M/S. Kumar Construction Co. vs Delhi Development Authority
2009 Latest Caselaw 3079 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                F.A.O. (OS) NO.697 OF 2006 & C.M. NOS.15357 OF
                           2006, 15358 OF 2006


%                                          Reserved on : 2nd July, 2009
                                      Pronounced on : 10th August, 2009

        M/S. KUMAR CONSTRUCTION CO.           ..... Appellant
                          Through: Mr. B.K. Dewan, Advocate.

                                  versus

        DELHI DEVELOPMENT AUTHORITY       ..... Respondent
                          Through: Mr. Gaurav Sarin, Advocate.


CORAM:
HON'BLE MR. JUSTICE MUKUL MUDGAL
HON'BLE MR. JUSTICE NEERAJ KISHAN KAUL

1.      Whether Reporters of the local newspapers may be allowed to
        see the judgment?                                       No
2.      Whether to be referred to the Reporter or not?          No
3.      Whether the judgment should be reported in the Digest? No

                             JUDGMENT

NEERAJ KISHAN KAUL, J.

1. The present appeal arises out of the impugned judgment

of the learned Single Judge dated 28th July, 2006. Briefly stated the

facts of the case are as follows.

2. The dispute arose between the parties with regard to the

contract for construction of convenient shopping centre at Gulabi

Bagh, Delhi which was granted to the appellant vide agreement dated

25th October, 1988/25th November, 1988 entered into between the

appellant and the respondent. An Arbitrator was appointed to

adjudicate the disputes between the parties, who subsequently

rendered the Award in the year 1992. The appellant raised objections

to the Award. The learned Single Judge was pleased to dismiss the

said objections. Accordingly, the present appeal has been filed

against the dismissal of the said objections.

3. As per the findings of the Arbitrator, the

contractor/appellant did not complete the work and so the contract

was rescinded and then the work was got done at the risk of the

contractor. The Arbitrator further found that the Delhi Development

Authority (DDA) had proved the breach of contract on the part of the

contractor. Further, the Arbitrator held that the Contractor/appellant

should have executed the work to the extent possible till the

stipulated date of completion as per the agreement but he, in fact,

abandoned the work. The claimant/DDA filed details that they

suffered loss by getting the work completed elsewhere at extra cost.

It was also held by the Arbitrator that the DDA was also responsible

for the initial delay of five months in issuing of structural drawings.

The Arbitrator, thus, came to the conclusion that the contractor,

therefore, could not be held to be solely responsible for the delay.

The Arbitrator applied the thumb rule of linear proportion and

awarded a certain sum to the DDA. Essentially, the objections raised

by the appellant before the learned Single Judge were as follows :-

a) The Arbitrator violated the rules of natural justice.

b) The DDA was responsible for the breach and hence the DDA

was liable to pay damages and not the contractor/appellant.

c) The Award was made beyond the period of four months

provided by Section 28 read with the implied conditions of

arbitration agreement given in the First Schedule of the

Arbitration Act, 1940.

4. As regards the point of violation of natural justice, the

learned Single Judge set out the facts as follows :-

"10. The letters exchanged between the petitioner/contractor and the Arbitrator are on record. The first letter of the contractor on record is dated 3.11.2000 in which it is submitted that for unavoidable reasons it could not be possible to submit the CSF and, accordingly, time be granted at least upto 16.12.2000. The next letter is of 28.11.2000 seeking further time to file CSF by 31.12.2000 on the ground that the arbitration counsel Mr. R.D. Mittal was not maintaining good health. The Arbitrator addressed a letter to both the parties on 27.12.2000 stating therein that the respondent (petitioner/contractor) had requested for time to file CSF and his counsel was not well and, therefore, he was given chance till 31.12.2000 and the next date of hearing was fixed for 12.1.2001 at 2.30 p.m. The next document is an application from Mr. B.K. Dewan, advocate for petitioner, asking for an adjournment on 12.1.2001. The next letter of the Arbitrator dated 30.1.2001 addressed to both the parties says that the arbitration came up for hearing on 12.1.2001 at 2.30 p.m. when the contractor requested for an adjournment as he had to engage a new counsel and, therefore, the next date of hearing was fixed for 2.2.2001 at 3.00 p.m. On 2.2.2001 the petitioner/contractor filed written statement. The Arbitrator fixed the case for hearing on 9.3.2001 and informed the parties by letter dated 20.2.2001.

However, the date was subsequently changed by letter dated 27.2.201 by which the fresh date fixed was 14.3.2001 at 3.00 p.m. The subsequent letter of the Arbitrator dated 10.4.2001 stated that the arguments would be heard regarding objections raised by the contractor on 20.4.2001 at 4.00 p.m. The next document is of 23.4.2001 wherein the Arbitrator records that on 20.4.2001 the contractor did not come and, therefore, hearing could not proceed. The adjourned date was then declared as

3.5.2001 at 4.30 p.m. On 3.5.2001 the Arbitrator received a request for adjournment from the contractor by post and, therefore, adjourned the hearing to 30.5.2001. This is recorded in the letter dated 28.5.2001. On 30.5.2001 the contractor again remained absent and the claimant requested for ex-parte proceedings. The Arbitrator recorded this in the letter dated 11.6.2001.

The Arbitrator also informed the parties that next date of hearing was fixed for 2.7.2001 when both parties were directed to ensure their presence, failing which ex-parte proceedings would be taken. On 2.7.2001 the contractor again asked for adjournment which is evidenced by the letter dated 29.6.2001 saying that the petitioner -Mr. S.K. Gupta was not physically well and had been advised bed rest upto 12.7.2001. At the same time, a request was made not to fix any further date till certain documents were delivered to the contractor. This letter was accompanied by a medical certificate. The next document is dated 9.7.2001 wherein the Arbitrator records that the contractor had made a request for postponement of hearing but ex parte proceedings were taken up on 9.7.2001 and oral hearing was concluded. The claimant was directed to file non-judicial stamp papers worth Rs.75/- along with 10 additional sheets for making and publication of the Award. The contractor/petitioner then sent the letter dated 13.7.2001 asking for setting aside the ex parte proceedings. Arbitrator made his Award on 5.10.2001. The question is whether the Arbitrator has violated the rules of natural justice."

5. The learned Single Judge rightly concluded that the

narration of facts itself clearly showed that the contractor/appellant

had no intention to appear and participate in the arbitration

proceedings. The learned Single Judge rightly noted that after the

first two hearings, the appellant did nothing other than seeking

repeated adjournments on one pretext or the other. The learned

Single Judge also noted that the contractor/appellant had even

engaged a counsel Mr. B.K. Dewan. However, Mr. B.K. Dewan did

not put in appearance except on one occasion. The contractor never

made any grievance about the failure on the part of Mr. B.K. Dewan

to represent the appellant/contractor.

6. The learned Single Judge, in our view, correctly came to

the conclusion that if the contractor/appellant was unwell, he could

have deputed his advocate or his associate - Mr. Vijay Narang to

appear before the Arbitrator but the appellant/contractor adopted

none of the said two courses. The learned Single Judge, thus, rightly

held that there was clear indication of the fact that the Arbitrator had

given sufficient opportunities to the appellant/contractor till it

became clear and evident that the contractor did not intend to take

part in the arbitration proceedings. The learned Single Judge

correctly held that, therefore, it was no more necessary for the

Arbitrator to either adjourn the proceedings repeatedly or to set aside

the ex-parte proceedings that had already taken place. In our view,

the learned Single Judge was right in coming to the conclusion that

there had been no violation of principles of natural justice.

7. So far as the second objection is concerned, the learned

Single Judge has rightly held that whether DDA was responsible for

the breach or not was a question of fact and it is not for this court to

sit in appeal over the Award of the learned Arbitrator. The learned

Single Judge was also correct in holding that in addition, the

question as to who was in breach was also barred by the principles of

constructive res judicata. The learned Single Judge took note of the

fact that the quantum of damages had been calculated by the

Arbitrator according to his own wisdom by applying the principles of

linear proportion. The learned Single Judge has rightly held that it

could not be said that his calculation is perverse or in any way illegal

to warrant any interference by the court.

8. As far as the third objection is concerned, that is, that

the Award was passed beyond the period of four months, the learned

Single Judge took note of the fact that in the objection petition filed

by the contractor/appellant, there was no grievance expressed that

the Award was made beyond the period of four months. It was only

during the arguments that the said objection was taken. The learned

Single Judge also noticed that even when the arbitration proceedings

were in progress and the appellant/contractor repeatedly took

adjournments, he never raised objection to the continuance of

arbitration proceedings on the ground that four months' period had

come to an end. The Arbitrator thus had correctly come to the

conclusion that the appellant/contractor had himself delayed the

proceedings. The learned Single Judge, in our view, was absolutely

correct in coming to the conclusion that the Arbitrator had followed

the rules of natural justice and had arrived at the finding on the

basis of the material placed before him. The learned Single Judge

was, thus, right in extending the time and to bring the matter to an

end. The time was, therefore, rightly extended by the learned Single

Judge.

9. The view taken by the Arbitrator was a plausible view

and warrants no interference by the court. The court cannot re-

appreciate evidence or examine the correctness of conclusions arrived

at by the Arbitrator. The jurisdiction of the court is not appellate in

nature. It is not open to the court to interfere with the Award merely

because in the opinion of the court, the other view is equally possible.

It is only when the Arbitrator has misconducted himself or the Award

is improperly procured or otherwise invalid, the court may set aside

the Award. When the Arbitrator has applied his mind to the

pleadings, the evidence adduced before him and the terms of the

contract, there is no scope for the court to re-appraise the matter as

if this were an appeal and even if two views are possible, the view

taken by the Arbitrator would prevail. So long as the Award made by

the Arbitrator can be said to be one by a reasonable person, no

interference is called for.

10. The scope of interference by the court is limited and the

court would not be justified in re-appreciating the material on record

and substituting its view in place of the Arbitrator's view. When

there is an error apparent on the face of the record or where the

Arbitrator has not followed the statutory legal position or where the

Arbitrator exceeds the terms of the agreement or passes an Award in

the absence of any evidence which is apparent on the face of the

Award or unless there is total perversity in the Award or in cases of

jurisdictional errors, the same can be set aside by the court.

However, that is not the position in the present case.

11. We consequently see no infirmity in the judgment of the

learned Single Judge to warrant any interference. Accordingly, the

appeal is dismissed. All pending applications stand disposed of as

well.

NEERAJ KISHAN KAUL [JUDGE]

MUKUL MUDGAL [JUDGE] AUGUST 10, 2009 'AA'