M/S Anant Raj Agencies vs Delhi Development Authority & ...
2009 Latest Caselaw 4536 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI
+                        C.S. (OS) No.884A/1996


                                            9th November, 2009

M/s Anant Raj Agencies                          ..Petitioner
                         Through:    Mr. Harish Malhotra, Sr. Advocate
                                     with Mr.N.K.Kantawala, Advocate.
              VERSUS

Delhi Development Authority & Anr.                    ...Respondent
                         Through:    Ms. Anusuya Salwan, 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?

     3. Whether the judgment should be reported in the Digest?
    %

JUDGMENT (ORAL)

I.A. No.8362/1994 in CS(OS) No. 884A/1996

1. These are objections under Sections 30 and 33 of the Arbitration

Act, 1940 against the award dated 26.3.1996 passed by the sole

Arbitrator.

C.S(OS)No.884A/1996 Page 1

2. The Award has been passed on account of disputes which arose

between the parties for the work of construction of 8314 Houses in

Sector-15, Rohini, Delhi and also construction of 352 EWS houses.

3. Though the award deals with various claims as made by the

claimant/non-objector/petitioner before the Arbitrator, in this court,

the objector/DDA has basically opposed two claims being Item Nos.

24 and 27 of claim No.1.

4. Item No. 24 pertains to the claim which was made by the

contractor for straightening and cutting of steel bars. This claim has

been awarded by the Arbitrator for a sum of Rs.1,53,119/-. The

Agreement clause with respect to this item is Clause No. 3.7. This

issue with regard to claims for straightening and cutting of steel bars is

no longer res integra and it has been held by various judgments of this

court including the judgment of Narain Das R.Israni VS. DDA 2005

(3) Arb.LR.455(Delhi) that such a claim made by the contractor

cannot be allowed unless at the time of execution of work, a notice is

given for such a claim. Admittedly, in the present case no such notice

has been given. I may note that the view of the learned Single Judge

C.S(OS)No.884A/1996 Page 2 in the case of Narain Das R. Israni (Supra) has been upheld by a

Division Bench of the Court in the judgment reported as M/s Anant

Raj Agencies Vs. DDA (2009) 2 Arb.LR 325.

Accordingly, this claim as awarded by the Arbitrator is clearly

illegal and in view of the judgments stated above, the objection in this

regard is sustained and the Award under Item No.24 of claim No.1 is

set aside.

5. The second main argument of the objector pertains to Item No.

27 of claim No.1. Under this item, the contractor had claimed

escalation charges towards the extended period of the contract. The

Arbitrator has allowed this item for a sum of Rs.20,62,840/-. In the

contract between the parties there is a clause namely Clause 10CC and

as per which the contractor can claim and is entitled to escalation

during the period of performance of the contract. It is not seriously

disputed by the counsel for the non-objector that the claimant has in

fact got escalation in terms of Clause 10CC for the extended period of

the contract. That being the position, an additional claim for

escalation being allowed for the same period would amount to

C.S(OS)No.884A/1996 Page 3 duplication of the claim awarded and the same is clearly not

sustainable. Therefore, this claim with respect to Item No. 27 since it

amounts to duplication with respect to the escalation which has

already been granted under Clause 10CC is clearly illegal and is liable

to fail. This part of the objection also succeeds and award under this

item is set aside. I may note that the counsel for the objector in this

regard has referred to the decision of the DDA Vs. K.C.Goyal 2001(II)

AD (Delhi) 116 and DDA Vs. U.Kashyap 1998 (7) AD( Delhi) 300

which supports this proposition. In accordance with these judgments,

the contention of the objector is correct and deserves acceptance. This

part of the Award which pertains to Item 27 of claim 1 is set aside.

6. There were also various other objections which were raised by

the objector in a general manner, almost in a consolidated fashion so

to say, and which objections pertain to different sub-heads of claim

no.1 except items 24 and 27 discussed above. A reading of the

Award, however, in this behalf shows that the Arbitrator has gone

into great depth and detail with respect to each of these claims, and

has arrived at detailed finding of facts after taking note of various

C.S(OS)No.884A/1996 Page 4 evidences and other documents as filed before him. Each of these

finding of facts is duly supported by reasons. It is settled law that this

court cannot go into the reasonableness of the reasons as given by the

Arbitrator under Sections 30 and 33. In the present case the reasons

are not in any manner perverse for this court to interfere with the

same. In this view of the matter, the counsel for the DDA could not

very seriously dispute the detailed finding of facts that have been

actually arrived at and the detailed reasoning which has been given

and thus the objections could not be seriously pressed. Accordingly,

these objections with respect to these sub items of claim no.1 are

misconceived and are, therefore, dismissed.

7. That leaves me with the issue with regard to the rate of interest

to be awarded to the non-objector. The Award, I may note, has

given interest @ 18% and that too compounded quarterly. The

interest aspect is seen in three stages viz pre-arbitration proceedings

period, during the arbitration proceedings/pendente lite and till the

passing of the decree by this court and finally from the date of decree

till actual payment.

C.S(OS)No.884A/1996 Page 5

8. The rate of interest so awarded by the Arbitrator is indeed a

very high rate considering today's scenario. On the aspect of pre-

reference interest, Ms. Salwan has referred to a recent Supreme Court

Judgment reported as State of Rajasthan and Anr. Vs. Ferro Concrete

Constructions Pvt. Ltd., 2009(3) Arb.L.R. 140(SC) to canvass the

proposition that even if a notice is given under the Interest Act, 1978

yet in such cases the maximum rate of interest which a person is

entitled to would be the current rate of interest as per Section 3 and

the definition clause in the Interest Act. The Supreme Court referring

to the relevant provisions of the Interest Act has granted interest @

9% per annum simple in the facts of that case. Considering however

the facts and circumstances of the present case and since at the

relevant point of time when these arbitration proceedings were going

on rates charged by nationalized bank varied from 18% to 24% per

annum and that too with quarterly rests and to which sometimes

penal interest was added, I think the interest of justice will be well

served if the pre-reference rate of interest is allowed @ 11% per

annum simple.

C.S(OS)No.884A/1996 Page 6 So far as pendent lite and future interest is concerned, it has

been recently held by the Supreme Court in the judgments reported as

Rajendra Construction Co. Vs. Maharashtra Housing & Area

Development Authority & ors.2005 (6) 678, McDermott International

Inc. Vs. Burn Standard Co. Ltd.& ors 2006 (11) SCC 181, Rajasthan

State Road Transport Corpn. Vs. Indag Rubber Ltd. (2006) 7 SCC 700

and Krishna Bhagya Jala Nigam Ltd. Vs. G.Harischandra, 2007 (2) SCC

720 that the court must take note of the falling interest rates and the

court should reduce the rate of interest as granted under the Award,

more so if the interest which is to be granted is for a very long period.

I note in this case that the Award has been made way back in 1996

and today we are in 2009 when the objections are coming up for

disposal. Accordingly, in terms of mandate of the aforesaid judgments

of the Supreme Court, I am of the view that in the facts and

circumstances of the case, it will be just and proper that instead of the

18% rate of interest which is given by the Award, wherever interest is

awarded under the award towards pendent lite and future interest,

the same should be read to be 9% per annum simple. Accordingly, the

award dated 26.3.1996 so far as the same deals with grant of C.S(OS)No.884A/1996 Page 7 pendente lite interest, after the award till the passing of the decree

would now be taken at an interest at simple rate of 9% per annum.

In terms of Section 29 of the Arbitration Act, 1940, I further award

interest at 9% per annum till payment. In case, the respondent makes

the payment of the awarded amount and as modified by the present

judgment within 90 days from today then the rate of interest of 9%

simple will be applicable, however, in case payment is made after a

period of 90 days from the date of this judgment, the rate of interest

shall be at 11% per annum simple throughout.

9. In view of the above, the Award dated 26.3.1996 is made Rule

of the Court subject to reduction therefrom of the claims of items 24

and 27 of claim no.1. The rate of interest shall also be 9% per annum

simple except if the payment is not made within 90 days from today's

date the same shall be 11% pers annum simple. With these

observations, objections and the suit stand disposed of.

10. Parties to bear their own costs.

                                          VALMIKI J.MEHTA, J


November 09, 2009/dkg/ib

C.S(OS)No.884A/1996                                              Page 8