial conscience with regard to the basis of computation

for the amount awarded. However, the absence did not introduce any

fatality in the award.

12. This is not a case where the findings of the Arbitrator is not

based on evidence. The purpose of arbitration is to provide a speedy

and economical remedy for commercial disputes. The Arbitrator is not

required to give detailed judgment or detailed reasons. Courts are not

required to go into the reasonableness of the reasons or sufficiency of

the reasons. The court is not required to reappraise the evidence and

sit as a court of appeal. In this case, it would be seen that award is

dated 19th March, 1990 and a period of nearly 18 years has elapsed

since then, such objections and pleas do not deserve to be

countenanced.

13. We may observe in addition that the Arbitrator has carefully

considered each item of claims and wherever required had not granted

or reduce the claim where the allocation was made before the stipulated

FAO(OS) 2 of 1993 Page 10 of page 11 date i.e 23rd January, 1985. It is only in cases where allocation or

confirmation of sizes was given by appellant belatedly which made the

execution impossible, before the stipulated date that compensation has

been awarded taking into account the rise in price of timber, rise in

seasoning cost, rise in fabrication cost and rise in truck freight.

Moreover adopting the rates at which the appellant itself had awarded

the work in competitive bidding to other parties during the

contemporaneous period was a rational method adopted for assessing

the enhancement in rates.

We, therefore, find no error or infirmity in the award or in

the impugned order. Needless to mention that none of the judgments

referred to in view of the discussion aforesaid and the facts as noted

would apply and advance the appellant's case.

Appeal has no merit and is liable to be dismissed. However,

on the question of award of interest, considering the prevalent rate of

interest and the rate as admissible for F.D's, counsel for the

respondent on behalf of the respondent has consented that post award

interest may be reduced to 8.25% p.a. We, accordingly, dismiss the

appeal subject to the modification in the decree that the interest shall

be @ 8.25% p.a from the date of award.

Manmohan Sarin, J.

Manmohan, J.

July 21, 2008
ssb



  FAO(OS) 2 of 1993                                       Page 11 of page 11