Union Of India vs M/S Wishwa Mittar Bajaj & Sons & ...
2009 Latest Caselaw 1717 Del

             * IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                                       Date of Reserve: 24.3.2009
                                                                      Date of Order: April 28, 2009

OMP No. 467/2005
%                                                                                       28.4.2009

        Union of India                                                             ... Petitioner
                                   Through: Nemo

                   Versus


        M/s Wishwa Mittar Bajaj & Sons & Anr.      ... Respondents
                      Through: Mr. Harish Malhotra, Sr. Advocate
                      with Ms. Namita Chaudhary, Advocate


JUSTICE SHIV NARAYAN DHINGRA

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 judgment should be reported in Digest?                                              Yes.

JUDGMENT

Union of India has filed objections under Section 34 of the

Arbitration & Conciliation Act, 1996 to the award dated 31.7.2005 passed by

respondent no.2/ the sole Arbitrator.

2. Brief facts relevant for the purpose of deciding this petition are that

the respondent no.1 was awarded a lump sum contract for construction of

infrastructure for breeding and training of dogs at RVC Centre and School at

Merrut. The contract was for a sum of Rs.2, 79, 44,098.10. The work was to be

completed by 15.4.2003. The work was completed on 12.4.2003 and the

respondent no.1 submitted its final bill. After the payment against final bill was

received, except a part of amount withheld by the petitioner, respondent no.1

raised a dispute and the matter was referred to the Arbitrator/respondent no.2.

Before the Arbitrator, respondent made 10 claims. Claim no. 1 as compensation

on account of delay in payment of running bills and final bill; claim no.2 for

reimbursement of additional expenditure incurred for providing extra work; claim

no.3 for reimbursement of payment made to labour sitting idle; claim no.4 for

reimbursement for charges paid for testing of steel; claim no.5 for release of bank

guarantee against retention money; claim no. 6 for refund of amount deducted on

account of STE from final bill; claim no.7 for reimbursement of expenditure

incurred on renewal of bank guarantee; claim no.8 for refund of testing charges;

claim no.9 for reimbursement of extra expenditure incurred on watch and ward of

the building due to delay in taking over possession and claim no.10 was

regarding interest. The learned Arbitrator disallowed claims no. 3, 6 & 8 and

against other claims allowed different amounts. Regarding interest the learned

Arbitrator allowed 12% interest for pre-arbitration period and 9 % interest for

pendent lite and future.

3. The award has been challenged by the petitioner on the ground

that different amounts have been awarded by the learned Arbitrator beyond the

contract and the claims raised by the claimant were neither tenable nor could be

adjudicated in view of the specific terms of contract between the parties.

4. It is also submitted by the petitioner that the claims raised before

the Arbitrator were not at all raised at any time during currency of contract or at

the time of presentation of final bill. The respondent had given 'no claim'

certificate and accepted the final bill without reservation. After giving 'no claim'

certificate by the respondent the claims raised by the respondent could not have

been considered by the Arbitrator and they were beyond the jurisdiction of the

Arbitrator. The award passed by the learned Arbitrator was also perverse and in

violation of conditions 64 & 66 of the contract.

5. After the contract was concluded while making final bill, the

respondent no. 1 issued a certificate to the following effect:

It is certified that I have prepared this final bill for claiming entire payment due to me from the contract agreement. This FB includes all claims raised by me from time to time irrespective of the fact whether they are admitted/accepted by the department or not. I now categorically certify that I do not have more claims in r/o this contract by found these already included in this FB by me. This amount so claimed by me shall be full and final satisfaction of all claims to the extent disallowed to me from this final bill.

                   Dated                                                                  sd/-

                   CA No. CEB/MRT/07 of 2000-2001                                   Contractor

                                                                M/s WM Bajaj & Sons

5. The work of the building was completed on 12.4.2003 and

possession thereof was taken by the petitioner vide letter dated 16.4.2003

subject to rectification of the defects by 5.5.2003. A list of defects was pointed

out to the respondent at the time of taking over of the work and the respondent

was to rectify these defects as per the contract. It is after the defects were

rectified that final bill was entertained and 'no claim' certificate was issued by the

petitioner. A perusal of correspondence and letters written by the respondent

after submission of final bill would show that the petitioner had recovered a sum

of Rs.2,23,400/- from the final bill and in the correspondence the respondent was

asking for refund of this money. The petitioner also asked that the bank

guarantee should be released. The respondent in its letter dated 18.3.2004 to

the petitioner categorically mentioned that undisputed part of final bill had been

paid to him on 11.1.2004. He only requested for the release of bank guarantee

furnished by him. It is well known fact that retention money is retained by the

employer during the defect liability period. The defects found at the time of

taking over of building on 16.4.2003 were immediately pointed out to the

respondent and the respondent was to rectify these defects.

6. In 1992(2) R.A.J 480 (Del.) Unitech Limited v. Container

Corporation of India, this Court had observed that where full and final satisfaction

is acknowledged by a receipt in writing and the amount is received

unconditionally there is an accord and satisfaction by settlement of all claims by

the petitioner. If allegations are made subsequently of the receipt of the amount

they are to be considered afterthought.

7. In the present case the respondent no.1 could have raised only

those disputes before the Arbitrator which had arisen during the currency of

contract. After the contract was over and the respondent raised a bill and

submitted it to the petitioner stating that the bill represented all his claims finally

and nothing was left out, he could not have raised those disputes which were not

covered in the bill. If the disputes were raked up later on in respect of those

issues which he did not raise during the contract period, such a dispute cannot

be referred to arbitration. While raising the bills the respondent had not made

any claim for additional items like fixing of glazing, providing of copper wire

instead of aluminum wire, laying additional lintel etc. The respondent very well

knew he was having a lump sum contract of construction of the building and

building was to be completed in all respects. He gave a full and final bill with a

'no claim' certificate after about 3 months of the completion of the building in

May, 2003. Though the payment was delayed by the Union of India the

respondent would have at the most been allowed interest on the delayed part of

the final bill and not in respect of his other claims, which he raked up later,

beyond the contract period. In this case, no amount for extra work could have

been at all allowed to the respondent since respondent was to give building

complete in all respects.

8. Looking at the award it is apparent that the award passed by the

learned Arbitrator is contrary to the contract. An Arbitrator is bound by the

contract and cannot write a new contract for the parties. The Arbitrator awarded

a sum of Rs.5,38,000/- against additional work of fixing glazing in the main

administrative block, to the respondent no.1 on the ground that glazing was not

shown in the plan of the administrative block. He also observed that the plan did

not indicate provision of LB-1 plinth beam and FB-2 (Additional), which was

provided by the claimant and there was discrepancy in reinforcement details of

RCC Column's C-1, C-2 and C-3 and there was provision for aluminum

conductor cable whereas copper conductor had been provided by the

claimant/respondent. If the Arbitrator had only bothered to have a look at the

contract, he would have found that since it was a lump sum contract, the contract

specifically provided as under:

The lump sum amount quoted by contractor shall be deemed to include the minor extra constructional details which may have not been specifically on drawings or given in particular specifications but are essential for the execution of works and services in the workman like manner should instruction and established during execution of work. In case of difference in items of work/minor extras/minor construction details which are to have been included in the contract lump sum, the decision of accepting officer shall be final, conclusive and binding.

9. The contract further provided that though the drawings have been

given in the schedule to the contract but in case the details of some of the

drawings were missing, the same shall be further provided and it shall be

deemed to be included in the list of things and drawings mentioned in the

contract drawings. The contract also provided that the site plan and layout plan

were tentative and wherever necessary, the details shall be furnished later on

and the contractor shall not be entitled for any additional amount of payment for

such varied layout of the building. The contract provided that some of the items

which were essential for execution and completion of entire work shall always be

considered present even if their details are not shown viz. reinforcement of any

RCC, dwarf wall in situations like verandah, passage etc., lintels over doors,

windows and openings not shown in drawings. Clause 11.2.4 specifically

provided that the hardware for doors/windows etc. though not included in the

drawing, but essential for functioning and entire completion of the building, even

if missed out shall be provided by the contractor and the building shall be

complete in all respects from utility point of view and this shall be deemed to be

included in the lump sum quote.

10. In the wake of these specific clauses in the contract, the Arbitrator

could not have entertained any claim for fixing glazing or for not including plinth

beam, RCC column etc. The awarding of amount of Rs.5,38,000/- is absolutely

contrary to the contract.

11. The Arbitrator has, under claim no.9 which was for extra

expenditure incurred on watch and ward staff due to alleged delay in taking over

allowed a sum of Rs.2,70,000/-. It seems the Arbitrator had determined to allow

the claims of the respondent without referring to the documents. The building

was complete on 12.4.2003, the last date of completion of building was

15.4.2003, the possession of the building was taken over by the petitioner on

16.4.2003 and still the Arbitrator has observed that there was delay in taking over

of the building. Similarly, claim no.1 has been allowed by the Arbitrator for sum

of Rs.8,150/- without any rhyme and reason despite the fact that respondent had

given 'no further claim' certificate at the time of raising final bill. Same is true in

respect of claim no.4 and claim no.9. The only tenable part of this award is

regarding release of the bank guarantee. The learned Arbitrator has directed the

petitioner to release the bank guarantee against retention money of Rs.3 lac in

favour of the claimant with immediate effect. I consider that this is the only

tenable part of the award.

12. The award of the learned Arbitrator in respect of all claims except

return of bank guarantee and interest on the unpaid final bill amount from May'03

to February'04 @ 12%, is set aside being beyond jurisdiction. The petition of the

petitioner under Section 34 of the Arbitration & Conciliation Act, 1996 is allowed

in above terms.

April 28, 2009                                                SHIV NARAYAN DHINGRA, J.
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