M/S Kirat Chand Jain Family Trust vs Union Of India
2009 Latest Caselaw 2955 Del

*           IN THE HIGH COURT OF DELHI AT NEW DELHI


                                                 Date of Reserve: July 09, 2009
                                                    Date of Order: July 31, 2009

+CS(OS) 342A/1995
%                                                                     31.07.2009
     M/s Kirat Chand Jain Family Trust                         ...Plaintiff
     Through: Mr. Sandeep Sharma, Advocate

       Versus

       Union of India                                          ...Respondent
       Through: Nemo


       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 petitioner has filed this petition under Section 30 and 33 of the

Arbitration Act, 1940 assailing an award dated 4th November 1994 passed by

learned Sole Arbitrator whereby he awarded a sum of Rs.28,27,666/- in

favour of respondent and against the petitioner.

2. The petitioner was awarded work of construction of 110 bedded ward

block with intensive care unit and other technical facilities at G.B. Pant

Hospital, New Delhi SH. Pile Foundation vide letter of award dated 13th June

1986. The schedule date of start of work was 23rd June 1986. The completion

period of work was 9 months and schedule date of completion of work was

22nd March 1987. The work included providing 12 meter deep driven Cast-in-

Situ Pile foundation. Respondent, Union of India through its specialized wing

was to conduct detailed soil exploration and laboratory tests in presence of

CS(OS) 342A/1995 M/s Kirat Chand Jain Family Trust v.UOI Page 1 Of 8 petitioner and the petitioner based on soil data so obtained was to prepare

designs for the foundation as per IS-2911 Part-I Section-I-1971.

3. There was some delay in conducting soil investigation by the

respondent, Union of India, and the report of soil testing was sent to claimant

for preparing designs on 28th November 1986. It was alleged by respondent

that the claimant, instead of preparing designs as per the contract raised

objections to the report and pointed out shortcomings of the report despite

the fact that petitioner was associated in soil investigation it objected to the

report on the ground that the claimant was not associated during soil

investigation. Ultimately, when the claimant submitted designs of the pile

foundation, it furnished designs contrary to contract based on Hiley formulae

whereas contract provided for designs based on static formulae as given in

I.S. Code. The suggestion of the claimant was that 2/3 pile foundations as per

hiley design could be driven in earth and checked for required strength of 60

metric ton capacity. This design was rejected by the respondent, Union of

India, being not in conformity with IS 2911 Part-I Section 1979 as required

under the contract. Respondent asked the claimant to do pile foundation as

per the designs given in contract and bring a hammer of 3.5 metric ton for

the same as against 1.5 and 2 metric ton capacity hammer which had been

brought by the claimant on the site. The claimant insisted that the design

submitted by the claimant would give requisite strength as the claimant

(petitioner herein) had followed sound design practice. Because of this

dispute, piles were not constructed and practically no work had started. While

petitioner insisted on a soil depth of about 6 meters, the respondent Union of

India struck to its stand of 12 meters deep piles as per I.S. Code. The claimant

ultimately installed two test piles and conducted tests on these piles.

CS(OS) 342A/1995 M/s Kirat Chand Jain Family Trust v.UOI Page 2 Of 8 According to claimant, the tests were satisfactory and gave requisite strength

whereas the contention of respondent had been that the tests were not

conducted earnestly with dispatch due to inadequate and improper technical

arrangement. The respondent insisted that the piles depth should be as per

the agreement and asked the petitioner to provide additional test piles to be

driven up to 12 meter or the refusal point. During this process, the

completion date had already expired but the parties continued with the work.

A 'RIG' mobilized by the petitioner on the site also toppled on the site. The

claimant thereafter told the respondent that it was improper to ask him to

drive piles up to 12 meters depth in view of available data of soil when the

required load carrying capacity could be achieved at much smaller depth of 6

meter. The petitioner stated that it was ready to get further test conduct on

the piles with 6 meters depth in the ground.

4. The respondent Union of India ultimately rescinded the contract on 7th

June 1988 when the petitioner apparently did not seem to be prepared to

have pile foundation with 12 meter depth. After rescinding of contract,

respondent got this work completed through other agency. On rescinding of

contract, petitioner raised several claims against respondent and wanted the

claims to be referred to the Arbitrator. The respondent appointed an

Arbitrator as per letter dated 18th July 1988 and referred the disputes raised

by the petitioner to the arbitrator with a condition that if the amount awarded

was more than Rs.50,000/-, the Arbitrator shall give a reasoned award. This

condition was even otherwise provided in the contract in clause 25 and the

arbitrator was to give a reasoned award in case of amount of award

exceeding Rs.50,000/-.

CS(OS) 342A/1995 M/s Kirat Chand Jain Family Trust v.UOI Page 3 Of 8

5. The claimant in his initial letter dated 30thJune 1987 raised an issue

that rescinding of contract was bad in law and claimed an amount of

Rs.11,74,900/- against various heads. The claimant sent reminder of his letter

for appointment of an arbitrator and in the reminder claimant made

additional claims and stated that he was entitled to Rs.25,17,748/-.

6. The claimant had also approached this Court for appointment of an

arbitrator vide Suit No.559 of 1988 alleging therein that despite invocation of

arbitration clause, respondent did not appoint an arbitrator. However, this

Court was informed by respondent on 27th April 1988 that an arbitrator had

already been appointed. This Court vide order dated 27th April 1988 observed

that all the disputes that were raised by the claimant (petitioner herein) in the

suit filed before the Court shall be adjudicated by the arbitrator appointed by

respondent, Union of India.

7. Both parties made claim and counter claim before the arbitrator and

the learned arbitrator gave the impugned award.

8. The award has been assailed by petitioner on the ground that the

learned arbitrator grossly misconducted the proceedings and acted with

prejudiced mind and was biased in favour of respondent and against the

petitioner /claimant. He passed the award behind the back of claimant by

keeping the claimant in dark. The claimant had made an application dated

28th December 1993 and 4th January 1994 regarding deficiency of record and

documents and the vital information was yet to be supplied by respondent to

claimant, however, arbitrator issued no instructions on these applications and

did not seek the record from respondent which was necessary for

CS(OS) 342A/1995 M/s Kirat Chand Jain Family Trust v.UOI Page 4 Of 8 adjudicating the disputes. Thus, this amounted to legal misconduct. The other

objection is that the time for publishing the award had already expired. The

learned arbitrator manipulated the proceedings and behind the back of the

claimant recorded that the parties extended the time, by mutual consent, up

to 31st December 1994. It is further alleged that the arbitrator misconducted

himself in disclosing his mind to respondent by issuing directions telling

respondent to file non judicial stamp paper for aware and keeping silent

about the similar action by the petitioner. The petitioner quoted other

instances in support of its contention that the arbitrator misconducted himself

and stepped out of his jurisdiction. It is also alleged that Arbitrator did not

decide the basic disputes pertaining to required length of piles for carrying

required load. It is submitted that as per contract the length could be 12

meter (±) i.e. variation in length was allowed but the learned arbitrator

assumed that the scope of work envisaged the depth of the piles as 12

meters deep driven-caste-in-situ.

9. It is also submitted that the arbitrator though observed that there was

a five months' initial delay out of total 9 months contract period on the part of

respondent but he still has not found petitioner entitled for any relief. The

arbitrator has also erred in holding that claimant wished to draw only 6.0

meter depth piles whereas claimant's case had all along been that the depth

should not be calculated on the basis of static formulae as insisted upon by

the respondent but the actual driven depth may vary depending on under

rocks data and resistance of the place. It is also submitted that the learned

arbitrator did not apply its mind. The agency which was assigned the contract

after the petitioner was not the one as mentioned by the learned arbitrator

i.e. M/s Suplex Private Limited. The learned arbitrator awarded an amount of

CS(OS) 342A/1995 M/s Kirat Chand Jain Family Trust v.UOI Page 5 Of 8 Rs.28,02,281/- in favour of respondent without mentioning the name of

agency even correctly. It is further submitted that the award passed by

learned Arbitrator was a non speaking generally and none of the claims of

petitioner was discussed or a specific order was passed whereas claim of

respondent has been allowed without giving reasons.

10. Respondent has refuted the application made by claimant/petitioner

and denied all allegations.

11. A perusal of award would show that the learned arbitrator gave

sufficient time and opportunities to both the parties to place their case before

the arbitrator. The conduct of petitioner before the arbitrator has been that of

an escapist. The petitioner had been seeking adjournments after

adjournments and the allegations made by petitioner against the arbitrator

regarding his bias are not supported from the proceedings as conducted by

the learned Arbitrator.

12. The award shows that the learned arbitrator in the award first

discussed the scope of work and the conduct of petitioner during the

continuation of work and observed that petitioner was not prepared to do

work in accordance with the contract and was not prepared to lay pillars/piles

to the depth of 12 meters as per specification, provided in the contract and

the arbitrator came to conclusion that the claimant had generally failed to

discharge the contractual obligations of supply of designs as per the agreed

specifications and parameters with due discharge after providing of soil test

results and failed to work as per contract. The arbitrator held petitioner/

claimant responsible for rescinding of contract. After holding so, the learned

CS(OS) 342A/1995 M/s Kirat Chand Jain Family Trust v.UOI Page 6 Of 8 arbitrator rejected all the claims of petitioner since they were based on the

plea that petitioner was not responsible for rescinding the contract. However,

learned arbitrator thereafter observed that the respondent had to get the

work done through alternative agency and, therefore, he awarded a sum of

Rs.28,02,281/- as amount spent extra by respondent. The other claim of

respondent for levy of compensation was rejected. A claim of respondent for

recovery of Rs.25,605/- from the claimant towards costs of cement was also

allowed. The arbitrator observed that after rescinding of contract of

petitioner, the respondent got the work completed through M/s Simplex

Private Limited which was a specialized agency in this kind of work and this

agency drive the pillars up to 12 meters depth and even more at most of the

location, in accordance with contract.

13. It is obvious from the award that the learned arbitrator while allowing

the claim of respondent to the tune of Rs.28,02,281/- has not given reasons

as to why this amount was being allowed . If the work had been got done by

respondent at risk and costs of petitioner in terms of agreement, the learned

arbitrator was supposed to give the reasons as to what costs the respondent

would have incurred had the work been done by petitioner under the contract

and what was the contractual amount paid by respondent to the new agency

and for what extent of work. The difference in two costs showing the amount

of risk purchase has not been specified by the learned Arbitrator.

14. In my view, giving of reasons in allowing a claim of more than

Rs.50,000/- was mandatory for the arbitrator under arbitration clause as well

as per the letter of appointment of the arbitrator. The award passed by the

arbitrator in respect of claim No.1 of Rs.28,02,281/- without giving reasons,

CS(OS) 342A/1995 M/s Kirat Chand Jain Family Trust v.UOI Page 7 Of 8 therefore, is not tenable and it is liable to be set aside.

15. The learned arbitrator has awarded another sum of Rs.25,605/-. This

amount the arbitrator held, respondent was entitled to recover towards the

costs of cement and steel supplied by respondent to the petitioner. Since this

claim was below Rs.50,000/-, the learned arbitrator could have allowed this

claim without a speaking award. In the counter claim filed by respondent,

respondent had given analysis of different quantities of steel and cement

supplied by it to the claimant and the quantities which were already removed

/shifted to other site and the balance quantities in the custody of the

claimant/ petitioner. Since the arbitrator has allowed this claim of respondent

taking into account the data presented to him which were remained

uncontroverted, this part of the award though non-speaking, cannot be set

aside on account of giving no reasons.

16. In the result, I partly allow objections filed by the petitioner. The award

of learned arbitrator for a sum of Rs.28,02,281/- is hereby set aside and the

award for a sum of Rs.25,605/- and for costs and interest is made a rule of

the Court. Decree sheet be prepared in above terms.

17. The petition stands disposed of.

July 31, 2009                                      SHIV NARAYAN DHINGRA J.
rd




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