M/S Uppal Engineering Corp. vs Cwc
2008 Latest Caselaw 1619 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+         CS(OS) No. 843A/1990 and I.A. No. 7640/1993

                                     Date of decision : 11.9.2008
IN THE MATTER OF :

       M/S UPPAL ENGINEERING CORPORATION              ..... Petitioner
                                Through Mr. Pramod Kr. Seth, Adv.

                      Versus

       C.W.C                                                ..... Respondent
                                     Through Mr. K.K. Tyagi with Mr. Iftekhar
                                     Ahmad, Advs.

       CORAM

*      HON'BLE MS.JUSTICE HIMA KOHLI

              1. Whether Reporters of Local papers may      be
                 allowed to see the Judgment?               Yes

              2. To be referred to the Reporter or not?             Yes

               3. Whether the judgment should be reported in the
                  Digest?                                        Yes


HIMA KOHLI, J. (ORAL)

1. The present application filed under Sections 30 and 33 of the

Arbitration Act, 1940 (for short 'the Act') is directed against an award dated

05.9.1989 passed by the learned Arbitrator in respect of the disputes

between the objector/contractor and the respondent/CWC. In a nutshell, the

facts of the case are that the objector/contractor was awarded the work of

construction of 50,000 MT capacity godown along with the ancillary buildings

at Muzaffarnagar (UP), vide award letter dated 31.5.1979. The said work

was to be completed within a period of 15 months i.e. by 09.9. 1980.

2. It is the case of the objector/contractor that though it had geared

up its entire resources and mobilized to the site of work, the work could not

be proceeded with at the desired pace because of a stay order operating at

the site of work and later, because of shortage of diesel, which the

respondent/CWC failed to arrange, in spite of various requests made by the

petitioner. On the other hand, the case of the respondent/CWC is that the

objector/contractor had to complete the work by 31.3.1981 and the total cost

of work was Rs.1,43,32,130.10 paise, but the actual work done by the

objector/contractor was of the order of Rs.1,09,44,000/- till 05.8.1981 and

thereafter, the work was abandoned by him. As a result, a notice was issued

to the objector/contractor but it refused to hand over the possession of the

godowns and the stocks to the respondent/CWC. Hence, the respondent was

compelled to issue a notice to show cause to the objector/contractor, as to

why its contract may not be cancelled. As the response to the aforesaid

notice to show-cause was found to be un-satisfactory by the respondent, the

contract was rescinded vide letter dated 09.9.1981.

3. It is undisputed the disputes and differences arose between the

parties and the petitioner invoked the arbitration clause, as per clause 25 of

the agreement between the parties, seeking adjudication of the disputes by

appointment of an arbitral tribunal, vide letters dated 13/14.8.1981 and

14.10.1981. Thereupon, the Appointing Authority, in the first instance,

appointed one Sh. A.U. Rajsinghani as the Sole Arbitrator vide letter dated

22.10.1981. After a point of time, the said Arbitrator expressed his inability

to continue with the work and thereafter, the Managing Director of the

respondent/CWC appointed Sh. B.K. Sharma, as the Arbitrator, vide letter

dated 08.9.1988, who continued with the proceedings and has rendered the

award dated 05.9.1989, impugned by the objector/contractor herein.

4. The first objection raised by the learned counsel for the

objector/contractor to assail the impugned award is that the original

agreement governing the parties is missing from the records and thus, the

award having been rendered in the absence of the original agreement before

the arbitral tribunal, the same is liable to be set aside. In support of the

aforesaid submissions, learned counsel for the objector/contractor relies on

the judement of Bhai Sardar Singh & Sons vs. New Delhi Municipal

Committee, reported at AIR 1981 Delhi 374 and an unreported judgement

dated 09.2.2001 in the case of Uppal Engineering vs. UOI (Suit No. 412-

A/1990).

5. The aforesaid plea raised on behalf of the objector/contractor is

disputed by the counsel for the respondent/CWC who submits that a perusal

of the ground taken by the objector/contractor in the application shows that

there was no mention of such an objection taken by him now. Counsel for

the objector/contractor draws the attention of this Court to the last para of

pages 25 and 26 of the objections to state that such a ground was taken in

the aforesaid paras. A perusal of the aforesaid pages shows that the

objector/contractor has levelled an allegation against the Executive Engineer

of the respondent/CWC to the effect that the records of the arbitral

proceedings were given by the learned Arbitrator to him and upon an

inspection of the records, it is revealed that the papers have been replaced

from the original records and that the original agreement filed before the

learned Arbitrator, which contained the schedule of terms and rates of the

subject work are also missing and have been replaced by a blank booklet of

the contract conditions.

6. The aforesaid objection taken on behalf of the objector/

contractor cannot be interpreted to mean that any objection was taken to

the effect that the original agreement was missing from the arbitral records

and hence, it ought to be assumed that the learned Arbitrator rendered an

award without perusing the original agreement. On the contrary, the

objector/contractor has himself stated that the original agreement was filed

before the learned Arbitrator and that the same contains a certain schedule

of terms and rates, which were purportedly replaced by a blank booklet of

the contract conditions. In fact, what has been termed as a "blank booklet"

of the objector/contractor, is a printed format of the contract conditions.

Hence, the judgments sought to be relied upon by the counsel for the

objector/ contractor, can be of no avail. At this stage, learned counsel for

the objector/contractor submits that what was meant by the aforesaid

averment was that the booklet was unsigned. However, no such objection

has been raised in the grounds taken to assail the award and such an

objection taken at this stage in the course of arguments cannot be

permitted, being barred by limitation. For the aforesaid reason, the first

objection taken to the impugned award is rejected.

7. The second objection taken on behalf of the objector/contractor

is that no arguments were heard by the learned Arbitrator on claims No. 1 to

9 at any point of time. He relies upon the observations of the learned

Arbitrator, in the last para of page 2 of the award, in support of his

submissions. In the last para of page 2 of the award, the Arbitrator observed

that the previous Arbitrator had not framed any specific issues, and instead,

he had considered each of the 20 separate claims filed individually. He

further noted that he had examined 10 claims, and that the 10th claim was

only partly examined. Therefore, the learned Arbitrator started further

examination from the stage from where the earlier Arbitrator left.

8. The aforesaid observations of the learned Arbitrator have to be

examined in the light of the proceedings held by the previous Arbitrator. A

perusal of the arbitral record shows that, in the order-sheet dated 26.5.1989,

the sole Arbitrator observed as below:

"In the first instance, the progress in the case made by the previous Arbitrator Shri A.U. Rajshinghani was reviewed and the minutes pertaining to the 24th, 25th and 26th meetings held on 03.12.1984, 05.1.1985 and 19.1.1985 respectively were gone through. It was noted that Claim No. 10 and beyond upto No. 15th, as lodged by the claimants were to be examined."

9. Further, the records reveal that the meetings held on 03.12.1984

and 19.1.1985 by the previous Arbitrator, which have been stated to be

reviewed by the subsequent Arbitrator, give the details of the discussions

and the decisions taken by the earlier Arbitrator. Viewed in the aforesaid

light, the observations of the learned Arbitrator at page 2 of the award fall

into place. Taking it further from there, the claims of the objector/contractor

in respect of claims No. 1 to 9 have been dealt with at pages 4 & 5 of the

impugned award, and it shows that the learned Arbitrator duly considered

the material placed on the record, including the measurements of various

items taken in the Measurement Book, the terms and conditions of the

contract agreement and the nature of the work carried out by the

objector/contractor. Out of claims No. 1 to 9, claims No. 4, 6, 7 & 8 of the

objector/contractor were duly accepted. Hence, the objection raised by the

objector/contractor to the effect that no arguments were heard on claims No.

1 to 9 is not acceptable.

10. In this context, it is also relevant to note that the question of

hearing arguments by the learned Arbitrator, in respect of claims No. 1 to 9

would have arisen, had objector/contractor appeared before the learned

Arbitrator. A perusal of page 3 of the award shows that the

objector/contractor repeatedly sought long adjournments from the learned

Arbitrator. The learned Arbitrator was compelled to issue show-cause

notices to him on account of his non-appearance. He observed that the

proceedings were to be finalized and an award made by 05.9.1989 and as

the objector/contractor failed to appear before him, a show-cause notice was

issued on 31.8.1989 regarding ex-parte consideration of the claims. The

same was sent to the objector/contractor by registered post, special

messenger and also telegraphically. The objector/contractor refused to

accept the notice sent by special messenger. The registered AD notice was

not returned back and the telegraph was deemed to have been received in

normal course. Still, the objector/contractor did not appear on 04.9.1989

nor did he send any communication for explaining his absence, thus,

compelling the learned Arbitrator to proceed to render the award on the

basis of the documents on the record. It, therefore, does not lie in the mouth

of the objector/contractor to state that no arguments were heard by the

learned Arbitrator, in respect of claims No. 1 to 9 at any time. The said

objection is rejected.

11. As far as the third objection raised on behalf of the

objector/contractor to the effect that there was no application of mind by

the sole Arbitrator, in view of the fact that claim No. 3, relating to anti-

termite treatment for a sum of Rs.9,05,331.18/- was rejected is concerned,

counsel for the objector/contractor states that, despite the fact that vouchers

in respect of the work of anti-termite treatment were filed before the learned

Arbitrator and are a part of the arbitral record, the said claim was rejected on

the plea that the petitioner never produced the desired vouchers or any

evidence, in support of the said claim. Counsel for the respondent states

that the aforesaid claim was opposed by the respondent/CWC as the same

was not part of the work awarded to the contractor. He further states that

the objector/contractor failed to place on record any documents along with

claims/submissions to establish the said claim, and furthermore, even if

notice is taken of the document indicated at page No. 28 of the arbitral

proceedings, which was a reminder dated 7.5.1980 by a contractor to the

objector for payment of a sum of Rs. 3,48,540/- towards anti-termite

treatment, the aforesaid document could not have substantiated the claim

raised of over Rs.9,00,000/- raised by the objector/contractor in claim No.3.

12. It is further pertinent to note that the aforesaid document came

to be filed by the objector/contractor only on 26.5.1989. In the order-sheet

of the proceedings dated 03.12.1984, the objector/contractor was specifically

directed that it should submit the vouchers in respect of purchase of Aldrex

by the next date i.e. 20.12.1984. It was also recorded that, in case any party

fails to bring the relevant documents desired by the Arbitrator on the said

date, the Arbitrator would proceed and finalize the discussions even without

reference to such documents. The aforesaid document came to see the light

of the day only on 26.5.1989, that is, after a period of over four years from

the date of the aforesaid order. Furthermore, as per the records, the

objector/contractor chose to stay away from the arbitral proceedings on the

date when it was fixed for arguments, as is apparent from the perusal of the

impugned award. In these circumstances, the learned Arbitrator cannot be

blamed for dis-allowing the said claim on the ground that the claimant never

actually produced the desired vouchers, in respect of the said claim.

13. The last objection taken by the learned counsel for the

objector/contractor is in respect of claim No. 14, which relates to an amount

of Rs.11,75,000/-, claimed on the ground of an all around increase in the

prices of building materials etc. Counsel for the objector/contractor submits

that the increase claimed by his client was @ 18%, as detailed in „Ext. C-97‟

and there was no question of absorbing 10% escalation and thus, there is an

error on the face of the award. In reply thereto, counsel for the

respondent/CWC states that the claim for escalation has to be seen in the

light of the provisions of the contract. The escalation was governed by

Clause 10(C) of the Contract Agreement, under which the

claimant/contractor was required to absorb the first 10% of the increase in

prices/wages. Taking that into consideration, the learned Arbitrator held that

at best, he could be compensated for increase upto 8%. However, looking at

the time span for which the execution of the work remained held up for

reasons beyond the contractor‟s control, the learned Arbitrator decided to

give to the respondent/contractor 2% increase as against 8%. Thus, a sum

of Rs.1,30,000/- was awarded to the objector/contractor.

14. There appears no error on the record, as far as observations of the

Arbitrator in respect of Claim No.14 is concerned. It is settled law that this

Court, while deciding the objections under Sections 30 & 33 of the Act, is not

required to go into the reasonableness of the reasons given by the learned

Arbitrator (Refer : State of Rajasthan vs. Puri Construction Co. Ltd. & Anr., JT

1994 (6) SC 412). Furthermore, merely because this Court could arrive at a

different conclusion on the same set of facts and evidence on the record, as

compared to the award given by the Sole Arbitrator, cannot be a ground for

the Court to interfere with the award and hold it to be perverse or arbitrary.

(Refer: DDA vs. Bhagat Construction Co. Pvt. Ltd., 2004 (3) Arb. LR 481).

The observations made by the learned Arbitrator are based on sound

reasoning as indicated in the impugned award and does not deserve

interference. Hence, the said objection is also rejected. No other ground is

urged on behalf of the objector/contractor.

15. In view of the aforesaid discussion, it is held that there is no

merit in the objections filed by the objector/contractor. The application is,

therefore, rejected. The award dated 05.9.1989 rendered by Sh. B.K.

Sharma, Sole Arbitrator is made rule of the Court. The respondent shall

be entitled to receive future interest on the awarded amount payable @ 9%

p.a. from the date of the decree, till the date of realization. Decree sheet be

drawn up accordingly.

HIMA KOHLI,J

SEPTEMBER 11, 2008 KA/sk