M/S. Prominent Electric Works vs Delhi Development Authority & ...
2009 Latest Caselaw 4521 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI
+                        C.S. (OS) No. 674-A/1997
                                          6th November, 2009.


M/S. PROMINENT ELECTRIC WORKS               ..Petitioner
                  Through: Mr. Vivekanand, Advocate.
         VERSUS


DELHI DEVELOPMENT AUTHORITY & ORS.                   ...Respondents
                         Through:    Ms. Amita Singh, Advocate
CORAM:
HON‟BLE MR. JUSTICE VALMIKI J.MEHTA

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

     2. To be referred to the Reporter or not?       Yes

     3. Whether the judgment should be reported in the Digest?   Yes
 %
JUDGMENT (ORAL)

I.A. No.252/1998 and CS(OS) No.674A/1997

1. These are the objections filed by the petitioner under

Sections 30 and 33 of the Arbitration Act, 1940 against the Award

dated 14.3.1997. The award arises on account of the disputes which

arose between the parties with respect to the work of construction of

C.S(OS)No.674A/1997 Page 1 410 Janta Houses for harijans and landless persons at Peera Garhi,

New Delhi.

2. The facts of this case are that the work was awarded to

the petitioner vide letter dated 14.9.1983 which prescribed the

stipulated date of completion as 24.9.1983. Since the work could not

be completed even well after 24.9.1983, the work in question was

broken up with respect to the balance work which was of the amount

of Rs.33,292/-. For this balance work of Rs.33,292/-, a

supplementary agreement dated 31.8.1988 was entered into between

the parties which prescribed the period for completion of work to be

nine months. The work was however completed on 20.3.1993.

3. The counsel for the objector/petitioner has challenged the

award whereby his claims filed in 1994 have been dismissed as being

time barred, because claims filed were with respect to the main

contract dated 14.9.1983 and which was already closed when the

supplementary agreement dated 31.8.1988 was entered into between

the parties. The counsel for the objector has referred to the

agreement dated 31.8.1988 which uses instead of word „closure‟, the

C.S(OS)No.674A/1997 Page 2 expression "provisional closure". The counsel for the objector

therefore contended that all the disputes under the original agreement

dated 14.9.1983 continued to survive right till the end when the

balance work under the supplementary agreement was ultimately

completed on 20.3.1993. The counsel for the objector/petitioner has

also very heavily relied upon the final bill dated 18.1.1994. The

counsel relying on this final bill has pointed out that this is a

consolidated bill for work done both as per the original agreement as

also the supplementary agreement. He has further referred to the fact

that in the supplementary agreement dated 31.8.1988 there is no date

mentioned for completion of work under the contract dated

14.9.1983. Per contra the counsel for the non-objector, however,

urges that two views are possible for this expression „provisional

closure‟ as used in the letter dated 31.8.1988. She has further urged

that one of the acceptable views can certainly be as held by the

Arbitrator that the original contract was closed whereby the claims

under the same ought to have been filed when the same was closed in

1988 and not in 1994 and only the balance work remained to be

performed by means of the fresh agreement titled as supplementary C.S(OS)No.674A/1997 Page 3 agreement thereby nothing remained to be done under the original

agreement, and this Court while hearing objections under Sections 30

and 33, has repeatedly held that it will not interfere with the Award if

two views are possible. Consequently, the Arbitrator having taken one

view which shows that the first contract was closed when the

supplementary agreement was signed on 31.8.1988, claims had to be

filed within three years from that date so far as the claims under the

first contract and which admittedly was not done. It was, therefore,

urged that the conclusion on the issue of limitation as held by the

Arbitrator, therefore, is clearly justified.

4. I feel that the contention of the objector is correct and

merits acceptance. In the final bill dated 18.1.1994, there is a specific

mention of the actual date of completion of work, which was not

mentioned in the Supplementary Agreement dated 31.8.1988, and,

which final bill is with reference not only to the original agreement of

1983 but also for the supplementary agreement dated 31.8.1988. This

final bill also while referring to both the contracts mentions the date

of closure not as the date of the supplementary agreement dated

C.S(OS)No.674A/1997 Page 4 31.8.1988 but 20.3.1993 which is inclusive of the work completed

after the supplementary agreement dated 31.8.1988. A reference to

the final bill and the entries contained therein does definitely show

that it was a consolidated bill for both the agreements and since it was

a consolidated bill for both the contracts, it refers to payments made

under the first contract also. Consequently the Arbitrator so far as

having determined the issue that the claims for the agreement which

began in 1983 are barred by limitation does not appear to be correct

considering the fact of this admitted document being the final bill.

The Arbitrator has while arriving at the conclusion that the claims are

barred by limitation has referred to the supplementary agreement

which is the document earlier in point of time dated 31.8.1988, but

has not referred to the vital, crucial and admitted later document

being the final bill dated 18.1.1994. By not considering this most

relevant document, the Arbitrator has mis-conducted himself and the

proceedings as per K.P Poulose Vs. State of Kerala, (1975)2SCC 326.

How the parties understand the terms of a contract is best understood

by their actions in terms of such a contract (vide Godhra Electricity

Company Vs. State of Gujrat, AIR 1975 SC32). I consequently hold C.S(OS)No.674A/1997 Page 5 that the findings of the Arbitrator of the claims being time barred are

illegal and hence liable to be set aside. The objections are therefore

allowed, though for the record only, as the objections have to be

ultimately dismissed as held by me later in this judgment.

5. The issue which now I have to consider is what to do in a

very old case like the present one where the contract is more than 26

years old and work under which contract was duly completed more

than 16 years from today. Once the issue of limitation is decided in

favour of the petitioner/objector, and it is held that the Arbitrator was

not justified in dismissing the claims on the ground that the same were

barred by the limitation, the issue is that while hearing objections

under Sections 30 and 33 of the Arbitration Act, 1940 is it necessary

for the Court to necessarily remit the matter back to the Arbitrator for

redetermination or can the Court look into the merits of the disputes

itself for arriving at a final decision itself . I am of the opinion that in a

particular case where detailed and lengthy arguments on many issues

are required, many documents are to be looked into, detailed

evidence has to be considered, that case may be a case where the

C.S(OS)No.674A/1997 Page 6 matter may have to be remitted, but, is it so required also in such a

case where it is obvious from the facts as pleaded and the evidence as

led that remission would serve no purpose inasmuch as the

conclusions which are to be arrived at are obvious from the

arbitration record. I am of the firm opinion that this Court can, in

such a latter scenario, the Court can as well look into the issue with

respect to the merits of the claims which are made since not much

time is to be taken for arriving at a decision on those issues. Every civil

court has inherent power under Section 151 CPC to do justice and I,

therefore, invoke this power in the facts and circumstances of this case.

Accordingly, in view of the fact of the pendency of these disputes

since the last over 16 years and the objections itself having been filed

in the year 1997 i.e. more than 12 years back and the state of the

pleadings and evidence as led before the Arbitrator, I have persuaded

myself to look into the issue as regards the merits of the claims which

were made by the claimant before the Arbitrator. Long pendency of

litigation itself is a prejudice which ought to be addressed.

C.S(OS)No.674A/1997 Page 7

6. The main claims which have been rejected by the

Arbitrator, for the main contract of the value of Rs.3,89,688/- and the

supplementary agreement of the value of Rs.33,292/-, are

disproportionately high when compared to the value of the contracts.

Some of the claims are:- a claim of Rs.5,00,000/- for loss on account

of overheads at site; at head office; alongwith loss and profits due to

prolongation of the contract, a claim of Rs.3,15,000/- as damages on

account of idle labour and staff due to prolongation of work, a claim

of Rs.1,25,000/- on account of increase in cost of material and labour

and so on. On looking at all these claims as per the claim petition, I

enquired from the counsel for the objector that what is the break-up

of these claims because no break-up of the same as relatable to which

contract i.e. they pertain to the period of the original contract period

or the supplementary contract period and considering type/nature of

the claims whether they have been effectively broken up for the two

different periods and in what manner each of these claims is

established and proved before the Arbitrator. The counsel for the

objector in this regard has been very fair in stating that there is no

break up available in the claim petition with regard to the different C.S(OS)No.674A/1997 Page 8 heads of claims or otherwise. The counsel for the objector said that

the claims are conjoint claims for the complete period right from the

work being awarded in 1983 till the same was completed in 1993.

The next question then posed by me to the counsel for the objector is

how and in what manner these claims have been substantiated by

filing of the requisite evidence before the Arbitrator if the same have

to be allowed. To this, the counsel says that arbitrators are experts in

the field and no evidence is required and consequently, such claims

can be regularly allowed by the Arbitrator.

7. I do not agree at all with the contention which has been

urged by counsel for the objector. Surely, mere statements contained

in the statement of facts or pleadings without being supported by

evidence cannot mean that in spite of the same having not been

proved as required by the doctrine of discharge of onus on balance of

probabilities, leave alone to the complete conviction of the Arbitrator,

yet such status can still entitle the contractor/claimant to the damages

as claimed. This argument urged by the objector is against all cannons

of justice, equity, law and the principle of burden/discharge of proof.

C.S(OS)No.674A/1997 Page 9 No doubt burden of proof in a civil case is on balance of probabilities

but surely some reasonable amount of evidence has to be there on the

basis of which an Arbitrator can make an honest guess work for

allowing the claims. It is not an argument available to the

contractor/claimant to say that on the basis of very tennuous and

almost non existent evidence, the Arbitrator is entitled to make a guess

work merely because he is allegedly an expert in the field being an

Engineer. The Arbitrator being an engineer cannot mean that basic

minimum requirements of the Evidence Act have to be thrown to the

winds when huge monetary liability by the Award can be fastened on

to the opposite party. Surely basic and fundamental principles of

Evidence Act, 1872 are applicable even to arbitration proceedings. I

find that, and which could not be at all rebutted by the objector, that

there is no evidence as available before the Arbitrator to discharge the

onus of proof as required in a civil case. The claimant has therefore

miserably failed to discharge the onus, which he has to, in order to

succeed in establishing the claims. The claims, therefore, as filed are

clearly liable to be dismissed.

C.S(OS)No.674A/1997 Page 10

8. Accordingly, though the objection petition is allowed for

the purpose of record in that it is held that the Arbitrator was not

justified in holding the claims to be beyond limitation, however,

having examined the merits of the matter with respect to the claims

which were made before the Arbitrator, and the other details

including the evidence. I am of the opinion that objection petition is

liable to be dismissed and it is not required that the matter should be

remitted to the Arbitrator for fresh consideration. Accordingly, the

objection petition is dismissed and the Award is made the rule of the

Court.

9. At this stage, the counsel for the objector has relied upon

Union of India Vs. Madhya Pradesh Export Corporation Ltd.

1998(suppl.) Arb.LR. 618 to contend that this Court should not

decide the issue on merits. I find that the said judgment is only with

respect to modification or correction of the Award and not with

respect to the fact whether if on account of delays caused by long

pendency of cases and the lack of evidence a Court cannot and shall

not look into the case on merits and it is necessary that an exercise in

C.S(OS)No.674A/1997 Page 11 futility should and ought to be resorted to by referring the matter back

to the Arbitrator though the same will serve no purpose because the

claims in no circumstances are at all proved as the onus to prove the

claims has not even been the least bit discharged.

The Supreme Court in the Constitution Bench case reported as

Padma Sundra Rao Vs. State of Tamil Nadu 2002(3)SCC 533 has held

that the ratio of a case has to be read with reference to the facts of

each particular case and even a single fact which is different may make

a difference to the ratio. Thus on the facts of the present case I do not

find the judgment cited by the Objector is applicable.

10. Ordinarily, I would have imposed costs for disposal of the

objections, however, since objections are for the purpose of record

qua the issue of limitation allowed, but since ultimately the objections

are being dismissed because I am not remitting back to the Arbitrator,

I am not imposing costs in the matter and leave the parties to bear

their own costs.

                                              VALMIKI J.MEHTA, J
November 6, 2009
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C.S(OS)No.674A/1997                                               Page 12