D.R.Sharma vs Delhi Development Authority
2009 Latest Caselaw 2790 Del

            * IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                          Date of Reserve: 8.7.2009
                                                           Date of Order: 23.7.2009

CS (OS) No. 66A/1992
%                                                                23.07.2009

       D.R.Sharma                                    ... Plaintiff/Petitioner
                               Through: Shri B.M.Sehgal, Advocate

               Versus


       Delhi Development Authority    ... Respondent/Defendant
                     Through: Ms. Renuka Arora, 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

The respondent/DDA filed objections against award dated

24.6.1991 whereby the learned Arbitrator allowed some of the claims of the

petitioner either fully or partly.

2. The petitioner was awarded a contract for laying down sewerage

line under Re-development Scheme of Kingsway Camp. The date of start of

work was 16.12.1984 and the stipulated date for completion of work was

15.4.1985. According to respondent/DDA the work was much behind the

schedule and was not completed by petitioner even by the end of 1986 with the

result that DDA was constrained to rescind the contract vide its notice of decision

dated 22.1.1987. The dispute was raised by the petitioner in respect of its claims

which was referred to the Arbitrator in terms of clause 25 of the Agreement

between the parties and the learned Arbitrator passed the impugned award.

3. Claim No.1 was made by the petitioner for a sum of Rs.80,000/-

due towards the final bill. The learned Arbitrator allowed an amount of

Rs.70,508.47. Claim No.2 for a sum of Rs.5,00,000/- towards extra/substituted

items was rejected by the learned Arbitrator. Claim no.3 for a sum of Rs.10,000/-

towards amount withheld by the respondent/DDA for not conducting Disc-test by

the petitioner was allowed in full. Claims No. 4, 5 & 6 of the petitioner were

rejected by the learned Arbitrator. Claim No.7 for a sum of Rs.2,00,000/- was

made by the petitioner for damages. The learned Arbitrator awarded a sum of

Rs.1,83,993.21. Claim No.8 made by the claimant for increase in rates of bricks

etc. was rejected. Claim No.9 made by the petitioner for a sum of Rs.15,000/-

claiming that the respondent had failed to release the payment in time was

allowed by the learned Arbitrator in full. Claims No. 10 & 11 made by the

petitioner were rejected. Claim no.12 was for pendent lite interest. The learned

Arbitrator allowed 12% p.a. interest from date of award to the date of actual

payment or upto the date of award being made a Rule of the Court.

4. Counter Claim No.1 of the respondent/DDA for a sum of Rs.

1,79,881/- on account of contract having been rescinded under Clause 3 of the

Agreement and the balance work got done at the risk and cost of petitioner by

incurring extra expenditure was rejected by the learned Arbitrator. Counter Claim

No.2 for a sum of Rs. 1,00,889/- on account of delay in work as well as Counter

Claim no. 3 for Rs.1,00,000/- against forfeiture of security deposit made by the

DDA were rejected. Counter Claim No.4 made by the respondent/DDA for

Rs.28,976/- on account of rectification of defects was allowed.

5. The respondent/DDA has assailed the award claim-wise. It is

stated by respondent/DDA that under Clause 25 of the Agreement, whereunder

the learned Arbitrator was appointed, it was obligatory on the part of the

Arbitrator to give reasons for awarding any amount, if the awarded amount was

more than Rs.50,000/-. The learned Arbitrator while allowing Claim No.1 for Rs.

70,508.47 gave no reasons and gave a totally non-speaking award thereby the

learned Arbitrator misconducted himself and the proceedings. The award of the

Arbitrator on this count was bad in law. It is also stated that the award against

claim no.1 was otherwise bad because it was contrary to clause 7 of the

agreement. On the other hand, the petitioner has submitted that objection raised

by the petitioner was baseless. Clause 7 of the agreement was not applicable

and there was no misconduct on the part of the Arbitrator.

6. A perusal of Award shows that while allowing a sum of

Rs.70,508.47 in favour of the petitioner under claim no.1, the only reason given

by the learned Arbitrator was - "After taking into consideration all the contentions

put forth by both the parties and all other relevant facts arising therefrom, I hold

that claim of the claimants is partly justified, to the extent of Rs.70,508.47".

7. There is no dispute about the fact that the learned Arbitrator was

required to given reasons in terms of clause 25 of the contract, the relevant part

of which reads as under:

"In all cases where the amount of claim in dispute is Rs.50,000/- (Rs.Fifty Thousand) and above, the Arbitrator will give reasons for the award".

8. It is obvious that the learned Arbitrator had given no reason for

awarding the amount. In Gora Lal v. UOI (2003) 12 SCC 459 the arbitration

clause between the parties provided that the Arbitrator on all matters referred to

him shall indicate his findings along with sums awarded separately on each

individual item of the dispute. The Arbitrator in that case had not given his

finding and the award was set aside by the High Court. The matter went to

Supreme Court and Supreme Court observed as under:

7. The point for determination in this case is: whether the arbitrator ought to have given reasons in support of his findings, along with the sums awarded, on each item of dispute. To decide this point, we have to go by the text and the context of clause 70 of the arbitration agreement quoted above. Under the said clause, the arbitrator was required to identify each individual item of dispute and give his findings

thereon along with the sum awarded. In this context, one has to read the word "findings" with the expression "on each item of dispute" and if so read it is clear that the word "finding" denotes "reasons" in support of the said conclusion on each item of dispute. The word "finding" has been defined in "Words and Phrases, Permanent Edn., 17, West Publishing Co." to mean "an ascertainment of facts and the result of investigations". Applying the above test to clause 70, we are of the view that the arbitrator was required to give reasons in support of his findings on the items of dispute along with the sums awarded. We make it clear that this order is confined to the facts of this case and our interpretation is confined to clause 70 of the arbitration agreement in this case.

9. I consider that the award of the learned Arbitrator under claim no.1

is liable to be set aside in view of clause 25 of the contract as it gives no reason

why the amount has been awarded. Even otherwise, I find that the learned

Arbitrator in his discussion had observed that the claimant had largely depended

upon the theoretical calculations for the measurement claimed by them. The

claim was not based on actual measurements and could not have been allowed

by the Arbitrator by a non-speaking award. The award against Claim no.1 is set

aside on this count.

10. Claim No.3 was made by the petitioner for sum of Rs.10,000/-.

This amount was deducted from the bill of the petitioner as the petitioner failed to

perform the necessary Disc-test in order to ascertain the functionality of sewer

lines laid by the petitioner. There is no dispute about the fact that this disc test

was not performed by the petitioner and this amount was deducted because of

non-performance of this test. The learned Arbitrator allowed this amount to the

petitioner on the ground that the respondent had also not carried the Disc-test

and put the sewer line to use without the Disc-test. It is stated by

respondent/DDA in objections that this amount could not have been awarded to

the petitioner as the deduction was admittedly made for not conducting the test.

The fact that DDA put the sewer line to use without conducting the same test is

no ground for awarding the amount to the petitioner. The learned Counsel for

petitioner has argued that the amount was justly awarded and no recovery could

be made if the amount deducted was not spent for the purpose it was withheld.

11. Under the contract, the petitioner was to perform the Disc-test on

the sewer line. This was one of the conditions of the contract and since this

condition was not fulfilled, the amount which was to be spent on the test was

deducted. It was not obligatory on the respondent/DDA to conduct this Disc-test

before putting the sewer line to use. DDA could have ensured the clearance of

sewer line by manual inspection or other modes. The Disc-test was the

obligation of the contractor. The amount deducted cannot be directed to be

refunded back to the contractor on the ground that the same test was not

conducted by DDA. I, therefore find that this amount was awarded to the

Contractor, contrary to contract. The Arbitrator is bound by the contract and

cannot allow a claim which is contrary to contract. The award of this claim is

therefore, set aside.

12. Claim No.7 was raised by the claimant for damages of

Rs.2,00,000/-. The learned Arbitrator observed that the entire site was not made

available to the claimant by respondent, during currency of the stipulated contract

period ie. 04 months. He observed that it was respondent/DDA, which was liable

for prolongation of the contract beyond the stipulated date of completion. The

claimant at relevant time had requested respondent to measure up the work and

pay for work executed by then, or pay 40% above the Delhi Schedule of Rates,

1981, for the work yet to be executed thereafter. The work was not measured up

and paid, but the work continued. No new date for completion of remaining work

was fixed by mutual consent or otherwise. The time for completion of work was

thus set at large by the conduct of the parties. The arbitrator held that under

these circumstances the delay beyond the stipulated date of completion was

attributable to DDA and claimant was entitled to be compensated for work done

beyond the stipulated date of completion, due to breaches committed by DDA.

He therefore awarded a sum of Rs.1,83,993.21.

13. It is argued by the learned Counsel for the respondent that the

award was contrary to the terms of the contract. It was specifically provided in

the contract that no compensation would be awardable in case of partial

availability of site or delay in providing of material at site and the work was to be

rescheduled accordingly and in case of rescheduling of the, work the Contractor

would not be entitled to any compensation or damages for the period of delay.

The learned Counsel for the petitioner on the other hand argued that as per the

contract the site was to be made available on the date of contract and the

petitioner suffered loss due to site not being available and the work dragged on

due to this. The rates given in the tender were based on Delhi Schedule of

Rates, 1977 whereas when the work was completed Delhi Schedule of Rates

1988 was applicable. There was no escalation clause in the agreement because

clause 10(c) which was applicable only in case of statutory increase. The

Arbitrator therefore rightly awarded damages on the basis of difference in rates of

Delhi Schedule of Rates of 1988 and 1977, since the breach was committed on

the part of the respondent.

14. Clause 7 of General Conditions of the contract reads as under:

"The contractor is advised to see the site of work before tendering to apprise himself of the conditions existing at site of work."

15. . It is apparent that the contractor/claimant was to see the site

before even filing tender/quotations for the work and to apprise himself what was

the condition of site, the site was clear and available for work or not. Despite the

fact that in notice inviting tender clause 2-A read "The site of the work is

available", the specifications and conditions attached with the contract

specifically provided as under:

The Contractor must get acquainted with the proposed site for the works and study specifications and conditions carefully before tendering. The works shall be executed as per program approved by the Engineer-in-Charge. If part of the site is not available for any reason or there is some un- avoidable delay in supply of materials stipulated by the department, the program of construction shall be modified accordingly and the contractor shall have no claim for any extras or compensation on this account.

16. The above condition makes it abundantly clear that the non-

availability of site in time could not be a ground for payment of damages. This

clause also makes it clear that time was not essence of the contract and in case

the site was not partly available for any reason, the period for executing the

contract could be extended and rescheduled and in case of modification of the

schedule of completion of contract, the claimant was not to lay any claim for extra

compensation/damages on this ground. The learned Arbitrator ignored this

condition of contract altogether. The contention of the respondent had been that

the delay was on the part of the contractor and the site order book and various

letters written by the respondent/DDA calling upon the petitioner to expedite the

work have been ignored by the learned Arbitrator. Not going into this contention

- whether the Arbitrator appreciated the evidence regarding delay on the part of

the contractor, still I consider that in view of the specific clause in the contract

that the contractor would not be entitled for compensation because of

rescheduling of the contract, the learned Arbitrator could not have awarded

compensation. The Arbitrator himself has observed that it was due to conduct of

both the parties that the time was set at large, the learned Arbitrator could not

have therefore, held that DDA alone was responsible for setting the time at large

and thereafter awarded compensation. When both the parties' conduct set the

time at large, the contractor would not be entitled for any compensation, more so

in view of the specific clause given in the contract that rescheduling of work shall

not entitle the contractor for any compensation. It is also not understood in view

of the fact that there was no escalation clause provided in the contract, how the

learned Arbitrator could have provided escalation to the contractor? The

Arbitrator is prisoner of the contract and he cannot write a new contract for the

parties. If there is no clause for escalation, the Arbitrator cannot introduce

escalation clause and give enhancement/compensation to the contractor. I,

therefore set aside this award being contrary to contract.

17. Claim No.9 was for refund of Rs.15,000/- claimed by the DDA as

rebate. The learned Arbitrator observed that this rebate was offered by the

contractor conditionally and the condition was not fulfilled by DDA while

deducting the rebate. I find no reason to disturb the award of the Arbitrator on

this count.

18. It is submitted by learned Counsel for respondent/DDA that counter

claim no.1 was in respect of rest of the work got done at risk and cost of the

petitioner in terms of clause 3 of the agreement and therefore could not have

been rejected. Conclusion arrived at by the learned Arbitrator was that the

contractor had already done the quantum of work as per contract inclusive of

deviation provided therein. This finding of the Arbitrator cannot be assailed by

the DDA I, therefore, consider that any further work beyond the original contract

and deviation could not have been done at cost and risk of the contractor. The

Counter Claim has been rightly rejected by the Arbitrator. Similarly, the award of

Arbitrator on Counter Claims no.2 & 3 is upheld. The learned Arbitrator allowed

Counter Claim no.4 of the respondent and awarded a sum of Rs.28,976/- to the

respondent. This awarding of amount has not been assailed by the

claimant/contractor by filing any objections.

19. As a result of my above discussion, the award of the learned

Arbitrator in respect of claims no.1, 3 & 7 are set aside and rest of the award is

upheld and made a Rule of Court. Decree Holder would be entitled to interest @

8% p.a. from the date of award till realization.

Decree Sheet be prepared accordingly.

July 23, 2009                                      SHIV NARAYAN DHINGRA, J.
vn