Sunder Lal Khatri & Sons vs Dda
2009 Latest Caselaw 3207 Del

*           IN THE HIGH COURT OF DELHI AT NEW DELHI


                                                   Date of Reserve: July 08, 2009
                                                    Date of Order: August 18, 2009

+CS(OS) 2404A/1995
%                                                         18.08.2009
     Sunder Lal Khatri & Sons                             ...Plaintiff
     Through: Mr. Harish Malhotra, Sr. Adv. with Mr. Rajender Aggarwal,
     Advocates

       Versus

       DDA                                                        ... Defendant
       Through: Mr. Bhupesh Narula, 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

1. By this order, I shall dispose of the objections raised by DDA against

an award dated 28th September 1995 passed by the learned Arbitrator. The

objections have been raised claim-wise, so I shall be dealing with these

objections claim-wise.

2. Claim No.1: The learned arbitrator has awarded a sum of

Rs.4,75,367.75 in favour of petitioner holding that the amount on the basis of

a final bill of Rs.9,21,362/- of the work done prepared by the contractor minus

the recoveries to be made by petitioner. The recoveries for the stipulated

material to be done by DDA was held as Rs.3,25,319.25 and for outstanding

secured advance as Rs.1,20,675/-, thus DDA had to recover Rs.4,45,994.25.

The balance amount payable to the claimant has been held to be

CS(OS) 2404A/1995 Sunder Lal Khatri & Sons v.DDA Page 1 Of 17 Rs.4,75,367.75.

3. A perusal of award shows that claim no.1 has been inflated in a very

strange manner by claimant after the appointment of present arbitrator in the

year 1992. The claimant filed its detailed statement of claim on 5 th July 1985.

The contract between the parties was terminated in July 1984. Thereafter,

claimant had invoked arbitration clause and an arbitrator was appointed.

After appointment of arbitrator, claimant gave details of its claim as under:

               "Claim No.1:-       Rs.4 lakhs on account of work done
              not/short paid.

The claimants claim a sum of Rs.4 lac on account of work executed but not/short paid. The said amount as claimed is on account of difference in part rates paid and full rate payable for the work carried out and accounted for up to last R/bill. Resides this, the amount claimed also includes the amount due on account of work executed after the last R/bill paid. In addition, the amount claimed includes the amount not/short paid in relation to various operations executed at site by way of extra/substituted items. The respondents have not correctly applied the provision of agreement for determining the rates of few extra/substituted items. Fro some of the operations, the claimants have not been paid for at all though execute at site. There is no justification with the respondents in not making payment to the claimants for the work executed by them at site which is otherwise due in terms of the contract. Any deduction/ reduction/ recoveries made in the final bill which are otherwise unjustified, shall also remain a matter of dispute. There being no justification with the respondents in not releasing the amount due to the claimants, it is prayed that the learned arbitrator maybe pleased to allow the amount due in favour of the claimants.

CS(OS) 2404A/1995 Sunder Lal Khatri & Sons v.DDA Page 2 Of 17 The respondents are required to file before the learned Arbitrator with a copy to the claimants, the copy of final bill or the work executed by the claimants. The claimants reserve their right to make further submissions in this regard on receipt of copy of final bill."

4. No amended claim petition was filed by the claimant before the

arbitrator. However, perusal of award would show that the claim no.1 of Rs.4

lac filed by the claimant was modified on a request sent for a claim of Rs.

6,25,000/- by the claimant to the Engineer Member who referred the modified

claim to the arbitrator vide letter dated 24th March 1992. The present

arbitrator was appointed on 17th March 1992 and the previous arbitrator was

appointed in March 1985. From 1985 till 1992, the contractor had not asked

for any modification of his claim, but suddenly the claim made by the

contractor started swelling. There are no reasons assigned anywhere either in

the award or in the pleadings or in the statement of claim as to on what basis,

the initial claim of Rs.4 lac stood modified to Rs.6,25,000/-.

5. The learned arbitrator during discussions on claim no.1 observed that

the contractor during pendency of proceedings before him prepared a final

bill of Rs.9,21,362/-. This observation is also beyond comprehension. The

claim of Rs.4 lac was made by the contractor against short payment/ non-

payment of work done by him, after about one year of the termination of the

contract when the contractor very well knew as to how much work he had

done; how much payment he had received; what was the balance amount

recoverable. From 1985 till 1992, the amount of Rs.4 lac stated by him in the

statement of claim remain unchanged. This amount swelled to Rs.9,21,362/-

suddenly after about eight years of termination of contract. The learned

CS(OS) 2404A/1995 Sunder Lal Khatri & Sons v.DDA Page 3 Of 17 Arbitrator did not take into account the fact that he was not supposed to

consider time-barred claim. It was a case of termination of contract and a

dispute was raised by the contractor himself for his claims. There cannot be a

doubt that the contractor was knowing the amount of work done by him, the

amount of money recovered by him. The limitation in this case, therefore,

commenced from the date of termination of contract i.e. July, 1984 and after

July 1987, all claims of the contractor raised by it before the arbitrator would

have been barred by limitation. Merely because the engineer referred a claim

does not mean that the arbitrator gets jurisdiction to entertain time-barred

claim. In J.S. Budhiraja v Chairman Orissa Mining Corporation Limited and

another 2008(1) Arbitrator Law Report 238 SC, the Supreme Court had

observed:-

"18. The learned counsel for the appellant submitted that the limitation would begun to run from the date on which a difference arose between the parties, and in this case the difference arose only when OMC refused to comply with the notice dated 4.6.1980 seeking reference to arbitration. We are afraid, the contention is without merit.

The appellant is obviously confusing the limitation for a petition under section 8(2) of the Arbitration Act, 1940 with the limitation for the claim itself. The limitation for a suit is calculated as on the date of filing of the suit. In the case of arbitration, limitation for the claim is to be calculated on the date on which the arbitration is deemed to have commenced. Section 37(3) of the Act provides that for the purpose of Limitation Act, an arbitration is deemed to have been commenced when one party to the arbitration agreement serves on the other party thereto, a notice requiring the appointment of an arbitrator. Such a notice having been served on 4.6.1980, it has to be seen whether the claims were in time as on that date. If the claims were barred on 4.6.1980, it follows that the claims had to be rejected by the arbitrator on the ground that the claims were barred by limitation. The said period has nothing to do with the period of limitation for filing a petition under section 8(2) of the Act. Insofar as a petition under section 8(2), the cause of action would arise when the other party fails to comply with the notice invoking arbitration. Therefore, the period of limitation for filing a petition under section 8(2) seeking appointment of an arbitrator cannot be confused with the period of limitation for

CS(OS) 2404A/1995 Sunder Lal Khatri & Sons v.DDA Page 4 Of 17 making a claim. The decisions of this Court in Inder Singh Rekhi vs. Delhi Development Authority - (1988) 2 SCC 338, Panchu Gopal Bose vs. Board of Trustees for Port of Calcutta - (1993) 4 SCC 338 and Utkal Commercial Corporation vs. Central Coal Fields - (1999) 2 SCC 571 also make this position clear.

21. The arbitrator committed an error apparent on the face of the record and a legal misconduct in holding that the entire claim was within time. His assumption that if the application filed by the contractor in 1980 under section 8(2) of Arbitration Act for appointment of an Arbitrator was in time, all claims made in the claim statement filed before the Arbitrator appointed in such proceeding under section 8(2) are also in time, is patently erroneous and is an error apparent on the face of the record. The reasoning of the arbitrator that on account of the formation of the Committee by OMC to scrutinize the pending claims in pursuance of the OMC's letter dated 28.10.1978, and the payment of Rs.3,50,000/- on 4.3.1980 in pursuance of the Committee giving its final report on 7.12.1979, every claim of the contract including new claims which were made for the first time in the claim statement filed in 1986 (as contrasted with 'pending claims' considered by OMC), are not barred by limitation, is also an error apparent in the face of the award. Under section 18 an acknowledgement in writing extends the limitation. Under section 19 a payment made on account of a debt, enables a fresh period of limitation being computed. Therefore, the letter of OMC dated 28.10.1978 and the payment of Rs.3,50,000/- by OMC, would result in a fresh period of limitation being computed only in regard to the 'existing debt' in respect of which acknowledgment and payment was made. Admittedly, as at that time, the claim of the contractor was only for a sum of Rs.50,15,820. Therefore, the letter dated 28.10.1978 and payment on 4.3.1980 extended the limitation only in respect of the claims which were part of the said claim of Rs.50,15,820. Therefore, the fresh claims of Rs.67,64,488/- (out of the total claim of Rs.95,96,616) is barred by limitation and the award made in that behalf is liable to be set aside Consequently, we hold that only that part of the claim before the Arbitrator which was part of the claim of Rs.5015,820/- made by the contractor, that was existing or pending as on 28.10.1978 and 4.3.1980, namely Rs.28,32,128 (out of Rs.95,96,616) could have been considered by the Arbitrator."

6. It is obvious from the law laid down by the Supreme Court that the

limitation would begin to run from the date of cause of action and an

CS(OS) 2404A/1995 Sunder Lal Khatri & Sons v.DDA Page 5 Of 17 arbitrator has to consider if the claims preferred before him were within the

period of limitation or not. The period of limitation for filing a petition for

arbitration has nothing to do with the period of limitation of the claim made.

7. In case where the contract is terminated by one party because of

defaults of the other party, the cause of action is the date of termination of

contract and limitation starts from that day and the aggrieved party is

supposed to make the claims within three years from the date of termination

of contract. In the present case, the contract was terminated on 31st July

1984. The claims could have been made by contractor only upto 31 st July

1987. The contractor did file a statement of claims before the arbitrator G.R.

Hingorani on 5th July 1985 with supporting documents. All claims referred to

the arbitrator subsequent to July, 1987, whether by the petitioner or

counterclaim by the respondent, would be barred by limitation.

8. Looking at the initial claim of petitioner being Rs.4 lac and the

conclusion drawn by the arbitrator that out of this amount a sum of more

than Rs.4,44,994.25 was to be adjusted, the claim of the claimant should

have been in the negative to the tune of Rs.75,367.75. The award made by

the arbitrator allowing time barred claim is patently erroneous and the error

is apparent on the face of it, as arbitrator himself records that the amended

(inflated) claim was sent to him after about 8 years of the termination of

contract. I, therefore, set aside the amount awarded by the arbitrator under

claim No.1.

9. Claim No.2: Claim No.2 was towards refund of security deposit.

The learned arbitrator has allowed the refund of the security amount. I find no

CS(OS) 2404A/1995 Sunder Lal Khatri & Sons v.DDA Page 6 Of 17 reason to interfere with this part of award.

10. Claim No.3: Claim No.3 was made by the petitioner/claimant for

a sum of Rs.40,000/- under clause 10C towards rise in wages or labour. The

learned arbitrator observed that the delay was attributable to the respondent

and the contractor was not at fault as admitted by the respondent vide R-49.

The learned arbitrator, therefore, allowed claim of Rs.29,624/- in favour of

claimant/ petitioner.

11. Clause 10C of the agreement reads as under: "Clause 10C.

If during the progress of the works, the price of any material

incorporated in the works, (not being a material supplied from the

Engineer-in-Charge's stores in accordance with Clause 10 hereof)

and/or wages of labour increases as a direct result of the coming into

force of any CS(OS) 4405/1992 M/s Verma Construction Company

v.DDA Page 5 Of 13 fresh law, or statutory rule or order (but not due to

any changes in sales tax) and such increase exceed ten percent of the

price and/or wages prevailing at the time of receipt of the tender for

the work, and contractor thereupon necessarily and properly

pays in respect of the material (incorporated in the work) such

increased price and/or in respect of labour engaged on the

execution of the work such increased wags, then the amount of the

contact shall accordingly be varied provided always that any increase

so payable is not, in the opinion of the Superintending

Engineer (whose decision shall be final and binding)

attributable to delay in the execution of the contract within

the control of the contactor. Provided, however, no

reimbursements shall be made if the increase is not more than

10% of the said prices/ wages and if so the reimbursements

shall be made only on the excess over 10% of the said prices/

wages and if so the reimbursements shall be made only on the excess

CS(OS) 2404A/1995 Sunder Lal Khatri & Sons v.DDA Page 7 Of 17 over 10% and provided further that any such increase shall not be

payable if such increased has become operative after the contact or

extended date of completion of the work in question.

If during the progress of the works, the price of any material

incorporated in the works [not being a material supplied from the

Engineer-in-Charge's stores in accordance with Clause 10 hereof]

and/or wages of labour is decreased as a direct result of the coming

into force of any fresh law or statutory rule or order [but not due to any

changes in sales tax] and such decrease exceeds ten percent of the

prices and/or wages prevailing at the time of receipt of the tender for

the works. Delhi Development Authority shall in respect of materials

incorporated in the work [not being materials supplied from the

Engineer-in-in charge's stores in accordance with Clause 10 hereof]

and/or labour engaged on the execution of the work after the date of

coming into force of such law statutory rule or order be entitled to

deduct from the dues of the contractor such amount as shall be

equivalent of difference between the prices of materials and/or wags

as they prevailed at the time of receipt of tender for the work minus

ten percent thereof and the prices of materials and /or wages of labour

on the coming into force of such law, statutory rule or order. The

contractor shall for the purpose of this condition keep such books of

account and other documents as are necessary to show the amount of

any increase claimed or reduction available and shall allow inspection

of the same by a duly authorized representative of Delhi Development

Authority and further shall, at the request of the Engineer-in-Charge

furnish, verified in such a manner as the Engineer -in-charge may

require any document to kept and such other information as Engineer-

in-charge may require. The contractor shall, within a reasonable time

of his becoming aware of any alteration in the prices of any such

materials and/or wages of labour, give notice thereof to the

Engineer-in-Charge, stating that the same is given in pursuant

to this condition together with all information relating thereto

which he may be in a position to supply."

CS(OS) 2404A/1995 Sunder Lal Khatri & Sons v.DDA Page 8 Of 17

12. A perusal of clause 10C makes it abundantly clear that claim under

clause 10C lies only if during the progress of work, price of any material (not

being a material supplied from the Engineer-in-charge store) or wages of

labour increases because of coming into force of any fresh law, statutory rule

or order and such increase exceeds 10% of the price /wages prevailing at the

time of the receipt of tender. The contractor can claim reimbursement of the

increase in price and labour wages only if the increase is more than 10% and

only to the extent it was in excess of 10% and he serves a notice on DDA

during progress of work. Such reimbursement of the increased prices/labour

is to be made only if it is approved by the Superintending Engineering. A

similar provision is there in Clause 10C in respect of reduction in price and

reduction in wages. Clause 10C also provides that in order to claim such an

increase, the contractor will have to keep books of accounts showing

payment of increased wages to labour and increased price for goods. Thus,

an enhancement under Clause 10C can be allowed only if the conditions, as

set out in Clause 10C, are satisfied. The learned arbitrator was not at liberty

to award any arbitrary amount under Clause 10C. Only that amount could be

awarded under Clause 10C as permitted under it and for which books of

accounts had been maintained by the contractor and it is shown that there

was statutory increase either in the labour rates or in the rate of materials. No

presumption could be drawn by the learned Arbitrator that because of the

contract overrunning, there was necessarily going to be a price rise and

necessarily going to be a wage rise. Any such award where a departure from

the contractual clauses is made, is liable to be set aside on this ground. A

departure from the contract amounts to manifest disregard of the authority

CS(OS) 2404A/1995 Sunder Lal Khatri & Sons v.DDA Page 9 Of 17 by the arbitrator. The arbitrator, being the prisoner of the contract, is bound

to remain within the four corners of the contract.

13. A perusal of reply filed by respondent/DDA shows that DDA had sought

refund of the amount paid by it on ad hoc basis to the claimant. The claimant

under this head could have raised the claim only in terms of clause 10C. The

arbitrator could not have allowed any amount contrary to the contract. Clause

10C is not meant for enrichment of the contractor. It is meant to see that the

labour gets its dues and proper account is maintained of the payment made

of wages to the labour, whenever there is an enhancement in the wages of

labour. The learned arbitrator is supposed to grant this claim only on the

basis of wage register maintained by the claimant after ensuring that

enhancement of wages were duly paid to the labour. Mere issuance of

notification by the Government is no proof of the fact that wages were paid to

the labour as per notification. A claim under clause 10C can be allowed by the

arbitrator only and if only the conditions specified therein are satisfied. It

cannot be allowed either on presumption or on whims and fancies. I,

therefore, find that the award under this claim is contrary to the terms of the

contract and is liable to be set aside. It is ordered accordingly.

14. Claim No.4: The claimant raised a claim of Rs.70,000/- under clause

10C on account of rise in price of bricks. The learned arbitrator awarded a

sum of Rs.64,937/- on the ground that he had gone through the calculations

and the calculations had not been disputed by respondent. Respondent in

reply to claim no.4 stated that during the contract a provisional payment was

made to the contractor under clause 10C with an undertaking that in case

there was delay in execution of work on the part of contractor, he would

CS(OS) 2404A/1995 Sunder Lal Khatri & Sons v.DDA Page 10 Of 17 refund the same to DDA. Rs.79,111/- was paid by DDA to the

contractor/claimant on provisional basis. Since this amount was paid by DDA,

DDA could not have asked for recovery of this amount but any additional

amount could have been allowed by the learned arbitrator only if the

conditions of clause 10C as stated above were satisfied. In absence of

satisfaction of conditions under clause 10C i.e. the difference being more than

10% of the initial value, award under claim 4 is liable to be set aside. It is

hereby set aside.

15. Claim No.6: The claim No.6 was filed by the claimant/ contractor

on 5th July 1985 for Rs.1 lac. The learned arbitrator has awarded a sum of

Rs.47,514.50 holding that in view of the serious contentions of respondent

/DDA, he allows a sum of Rs.47,514.50 being 50% of the amount claimed.

Although I find that the learned arbitrator has given no reasons as to why he

was allowing 50% of the claim and not 40% or 30% or 60%, however, I do not

disturb the award under this claim.

16. Claim No.7: Claim No.7 was made by the petitioner / claimant

for Rs.15 lac on account of damages for alleged failure on the part of

DDA/Department in making available the site free of hindrance, delay in

handing over required drawings, decisions in time and not supplying material

in time. The contractor claimed this amount on the ground of infructuous

expenditure on account of idle central shuttering and establishment. The

learned arbitrator awarded a sum of Rs.5,00,600/- to the claimant observing

that whenever there was delay in completing the work of the contract, the

contractor was bound to suffer losses on account of idle tool and plant,

infructous overheads, losses on account of escalation, loss of profitability etc.

CS(OS) 2404A/1995 Sunder Lal Khatri & Sons v.DDA Page 11 Of 17 The learned arbitrator held that the claimant was entitled to claim a sum of

Rs.3,250/- per month for a period of 27 months on account of non productivity

of tools and plant. Thus, he awarded Rs.87,750/- under the heads of idle tools

and plants. He awarded 25% of the salary amount claimed for the delayed

period amounting to Rs.1,22,850/- to the contractor on the ground that

claimant had to deploy one engineer, one store keeper and a chowkidar and

mason at the work site and since the work got delayed, he had to incur extra

expenditure on them. He awarded a sum of Rs.1,90,000/- on account of loss

suffered by the claimant/ contractor due to price rise and awarded another

sum of Rs.1 lac as costs on tools and plant left by the contractor at site but

not returned to the contractor. This claim has been assailed by DDA on the

ground that grant of claim was contrary to the terms and conditions of the

contract.

17. It is worthwhile to note that delay in this case was due to a stay order

obtained in respect of the site of construction from the Court and due to site

having bushes etc requiring leveling and dressing before the work could be

started. No doubt para 2(a) of NIT states that, "The site for work being

available" but this does not show that the site is absolutely ready for work

and there being no hindrance. It is for this reason that the tender document

under "Specification & Conditions" provides as under:

"1. The contractor must get acquainted with the proposed site

for the works and study specifications and conditions carefully

before tendering. The work shall be executed as per

programme approved by the Engineer-in-Charge. If part of site

is not available for any reason or there is some un-avoidable

delay in supply of materials stipulated by the Department, the

programme of construction shall be modified accordingly and

CS(OS) 2404A/1995 Sunder Lal Khatri & Sons v.DDA Page 12 Of 17 the contractor shall have no claim for any extras or

compensation on this account. "

18. The plea of claimant is that words "If part of site is not available for any

reason" imply that there must be justifiable reasons. The reading of this

clause only shows that „for any reason‟ means for any reasons whatsoever

and not that there must be some justifiable reasons. It is clear from above

clause that in case the work got prolonged due to non-availability of site or

due to any other reason the work of construction was to be re-programmed,

modified (by extension of time for completing the work) No claim for any

extra amount or compensation could be made by the contractor under such

circumstances unless contract provided that in case of extension of time, the

contractor would be entitled for additional amounts.

19. A perusal of award in respect of claim no.7 would show that learned

arbitrator observed that the general conditions and specifications as relied

upon by the respondent DDA would not come to the rescue of DDA because it

was not a case of non supply of material but the delay was on account of non

supply of drawings and decision. However, this observation of the learned

arbitrator is contradictory to the contentions in claim and the observations

made by learned arbitrator at page 13 of award. The claimant had contended

before the arbitrator that there was delay due to non issuance of drawings,

non supply of cement, non availability of site, delay in taking decisions and

non-payment of dues in time. Non issuance of drawings and decision was

only one of the factors enumerated. The other factors for delay as

enumerated by the claimant/ contractor were non availability of site due to

presence of barracks, non issuance of cement, non-payment of dues etc. The

aforesaid clauses of the contract specifically take care of the non issuance of

CS(OS) 2404A/1995 Sunder Lal Khatri & Sons v.DDA Page 13 Of 17 cement, steel and other material and non availability of site. It is specifically

provided that in case of any delay in providing site or material, the

programme of construction has to be re-scheduled and the contractor would

not be entitled for any damages. The damages have been awarded to the

contractor considering the idleness of his machinery, engineer, supervisor

and deployment of labour, chowkidar etc on the presumption that the

contractor was having no other work and he was having one sole contract at

that time. It is never a case that one contractor does one work at a time and

till the work is over, he does not engage his employees, labour, machinery,

engineer, supervisor at other sites. Whenever a contractor claims loss on

account of prolongation of contract on the ground that he has not been able

to fruitfully utilized his machines and men, the arbitrator cannot presume that

the contractor was having only one contract and he had no other site of work

where he could deploy his engineer and labour. It is also a known fact that

the civil contractors do not employ labour, chowkidars and other workforce as

their permanent workforce. The workforce is employed by the civil

contractors for a specific work and for specific period when the work is going

on. It is for this reason that the contract provides for maintenance of wage

register so that the record is there that the contractor had been employing

the workforce all along for which the contractor makes claim. In absence of

any wage register, no presumption can be drawn that the contractor had

really paid wages to the workforce as claimed or this workforce was being

employed at site. No claim could have been allowed by the arbitrator in

absence of record of employment of engineer, supervisor, chowkidar, etc.

record more so when the contract specifically provides that the contractor

would not be entitled for any damages in case the contract gets prolonged

due to non supply of material or non availability of site. The arbitrators

CS(OS) 2404A/1995 Sunder Lal Khatri & Sons v.DDA Page 14 Of 17 allowing 25% or 50% of the claimed amount, without giving reason for

arriving at such percentage amounts to arbitrariness. In Bharat Coking Coal

Ltd. v L.K. Ahuja 2004(5) SCC 109, the Supreme Court observed as under:

"Para 23. Claim No. 8 has been rejected by the arbitrator. Now

we proceed to consider claim No. 9 for loss arising out of turnover due

to prolongation of work. The claim made under this head is in a sum of

Rs.10 lakhs. The arbitrator rightly held that on account of escalation in

wage and prices of materials compensation was obtained and,

therefore, there is

not much justification in asking compensation for loss of profits on

account of prolongation of works. However, he came to the conclusion

that a sum of Rs.6,00,000/- would be appropriate compensation in a

matter of this nature being 15% of the total profit over the amount that

has been agreed to be paid. While a sum of Rs.12,00,000/- would be

the appropriate entitlement, he held that a sum of Rs.6,00,000/- would

be appropriate. He also awarded interest on the amounts payable at

15% per annum.

Para 24. Here when claim for escalation of wage bills and price

for material s compensation has been paid and compensation for

delay in the payment of the amount payable under the contract or for

other extra works is to be paid with interest thereon, it is rather

difficult for us to accept the proposition that in addition 15% of the

total profit should be computed under the heading "Loss or Proft". It is

not unusual for the contractors to claim loss of profit arising out of

diminution in turnover on account of delay in the matter of completion

of the work. What he should establish in such a situation is that had he

received the amount due under the contract, he could have utilized the

same for some other business in which he could have earned profit.

Unless such a plea is raised and established, claim for loss of profits

could not have been granted. In this case, no such material is available

on record. In the absence of any evidence, the arbitrator could not

have awarded the same. This aspect was very well settled in Sunley

CS(OS) 2404A/1995 Sunder Lal Khatri & Sons v.DDA Page 15 Of 17 (B) & Co. Ltd. v. Cunard White Star Ltd. (1940) 1 KB 740 by the Court

of Appeal in England. Therefore, we have no hesitation in deleting sum

of Rs.6,00,000/- awarded to the claimant."

I therefore consider that award of Rs.5,00,600 was untenable and only an

amount of Rs.1 lac awarded by the arbitrator towards tool and plant was

tenable. The award made under claim 7 is, therefore, modified and only

award of Rs.1 lac is upheld and award of Rs.4,00,600/- is hereby set aside.

20. Under claim No.8, the claimant, in his claim dated 5th July 1985 claimed

interest @ 12% per annum both pre-suit and pendent lite on the amount

fallen due. However, in 1992, contractor got a reference made for interest @

18%. This modification was not permissible being barred by limitation. 6%

additional interest would result into additional amounts being claimed in 1992

i.e. 7 years after reference. The learned arbitrator has allowed interest @ 12%

pendent lite from 13th March 1985 i.e. from the date of entering the reference

by previous arbitrator to 19th March 1992 till the claim of interest was

modified and, he awarded interest @ 17.5% for subsequent period. I consider

that awarding of interest @ 17.5% per annum was contrary to law. The

contractor could not have modified the claim after a period of three years

from the date of cause of action. 6% difference in rate of interest makes a lot

of difference. The award of the learned arbitrator regarding interest is

modified and claimant is held entitled for interest @ 12% per month from 13th

March 1985 till date of payment or decree, whichever is earlier.

21. In view of my foregoing discussion, the objections of respondent/DDA in

respect of claim no.1, 3, 4; and partly in respect of claim no.7 are allowed.

The award made by the arbitrator is modified accordingly.

CS(OS) 2404A/1995 Sunder Lal Khatri & Sons v.DDA Page 16 Of 17

22. The learned arbitrator has dealt with the counter claims of respondent

DDA. All the counter claims of respondent were filed beyond the period of

limitation. The amended counter claim of respondent was also filed beyond

the period of limitation. The arbitrator has rejected these counter claims for

different reasons. I consider that these counter claims were not entertainable

since they were barred by time.

23. In view of above discussion, the award made by the arbitrator, as

modified by the Court is made a rule of the Court. The petitioner would be

entitled to interest from the date of decree till realization @ 8% per annum.

August18, 2009                                       SHIV NARAYAN DHINGRA J.
rd




CS(OS) 2404A/1995   Sunder Lal Khatri & Sons v.DDA                 Page 17 Of 17