Delhi High Court
D.D.A vs M/S Nav Bharat Const. Co. on 20 April, 2009
Author: Mukul Mudgal
R-1
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO(OS) No. 90/1998
April 20, 2009
D.D.A ....Appellant
Through Mr. Bhupesh Narula, Advocate.
versus
M/s NAV BHARAT CONST. CO. ..... Respondent
Through Mr. S.S.Tripathy, Advocate.
CORAM:
HON'BLE MR. JUSTICE MUKUL MUDGAL
HON'BLE MR. JUSTICE VALMIKI J. MEHTA
1. Whether the Reporters of local papers may be
allowed to see the judgment? No
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in the Digest? Yes
% J U D G M E N T (Oral)
MUKUL MUDGAL, J.
1. This appeal challenges the judgment of the learned Single Judge dated
21.10.1997 by which the objections preferred by the original respondent/DDA
i.e., the appellant before us, were dismissed and the award dated 19.6.1993 was
made a rule of the Court. Before us, the submission of the learned counsel for
the appellant is in respect of Claim No.8 which awarded damages to the
FAO (OS) No. 90/1998 page 1
respondent on account of infructuous expenditure and damages sustained by the
contractor due to various breaches of delays committed by the appellant. The
Arbitrator dealt with the aforesaid claim in the following terms :
"Claim No.8: Claimants claim a sum of Rs.15.00 lakhs
on account of infructuous expenditure and damages
sustained by the contractors due to various breaches
committed by the respondents.
AWARD:
The work could not be completed by the claimant within
the stipulated period of contract for reasons beyond its
control and due to the reasons substantially attributable to
the respondent, such as non-issue of drawings, non-issue of
stipulated materials, i.e., cement, steel, pipes and shutters
and also due to existence of various hindrances, such as
existence of Nallah and non-laying of electrical conduits.
Thus, as against specified period of 12 months the work
was completed in 37 months. As per clause 2 of the
Agreement, the time was deemed to be the essence of the
contract and if there was any delay in completion on the
part of the claimants then it was liable to pay a specified
sum as compensation to the respondents. The fact that the
extension of time for completion of work up to 9.11.1987
against the stipulated date of completion of 7.10.1985 was
granted by the respondents without levy of compensation
implies that the delay of more than 2 years in completion
of work was not attributable to the claimant. The denial of
the claim by the respondents on the grounds of an
undertaking having been given by the claimant to the
effect that it (the claimant) will not claim any damages due
to delayed completion of work carries no meaning. In this
context I rely on the ratio of the judgment DLT-1988-PPs
476 of Delhi High Court. Another argument advanced by
the respondents in denying the claim on the plea that due
to delayed completion of work the claimant had been paid
under clause 10-CC holds only partially good because
clause 10-CC does not make up for the entire loss which a
contractor is bound to suffer due to escalation in costs as
FAO (OS) No. 90/1998 page 2
well as on account of non-utilization of establishment and
T & P fully during the prolongation period. The claimant
argued that the prevailing rate in the year 1986-87 for
similar works was higher by 43.50 per cent as compared to
the rate at which the work was awarded to him. This
contention of the claimant was not contradicted by the
respondents. However, considering the payment having
been made/allowed under clause 10-CC and also that the
stipulated material even during the prolongation period
was issued at fixed price I feel that the claimant is entitled
to 10 per cent extra on the work executed during the
extended/prolongation period. Admittedly, the quantum of
work executed during the extended period was to the
extent of Rs.49,62,612. Thus, in view of the above the
claimant is entitled to a sum of Rs. 4,96, 261 due to
increase in price/rates during the prolongation period. As
has already been established in the preceding paragraphs,
the work which was contemplated to be completed in 12
months prolonged to a period of 37 months. Under the
circumstances it cannot be denied that the establishment
and T & P had to be maintained at site for additional
period of more than 2 years which is bound to entail
additional/infructuous expenditure. I assess damages on
this account to the tune of Rs.2.00 lakhs. Thus, in view of
my above finding I hold that the claim is justified to an
extent of Rs.6,96,261 and accordingly I award this sum in
favour of the claimant".
2. The objections in respect of claim No.8 was rejected by the learned
Single Judge principally on the ground of the issue of undertaking having been
given by the contractor of not claiming amounts under this head and thus
consequently not being open to the contractor to claim further damages. In our
view, the above finding of the learned Single Judge ignores the claim No.5 in
para 10 where he has dealt with this issue in para 10 of the judgment and upheld
the amount paid under clause 10 CC of the agreement. Having considered the
entire discussion of the learned Single Judge in respect of claim No.8 we are of
FAO (OS) No. 90/1998 page 3
the view that the learned Single Judge largely dealt with the case law only on
the issue of factum of furnishing of undertaking which was relied upon by the
DDA, and the learned Single Judge in our view does not appear to have noticed
the effect of payment under Clause No.10 CC already having been made which
would include claims under claim No.8, and particularly, when such plea was
raised in respect of claim no.8 before the learned Single Judge as objection
No.1(g) as well as before the Arbitrator himself.
3. We are satisfied qua claim No.8 that the judgment of the learned Single
Judge is contrary to the position of law one such judgment is reported as Anant
Raj Agencies Vs. DDA, 2005 (5) Arb LR 590. The reasoning in another
judgment of the Division Bench of this court in Delhi Development Authority
Vs. U. Kashyap, 1999 (1) Arb LR88 also in effect is also the same that once
increase as per clause 10(CC) is awarded then additional sums for increase in
cost cannot be granted. Thus, in our view, the affirmation of the grant of
additional sums in addition to the payment under Clause 10 CC for increase in
cost by the Single Judge was not justified.
4. The learned counsel for the appellant has pressed the issue of interest of
14% which was awarded at the rate of 14% which in our view is excessive as
per the current position of law laid down in Rajendra Construction Co. Vs.
Maharashtra Housing & Area Development Authority and others, 2005 (6)
SCC 678, McDermott International Inc.Vs. Burn Standard Co. Ltd. and
FAO (OS) No. 90/1998 page 4
others, 2006 (11) SCC 181 & Rajasthan State Road Transport Corporation v.
Indag Rubber Ltd., (2006) 7 SCC 700 & Krishna Bhagya Jala Nigam Ltd. Vs.
G.Harischandra, 2007 (2) SCC 720.
5. Accordingly, while setting aside the award in respect of claim No.8 and
the affirmation thereof by the learned Single Judge, the rest of the award is
upheld with the reduction of the interest to 9% per annum to be paid as per the
award. We may note that pursuant to the orders dated 3.4.1998 of this court the
appellant/DDA has deposited the amount in this court and which the respondent
was entitled to withdraw on furnishing security. The amount it appears has not
been withdrawn by the respondent. If the amount has not been released to the
respondent the balance amount in light of the reduced interest awarded by us
shall be released to the respondent. The respondent shall be entitled to interest
accrued thereon at 9% till the date of this order..
6. The appeal stands disposed of in the above terms.
MUKUL MUDGAL, J
VALMIKI J. MEHTA, J
APRIL20, 2009
ib
FAO (OS) No. 90/1998 page 5
