Goel Associates vs Ecil Coop. Group Housing Society
2009 Latest Caselaw 1607 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+                       C.S.(OS) 2145A/1999

                                  Date of Decision: 23st April, 2009

      GOEL ASSOCIATES                                  ... Petitioner
                       Through:    Mr. D.R. Bhatia, Advocate.

             versus

      ECIL COOP. GROUP HOUSING SOCIETY           ..... Respondent
                     Through: Mr. S.C. Singhal, Advocate.

      CORAM:
      HON'BLE MR. JUSTICE VIPIN SANGHI

      1. Whether the Reporters of local papers may          No
         be allowed to see the judgment?
      2. To be referred to Reporter or not?                 No
      3. Whether the judgment should be reported            No
         in the Digest?
%                         JUDGMENT (Oral)

VIPIN SANGHI, J.

1. This petition under Section 34 of the Arbitration & Conciliation

Act 1996 (The Act) has been filed to challenge the award dated

27.08.1999 in Arbitration Case No. 97/1998 passed by Mr. Justice P.K.

Bahri (retd.) on the claims preferred by the petitioner/consultant and

counter-claims preferred by the respondent society.

2. The parties entered into an agreement dated 09.04.1996

whereunder the petitioner was appointed as the consultant architect

for the construction of Group Housing Society Flats for the members of

the respondent society. Clause 12 of the agreement entitled the

society to terminate the contract at any stage, if they found the

services of the architect are not satisfactory. The services of the

petitioner/claimant were terminated on 05.04.1997. The same gave

rise to disputes between the parties which were sought to be referred

to arbitration.

3. Before the learned Arbitrator the defence of the respondent

society, to justify the termination of the contract was that the

petitioner/architect was insisting on the appointment of a contractor of

his own choice and was threatening the respondent society that in the

event of named contractor not being appointed, the respondent

society would suffer adverse consequences. The learned Arbitrator

accepted the aforesaid ground on a perusal of the materials placed on

record including the resolutions passed by the Managing Committee

prior to the termination of the agreement dated 09.04.1996.

4. The learned Arbitrator found that the petitioner had been

paid an amount of Rs. 1,26,000/- till the time of termination. He

rejected the claim for balance fee payable under the agreement which

would have been paid to the petitioner, had it not been terminated

earlier. He also rejected the claim for damages on account of loss of

reputation and business due to termination of the contract on the

ground that no evidence was led and no submission was made in that

regard. The counter-claims of the respondent society were also

rejected as being an afterthought and a counter blast to the claims of

the claimant. Consequently, the learned Arbitrator made a `NIL'

award.

5. The first submission of Mr. D.R. Bhatia, counsel for the

petitioner/objector is that initially the learned Arbitrator had fixed his

fee at Rs. 5,000/- per hearing to be shared equally by both the parties.

However, after the filing of the counter-claims by the respondent in

excess of Rs. 1 crore, the fees was upwardly revised to Rs. 10,000/- per

hearing to be shared equally by the parties. He submits that the

upward revision disabled the petitioner/claimant from pursuing the

arbitration proceedings effectively. He submits that on this ground the

award should be set aside.

6. I find no merit in the submission of Mr. Bhatia. Admittedly,

no such grievance was raised by the petitioner before the learned

Arbitrator or before the court during the stage of arbitration. The

petitioner willingly participated in the proceedings without raising any

such objection. Even in the present objection petition, I find that

paragraph 8, apart from reciting the aforesaid development does not

state that the petitioner was unable to pay the fee and that he has

suffered on that account. I, therefore, reject this submission.

7. The next submission of learned counsel for the

petitioner/objector is that the petitioner during the course of the

arbitration proceedings had moved an application dated 07.02.1999

before the learned Arbitrator requiring the respondent society to

produce the following record in their power and possession:

"Minute books of the Managing Committee and Annual General Body Meetings along with

secretary as report if any held after 09.04.1996".

8. The submission of Mr. Bhatia is that the learned Arbitrator,

however, did not pass any orders on this application. Instead he

proceeded to hear the matter and passed the impugned award

wherein it was held by him that the justification offered by the

respondent society for termination of the contract was made out.

9. The relevant part of the award dealing with the aforesaid issue

reads as follows:

"40. Coming back to the real issue I am only left with the copies of resolutions of the Managing Committee of the respondent on this subject (Annexure R 5). Minutes of meeting of 15.3.1997 show that tenders of seven contractors were received and at the time of opening of tenders, five contractors were present who deposited the earnest money with the tenders. Minutes of the meeting dated 19.3.1997 show that the Secretary informed the committee that the claimant had been sending threatening messages that if the contractor of his choice and liking was not appointed, he would do his best to damage the working of the society and had threatened to make a report to the Registrar against appointment of any contractor of the choice of the Committee. He also informed that soon after his confrontation with the General Body on 26.7.1996, he canvassed for appointment of contractor, preferably M/S Chinar or M/s..... The name of the said proposed contractor is not recorded. The minutes proceed to record that the Managing Committee had been resisting the pressure of the claimant for appointment of contractor of his choice and had advertised in newspapers for getting tenders. It is further

recorded that the claimant for long had been insisting on giving contract on square foot basis rather than on item rates and on that score the tender work was delayed, as the committee did not yield to his demand. It is further mentioned that the claimant wanted to short-list the contractors to be selected and approved by him. The Secretary informed that after the letters had been issued to the contractors, the claimant told the Secretary that only that contractor would work in the society, which would be approved by him. The Secretary told the claimant that it was the sole discretion of the Managing Committee to appoint a contractor and the claimant would have no say in the matter.

41. The Society informed that the claimant had conveyed through Associate Architect that he would create a scene in the General Body and put the committee in difficult situation by telling that he had a tender of the a contractor at very low rates. The Managing Committee then recorded that the claimant would not be allowed to have any say and after negotiating with tenderers, selected M/S Viz Contractors (P) Ltd., as contractor.

42. The minutes of meeting dated 5.4.1997 show that the claimant continued to maintain high pressure tactics for appointment of his own contractor and threatened to blackmail the office bearers on Bhoomi Puja day on 12.9.1997. The Managing Committee thus took decision to terminate his contract. Soon after the termination letter was received, the claimant lodged a complaint with the Registrar against the Managing Committee in which he alleged that against his advice, the committee has awarded the contract at Rs. 660 lakhs while the rate comes to Rs. 540/- per sq. ft., when it should have been Rs. 440/- per sq. ft. He gave the total area as 1,12,500 sq. ft. It is

significant to note that the claimant in his bills for getting his fee himself has quoted the rate of Rs. 600/- per sq. ft. and estimated total cost of Rs. 631 lakhs and got Rs. 1,28,200/-, the ten per cent fee on that basis. This immediate reaction of the claimant shows that he was not happy with the Managing Committee for not toeing his line in selection of the contractor. There were eight members of the Managing Committee. They had no ill will towards the claimant. There is no reason to doubt the correctness of facts recorded in the minutes of the meetings of the Managing Committee.

43. It is evident that the claimant was putting pressure on the Committee to appoint contractor in consultation with him and as the Committee did not relent, he threatened to put the office bearers in bad light before other members of the society.

44. The learned counsel for the claimant has vehemently contended that a clumsy attempt has been made to have some ground for terminating the contract. He has pointed out that the names of contractors whom the claimant favoured for appointment are not even disclosed. In the minutes name of one contractor is mentioned but the same is quite incomplete and there is blank space kept wherein name of second contractor was supposed to be indicated. Nothing in my view turns on this. In case the respondent intended to incorporate any wrong names, the respondent had enough opportunity to do so. Keeping the record as it is, the respondent has acted fairly. Whatever information the Secretary made available, was incorporated in the minutes.

45. The facts appearing in the minutes of the two meetings of the Managing Committee leave no room for doubt that the claimant was exceeding his duties and obligations

enumerated in the contract. He had no business to try to impose his choice on the Committee. The threats being held out by him to the members of the Managing Committee were in bad taste. From such facts any prudent person could conclude that the work of the claimant as an Architect is not satisfactory. Thus I reach the finding that the respondent was within its rights to terminate the contract in consonance with letter and spirit of the clause 12 of the contract."

10. I find no merit in the submission of Mr. Bhatia for various

reasons. Firstly, the learned Arbitrator has returned a finding of fact

with regard to the petitioner exerting undue pressure on the

respondent society. The arbitrator is the final judge of facts. In these

proceedings, it is not for the Court to re-appreciate the material and

evidence placed before the Arbitrator and arrive at its own findings on

issues of fact. It cannot be said that the finding of the learned

Arbitrator on the said issue is based on no evidence or material

whatsoever. So long as there was some material before him, he could

base his findings on the same. It is not for this Court to judge the

sufficiency or insufficiency of the evidence. A perusal of the award

would show that the learned Arbitrator upheld the defence of the

respondent society that the petitioner was exerting undue pressure on

the society for appointment of a particular contractor of his own

choice, inter alia, on the basis of the minutes of the meeting dated

19.03.1997.

11. The learned Arbitrator was not concerned and did not look into

all the minutes of the Managing Committee Meeting and Annual

General Meeting held after 09.04.1996 (which was the date of

appointment of the petitioner as the architect) as sought for by the

petitioner claimant in his application. This is for the reason that there

was no dispute or issue raised with regard to the initial appointment or

working of the petitioner. The agreement executed between the

parties was an admitted document and no controversy with regard to

the same was ever raised. There was no reason for the learned

Arbitrator to, therefore, summon the record for the period after

09.04.1996.

12. Mr. Bhatia has submitted that the date 09.04.1996 was

mistakenly typed in the application dated 07.02.1999 moved before

the learned Arbitrator. The same ought to be read as 09.04.1997. In

my view, even if the aforesaid was a typographical error before the

learned Arbitrator, the same cannot be corrected at this stage before

me. The fact of the matter is that the learned Arbitrator proceeded on

the basis of the record before him. He had no reason to believe that

the petitioner was desirous of calling for the record pertaining to the

meetings held on 19.03.1997 and/or 05.04.1997. At this stage, Mr.

Bhatia submits that the petitioner had asked for the minutes of the

Managing Committee and Annual General Body and the report of the

secretary after the appointment of the architect on 09.04.1996.

Consequently, the same included the entire record up to the date of

termination and not just the record immediately after the appointment

of the petitioner as the architect.

13. Since the learned Arbitrator found in favour of the petitioner that

the work of the petitioner, till the date of termination of the contract

was satisfactory, in my view, there was no occasion for the learned

Arbitrator to have summoned the entire record as required by the

petitioner and the failure of the Arbitrator, in any event, cannot be said

to have vitiated the award.

14. In any event, to satisfy the conscience of the court as to whether

the production of the original minutes/proceedings register before the

learned Arbitrator could have had any material bearing on the

determination of the Arbitrator, the respondent was directed to

produce the original record containing the minutes of Managing

Committee Meetings held at the relevant time. The same has been

produced before the court and has been perused by me. The

proceedings register shows that a Managing Committee meeting was

held on 15.03.1997 (which begins at page 24 and ends at page 29 of

the proceedings register). In this meeting resolution nos. 44, 45 and

46 were passed. The next meeting of the Managing Committee of

which the minutes are recorded is of 19.03.1997. As recorded by the

learned Arbitrator, the minutes of Managing Committee meeting of

19.03.1997 (which begin on page 30 and end on page 33 of the

proceeding register) clearly bring out the stand of the respondent that

the architect had been sending threatening messages that if the

contractor of his own choice and liking was not appointed by the

Managing Committee, he would do his best to damage the work of the

society and its standing. He even threatened to report with the

Registrar Cooperative Societies against the appointment of contractor

of the choice of the Managing Committee. These minutes also record

that immediately after his confirmation by the General Body on

28.07.1996, the architect had started canvassing for appointment of

the contractor, preferably M/s. Chinar and one other contractor whose

name is not recorded in the minutes. The resolution no. 47 passed on

the said date also records that the Managing Committee seriously

reviewed the situation and decided that the independence of the

Managing Committee would be maintained and that the architect

would not be allowed to have its contractor thrust on the society. This

was followed by the next meeting of the Managing Committee of

23.03.1997. The resolution passed in this meeting bears resolution

no. 47-A. It is, therefore, seen that the proceedings register as

maintained by the respondent society appears to be genuine and a

properly and routinely maintained document. The minutes of the

Managing Committee Meeting dated 19.03.1997 appear to be

contemporaneously recorded since they are preceded by minutes of

15.03.1997 (wherein resolution Nos. 44, 45 and 46 were passed) and

succeeded by the Managing Committee Meeting minutes of

23.03.1997 (when resolution no.47A was passed).

15. Mr. Bhatia, learned counsel for the objector submits that a

perusal of the register shows that the minutes of the Managing

Committee Meeting held on 05.04.1997, wherein it was resolved that

the contract with the petitioner be terminated vide resolution no. 48,

have been separately written out and pasted in the minute book.

16. In my view, that by itself cannot lead to an unimpeachable

conclusion that the Minutes of the meetings dated 19.03.1997 and

05.04.1997 are false and fabricated as contended by the petitioner and

raise a doubt so far as the genuineness of the said minutes are

concerned. As aforesaid, these are issues of fact on which the learned

Arbitrator and not the Court is the final judge. Undoubtedly, two views

were possible. The Arbitrator has accepted the view that the Minutes

dated 05.04.1997 were genuine as he has relied on the same.

Pertinently, by the same resolution no.48 passed on 05.04.1997, by

which the petitioner was removed the new architect M/s. Vidhyanath

Associates was recommended for appointment. The minutes dated

19.3.1997 were not put to challenge by the petitioner on any ground.

17. Moreover, the issue before the Arbitrator was whether the

respondent society had a justifiable ground available to it to terminate

the contract with the petitioner. The fact that such ground was

available is evident from the contemporaneously recorded minutes of

19.03.1997.

18. My attention has also been drawn to para 15 of the award. It

appears that the parties had agreed that no oral evidence would be led

and no cross-examination of witness would be done and only final

arguments shall be advanced. The respondent society had filed its

affidavit by way of evidence and placed the resolutions dated

15.03.1997, 19.03.1997 and 05.04.1997 on record and relied upon the

same. These were relied upon by the learned Arbitrator in view of the

aforesaid understanding between the parties.

19. For the aforesaid reasons I see no merit in the objection of

the petitioner with regard to the non consideration of the petitioner's

application dated 07.02.1999. I find no merit in the petition. The

same is accordingly dismissed. The parties shall bear their respective

costs.

VIPIN SANGHI, J.

April 23, 2009 dp