V.K. Madan vs Delhi Development Authority
2009 Latest Caselaw 4672 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELH

+                          CS(OS) No.97A/2000

                                                 17th November, 2009.

V.K. MADAN

                                                           ...Petitioner

                           Through:     Mr. Raman Kapur, Advocate
              VERSUS

DELHI DEVELOPMENT AUTHORITY                            ....Respondent.

                           Through:     Mr. Rajesh Mahajan, 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)

VALIMIKI J. MEHTA, J.

I.A.No.10537/2002 & CS(OS) No.97A/2000

1. These are objections under Sections 30 & 33 of the Arbitration Act, 1940

preferred by the respondent to the Award dated 28.12.1999 passed by the sole

arbitrator.

CS(OS) 97A/2000 Page 1

2. The counsel for the parties at the outset have agreed that though there was

initially a controversy as to whether the objections should be treated under the

Arbitration Act, 1940 or the Arbitration and Conciliation Act, 1996, it is agreed

that now these objections be treated as objections under the 1940 Act.

3. The counsel for the objector has very fairly not pressed any objections to

the claim Nos. 1, 2, 3, 5 and 7 as per the Award. The only objections are with

respect to Claim Nos.6, 17 and 18 as awarded by the Arbitrator.

4. Claim No.6 of the non objector/contractor was with respect to the

payment under Clause 10C. The Arbitrator in this behalf has passed a detailed

Award with reasons holding that not only did the labour rates actually increase

as per the notifications filed before the Arbitrator but, the contractor also duly

filed various labour reports which were verified by the department and also no

complaint of any labour was filed showing that the payments to the labour were

not made. As regards the contention of the objector that the books of accounts

were not supplied by the contractor, the Arbitrator has held that no such demand

was ever raised and, therefore, there arose no question of submission of such

books of accounts. I have read Clause 10C of the contract in this regard and the

said clause is reproduced herein.

" Clause 10C The contractor shall for the purpose of this condition keep such books of account and other documents as are

CS(OS) 97A/2000 Page 2 necessary to show the amount of any increase claimed or reduction available and shall allow inspection of the same by a duly authorised representative of Delhi Development Authority and further shall, at the request of the Engineer-in-Charge furnish, verified in such a manner as the Engineer-in-Charge may require any document to kept and such other information as Engineer-in-Charge may require"

A reference to this portion of Clause 10C clearly shows that the

contractor only has to keep his books of accounts ready for inspection. It is not

the contention of the objector that the books of accounts were asked for.

Accordingly, the finding of the Arbitrator that no books of accounts having

been called for, there is no violation of clause 10C is clearly justified.

Accordingly, I do not find any merit in this objection and the Arbitrator by the

detailed reasoning has correctly held the claimant/non-objector entitled to

enhanced charges payable towards labour under Clause 10 C.

5. Claim No. 17 of the contractor/non objector pertained to losses/damages

on account of increase in the prices of material, losses for idle labour, tools;

plant; establishment etc. during the prolonged period of the contract. I may at

the outset note that the claim under this head is for increase in the prices of

material and labour which are not those which are covered under Clause 10 C

and are other than those Claims falling under Clause 10C. With regard to this

claim, the Arbitrator has held that in fact the objector was guilty of causing

delays in the performance of contract on various counts and, consequently, the

CS(OS) 97A/2000 Page 3 objector admittedly extended the contract without levy of compensation. This

finding of fact, therefore, has not been and could not be challenged by the

objector. Once the objector is held guilty of delay in prolongation of the work,

the consequences are thereupon on the objector and the contractor has to be

accordingly compensated. This compensation is therefore, being awarded by

the Arbitrator with respect to the claims for idle establishment, chowkidars and

idle tools and plant. I may note that this claim probably ought to have been

better worded because in fact counsel for the non-objector asserts that the same

is a claim for loss of profitability. In any case, there is no such objection of mis-

description on behalf of the objector and the only objection of the objector is

that for the claim of such loss and damages, there is no clause in the contract,

which therefore disentitles the claim for damages. Surely, this objection is

misconceived because law does not have to be reproduced in the contract and if

the law provides that in case of breach of contract, losses are caused, and which

can be claimed, then it cannot be asserted that there is required a clause in the

contract which permits the claims of loss/damages. In any case, the law has

now travelled to such an extent that the Supreme Court in its recent judgment in

G.Ramachandra Reddy Vs. Union of India 2009 (6) SCC 414 has held that in

fact, even if, there is a contractual clause prohibiting a claim for loss/damages

CS(OS) 97A/2000 Page 4 such contractual clauses have to be ignored and the contractor is entitled to

compensation/losses/damages as per law.

The objection with regard to Claim No.17 is also without any basis and is

accordingly rejected.

6. The last objection is with respect to Claim No.18. This was the claim for

interest and I note that the Arbitrator has awarded interest at the rate of 18% per

annum. The Supreme Court in the recent line of judgments reported as

Rajendra Construction Co. v. Maharashtra Housing & Area Development

Authority and others, 2005 (6) SCC 678, McDermott International Inc. v.

Burn Standard Co. Ltd. and others, 2006 (11) SCC 181, Rajasthan State Road

Transport Corporation v. Indag Rubber Ltd., (2006) 7 SCC 700 & Krishna

Bhagya Jala Nigam Ltd. v. G.Harischandra, 2007 (2) SCC 720 and State of

Rajasthan vs. Ferro Concrete Construction Pvt. Ltd (2009) 3 Arb. LR 140(SC)

has held that the courts should take note of the consistent fall in the rates of

interest in the changed economic scenario and ought to grant a lesser rate of

interest instead of the higher rates of interest which are granted by the

Arbitrator. Accordingly, following the mandate of the aforesaid Supreme Court

judgments, I direct that the rate of interest shall be at 9% per annum simple and

not 18% as awarded by the Arbitrator in the Award. To this extent, the

objections of the objector are accepted and the rate of interest is accordingly

CS(OS) 97A/2000 Page 5 reduced as stated above. The award only grants interest till the date of the

decree. In terms of Section 29 of the Arbitration Act, 1940, I therefore award

interest at the rate of 9% per annum from the date of decree till actual payment.

If the decretal amount is paid within a period of 90 days from today then the

rate of interest will continue to be 9%, however, if the amount is not paid within

a period of 90days from today then in such a case, the rate of interest will

become 11% per annum from the date of the award till the actual payment.

7. In view of the fact that the objector has very fairly not argued its various

objections with respect to its claims, I feel that the parties in this case should be

left to bear their own costs. The suit and the objection petition are disposed of

accordingly. The Award is made rule of the court subject to the modification

with regard to the rate of interest.

November 17, 2009                                     VALMIKI J.MEHTA, J
ib




CS(OS) 97A/2000                                                                Page 6