Delhi High Court
M/S Paragon Construction vs D.K.Sharma & Anr. on 1 July, 2009
Author: Shiv Narayan Dhingra
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Reserve: April 24, 2009
Date of Order: July 01, 2009
+CS(OS) 946A/1997 & IA No.125/1998
% 01.07.2009
M/s Paragon Construction ...Petitioner
Through: Mr. Ravi Sikri, Advocate
Versus
D.K. Sharma & Anr. ...Respondents
Through: Mr. K.L. Budhiraja 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
1. The subject matter of these objections is an award passed by the
learned Arbitrator on 6th January 1997 awarding a sum of Rs.10,13,185/- to
the claimant with 12% interest per annum on the amount awarded from the
date of award till actual realization/ payment. Though the award passed by
learned Arbitrator is a lumpsum award in which no reasons have been given
by the Arbitrator but a perusal of record would show that the Arbitrator had
first prepared a draft in which he had discussed all the claims and counter
claims giving reasons and then passed a lumpsum award. Thus, the reasons
can be deciphered from the record itself.
2. The award is objected to by the respondent National Projects
Construction Corporation Limited on the grounds that the appointment of the
Arbitrator itself was illegal since the claimant had accepted the final bill
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without any demur and once the final bill was accepted, no further claim of
the petitioner could be raised before the Arbitrator. The other ground is that
the Arbitrator gave a non-speaking award and overlooked and ignored the
evidence placed before him which had vital bearing on the matter in
controversy and he did not deal with the claims made by the objector in
answering to the claims of the petitioner. The other objection is that the
award was contrary to the terms of contract. Most of the claims made by the
claimant were beyond the terms of the contract. The respondent had
provided to the learned Arbitrator a copy of measurement book (MB) duly
endorsed by the claimant. The claimant had accepted the correctness of the
measurements recorded therein and it was not open to the claimant to make
any claim against respondent in relation to the work order in question beyond
MB. It is further submitted that once the final bill had been accepted by the
petitioner, nothing remained due to the petitioner from respondent and thus
the arbitrator should have dismissed the claims. It is further submitted that
the claims of the claimant were barred by time as per the terms of contract
and the award was, therefore, without jurisdiction and had an error apparent
on the face of it.
3. The claimant had made following claims before the Arbitrator:
"Claim No.1 :Refund of Hire charges of Rs.21,685/- said to
have been hired out to claimants.
Claim No.2: Refund of Rs.90,000/- recovered towards
compensation payable to accident victim who
died during an accident which was cowped by
truch engaged at site by the claimant.
Claim No.3: Refund of Rs.1,89,000/- withheld for alleged
slow progress of work.
Claim No.4: Release of payment of Rs.3,02,500/- towards
CS(OS) 946A/1997 M/s Paragon Construction v D.K. Sharma & Anr. Page 2 Of 7
extra lead charges for earth work.
Claim No.5: Payment of Rs.9,79,690/- towards idling
charges of machinery, labour & overheads.
Claim No.6: Payment of pre-suit interest of Rs.15,60,086/.
Claim No.7: Payment of Pendente-lite future interest @
20% p.a.
Claim No.8: Payment of Rs.50,000/- towards cost of
arbitration.
4. Respondent also made following counter claims:
"Counter claim No.1: Payment of damages of
Rs.9,50,000/- for slow progress.
Counter claim No.2: Payment of Rs.15 lac as
overheads charges as extra
expenses incurred during
extended period of 3 months,
which was necessitated due to
slow progress of claimants.
Counter Claim No.3: Payment of Rs.1,58,550/- for
providing technical staff for one
year for giving lines & layout."
5. It is an undisputed fact that the claimant had accepted the final bill on
28th May, 1989 with following endorsement:
"Final bill accepted except that any amount paid to NPCL
by NHPC against our work will be passed on to M/s
Paragon Construction (India) Pvt. Ltd.
Sd/-
Subash (Director)"
6. The claimant had asked for additional payment on the ground of
CS(OS) 946A/1997 M/s Paragon Construction v D.K. Sharma & Anr. Page 3 Of 7
additional lead in earth excavations. The respondent who had given this
contract on behalf of NHPC had also raised claims with NHPC for additional
amount on account of additional lead. The claimant's endorsement is in
respect of this claim which the objector had promised to pass on to claimant.
7. After acceptance of final bill, the claimant was to be paid the balance
security amount. The correspondence between the parties shows that at the
time of making the payment for balance security amount, the respondent
withheld an amount of Rs.90,000/- against accident case of M/s Complete
Experts and had also deducted hire charges of Rs.21,685/-. Claims No.1 and 2
pertained to these two amounts. The claim No.3 is in respect of deductions on
account of slow progress and claim No.4 is in respect of extra lead for which
endorsement was made by the director of the claimant company at the time
of accepting final bill.
8. Learned Arbitrator came to conclusion that the deductions of hiring
charges of Rs.21,685/- was without any basis and without any evidence and
this amount should be refunded. Similarly, in respect of claim No.2, he
observed that this amount was rightly withheld initially but since respondent
had not paid any amount to the victim and the claim of victim was settled by
insurance company, this amount cannot be kept by respondent and,
therefore, should be refunded back to the claimant. He observed that even
otherwise the claim of victim must have become barred by time in view of
clause 166(3) of Motor Vehicles Act. Thus, above two claims in fact arise after
final bill was finalized because of deductions made from the security amount.
The letter of respondent dated 13th June 1991 gave the details of deductions.
Thus, these two claims in fact arose after payment of final bill. However,
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other claims are of the period when the contract was in progress and before
finalization of the final bill. Clause 48 of the contract which is in respect of
payment of final bill reads as under:
"CLAUSE 48: PAYMENT OF FINAL BILL.
The final bill shall be submitted by the sub contactor
within one month of the date fixed for completion of the
work or of the date the certificate of completion furnished
by the Engineer-in-charge. No further claim in this regard
unless as specified herein under shall be entertained.
Payment shall be made within three months if the amount
of the contract plus that of the additional items is Upto
Rs.2 lac and in 6 months, if the same exceeds Rs.2 lac of
the submission of such bill. If there shall be any dispute
about any item or items of the work, then the undisputed
item or items only shall be paid within the said period of
three months of six months, as the case may be. The
contractor shall submit a list of the disputed item within
thirty days from the disallowance thereof and if he fails to
do so, his claim shall be deemed to have been fully
waived and absolutely extinguished"
9. A perusal of this clause would show that after finalization of work and
submission of final bill, in case there was any disputed item disallowed in the
final bill, the contractor had to submit a list of disputed items within 30 days
from the disallowance thereof and if he failed to do so, his claim shall deemed
to have been waived and shall stand extinguished. In view of this clause in
the contract, the claimant could not have raised disputes after 28 th June 1989
i.e. after 30 days of the finalization of the bill and acceptance of it by
respondent. Therefore, the claims made by claimant under Claim No.3 and 5
could not have been raised by the claimant in view of this clause of the
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contract after 28th June 1989. However, claim No.4 was in respect of extra
lead and the director of claimant had made endorsement that in case an
amount was received by respondent, it shall be passed over to the claimant.
It is apparent that the claimant was not paid for extra lead with the assurance
that the respondent has also made a claim for extra lead with NHPC and
whenever received, it will be passed over to the claimant. It seems that the
respondent did not receive payment against extra lead from NHPC.
Consequently, it did not pass over any payment to claimant and the claimant
was forced to re-agitate this point before the Arbitrator.
10. There is no clause in the contract in respect of payment on account of
idling charges which is claim No.5 neither this claim was received within 30
days of the acceptance of final bill. Similarly, claim No.3 was not made within
30 days. The learned Arbitrator failed to consider the clause 48 of the
contract while passing award in respect of different claims of claimant.
11. It is settled law that the arbitrator is the prisoner of contract. He cannot
adjudicate the claims between the parties of his own whims and fancies and
he has to adjudicate the claims on the basis of the contract. He cannot
adjudicate those claims which are in the nature of tortuous liabilities. He can
adjudicate only those claims which arise directly out of the contract. While
adjudicating claims, he cannot travel beyond the contract, nor can write a
new contract for the parties.
12. Although the award is a lumpsum award but the draft of the award
gives a split up of the claims allowed by the arbitrator as under:
Claim No.1 : Rs.21,685/-
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Claim No.2 : Rs.90,000/-
ClaimNo.3 : Rs.1,89,000/-
Claim No.4 : Rs.3,02,500/-
Claim No.5 : Rs.4,10,000/-
----------------
Total : Rs.10,13,185/-
------------------
13. Claims No. 3 and 5 could not have been entertained by the learned
Arbitrator in view of clause 48 of the contract, however, claims No.1, 2 and 4
were within the purview of the arbitrator since these claims arose after
signing of final bill and because of the fact that respondent did not receive
any amount from NHPC against extra lead. I, therefore, consider that the
award passed by learned Arbitrator only to the extent of claims No.1, 2 and 4
can be allowed amounting to Rs.4,14,185/- and award against claims No.3
and 5 are beyond the terms of the contract and could not have been raised
by the claimant in view of clause 48 of the contract. The objections of the
objector in respect of claim No.3 & 5 are allowed.
14. I, therefore, partly allow this award to the tune of Rs.4,14,185/-. The
amount awarded is modified accordingly. Claimant shall be entitled to 12%
interest per annum over this amount from the date of award till actual
realization as allowed by the learned arbitrator. The objections are allowed
partly in above terms. The modified award be made rule of court in above
terms. The petition stands disposed of.
July 01, 2009 SHIV NARAYAN DHINGRA J.
rd
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