Sh. S. Kumar vs Delhi Development Authority
2009 Latest Caselaw 4684 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELH

+                          CS(OS) No.1581A/1998

                                                 18th November, 2009.

SH. S. KUMAR

                                                          ...Petitioner

                           Through:     Mr. S.K. Jain, Advocate.
              VERSUS

DELHI DEVELOPMENT AUTHORITY                           ....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)

VALIMIKI J. MEHTA, J.

I.A.No.5256/1999 in CS(OS) No.1581A/1998

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

Arbitration Act, 1940 against the Award dated 13.7.1998 passed by the sole

Arbitrator. Ms. Salwan, on behalf of the objector, has pressed her challenge

only to claim Nos. 2,3,4,5,7,13,14 and 16 as awarded by the Arbitrator.

CS(OS) 1581A/1998                                                         Page 1
 2.           Claim No.2 is on account of work done but not paid.              The

Arbitrator has given detailed reasons as to how the contractor wrote various

letters showing extra work done and which were not responded to by the

objector. The only objection of the respondent was that the letters were not

received by the proper officer and were obtained by the Assistant Engineer

only. Not accepting this stand the Arbitrator has therefore held that the

contractor is entitled to the amount of the work done. I do not find any fault

with this reasoning of the Arbitrator. Even if I was of a different view since the

view taken by the Arbitrator is not a view which is a perverse view, sitting and

hearing objections under Sections 30 and 33 I would not like to interfere with

the findings in the Award.

3. Claim No.3 was on account of claim for escalation for higher

payment for work done during the extended period of work. It is not disputed

that the work period was in fact extended and the Arbitrator has relied upon the

notifications showing the enhanced charges payable to the labour. Accordingly,

the reasons of the Arbitrator are sound and this Court cannot go into the

reasonableness of the reasons as given by the Arbitrator.

4. Claim No.4 before the Arbitrator pertains to claim on account of

damages and loss of profitability. I find that the objection in this regard of the

CS(OS) 1581A/1998 Page 2 objector is justified because this claim is towards enhanced charges and for the

same subject and for the same period, escalation has already been paid to the

contractor under clause 10C. Therefore, payment under this head amounts to

duplication of payment which is impermissible in law. The Arbitrator, I note,

has not given any sufficient legal reasons for allowing this claim. In fact, the

Arbitrator notes under this head that the claim on account of damages and loss

of profitability was not established. Once the Arbitrator so holds that the said

claim is not established there cannot arise any reason for allowing of the same

claim by the Arbitrator. Objection in this regard is therefore justified and the

Award of the Arbitrator with respect to claim No.4 is set aside.

5. The claim No.5 before the Arbitrator pertained to increase in rates

beyond the stipulated date of completion beyond what has already been allowed

under clause 10C. The Arbitrator has arrived at a finding of fact that there was

a breach committed by the respondent. Such a finding of fact is final and it

cannot be challenged by the objector, more so because the same has not been

shown to be perverse. The claim for escalation therefore allowed by the

Arbitrator once it is found that the objector was guilty of breach is justified and

no fault therefore can be found with this part of the Award.

6. Claim No.7 of the contractor was its claim for payment because a

lesser amount was paid for the extra items. The condition in the contract was

CS(OS) 1581A/1998 Page 3 that if the extra items were sanctioned within a period of three months then the

respondent shall be entitled to a rebate of 1% of gross amount of all

extra/substituted items. However, it is an admitted fact that the sanction of

extra items was beyond the period of three months and therefore, the objector

was not entitled to rebate. Therefore, no objection can validly be sustained with

respect to claim no.7.

7. Claim No.13 though is of small amount of Rs.3556/-, I find that the

same is not justified. This amount of Rs.3556/- was recovered by the objector

because the contractor had to do certain painting works and such work was

found not to have been done. The Arbitrator has simply awarded the amount

merely because the objector had not issued any notice during the period of the

contract. I do not think that this is a justified reason because this is a claim for

work done and if work is not done then no payment can be claimed. Since the

work has not been done and the reasons of the Arbitrator are not justified, this

amount awarded under this claim, though of a small amount of Rs.3556/- , the

same is set aside and this claim of the contractor is rejected.

8. Claim No.14 is the claim of the contractor towards interest for

delayed payment. The Arbitrator has found as a matter of fact that there is a

delay in the payment of the amounts to the contractor. Since there is a delay in

the payment, the claimant is entitled to interest. It has been held by the

CS(OS) 1581A/1998 Page 4 Supreme Court in the case of South Eastern Coalfields Ltd. Vs. State of M.P.

(2003) 8SCC 648 that in certain cases interest can be granted in equity though

not provided for either in the agreement or in custom. Interest is therefore

basically compensation for the amount of monies illegally retained by a person

who ought to have made payment in time. I do not therefore find any merit

with the objection with regard to claim no.14.

9. That takes me to the last claim being claim No.16 with respect to

the interest granted by the Arbitrator. 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. 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 and State of

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

(SC) has held that on account of consistent fall in the rate of interest the courts

must reduce the rate of interest as granted by the Arbitrator, more so when the

Arbitration proceedings are of a long period. I note in this case, the Award is

more than 11 years old having been passed on 13.7.98. Therefore, in

accordance with the mandate in the aforesaid Supreme Court judgments in the

CS(OS) 1581A/1998 Page 5 facts and circumstances of the case, I feel interest at the rate of 9% per annum

simple ought to be awarded to the contractor. The counsel for the non-objector

has very strenuously relied upon the decision of the Supreme Court in the case

of Sayeed Ahmed Vs.State of UP (2009) 3 ARb. L.R 29. I find that the said

judgment will not apply in the facts and circumstances of the present case

because in that case, the Supreme Court found that the High Court did not

assign any reasons for reducing rate of interest. As already stated above, this

court is giving reasons in law inasmuch as the Supreme Court itself in the chain

of judgments reproduced above has specifically brought to the notice of the

courts that they should be alive to the changed economic scenario and grant a

lower rate of interest accordingly, I am therefore unable to agree with the

contention of the non-objector in this regard. Accordingly, objection petition is

partly allowed to the extent that the claims which are awarded under claimNo.4

and 13 as awarded by the Arbitrator are set aside. Further there is a

modification with respect to claim No.16 for the rate of interest to be 9% per

annum simple meaning thereby where the Arbitrator has awarded interest @

18% per annum or otherwise the rate of interest shall be read as 9% per annum

simple.

10. With the aforesaid modification, the objection petition and the suit

stands disposed of. The Award is made rule of the Court subject to the

CS(OS) 1581A/1998 Page 6 modifications. In case the objector makes the payment of the amount as per this

judgment within 90 days from today then the rate of interest from the date of the

today's judgment till the date of payment shall be 9%. However, in case of

payment after 90 days the rate of interest from the date of this judgment till

payment shall be 11% in terms of Section 29 of the Arbitration Act, 1940. No

order as to costs.

November 18, 2009                                  VALMIKI J.MEHTA, J
Ne/ib




CS(OS) 1581A/1998                                                          Page 7