Shri Ramesh Chander Gupta vs Delhi Development Authority & ...
2009 Latest Caselaw 2739 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                       CS(OS)202-A/1996

%                               Date of decision: 21stJuly, 2009

SHRI RAMESH CHANDER GUPTA                            .... Plaintiff
                        Through: Mr. Girish Aggarwal, Advocate

                               Versus

DELHI DEVELOPMENT AUTHORITY
& ANOTHER                                        .... Defendants
                        Through: Ms. Anusuya Salwan, Advocate


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.     Whether reporters of Local papers may
       be allowed to see the judgment?       No

2.     To be referred to the reporter or not?   No

3.     Whether the judgment should be reported
       in the Digest?                                 No


RAJIV SAHAI ENDLAW, J.

1 The suit was filed under Section 14 of the Arbitration Act,

1996 for filing of the arbitral award dated 20th December, 1995 in

this Court. Upon the award being filed, the notice of filing thereof

was issued to the parties. The defendant / DDA filed IA

No.3134/1996 in this Court under Section 30 and 33 of the Act.

The plaintiff Ramesh Chander Gupta also filed objections to the

award under Section 30 and 33 of the Act by way of IA

No.6082/1996. On completion of pleadings in both set of

objections, the usual issues were framed on 21st February, 1997.

The counsel for the parties at the time of framing of the issues

agreed that no evidence was required to be adduced and the

records of the arbitration proceedings be read as evidence. The

plaintiff died during the pendency of the proceedings before this

court and vide order dated 20th February, 2004 the legal

representative of the plaintiff allowed to be substituted.

2 The matter was called for final hearing today. However it

transpired that neither the arbitral award nor the arbitral record

was contained in the two files. However the matter being old, the

counsel for the parties in all fairness stated that the matter be not

adjourned and made their submissions and wherever necessary

made their own records available for appreciation of the

submissions being made by them. The copy of the arbitral award is

placed on the file of the present suit.

3 The counsel for the plaintiff at the outset stated that he has

instructions to withdraw IA No.6082/1996, being the objections to

the award preferred on behalf of the plaintiff and withdraw the

same. The counsel for the defendant has no objection to the same.

IA No.6082/1996 is dismissed as withdrawn.

4 The counsels have been heard on IA No.3034/1996.

5 The counsel for the defendant/DDA with respect to the award

generally contended that the award on various claims of the

plaintiff was without any reasons, though under the agreement, the

arbitrator was required to record reasons; it is also contended that

the arbitrator ignored important documents and has thus

misconducted himself.

6 Claim No.1 of the plaintiff was for Rs.15,000/- illegally

withheld. The award records that the defendant/DDA admitted that

the said sum had been withheld and in fact during the pendency of

the arbitration proceedings released/refunded Rs.4755.89 p. out of

therefrom. The arbitrator for the reason that defendant/DDA could

not produce any cogent evidence justifying withholding of the

balance amount, directed refund of the balance of Rs.10244.11 p.

It is contended by the counsel for the DDA that the said monies

were withheld for defective work done and towards

reduction/deduction items statement and that the arbitrator has

ignored Ex.R-25 under which the work was accepted at reduced

rates.

7 However this court in the jurisdiction even under Section 30

and 33 of the 1940 Act cannot interfere with the factual findings

arrived at by the arbitrator. Reference if any required can be made

to Coimbatore District Podu Thozillas Samgam Vs. Bala

Subramania Foundry AIR 1987 SC 2045 and Arosan Enterprises

Ltd. Vs. U.O.I. (1999) 9 SCC 449. In the absence of any plea of

bias, I do not find any reason not to believe the arbitrator when he

has recorded that the DDA did not produce before the arbitrator

any cogent evidence for deduction of the said sum of Rs.10244.11

p. Moreover it cannot be lost sight of that the DDA had initially

withheld a total sum of Rs.15,000/- out of which Rs.4755.89 p. was

released on claim being made by the plaintiff. The same is also

indicative of the withholding of the balance amount also being

without any reason.

8 Claim No.2 of the plaintiff before the arbitrator was for

Rs.13593/- on account of illegal recoveries made from the bill. The

defendant DDA claimed to have made the said recoveries at penal

rates for material issued to the plaintiff for carrying out of the

works and non-return of excess material by the plaintiff to the

defendant. The arbitrator found that the said material, in terms of

the agreement was to be kept in the joint custody of the plaintiff

and the defendant and further that the defendant had not issued

any notice claiming the balance material or notifying the loss

suffered if any on that account. The arbitrator finding the claim to

the extent of Rs.11601/- only to be justified, allowed the same. The

objection of the defendant is that the excess material not returned,

was under clause 42 to be recovered at double the issue rate and

thus it is contended that the award on this account is bad.

9 The defendant / DDA has not controverted the findings of the

arbitrator of the material under the agreement being required to be

kept in joint custody or of the defendant having not issued any

notice required to be issued under clause 42(1). In the absence of

contravention of the reasons given by the arbitrator, it cannot be

said that there is any error apparent on the face of the award or

that the arbitrator has misconducted himself.

10 Claim No.4 of the plaintiff was for Rs.85,000/- under clause

10(c) of the contract. The award records that the plaintiff however

restricted the claim for Rs.46624.70 p. only. The arbitrator found

that no delay had been attributed to the plaintiff and found the

claim of the plaintiff for Rs.39,237/- to be justified and allowed the

same. The objection of defendant/DDA is that the said claim was

not raised during the course of execution of the work and the

conditions of clause 10 (c ) were not satisfied by the plaintiff i.e. the

plaintiff did not submit any details to prove that there was any

statutory increase during the execution of work and payment to the

labour had been made at the increased rate of wages. Thus it was

averred that the award under the said claim was liable to be set

aside. The counsel for the defendant/DDA however in all fairness

admitted that in the present case there was delay on the part of the

defendant/DDA. She contended that the plaintiff neither at the

relevant time of execution nor before the arbitrator showed any

proof of increase in prices of material or increase in wages.

11 I may however notice that the arbitrator has while allowing

the said claim to extent aforesaid, recorded that the Executive

Engineer of the defendant had at no time demanded records from

the plaintiff in terms of clause 10 (c ). Clause 10 (c ) provides for

variation of the amount of the contract on account of delay, if in the

opinion of the Superintendent Engineer not attributable to or not

within the control of the contractor. The said clause also imposes

an obligation on the contractor to keep such books of accounts and

other documents as are necessary to show the amount of increase

claimed and also requires the contractor to allow inspection of the

same by a duly authorized representative of the DDA. The said

clause also requires the contractor to give notice within a

reasonable time of becoming aware of increase in prices, stating

that the same is given in pursuance to the said clause. The

objection of the defendant/DDA is not that the plaintiff did not give

notice of increase but is that proof of increase was not submitted.

One possible interpretation of the said clause is of the contractor

being required to only give a notice of increase within reasonable

time and to keep proof of increase ready with him and to give

inspection thereof if demanded. The arbitrator has found that the

defendant did not demand the said inspection. No fault can be

found with the said reasoning or logic of the arbitrator. The

counsel for the defendant/DDA has also contended that the

arbitrator has not recorded as to how he has arrived at the figure of

Rs.39237/- awarded. The same also in my view does not constitute

a ground to interfere with the award. The arbitrator has recorded

that he has considered and applied his mind to the pleadings

evidence etc. and the matter in dispute. The arbitrator has not

given a lump sum figure but has arrived at a specific figure of

Rs.39237/-. The award, merely for the reason of the arbitrator

having not given the break up of the amount awarded, does not

warrant interference.

12 Claim No.5 of the plaintiff of Rs.1,26,000/- was on account of

damages for keeping the establishment, T&P Machinery in the

extended period of delay. The arbitrator finding the delay to be of

634 days, held that owing to the delay the plaintiff was compelled

to maintain the establishment and overheads amounting to about

3.5% of the cost of the work and awarded a sum of Rs.41832.50p. to

the plaintiff on this account. The contention of the counsel for the

defendant / DDA is that the arbitrator having allowed the claims

under clause 10 (c ) for the reason of delay and having further

allowed claim No.7 for extra cost spent in executing the work after

stipulated period on account of rise in cost of man and material,

ought not to have allowed the claim No.5 for establishment

charges. It is urged that the same amounts to overlapping and

giving to the plaintiff something not provided for under the

agreement. The argument is that once the agreement provides the

formula for compensating the contractor for delay, no other

amounts for delay can be allowed. Per contra the counsel for the

plaintiff has contended that the claims under clause 10 (c ) are

dehors the claims on account of delay for establishment charges

which had to be maintained by the plaintiff for throughout the

period of delay.

13 This court in Narain Das Israni Vs. DDA CS(OS) 2488/2000

decided on 28.10.2005 has held that claims for damages on account

of delay under heads other than those provided for in the

agreement can be awarded. In the present case there is

considerable delay, admittedly attributable to the defendant/DDA.

The damage to the contractor on account of such delay, for the

reason of establishment costs is inherent. No misconduct /

perversity can be found in the award under claim No.5.

14 Claim No.7 was made by the plaintiff for Rs.312978/- on

account of extra cost spent in executing the work after the

stipulated period and due to rise in cost of man and material. The

arbitrator has on the basis of the sale price index of materials,

worked out the claim of the plaintiff on this account at Rs.59933.40

p. The counsel for the defendant has challenged the said award for

the reason of the plaintiff having agreed in documents filed before

the arbitrator that the delay was on his part. In this regard it may

be noticed that it is not in dispute that the delay was on the part of

the defendant. Once that is admitted, then the work done after the

stipulated date and the cost index applied by the arbitrator is not

controverted. The award on this ground is also not found to be

interferable.

15 Lastly the counsel for the defendant has made submissions

with respect to high rate of interest of 18 % per annum awarded by

the arbitrator. Per contra the counsel for the plaintiff has

contended that the plaintiff was awarded merely a sum of about

Rs.1.62 lacs and the arbitrator had given an opportunity to the

defendant to pay the said amount within three months; the

defendant having failed to pay the amount, there is justification for

award of future interest at 18% per annum.

16 The arbitrator has awarded pre suit interest to the plaintiff at

the rate of 12% per annum. No interference is required with the

same. The arbitrator has also awarded interest at 18% per annum

for the period the arbitration proceedings remained pending before

him. Considering the short term thereof, I do not find any reason to

interfere with the same also. The proceedings have remained

pending before this court for long. Objections to the award were

preferred by the plaintiff also and have been withdrawn today only.

In view of falling interest rates, sustaining interest @ 18% p.a. is

not found justified. Thus as far as the award of future interest at

18% per annum is considered, following of the dicta in Krishna

Bhagya Jala Nigam Vs. G. Haris Chandra Reddy AIR 2007 SC

817 and Flex Engineering Limited Vs. Antartica Construction

Co. 2007 (2) Arbitration Law Reporter 387 Delhi, the rate of

interest post award is reduced from 18% per annum to 10% per

annum till decree. The plaintiff shall also be entitled to future

interest from the date of the decree under Section 29 of the Act on

the principal amount at the rate of 10% per annum for a period of

60 days here from. If the defendant fails to pay the decreetal

amount within 60 days, the plaintiff shall thereafter be again

entitled to interest at 18% per annum.

17 The arbitral award as modified for interest as aforesaid is

thus made rule of the court and judgment is pronounced in terms

thereof. Decree sheet be drawn up. Parties to bear their own

costs.

RAJIV SAHAI ENDLAW (JUDGE) July 21, 2009 j