Ishwar Singh & Sons vs Delhi Development Authority & ...
2009 Latest Caselaw 5387 Del

                 * IN THE HIGH COURT OF DELHI AT NEW DELHI


                                                Date of Reserve: 1st September 2009
                                                  Date of Order: December 23, 2009

CS(OS) No. 764A/1991
%                                                                  23.12.2009

        Ishwar Singh & Sons                    ... Petitioner/Plaintiff
                           Through: Mr. Anurag Kumar, Advocate

                 Versus

        Delhi Development Authority & Anr.    ... Respondents/Defendants
                           Through: Ms. Geeta Mehrotra, Advocate

JUSTICE SHIV NARAYAN DHINGRA

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

2. To be referred to the reporter or not?

3. Whether judgment should be reported in Digest?

JUDGMENT

This Court vide order dated 21st April, 1994 had decided objections raised by DDA and had observed that the award in respect of claim no.8 was liable to be set aside. Against this order of the Court an appeal was preferred before the Division Bench and Division Bench vide its order dated 3rd July, 2008 observed that it was unable to agree with conclusion reached by the Single Judge to the extent that entire amount awarded under claim no.8 had to be set aside. The Division Bench observed that the respondent (contractor) was right to the extent that the damages claimed by him on account of the delay in making site available to him and in supply of materials may be excepted matters and to that extent the claim could not be examined by the Arbitrator however, the damages of Rs.6 lac under claim no.8 appeared to be composite one and not only on account of two contingencies which were excepted but on other grounds as well. The Division Bench while setting aside the award of the Arbitrator in respect of claim no.8, directed parties to appear before the learned Arbitrator i.e.

incumbent Superintendent Engineer, on an appointed date and the Arbitrator was directed to give an award afresh in respect of claim no.8 in terms of the contract.

2. The Arbitrator has given his fresh award in respect of claim no.8 which has been assailed by DDA under Section 30/33 of the Arbitration Act, 1940.

3. The claimant made a claim of Rs.6 lac on account of damages, the Arbitrator allowed a claim of Rs. 2,65,702/- to the claimant. The amount has been allowed by the Arbitrator on the ground that there was a delay of 39 days in handing over the site and the said delay was overlapped due to delay in revision of foundation drawings for 116 days and due to non availability of decision of earth filling for 164 days and non availability of water supply drawings up to 332 days. The work was thus delayed for 792 days. After considering the nature of all the hindrances due to various reasons, the Arbitrator observed that it would meet the ends of justice if the claimant was allowed damages for 663 days delay, (after deducting 129 days), a delay which was not permissible under General Clause-1 of the General Specifications and Conditions of the contract. After observing this, the learned Arbitrator allowed Rs.15,000/- lump sum towards depreciation of tools, plants, scaffolding and shuttering etc. and allowed Rs.1,03,617/= as amount which the claimant would have spent on maintaining supervisory staff , watch and ward and at least one Mechanic/Operator and one person for maintaining the account and record etc.. The learned Arbitrator took salary of Graduate Engineer @ Rs.1500/- p.m., Supervisor @ Rs.600/- p.m., two Chowkidars @ Rs.950/- p.m., Mechanic/Operator @ Rs.625/- p.m. and one Accountant @ Rs.1100/- p.m.. Since there was delay of 21.7 months according to the Arbitrator, so he allowed Rs.1,03,617/- on account of employment of above staff by the Contractor and allowed interest @ 12% p.a. an amount of Rs.1,18,617/- (Rs.15,000/- + Rs.1,03,617/-) from 12.12.1983 to 11.4.1994 and arrived at a figure of Rs.2,65,702/- and further directed that this amount shall carry simple interest @ 12% till date of decree or payment.

4. The main objection raised by the Objector/DDA is that no evidence was placed on record by the claimant before the Arbitrator that the claimant had

maintained the establishment or had paid the salaries to the persons. No vouchers of payment were produced before the Arbitrator to show that claimant had paid salaries to anyone.

5. The contractor had submitted that this Court cannot interfere with the award on the ground that Arbitrator had reached wrong conclusion. He relied on M/s Hindustan Tea Co. v. M/s K.Sashikant & Co. and Anr. AIR 1987 SC 81

6. The claim has been awarded by the Arbitrator on two grounds, one on account of depreciation of the machinery and second on account of maintenance of an establishment by the Contractor for the period by which the execution of the work could not be carried and there was delay. The Arbitrator has awarded both the amounts on the basis of presumptions made by him. What machinery remained idle, what was the value of the machinery, whether it remained on the site or not, nothing was produced on record before the Arbitrator. In fact, the award of the Arbitrator on claim no.8 is not based on evidence adduced by claimant but is based on presumptions made by the Arbitrator. Can a claim be allowed on the basis of presumptions by an Arbitrator? The claim is not in respect of any liquidated damages specified under the contract. The contract contains specific provision by way of Clause 10C and 10CC in case of rise in labour wages, material during the continuation of contract or during extended period of the contract. The contract does not contain any clause that in case there was delay in execution of the contract, the DDA would have to pay any liquidated damages. Whenever there is no provision in the Contract of pre-estimated damages, the damages are to be proved by way of evidence. Wherever parties pre-estimate the damages, the loss is not required to be proved and the agreement has a clause of liquidated damages however, it is not a case in the present award. It is a case of claim where the claimant claimed that he had to maintain an establishment for excess period and he had to employ engineer, supervisor, chowkidars, accountant etc. It is not required to be emphasized that engineer, supervisor, chowkidars, accountant are not the identities which dissolve into thin air and cannot be reproduced at the time of evidence. Maintenance of an establishment is an administrative work and every contractor, who maintains an establishment, keeps record of the establishment

maintained by him since he has to file his annual income tax return and balance sheet with the taxing authorities. He has to show how much expense he had done on the work, what was his revenue, what were his net profits and if there was loss - what his loss was. All documents in respect of payments are required to be preserved by every businessman and contractor. Thus, there would have been ample evidence available with the contractor to place before the Arbitrator if he had maintained an establishment exclusively for this contract, which remained idle. However, none was produced.

7. There is no presumption that a contractor survives on one contract which gets prolonged for years together and in which payment was hard to come. Normally, every contractor keeps with him sufficient work so that he can earn profits for himself and he earns administrative expenses and also pays salary to the staff. The contractor in this case did not produce any evidence even before the earlier Arbitrator nor before the latter Arbitrator before whom he agitated the claim. No presumptions can be made by the Arbitrator of payment made to staff because making of presumption of such expenses, without evidence is fraught with dangers and an Arbitrator then gets an absolute discretion to award any amount to the claimant on the basis of his presumptions. Expenses are to be proved by evidence.

8. The Arbitrator was also supposed to take into consideration the terms of contract before arriving at a conclusion that the contractor had maintained an establishment. The terms of contract provided with the contractor shall maintain record of all the labour and workmen employed by him. He shall maintain wage book and he shall send to DDA, time to time, an account of labour/workmen employed by him. At no point of time the claimant had sent to DDA an account of establishment being maintained by him during the period of extension. No reports were sent to DDA that how many persons were employed and how much payment was being made to them during the continuation of the contract or during prolonged period, despite the fact that it was one of the conditions of the contract.

9. It is settled law that an award which is without evidence, is not sustainable and passing of an award by the Arbitrator without evidence amounts to misconduct. There can be no award on the basis of presumptions. Any claim raised by the claimant has to be proved before the Arbitrator by cogent evidence. Castles cannot be built in the air; they are to be built on ground brick by brick and for claiming damages or claiming amount against any expenditure the claimant was supposed to prove before the Arbitrator the amount spent piece by piece. I, therefore find that the award passed by the Arbitrator on the basis of presumptions was not tenable and is liable to be set aside. The award is hereby set aside.

December 23, 2009                               SHIV NARAYAN DHINGRA, J.
vn