Delhi High Court
Satish Kumar vs Uoi & Others on 28 July, 2008
Author: Reva Khetrapal
REPORTED
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 1829A/1999
DATE OF RESERVE: May 06, 2008
DATE OF DECISION: July 28, 2008
SHRI SATISH KUMAR ..... Plaintiff
Through: Mr. Vivekanand, Advocate.
versus
UOI & ORS. ..... Defendants
Through: Mr.R.C.Nangia, Advocate
CORAM:
HON'BLE MS. JUSTICE REVA KHETRAPAL
1. Whether reporters of local papers may be allowed
to see the judgment?
2. To be referred to the Reporter or not?
3. Whether judgment should be reported in Digest?
JUDGMENT
: REVA KHETRAPAL, J.
1. The petitioner was awarded a contract for "Repairs to Passenger Platform
Service with Bitumastic Flooring on Platform No.2 at Saharanpur" vide work
order No.128-W/280/DEN-I/UMB dated 27.02.1992 by the respondent/Union of
India. By a letter dated 15.06.1995, the Union of India, through the General
Manager, Northern Railway, New Delhi appointed Shri Jagdeep Rai, Dy. Chief
Engineer/Const./Works, Northern Railway and Shri A.K.Lal, Dy. F.A. &
CAO/Const., Northern Railway, Delhi as Co-Arbitrators to adjudicate upon the
disputes. The said Co-Arbitrators, as per terms of reference, jointly requested Shri
Raj Kumar Sarkar, Dy. Chief Engineer/Deposit Work, Northern Railway, Patel
Nagar, New Delhi to act as Umpire vide letter No.94/Arb./JR-11 dated 29.6.95
which he agreed to act on 3.7.1995. The Co-Arbitrators entered into the reference
on 23.11.1995, but did not hold any hearing during the period of validity, that is,
four months from the date of entering into the reference. Accordingly, the
petitioner invoked the arbitration clause and requested Shri Raj Kumar Sarkar to
enter into the reference and to act as Umpire vide his letter dated 28.03.1998.
Shri Raj Kumar Sarkar entered into the reference on 5.4.1999 and after having
heard the parties and gone through the material on record, gave his award on
23.7.1999, thereby allowing the claims of the petitioner to the extent of
Rs.60,395/- (Rupees Sixty Thousand Three Hundred Ninety Five only) with
simple interest @ 12% p.a. on Rs.51,690/- (that is, Rs.60,395/- minus Rs.8705/- =
Rs.51690/-) from 1.10.92 till the date of payment. The learned Umpire further
held that if the awarded amount was not paid within a period of 75 days from the
date of publishing of the award, the respondent would be liable to pay interest @
18% to the contractor till the payment of the award amount. The learned Umpire,
however, rejected the counter claim of the Railways to the tune of Rs.15,000/-.
2. The respondent/Union of India has filed the present objections to the
award under Sections 30 and 33 of the Arbitration Act, 1940 on the ground that
the learned Umpire mis-conducted the proceedings, inasmuch as he could not
have awarded the said amount in accordance with the specific clauses of the
agreement and also as per the evidence available with him. The award of the
learned Arbitrator is, therefore, stated to be against the facts on record and bad in
law. The award is also stated to be based on conjectures and surmises. Finally, it
is submitted that by interpreting the clauses of the agreement in a manner
different from the original agreement, the learned Umpire has exceeded the terms
of reference. Thus, according to the Union of India, claims No.1,2,4 & 5 were
wrongly allowed by the arbitrator, while the counter-claim of the Railways was
wrongly dis-allowed and accordingly the award of the learned arbitrator was
liable to be set aside under the provisions of Sections 30 and 33 of the Arbitration
Act, 1940.
3. The petitioner/contractor has filed a detailed reply to the objections
denying the objections in seriatum and praying for the dismissal of the objections
with costs and for making the award the rule of the court with further interest @
18% p.a. from the date of decree till the date of the payment.
4. It is proposed to deal with the objections of the respondent/UOI claim-wise
and the same are accordingly dealt with as follows:-
Claim No.1:
5. The first Objection is with regard to the claim No.1, whereby the learned
arbitrator against the amount claimed of Rs.80,000/-, awarded a sum of
Rs.10,000/- in respect of the work done. It is stated by the Objector that in
accordance with Clause-45 of the General Conditions of Contract, which was part
of the agreement between the parties, the measurement of work recorded between
the parties was final and binding. Any claim in regard to measurement or any
claim for work which was not according to the measurement, being an 'excepted
matter', could not be awarded by the arbitrator. By awarding claim No.1, the
learned arbitrator has given an award contrary to the agreement between the
parties. It is also contended that the reasoning given by the learned arbitrator is
vague and baseless.
6. In reply it is denied that the dispute with regard to claim No.1 was an
'excepted matter'. It is submitted that the respondent took no plea of 'excepted
matter' either before the Court at the time of making of the order of reference by
the Court or before the learned Arbitrator. As per the recorded measurement, the
claimant was entitled to Rs.42,681.72 for work done after deducting the running
payment, the details whereof were filed before the arbitrator. Without issuance of
any show cause notice or intimation in writing, some of the measurements were
later on, behind the back of the claimant, struck off by the respondent on the
allegation of alleged defects. There were letters and material on record to show
that the claimant had rectified the defects. It was also an admitted case of the
respondent that the work as done by the claimant had been put to use and was
being utilized by the respondent without dismantling the same or without further
rectification, either departmentally or otherwise. Thus, the learned arbitrator,
keeping in view all the facts and circumstances, awarded a sum of Rs.10,000/- to
the claimant, though a much larger amount was claimed.
7. A perusal of the counter statement of facts on behalf of the respondent/UOI
filed before the learned arbitrator shows that it was nowhere pleaded by the
respondent that claim No.1 was in the category of 'excepted matters'. The plea of
the learned counsel for the respondent that Claim No.1 fell in the category of
'excepted matters' cannot, therefore, be entertained at this stage. Such a plea is
also not sustainable in view of the judgments of the Hon'ble Supreme court in
J.G.Engineers (P) Ltd. Vs. Calcutta Improvement Trust AIR 2002 S.C 766 and
Narain Prasad Lohia Vs. Nikunj Kumar Lohia 2002(1) Arbitration Law
Reporter (RLR) 493 (Supreme Court), wherein applying the principal of waiver,
it was held by the Hon'ble Supreme Court that the respondent not having taken the
objection with regard to the non-arbitrability of the claim before the arbitrator or
any objection that the said claims were 'excepted matters' and having contested
the claims on merits, is estopped from raising such an objection after having
suffered the award.
8. The learned arbitrator's finding that during discussion the respondent
agreed that defects of some portions were removed by the claimant and, therefore,
the claim was being partly allowed to the extent of Rs.10,000/- as against the
claim of Rs.80,000/-, cannot, therefore, be faulted, more so, as the learned
arbitrator has reasoned that though the respondent had entered the measurement of
the whole work done by the claimant in the measurement book, later some of the
measurements had been scored out on account of defects noticed. There is also
nothing on record to suggest that this scoring out in the measurement book was
done after issuance of notice to the claimant, in his presence. The amount has
been awarded on the basis of the measurement book and it is not the case of the
respondent that no measurement was recorded. The record also shows that by
letter dated 28.9.1992, the claimant had written to the respondent that the defects
had been rectified and that there was no rebuttal of this fact from the side of the
respondent.
Claim No.2:
8. Claim No.2 is towards idling of labour, staff, tools, plants and equipment
and additional expenses due to faults and failures of the respondent. Against the
claimed amount of Rs.4,15,000/- (Rupees Four Lacs and Fifteen Thousand only),
a sum of Rs.41,690/- only (Rupees Forty One Thousand Six Hundred Ninety
only) has been awarded by the arbitrator to the claimant with the following break
up:-
Claim No. Description of claims Amount claimed Amount
(Rs.) awarded (Rs.)
2. Idling of labour, staff , tools, plants and 4,15,000/- 41,690/-
equipments and additional expenses
due to faults and failures of respondent.
(i) Double wages of 10 workmen 72000/- 14400/-
@ Rs.40 per day for 6 months.
(ii) Salary of supervisor 24000/- 4645/-
(iii) Hire charges for T &P 90000/- 18000/-
(iv) Salary of watch & ward 24000/- 4645/-
(v) conveyance, rent, lodging, boarding 33000/- Nil
etc. for six months. ________
41690/-
________
Reasons of the amount awarded
After hearing the arguments of both
claimant and the respondent and going
through the records presented, the
claim is partly awarded as shown
against each item above due to non-
removal of hindrances and non-
availability of site during the day time
which resulted in hindrances and
labour output at site as also agreed by
respondent.
9. The reasons recorded by the arbitrator for award of this claim are that due
to non-removal of hindrances and non-availability of site during the day time
which resulted in hindrances and labour output at site, "as also agreed by the
respondent", the claim was being partly awarded. The basis of this claim thus
appears to be that the site and the electricity were not provided to the contractor
within the stipulated period. In this context, apart from the fact that the learned
arbitrator has recorded that, the non-removal of hindrances and non-availability of
site during the day time was admitted by the respondent, the learned counsel for
the claimant has drawn my attention to an intimation sent by the Assistant
Engineer, Northern Railway, Saharanpur to the S.H.O/GRP/Police, Saharanpur
dated 27.04.1992 which is to the following effect:-
"Northern Railway
Office of the Assistant Engineer/N.Rly
Saharanpur.
No.18-A/16/535 Dated 27/4/92
Sub: Repairs to pass, platform surface with bitumastic flooring of P F
No.2 at SRE.
The above work is being carried out by Shri Satish Kumar,
Contractor Saharanpur. Due to power cut in day time, the work is
being done during night time.
Please allow contractor's labour (about 10 men) to work on
the platform No.2 & 3 during night time so that the work may be
completed well in time i.e. within target date.
sd/-
Assistant Engineer
Northern Rly., Saharanpur."
10. The learned counsel for the claimant submits that in view of the fact that
the respondent was squarely to blame for the non-availability of the site during the
day time resulting in hindrances and increased labour output at the site, the
learned arbitrator was justified in granting claim No.2 in respect of idling
charges. He also points out that though the aforesaid charges were claimed for a
period of six months, the learned arbitrator has awarded the same for a period of
one and half month only.
11. The learned counsel for the respondent/UOI does not dispute the letter
dated 27.04.1992 or the fact that it was agreed to by the respondent before the
arbitrator that there was non-availability of site during the day time. This being so,
it is not understandable as to how the award of one and half month idling charges
on account of non-availability of the site to the claimant can be objected to by the
respondent. The contention of the respondent that the award of claim No.2 for idle
labour, staff, tools, etc. in the sum of Rs.41,690/- by the learned arbitrator is not
only contrary to the pleadings, but also against the record of the proceedings is,
therefore, clearly mis-placed.
Claim No.4:
12. In the context of claim No.4, the findings of the learned arbitration are as
follows:
Claim No. Description of claims Amount Amount
claimed awarded
4. Refund of earnest money/security deposit Rs.2500/-
(Earnest money deposited Rs.2500/-. Security
deposit Rs.6383/-. Deduct electric bill for
Rs.2678/-. Net amount payable Rs.8705/-).
Claim No. Description of claims Amount Amount
claimed awarded
Reasons of amount awarded. Rs.8705/-
As per the final bill prepared and entered in
measurement book No.D-571/UMB/90 Page-99
by the respondent, security deposit of Rs.6383/-
has been deducted from the Ist running on
account bill and out of E/money of Rs.5000/-,
the respondent has adjusted Rs.2400/- as
security deposit and an amount of Rs.2678/- is
to be deducted for electricity as per electric bill
from claimant. Thus, the respondent will pay
Rs.8705/- to the claimant (i.e. Rs.6383/- +
Rs.5000/- = Rs.11383/- minus Rs.2678/- =
Rs.8705/-). This has already been accepted by
the respondent during the arguments.
13. At the outset, the learned counsel for the claimant explained that though the
claim under this head was made for earnest money deposited in the sum of
Rs.2,500/-, the learned arbitrator has also dealt with the security deposit under this
head. It was elaborated by him that it was not that the security deposit was not
claimed before the arbitrator, but that the arbitrator instead of dealing with it in
claim No.1, has dealt with it in claim No.4.
14. A somewhat feeble attempt was made by the learned counsel for the
respondent to urge that the learned arbitrator was not justified in awarding the
aforesaid claim. The learned counsel for the petitioner, on the other hand, has
drawn my attention to page 171 of the records, which contains handwritten notes
with regard to the payment due to the contractor. The said handwritten records are
on the letter-head of the Northern Railway and read as follows:
"NORTHERN RAILWAY
Dy. Chief Engineer/Const.
N.rly, Tilak Bridge
Sh.R.K.Sarkar
Payment due to the contractor for "Repair to Passenger Platform
service with bitumastic flooring of Platform No.2 at Saharanpur.
(i) Security 10% Rs.6383.00 (against
CCI for Rs.63831)
(ii) Earnest money Rs.5000.00
(which was later on
adjusted as security
deposited for Rs.2400/-) __________
Total = Rs.11383.00
__________
Deduction for Electric
Bill charges Rs.2678.00
__________
Net Amount Payable = Rs.8705.00
__________
(Eight Thousands Seven
Hundred & Five only)"
15. Clearly, the findings of the learned arbitrator are based on this document
which emanates from the Northern Railway itself and was not disputed by the
counsel for the respondent before the lelarned arbitrator. The award of the claim
is, therefore, to my mind, being challenged for the sake of challenge.
Claim No.5:
16. The learned counsel for the respondent submits that interest @ 12% from
01.10.1992 till the date of payment could not have been awarded by the arbitrator
on the amounts awarded for claim No.1,2 & 3, as no interest as per Clause 16(2)
of the General Conditions of the Contract was payable to the contractor and on
this ground also the award of the learned arbitrator is liable to be set aside. This is
disputed by the counsel for the petitioner, who states that in terms of the award,
the claimant is now entitled for the enhanced rate of 18% p.a. According to him,
the alleged clause in any case is not a bar on the power and jurisdiction of the
court to award interest, and the legal position is well settled that the arbitrator has
the power, authority and discretion to award interest for all the periods on the
amounts found due and payable by the arbitrator. Further, the respondent before
the learned arbitrator had placed no reliance on clause 16(2) and could not,
therefore, do so at this stage.
17. There is, in my view, no merit in this objection either. The Hon'ble
Supreme Court in the case of State of U.P. Vs. Harish Chandra and Co. reported
in 1999 1 SCC 63 has laid down that any bar provided in the contract on payment
of interest, is not a prohibition against the contractor to raise a claim for interest
before the arbitrator on claimed amounts and cannot operate as a bar on the power
of the arbitrator to award interest to the claimant on the amounts awarded in his
favour.
Counter-Claim:
18. Finally, the award was assailed by the respondent's counsel on the ground
that the counter-claim of the Railways for expenditure of Rs.15,000/- incurred
before the various fora was wrongly rejected. It was submitted that there was
delay on the part of the claimant and in fact there were lots of defects in the works
done by the contractors, on account of which the respondent had to incur expenses
for rectifying the same and the rejection of the claim of Rs.15,000/- of the
Railways was accordingly unjustified. The learned counsel for the petitioner, on
the other, denied that the respondent incurred any expenses in rectifying the
defects as alleged, and pointed out that no evidence had been adduced before the
arbitrator in this regard nor any amount was ever demanded by the respondent
from the petitioner on account of alleged rectification of defects, and that the
counter claim of the Railways before the arbitrator was, therefore, an after-
thought and was rightly rejected by the learned arbitrator as such.
19. A glance at the award shows that the counter claim of Rs.15,000/- was
rejected by the learned arbitrator on the ground that no termination of contract
was done nor the defects were got rectified by the Railways, either departmentally
or through any other agencies by the respondent and the respondent had failed to
produce any record for the amount claimed. This being the position, the rejection
of the claim of the respondent which was without particulars and in support of
which there is not even a scrap of paper, in my view, was wholly justified.
20. To conclude, in the present case, in my considered opinion, the arbitrator
cannot be said to have taken into consideration any matter outside the scope of
reference. The appellant has also failed to prove that the findings of the learned
arbitrator were without any basis or that such findings were patently unjust or
perverse. In the case of State of Rajasthan Vs. Puri Construction Co. Ltd. And
Another (1994) 6 Supreme Court Cases 485, relying upon its earlier judgments
in Sudarsan Trading Co. V. Govt. of Kerala (1989) 2 SCC 38; Municipal
Corporation of Delhi Vs. Jagan Nath Ashok Kumar (1987) 4 SCC 497; Alopi
Parshad & Sons Ltd. Vs. Union of India (1960) 2 SCR 793 : AIR 1960 SC 588;
Kapoor Nilokheri Coop. Dairy Farm Society Ltd. Vs. Union of India (1973) 1
SCC 708; India Oil Corpn. Ltd. Vs. IndianCarbon Ltd. (1988) 3 SCC 36; State
of Orissa Vs. Lall Bros. (1988) 4 SCC 153; Firm Madanlal Roshanlal Mahajan
V. Hukumchand Mills Ltd. (1967) 1 SCR 105: AIR 1967 SC 1030, it has been
held by the Hon' ble Supreme Court as under:-
"Even if it is assumed that on the materials on record, a
different view could have been taken and the learned
arbitrator has failed to consider the documents and the
materials on record in their proper perspective, the award is
not liable to be struck down in view of the plethora of case law
to the effect that in the anxiety to render justice to the parties
to the arbitration, the court should not re-appraise the
evidence intrinsically with the close scrutiny for finding out
the conclusions drawn from such facts by the arbitrator is,
according to the understanding of the court, erroneous. Such
exercise of power, it is well settled, is alien to the scope and
ambit of challenge of award under the Arbitration act. Error
apparent on the face of the record does not mean that on
closer scrutiny of the import of documents and materials on
record, the finding made by the arbitrator may be held to be
erroneous. An error of law or fact committed by an arbitrator
by itself does not constitute misconduct warranting
interference with the award."
21. In view of the aforesaid legal and factual position, the petition is without
merit and is dismissed as such. The award is made rule of the Court. There will be
no order as to costs.
REVA KHETRAPAL, J
JULY 28, 2008
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