P.C. Sharma & Co. vs Delhi Development Authority
2010 Latest Caselaw 3053 Del

            *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                          CS(OS) 2057A/1996

%                                            Date of decision: 2nd July, 2010

P.C. SHARMA & CO.                                          ..... Petitioner
                           Through:      Mr. Sandeep Sharma with Mr.
                                         Vikas Sharma, Advocates.

                                    Versus

DELHI DEVELOPMENT AUTHORITY               .... Respondent
                Through: Mr. Bhupesh Narula, Advocate.

CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1.      Whether reporters of Local papers may
        be allowed to see the judgment?                      No

2.      To be referred to the reporter or not?               No

3.      Whether the judgment should be reported              No
        in the Digest?

RAJIV SAHAI ENDLAW, J.

1. The objections (IA No.12005/1996) preferred by the respondent

Delhi Development Authority (DDA) under Section 30 & 33 of the

Arbitration Act, 1940 upon being served with the notice of the filing of the

award dated 30th April, 1996 in this Court are for consideration. The

petitioner P.C. Sharma & Company has not preferred any objections to the

award.

2. The disputes arose between the parties out of the contract dated 14th

September, 1982 awarded by the respondent DDA to the petitioner

contractor for construction of 540 houses under the Self Financing Scheme.

The estimated cost put to tender of the said works was of Rs.2,37,98,571/-

and the work was to start on 24th September, 1982 and to be completed by

23rd September, 1983. The works were however completed on 31st January,

1986. On the arbitration clause being invoked by the petitioner contractor,

the respondent DDA appointed Shri G.S. Rao, retired Director General

(Works) as the Arbitrator. The Petitioner contractor made claims under as

many as 34 heads and for a total sum of Rs.1,07,65,314/- along with interest

and costs against the respondent DDA. The Arbitrator has allowed claims

for a total sum of Rs. 35,75,931/- and has also awarded interest thereon,

pendente lite at the rate of 15% per annum and future at the rate of 18% per

annum.

3. The counsel for the petitioner contractor at the outset has contended

that the scope of interference by this Court in the award is limited. Reliance

in this regard is placed on:-

(i) Judgment dated 17th December, 1999 of this Court in Suit

No.21-A/1996 titled Sh. Anil Garg Vs. DDA. However, the same is a

judgment on the requirement of giving reasons and that the Arbitrator

is only required to indicate the trend of his thought process but not his

mental meandrings. It was also reiterated that the reasonableness of

the reasons given by the Arbitrator cannot be challenged and that if on

a reading of the award it is obvious that the Arbitrator at the time of

the passing of the award has dealt with the rival contentions in

perspective, then the award sufficiently complies with the requirement

of giving reasons.

(ii) Judgment dated 19th March, 2009 of the Division Bench of this

Court in FA(OS) No.267/1996 titled DDA Vs. Madhur Krishna. This

judgment is again on the same aspect as in Anil Garg (supra).

(iii) DDA Vs. Bhagat Construction Co. (P) Ltd. 2004 (3) Arb. LR

548 (Delhi) (DB) where the Division Bench of this Court held that

where the Arbitrator is a retired Chief Engineer of CPWD and thus

well conversant with the kind of disputes he is adjudicating, the Court

ought not to substitute its own view on the opinion taken and the

decision rendered by the Arbitrator unless and until the decision of the

Arbitrator is manifestly perverse or has been arrived at on the basis of

wrong application of law.

(iv) DDA Vs. Bhagat Construction Co. Pvt. Ltd. 2004 (3) Arb. LR

481 (Delhi) (DB) where also the Division Bench of this Court for the

reason of the Arbitrator, being well versed in the matter being the

former Director General of CPWD, held no interference possible in

the award.

(v) Arosan Enterprises Ltd. Vs. Union of India 1999 (3) Arb. LR

310 (SC) holding that the interference by the Court under Section 30

is rather restrictive and the Arbitrator being the judge chosen by the

parties, his decision is final and reappraisal of evidence, and

interference where two views are possible is not permissible and the

Court cannot substitute its evaluation for that of the Arbitrator except

in the case of patently erroneous findings, easily demonstrable from

the material on record.

(v) M/s Sudarsan Trading Co. Vs. The Government of Kerala

AIR 1989 SC 890 holding that interpretation of contract is a matter for

the Arbitrator on which Court cannot substitute its own decision and

carving out a distinction between disputes as to the jurisdiction of the

Arbitrator and the disputes as to in what way that jurisdiction should

be exercised.

(vi) Order dated 2nd February, 2009 of the Division Bench of this

Court in FA(OS) No. 143/2006 titled DDA Vs. P.C. Sharma & Co.

negating the objection as to the claims allowed being overlapping and

holding the claims for prolongation of contract, for site expenses and

for loss of profitability to be forming three distinct heads of damages.

(vii) Goa, Daman & Diu Housing Board Vs. Ramakant V.P.

Darvotkar AIR 1991 SC 2089; however the said judgment is not

found apposite to the matter in controversy.

4. The objections of respondent DDA are hereafter taken up claim wise.

Re: Claim No.1

5. This claim was for refund of Rs.1,32,460/- deducted by the

respondent DDA out of payment made to the petitioner contractor towards

rebate for timely payments of bills. The Arbitrator has allowed the claim to

the extent of Rs.35,380/-. Under the contract the respondent DDA was

entitled to rebate of 0.5% for making monthly payments of the running bills.

It was the admitted position that neither monthly running bills were

submitted nor were payments made monthly. It was the case of the

respondent DDA that the responsibility for preparing and submitting the

bills was of the petitioner contractor and the petitioner contractor having not

prepared and submitted monthly bills, it could not make the monthly

payments but the same would not deprive it of the benefit of the rebate. It

was the case of the petitioner contractor that no date was fixed for the

petitioner contractor to submit the monthly bills and in any case as per the

practice of the respondent DDA, it was the Executive Engineer of DDA who

was to get the bills prepared after getting the measurement of the work done.

The Arbitrator found that in May, 1983 no running bill was paid; in August,

1985, though two bills were paid but because respondent DDA did not have

enough funds to honour these two bills, an amount of Rs.60,000/- was

withheld; again in October, 1985, the respondent DDA did not have funds

and hence an amount of Rs.1,50,000/- was deducted which was paid along

with bill of November, 1983. Accordingly, the claim to the extent of

Rs.35,380/- only was allowed.

6. The counsel for the respondent DDA has contended that the Arbitrator

has without any basis believed the contention of the petitioner contractor of

the practice prevalent in DDA; it is further contended that in any case the

contractor first has to submit the bills for measurement and without the

contractor taking the first step, the respondent DDA itself cannot prepare the

bills. It is also urged that there was nothing before the Arbitrator to show

that there was any fund problem with the respondent DDA, a chart is handed

over to show that payments were made every month.

7. Per contra the counsel for the petitioner contractor in this regard relied

on Sanyukt Nirmata Vs. DDA 2005 (3) Arb. LR 509 (Delhi) where this

Court held that the pre-requisite for submission of the bills is the date to be

fixed by the Engineer In-Charge. It is contended that without any date being

fixed in the present case also for submission of the bills, no delay can be

attributed to the petitioner contractor. Attention is also invited to the second

hearing before the Arbitrator held on 9th April, 1990 where the Executive

Engineer of the DDA had admitted the correctness of the statement of

payments by the petitioner contractor and wherein short payment forming

the basis of the award under this claim is reflected.

8. In the absence of the respondent DDA being able to demonstrate that

a date was fixed for the petitioner contractor to raise the bill, the judgment in

Sanyukt Nirmata (supra) would apply. Moreover the findings as to whether

the payments were made so as to entitle the respondent DDA to rebate or not

is a finding of fact and if this Court were to interfere with such findings, no

distinction will be left between an appeal and in a challenge to the award.

The objection to award under Claim No.1 is thus dismissed.

Re: Claim No.3

9. This claim was of Rs.1,77,945/- for cost of cement slurry used in

roughcast plaster. It was the case of the petitioner contractor that the

application of cement slurry was necessary to secure proper bond for

roughcast plaster and was directed to be done by the Executive Engineer and

the costs thereof were included in the analysis sent by the Executive

Engineer to the Superintending Engineer but sanction thereof was not

obtained. The respondent DDA did not dispute the application of cement

slurry but contends that it was not provided for and the cost of ordinary

plaster only was provided for in the schedule of rates. The Arbitrator,

assuming the costs of extra labour as 50 paise per sq.mt. awarded a sum of

Rs.31,890/-.

10. The counsel for the respondent DDA has contended that the award is

on the basis of assumption without reference to any actual data; that even if

assumptions were to be made, the same ought to have been made on the

basis of CPWD rates or DSR rates and there is no basis for the assumption

made in the award. The counsel for the petitioner contractor on the other

hand contended that such assumption is on the basis of the experience of the

Arbitrator. Reliance is placed on DDA Vs. Polo Singh & Co. 2003 (1) Arb.

LR 270 (Delhi) (DB) where a Division Bench of this Court reiterated that

interference with award even if based on guess work is not permissible.

11. In view of it being undisputed that the cement slurry was used and the

rate thereof not provided for, no case for interference with the award is made

out inasmuch as the reasoning given by the Arbitrator is a possible reasoning

and this Court cannot substitute its view for the same.

Re: Claim No.5

12. The petitioner contractor claimed Rs.5,572/- towards extra labour for

filling concrete in door frames and consolidating the same; it was its case

that the rate at which the said claim was made, was accepted by the

respondent DDA by paying / sanctioning the running bills at the said rate but

was subsequently declined. It was the contention of the respondent DDA

that payment under the running bills, as per the terms of agreement, is

merely by advance and payment under the running bills at the increased rate

was not binding in any manner on the respondent DDA. The parties were

also at issue as to whether any extra labour at all was involved in filling

concrete in the door frames. The Arbitrator concluded that compared to mass

concrete the work involved in filling concrete in small sections of pressed

steel is more involved and extra labour is involved and hence allowed the

claim.

13. The counsel for the respondent DDA has contended that there was no

proof of any extra work being involved and in the absence thereof the same

ought not to have been allowed. It is also contended that the said work was

admittedly part of the contract and no rate having been provided therefor in

the contract, could not be claimed or awarded. Per contra the counsel for the

petitioner contractor has contended that the Arbitrator has applied his expert

knowledge in concluding that extra work/labour is involved in filling

concrete on door frames and the same ought not to be interfered with. He has

also taken me through the claim before the Arbitrator and the reply thereto to

demonstrate that the only question for adjudication before the Adjudicator

was of the rate to be applied to the said work and there was no controversy

before the Arbitrator that a separate rate for the said work had to be applied

for and the only question was of the rate to be applied.

14. I find that the contention of the petitioner contractor and the pleadings

before the Arbitrator show that the only controversy with respect to the said

claim was as to the rate to be applied for the work of filling concrete on door

frames. For the reason of the respondent DDA having not objected to the

rate in the running bills and for the reason of the Arbitrator, who was

admittedly an expert, having applied his experience and expertise in

concluding the rate to be applied, no interference in the award under the said

claim is called for and the objections to the award under the said claim are

also dismissed.

Re: Claim No.8

15. Claim No.8 for Rs.6,07,726/- was on account of extra work/effort

required to be undertaken by the petitioner contractor for the reason of the

respondent DDA having changed the layout plan. The respondent DDA

controverted that the layout plan had been changed. The award however

records that the respondent DDA in its written arguments admitted some

charge in the orientation of blocks. The Arbitrator found a change in plans

and that the new site was hilly and undulating resulting in slow progress of

work and that the change involved shifting of the labour camp also. The

Arbitrator held the claim to be "more or less correct" but being not

convinced of the amount claimed under the said claim, awarded only

Rs.1,00,000/-.

16. The counsel for the respondent DDA has contended that the Arbitrator

has not even returned a definite finding of the claim being correct and has

arbitrarily awarded Rs.1,00,000/-. It is also urged that the denial by the

respondent DDA of any change in plans has not been considered. Attention

in this regard is also invited to Annexure R-3 in the Arbitrator's record and

to the drawing register and it is contended that there was no change in plan.

Per contra the counsel for the petitioner contractor contends that the finding

being factual cannot be interfered with. Reliance is placed on Bhagat

Construction Co. (P) Ltd. (supra) where owing to the experience and

expertise of the Arbitrator, the Court had refrained from interfering with the

award.

17. There is no challenge to the finding of the Arbitrator of the respondent

DDA in the written arguments having admitted to the change in orientation

of blocks. It is not as if the Arbitrator has allowed the entire claim of the

petitioner contractor. Less than 1/6 of the claimed amount has been awarded.

In view of the admission of some change, the assessment of the Arbitrator of

the extra work involved therefor cannot be interfered with. The respondent

DDA had the choice to appoint an Arbitrator and appointed a technical

person rather than a legal person. The sole purpose of appointment of a

technical rather than a legal person as an Arbitrator is to take benefit of the

special knowledge of the Arbitrator relating to the matters in dispute. Once a

change in plan is admitted, the reasoning of the Arbitrator of the new site

requiring additional labour is a finding of fact and the assessment by the

Arbitrator of the value of the extra work entailed is not interferable. After

all, all such matters cannot be measured with precision. There is a certain

amount of estimation to be made. It is for such estimation only that a

technical person was chosen as the Arbitrator. As for the language used by

the Arbitrator, he is not a person steeped in law. The language used by the

Arbitrator of the claim being "more or less correct" cannot be read to mean

that the Arbitrator was unsure of the basis of the claim. The Arbitrator has

used the expression "more or less" only for the reason of the change being

not of the magnitude as claimed by the petitioner contractor but of a lesser

magnitude. The objection to the award under the said claim is thus also

dismissed.

Re: Claim No.9

18. The petitioner contractor had claimed Rs.2,64,920/- by way of refund

of the rebate for charges for water not supplied by the respondent DDA. As

per the agreement, it was to be supplied by the respondent DDA at a single

point at site and further distribution was the responsibility of the petitioner

contractor. The Arbitrator found and it is not disputed, that arranging of an

electricity connection for drawing the water at the said point was the

responsibility of the respondent DDA. It was the admitted position that

though the respondent DDA applied for electricity connection for operating

the pump for drawing the water but the same was not obtained till the

completion of the work and for which reason the petitioner contractor

supplied electricity for the said pump from its own connection. Though a

sub meter was installed to measure the electricity consumption for operating

the pump but the same was done after sometime; the claim was of the

electricity consumption for the said pump before the installation of the sub

meter and for water obtained from tankers when the pump failed to function

for non maintenance thereof by the respondent DDA. There is no dispute

about the said factual position. The Arbitrator, finding that the petitioner

contractor had borne electricity charges for the pump for the initial period,

awarded Rs.50,000/- against the said claim.

19. The contention of the respondent DDA is that the said amount

awarded under the claim is without any quantification and evidence. On

inquiry as to what evidence could have been led by the petitioner contractor,

the counsel for the respondent DDA states that use of diesel for operating the

generator for running the said pump could have been shown.

20. In view of it being not disputed that the petitioner contractor did for

sometime bear electricity charges which the respondent DDA was to bear,

no interference with the award, even if on estimation basis, is called for and

the award is not found to be perverse. The respondent DDA has been unable

to show as to what the award for the amount admittedly due should have

been, if not Rs.50,000/. Again for such claims there is bound to be an

element of estimation and guess work and without it being shown that the

estimation based on the guess work is perverse, the Court can neither

substitute any other amount nor is it in the fitness after a long lapse of time

to remand the matter. The objections to award under Claim No.9 are also

dismissed.

Re: Claim No.10

21. The said claim was for Rs.27,521/- for use of white cement for

affixing the tiles. Under the contract, the cement was to be supplied by the

respondent DDA. It was the case of the petitioner contractor that the

respondent DDA supplied grey cement only and which if it had been used

for affixing the glazed tiles would have affected the colour of the tiles and

that white cement is normally used for affixing the tiles. The petitioner

contractor, therefore, used white cement and made the claim for the

difference in cost of grey cement and the white cement. The Arbitrator found

that the use of white cement was not disputed. It was the case of the

respondent DDA that under the contract the petitioner contractor was not

entitled to the extra cost of white cement. The Arbitrator found that the

respondent DDA has not contested the quantity of white cement used by the

petitioner contractor or the rate thereof and accordingly allowed the claim in

toto.

22. The counsel for the respondent DDA contends that the use of white

cement in affixing the tiles is not as per the contract or as per the CPWD

specifications. Per contra the counsel for the petitioner contractor relies on

Villayati Ram Mittal Vs. Union of India 1986 (1) Arb. LR 328 (Delhi),

copy whereof was filed as C-113 before the Arbitrator also in this regard.

Even though in the present case it was not provided in the contract that the

glazed tiles were to be affixed by white cement, as in the Villayati Ram

Mittal (supra) but it cannot be denied that if the glazed tiles had not been

affixed with white cement and had been affixed with grey cement, they

would have lost their colour and the use of white cement being for the

benefit of the respondent DDA and in accordance with the standard

practices, the award under this claim cannot be interfered with and the

objection is dismissed.

Re: Claim No.11

23. This claim of Rs.5,81,890/- for straightening and cutting of steel bars

was allowed to the extent of Rs.1,14,400/-. The law with respect to the said

claim is no longer res-integra. In Wee Arr Construction Builders Vs. DDA

2001 (IV) AD (Delhi) 65 as reiterated in Anant Raj Agencies Vs. DDA 2005

(1) Arb. LR 590 this Court has held that bending, binding and placing in

position steel for RCC work is included in the contract and the said work

necessarily requires the process of straightening of steel before cutting and it

was held that no claim for extra was maintainable on such account. It was

also held that the contractor cannot make such a claim for the reason of

having not given any notice to the respondent DDA at the time of carrying

out the said work that the same was to be treated as an additional/extra work.

The counsel for the petitioner contractor admitted the said legal position and

stated that he will check up and inform whether there was any evidence in

the present case of such notice having been given. However, the counsel for

the petitioner contractor has not shown any evidence of such notice having

been given.

24. The award does not record that any such notice was given. Resultantly

the objection to the award of Rs.1,14,400/- under the said claim is allowed

and the award under the said claim is set aside.

Re: Claim No.12

25. The petitioner contractor claimed Rs.1,38,724/- in respect of

overweight of steel. Under the agreement, steel was to be issued by the

respondent DDA. While measure of steel at the time of issuance was by

actual weight, the consumption thereof by the petitioner contractor was by

other measure. The Arbitrator allowed the said claim to the extent of

Rs.98,750/- by calculating overweight as the rate of 4% for 8mm and 3% for

10mm to 12mm steel.

26. The counsel for the respondent DDA has challenged the said award as

presumptive and has contended that Clause 42 of the contract provided for

unutilized steel and shows there was no question of overweight. It is further

contended that the petitioner contractor did not return any steel and hence no

case for allowing claim on account of overweight was made out. Per contra

the counsel for the petitioner contractor has contended that the recovery on

account of steel was being made by the respondent DDA from the petitioner

contractor in excess of the quantity given and hence the need for applying

overweight arose.

27. The Arbitrator has also recorded that the petitioner contractor has not

returned any steel. Nevertheless, claim on account of overweight has been

allowed because though the quantity of steel measured at the time of

issuance was 536.875 MT, recovery on account of cost of steel was being

made for 581.8502 MT. The said figures have not been disputed by the

counsel for the respondent DDA. If the respondent DDA had issued 536.875

MT of steel, it could have made recovery for that quantity only and not for

any excess quantity. The respondent DDA itself having claimed price of

excess quantity then issued, cannot object to the formula of overweight

being applied by the Arbitrator. The contention of the respondent DDA was

that the said formula has to be as per Clause 42 only. The Arbitrator has

however held that Clause 42 does not require diameterwise tallying. It was

the contention of the petitioner contractor that the field staff of the

respondent DDA maintained the register of overweight and on which its

signatures were taken but the said register was not produced by the

respondent DDA. It was in these circumstances that the Arbitrator, not

accepting the claim of petitioner contractor of overweight at the rate of 5%

in overall diameter, allowed the claim only to the extent of Rs.98,750/-.

28. I do not find the view of the Arbitrator in the circumstances to be an

impossible one. Once it is a possible view, the same does not call for any

interference and the objections are dismissed.

Re: Claim No.18

29. The petitioner contractor claimed Rs.40,70,423/- in respect of

payment for work done beyond stipulated date of completion. The

respondent DDA had extended the time for completion without taking any

action for delay against the petitioner contractor. The Arbitrator therefrom

concluded that the respondent DDA admitted delay to be on its own account.

The petitioner contractor made a claim for increase in costs during the

period of said extension. The respondent DDA contested that the petitioner

contractor at the time of extension had given in writing that it will not make

any claim on account of delay. The petitioner contractor contended that it

was forced to give such writing as otherwise the respondent DDA would not

have given extension and claimed that the construction costs has been

increasing at the rate of Rs.2.24% per month. The award records that the

respondent DDA had not challenged the said figure. The Arbitrator finding

that the bulk of the work was completed by June, 1984 when some allottees

had started taking possession, computed the additional costs incurred by

petitioner contractor on account of delay to be of Rs.24,00,000/- and allowed

the same. The Arbitrator while so computing took the value of the work

done in the period of delay to be of the value of Rs.200 lakhs.

30. The counsel for the respondent DDA has contended that even if the

work done during the period of delay was of the value of Rs.200 lakhs, the

said value of Rs.200 lakhs included the costs of material i.e. cement and

steel etc. supplied by the respondent DDA and thus the computation of

Rs.200 lakhs on this basis is inherently defective. It is further contended that

the total value of the work was of Rs.263 lakhs and in the said total value the

materials supplied by the respondent DDA was of Rs.82 lakhs; so even if the

work done during the period of delay was of Rs.200 lakhs, it would still

include the value of materials supplied by the respondent DDA and with

respect whereto no increase could be awarded.

31. It is also contended by counsel for the respondent DDA that the said

award is without any basis. There was no evidence for the Arbitrator to

conclude the value of the work done during the period of delay as Rs.200

lakhs; no records were kept or shown in this regard.

32. It is also contended that not demanding compensation while granting

extension could not have been deemed to be an admission by the respondent

DDA of the delay being on its own account.

33. It is further contended that the plea of having been forced to give an

undertaking not to claim any amount on account of extension of time for

completion of work was taken by the petitioner contractor only for making

the claim and after three years from giving the said certificate and not at the

contemporaneous time. It is urged that in the circumstances, the Arbitrator

could not have concluded that the respondent DDA has forced the petitioner

contractor to give such no claim certificate.

34. It is further the contention of the counsel for the respondent DDA that

under Clause 10C of the agreement, increase in price of material and labour

was reimbursable if such increase is caused by Government and only on the

contractor furnishing proof of having incurred the extra expenditure. It is

contended that the claim, if any, of the petitioner contractor could have been

under Clause 10C only and not otherwise as allowed by the Arbitrator; in the

absence of any proof of extra expenditure having been furnished, claim on

account of delay could not have been allowed on the formula of general

increase in costs of construction.

35. Reliance in this regard is placed on:-

(i) Steel Authority of India Vs. J.C. Budharaja AIR 1999 SC

3275 laying down that award of damages ignoring a prohibition in the

contract in that respect is without jurisdiction.

(ii) Kochar Construction Co. Vs. Union of India 1994 (1) Arb. LR

269 where the Division Bench of this Court held that mere filing of

costs analysis cannot be accepted as evidence of expenditure on

account of increased costs of construction even if costs analysis is not

disputed/controverted.

(iii) Anant Raj Agencies (supra) where this Court held that where

contract provides for a formula as per which escalation has to be

worked out, the Arbitrator is bound by the contract and cannot adopt a

different methodology.

(iv) Judgment dated 13th July, 2009 in CS(OS) No.154/1994 titled

M/s Republic Construction Co. Vs. DDA and judgment dated 23rd

July, 2009 in CS(OS) No.4405A/1992 titled Verma Construction Co.

Vs. DDA where this Court has held that a claim under Clause 10C lies

only if during the progress of work, price of any material (not being a

material supplied from the Engineer-In-Charge store) or wages of

labour increases because of coming into force of any fresh law,

statutory rule or order and such increase exceeds 10% of the

prices/wages prevailing at the time of the receipt of tender; the

contractor can claim reimbursement of prices only if it is more than

10% and only to the extent it was in excess of 10% and if he serves a

notice on DDA during progress of work. Such reimbursement on

increase of prices/labour is to be made only if it is approved by the

Superintending Engineer. It was further held that an enhancement

under Clause 10C can be allowed only if the conditions as set out

therein are satisfied and no presumption could be drawn by the

Arbitrator that because of the contract over-running, there was

necessarily going to be a price rise and necessarily going to be a wage

rise. The award on such basis was held to be contrary to the contract

and was set aside.

36. Per contra the counsel for the petitioner contractor has contended that

had the petitioner contractor not given the no claim undertaking on account

of delay, the respondent DDA would not have granted the extension. It was

enquired from the counsel for the petitioner contractor whether the

contractor had contemporaneously written any letter that it has been so

forced to give the no claim undertaking. Though no letter was shown but the

counsel for the petitioner contractor contended that since the arbitration had

already been invoked and the petition under Section 20 had been filed, the

occasion for writing such a letter did not arose. The counsel for the

petitioner contractor further contended that while adopting the formula of

increase the Arbitrator has excluded the costs indices of steel and cement. It

is contended that once delay was attributed to the respondent DDA, the

damage to the petitioner contractor was implicit and the award of the

Arbitrator in that respect need not be interfered with. It is further pointed out

that the contract in question is of before the time of introduction of Clause

10CC added in the subsequent contracts of DDA. Reliance in this regard is

placed on Jagat Ram Trehan & Sons Vs. DDA 125 (2005) DLT 786 where

objections to the amount awarded for delay in a contract without Clause

10CC were dismissed. The counsel for the petitioner contractor in this

regard also refers to:-

(i) State of Rajasthan Vs. Puri Construction Ltd. 1995 (22) Arb.

LR 1 (SC) laying down that the Arbitrator is the final arbiter for the

disputes between the parties and it is not open to challenge the award

on the ground that the Arbitrator has drawn his own conclusion or has

failed to appreciate the facts and where the plea of the award being

bad for award of lump-sum damages in the absence of any material

showing actual loss suffered by the contractor was dismissed.

(ii) Uttam Singh Duggal & Co. Vs. Union of India 35 (1988) DLT

372 where also the objection to the award on the ground of the same

being without proof of damages were dismissed holding the same to

be a matter of appreciation of facts.

(iii) N.D.R. Israni Vs. DDA 2008 (2) Arb. LR 410 (Delhi) where

award on the basis of cost index was upheld.

(iv) Bedi Construction Co. Vs. DDA 115 (2004) DLT 157 where

also objection to the award on the basis of the same being not in

accordance with Clause 10C was dismissed holding the assessment to

be under Clause 10C.

37. Clause 10C in the contract in the present case, is identical to that in

the judgments of this Court in M/s Republic Construction Co. and Verma

Construction Co. (supra). The same provided for escalation during the

progress of the works. The said clause is not limited only to the escalation

during the stipulated period of the contract. The work was in progress during

the period of extension, attributable whether to the petitioner contractor or to

the respondent DDA. Clause 10C does not admit of any distinction in

progress of the works within the stipulated period or the extended period. In

any case, upon extension, the extended period is deemed to be the modified

stipulated period and the escalation thereunder would be governed by Clause

10C. To the same effect is the recent judgment in Jeewan Builders Vs. DDA

MANU/DE/0584/2009, also laying down that escalation even during

extended period of contract has to be under Clause 10C and without proof on

record no amount can be awarded. The award on Claim No.18 is admittedly

not in accordance with the Clause 10C, though found to be covered by the

said clause. The same thus cannot be sustained. The Arbitrator is a creature

of the contract and cannot operate outside the contract. I thus allow the

objection to the award on Claim No.18 and set aside the award to that extent.

Re: Claim No.21

38. The counsel for the petitioner contractor claimed Rs.15,000/- for

replenishment of loss sustained on account of works of DESU while laying

the trenches. The Arbitrator has awarded Rs.5,000/- against the said claim.

The counsel for the respondent DDA has challenged the award as being

without any basis and has also contended that the claim for loss on account

of action of DESU should have been pursued against DESU and not against

the respondent DDA.

39. DESU was also permitted on the site by the respondent DDA only.

The view taken by the Arbitrator is a possible view and cannot be said to be

perverse and calls for no interference. The objections to award under said

claim are dismissed.

Re: Claim No.22

40. The petitioner contractor had claimed Rs.4,36,800/- for site expenses

and other overheads for the extended period of the contract. The claim has

been allowed to the extent of Rs.1,42,800/-.

41. The counsel for the respondent DDA has besides the arguments raised

with respect to the award under Claim No.18 challenged the award as being

arbitrary and without any proof or basis. It is also contended that the

agreement items included the overhead. Per contra the counsel for the

petitioner contractor has in this regard relied on M.L. Mahajan Vs. DDA

2005 (1) Arb. LR 561 (Delhi) where this Court did not find anything

objectionable or perverse in the award on such basis.

42. The matter being no longer res-integra, the objections to the award

under the said claim are to be dismissed.

Re: Claim No.23

43. The petitioner contractor had claimed Rs.2,00,000/- for doing the

work of cement paint over a roughcast plaster. The Arbitrator has found that

there is no item in the DSR for such specification and the rate in the DSR is

for painting on a smooth surface only. Finding the CPWD specification for

providing 20% increase in case of corrugated surface and holding that the

consumption of cement paint would be double over a rough surface than

over a plain surface, allowed the claim in toto.

44. The counsel for the respondent DDA has contended that it was known

to the petitioner contractor that the work of painting over rough surface/grit

finish, was to be carried out. Attention in this regard is invited to Clause 9 of

the agreement together with schedule to the agreement.

45. I do not find the contract or the schedule thereto to have provided for

cement paint on grit finish. The respondent DDA having admittedly required

grit finish with cement paint thereon cannot object to the award and no

perversity is found therein. The objections are dismissed.

Re: Claim No.26

46. The petitioner contractor claimed Rs.4,50,000/- for final bill of

undisputed items. The said claim has been allowed to the extent of

Rs.3,64,619/-.

47. The counsel for the respondent DDA has again contended that there is

no basis for the awarded figure. It is also contended that the rebate for

payment of final bill within 6 months has been wrongly disallowed.

48. The award aforesaid is factual and does not admit of any interference.

Suffice, it is to state that no perversity is shown therein. The objections are

dismissed.

Re: Claim No.33 for interest

49. The counsel for the respondent DDA has objected to the high rate of

interest awarded and has relied on recent judgments where the rate of

interest has been reduced to 8% to 10%. Per contra the counsel for the

petitioner contractor has justified the rate of interest owing to long passage

of time and the transaction being of a commercial nature.

50. Though the proceedings for making the award the Rule of the Court

and the objections preferred against the award, have remained pending for

long but it cannot be said to be for reasons attributable to the respondent

DDA. It also cannot be said that the respondent DDA has in the interregnum

used the money found due to the petitioner contractor commercially. In the

circumstances, considering the majority of the recent judgments providing

for lower rates of interest in view of the falling rates of interest, the interest

pendente lite is reduced from 15% to 6% and interest from the date of the

award and till the date of payment/decree from 18% to 9% per annum.

51. The counsel for the petitioner contractor has also contended that the

Bank Guarantee furnished by the petitioner contractor with the respondent

DDA has not been released and an order therefor may also be made.

52. In view of the findings above, the award as modified above is made

Rule of the Court and decree is passed in terms thereof. The petitioner

contractor is also granted interest under Section 29 at the rate of 9% per

annum. The respondent DDA is also directed to release the bank guarantee

furnished by the petitioner contractor within six weeks.

Under the circumstances, no order as to costs.

RAJIV SAHAI ENDLAW (JUDGE) 2nd July, 2010 bs