Nangia Construction Pvt. Ltd. vs Rail India Technical & Economic ...
2009 Latest Caselaw 4702 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELH

+                          CS(OS) No.2146/1997

                                                 18th November, 2009.



NANGIA CONSTRUCTION PVT. LTD.                                    ...Petitioner

                           Through:     Mr. D.R.Bhatia, Advocate
              VERSUS

RAIL INDIA TECHNICAL & ECONOMIC SERVICES                           ....Respondent.

                           Through:     Mr. Jagjit 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?

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

    %                            JUDGMENT (ORAL)

VALIMIKI J. MEHTA, J.

I.A.No.5460/1996 & CS(OS) No.2146/1997

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

The challenge is to the Award dated 15.9.1997 of the sole arbitrator. At the

outset, I must say that the counsel for the objector has very fairly only pressed

CS(OS) 2146/1997 Page 1 certain claims and counter claims which have been detailed hereinafter and has

not pressed objections to various other claims.

2. The claims which have been objected to by the counsel for the objector

are claim nos.1, 2 and 4. The counsel for the objector has more particularly

objected to claim no.1 with its sub- items being item no. 2, item no.8, item no.9,

item no.10, item no.11, item no.12 and item no.13. The basic contention of the

counsel for the objector is that each of these pertain to items of the additional

measurement claims when the measurements have already been recorded in the

measurement book during the progress of the work and to which measurement,

the only procedure to challenge was under Clause 8A and if no objection was

raised, as per the clause, the contractor shall thereafter not have the right to

dispute the same. The counsel for the objector has further argued that the final

bill also records these very measurements and consequently claims for

additional measurement beyond the measurement book and the final bill ought

not to have been allowed by the Arbitrator. I find force in the contention of the

objector because undoubtedly these claims are with respect to measurement

beyond the measurement book and the measurements as recorded in the final

bill. The final bill has been duly accepted by the contractor by putting his

signatures on the same, therefore, no further claims on the basis of additional

CS(OS) 2146/1997 Page 2 measurements showing the measurements more than the recorded measurement

ought to have been allowed by the Arbitrator.

3. The next claim which has been objected to by the objector is with respect

to claim no.6 which pertains to payment claimed by the contractor under clause

10CC for increased charges towards labour and material. The contention of the

counsel for the objector was that as per the contract, this clause will not apply

because the original period of contract was for less than 12 months. I find that

this argument is not sustainable because, though originally the contract was for

a period of 10 months, but it is not disputed that this contract was extended for a

much longer period than the original contractual period. I note that the

Arbitrator has disallowed any escalation during the original period of the

contract and has given escalation only for the extended period of the contract on

account of the increased rates. This approach of the Arbitrator therefore, cannot

be faulted with and consequently, the objection with regard to this claim is not

sustainable.

4. I may note at this stage that the counsel for the objector has also sought to

press and argue claim nos. 12,13 and 17 as awarded by the Arbitrator, but

during the course of the arguments it was realised that not much fault could be

found with the reasoning and the findings as arrived at by the Arbitrator because

CS(OS) 2146/1997 Page 3 when during the course of the arguments on various queries being put by the

court, no answers could be given to the same. Therefore, since this court hearing

objections under Sections 30 and 33 cannot go to the reasonableness of the

reasons given by the arbitrator and cannot hold a different view merely because

another view is taken by the Arbitrator, I consequently do not find that the

arguments as raised by the objectors qua these claims are therefore justified.

Accordingly, the objections as regard these claims are therefore dismissed.

5. That takes me to the final issue which is raised with respect to the

award of interest. The arbitrator by the Award has awarded interest at the rate

of 18% per annum. I may note that in various judgments which have been

passed by this court reference has been made to various Division Bench

judgments and also various Supreme Court judgments which have held that the

high rates of interest which has been granted by the Arbitrator in the Award

ought to be reduced in view of the consistent fall in the rates of interest in the

changed economic scenario. The judgments of the Supreme Court in this regard

are 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

CS(OS) 2146/1997 Page 4 Rajasthan vs. Ferro Concrete Construction Pvt. Ltd (2009) 3 Arb. LR

140(SC). Accordingly, in the facts and circumstances of the case, the interest of

justice requires that the rate of interest as granted by the Arbitrator should be

reduced from 18% to 9% per annum simple. Therefore, subject to the

modification with respect to sub items of Claim No.1 which are rejected and the

lesser rate of interest awarded of 9% per annum simple, the Award is made rule

of the court. Parties in the circumstances of the case are left to bear their own

costs. In case the payment under this judgment is made within a period of 90

days from today then the rate of interest shall continue at the rate of 9% per

annum simple till payment. In case, the payment is not made within 90 days

from today's date then from the date of this judgment, interest shall be at 11%

per annum simple till payment. Interest from date of this judgment is in terms

of Section 29 of the Arbitration Act 1940. The suit and the objections are

accordingly disposed of.

November 18, 2009                                  VALMIKI J.MEHTA, J
ib




CS(OS) 2146/1997                                                           Page 5