M/S. Sukumar Chand Jain vs Rail Vihar Sehkari Avas Samiti ...
2009 Latest Caselaw 5292 Del

*                   HIGH COURT OF DELHI : NEW DELHI

               Judgment reserved on : December 10, 2009
               Judgment delivered on : December 18, 2009

+                          F.A.O. (OS) No. 612/2009

%       M/s. Sukumar Chand Jain           ...  Appellant
                  Through: Mr. Sandeep Sharma, Advocate.

                                    versus

   Rail Vihar Sehkari Avas Samiti Ltd.            ...   Respondent
               Through: Nemo.
CORAM:

HON'BLE MR. JUSTICE VIKRAMAJIT SEN
HON'BLE MR. JUSTICE SUNIL GAUR

1.      Whether the Reporters of local
        papers may be allowed to see
        the judgment?

2.      To be referred to Reporter or not?

3.      Whether the judgment should be
        reported in the Digest?

SUNIL GAUR, J.

1. The Respondent-Society invited tender for the execution of the

"Development of Housing Site (laying of sewerage system) at

Sadaullabad, Loni, District Ghaziabad (U.P.). Appellant-Firm of

Engineers and Contractor (said to be engaged in doing construction

work) was awarded the work of laying of sewerage system as

aforesaid in December, 1996. The stipulated date for completion of

the aforesaid work was 3rd July, 1997. It is the precise case of the

Appellant that during the abovesaid contractual period, no substantial

F.A.O. (OS) No. 612/2009 Page 1 work could be executed and in this regard, correspondence was

exchanged between the parties and in the meanwhile, the cost of

construction increased tremendously. Appellant claims that the

construction of the septic tank was stopped by the Secretary of the

Respondent-Society. Since dispute between the parties in this matter

arose, statement of claim was made by the Appellant before the

Arbitrator, which was contested by the Respondent and the Arbitral

Proceedings resulted into an Award of 5th December, 2009.

2. Appellant had preferred objections under Section 34 of the

Arbitration & Conciliation Act, 1996 against this Award, which have

been dismissed in limini by the learned Single Judge vide impugned

order of November 09, 2009.

3. Sole Arbitrator has awarded a sum of Rs.3,46,624/- with

pendentelite interest at the rate of 18% per annum in favour of the

Claimant/Appellant. The objection of the Appellant to the aforesaid

award of 5th October, 2009 pertained to Claim No.1, 4 and 6. Claim

No.1 relates to payment for the work done by Appellant/Contractor.

Out of the ten running bills, payment for the 9th running bill has been

granted to the Appellant as this bill was verified by the Respondent.

For the remaining running bills, payment to the Appellant has been

declined by the Arbitrator as well as by the learned Single Judge

because the remaining running bills were not verified by the

Respondent. In fact, the main reason for declining the payment of the F.A.O. (OS) No. 612/2009 Page 2 remaining nine running bills to the Appellant was that the

measurement book to support these bills was not produced before

the Arbitrator. Learned Single Judge in the impugned order has

rightly relied upon Section 114 of the Evidence Act to draw an

adverse inference against the Appellant for not producing the

measurement book before the Arbitrator. In this appeal, learned

counsel for the Appellant has not been able to justify the non-

production of the measurement book. What has been emphasized by

the learned counsel for the Appellant is that even the remaining

running bills were verified by the Respondent. This aspect pertains to

the merits of the claim. Although, we are not required to go into this

aspect, but it needs to be noted that because Counsel for the

Respondent could not give the clarification to the Arbitrator regarding

the 9th running bill, therefore, the payment of this bill has been

awarded to the Appellant.

4. Claim No.4 related to interest for delayed payments. It has

been noticed by the learned Single Judge in the impugned order that

non-filing of the measurement book was the reason for the delay in

making the payment. For this, the Appellant is to be blamed.

Appellant has been rightly denied the interest on the delayed

payment by the Arbitrator and the learned Single Judge has correctly

not found any merit in the objection against denial of Claim No.4 by

the Arbitrator.

F.A.O. (OS) No. 612/2009 Page 3

5. Claim No.6 relates to infructuous expenditure, i.e., on account

of labour of the Appellant remaining idle. This claim has been

disallowed by the Arbitrator, as it was found that the letters relied

upon by the Appellant in respect of this claim were of no help and the

bills in question did show that the work was being done and in that

situation, Appellant/claimant was compensated on account of loss of

profit.

6. The challenge to an Award under Section 34 of the Arbitration

& Conciliation Act, 1996 can be on limited grounds, as provided in

Section 34 itself.

7. In Fiza Developers and Inter-Trade Pvt. Ltd. Vs. AMCI (I) Pvt.

Ltd. & Anr. 2009 (1) SCALE 371, Apex Court has reiterated the scope

of Section 34 of Arbitration and Conciliation Act, 1996, in these

words:-

"The grounds for setting aside the award are specific. Therefore necessarily a Petitioner who files an application will have to plead the facts necessary to make out the ingredients of any of the grounds mentioned in sub-section (2) and prove the same. Therefore, the only question that arises in an application under section 34 of the Act is whether the award requires to be set aside on any of the specified grounds in sub-section (2) thereof. Sub Section (2) also clearly places the burden of proof on the person who makes the application."

8. It is neither stated in the appeal nor it was pointed out by

counsel for the Appellant during the course of the arguments as to

under which sub-section of Section 34, the case of the Appellant falls.

F.A.O. (OS) No. 612/2009 Page 4 In fact, the Award in question is neither patently illegal nor is against

the public policy and is not covered by any of the grounds of

challenge as provided under Section 34 of the Arbitration &

Conciliation Act, 1996. The learned Single Judge has correctly, in our

opinion, not acted as a Court of Appeal and we find that the reliance

placed by the learned counsel for the Appellant upon Oil & Natural

Gas Corporation Ltd. vs. Saw Pipes Ltd., (2003) 5 SCC 575 is

misplaced.

9. In the light of the aforesaid, impugned order cannot be faulted

with. Learned Single Judge was justified in dismissing the objections

of the Appellant but the costs imposed while doing so, appears to be

on the higher side. We think it appropriate to reduce the costs from

Rs.50,000/- to Rs.20,000/- and modify the directions issued by the

learned Single Judge in this regard. Appellant is granted two weeks

time to deposit the reduced costs of Rs.20,000/- with the Registrar

General of this Court, who shall ensure that it is sent to the Prime

Minister Relief Fund.

10. With aforesaid modification, this appeal is dismissed in limini.

Sunil Gaur, J.

Vikramajit Sen, J.

December 18, 2009
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F.A.O. (OS) No. 612/2009                                               Page 5