Delhi High Court
Satish Kumar Marwah vs Union Of India & Ors. on 16 March, 2010
Author: Manmohan
#F-1A
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 2326/1992
SATISH KUMAR MARWAH ..... Petitioner
Through Ms. Maninder Acharya,
Advocate
versus
UNION OF INDIA & ORS. ..... Respondents
Through Mr. Anuj Aggarwal and
Mr. Gaurav Khanna, Advocates
for R-1 & 2 with Mr. K.M. Vyas,
EE, CPWD.
% Date of Decision : MARCH 16, 2010
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
1. Whether the 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 in the Digest? No.
JUDGMENT
MANMOHAN, J (ORAL)
I.A. No. 3000/1995
1. By way of the present application, objections have been filed by
respondents under Sections 30 and 33 of Arbitration Act, 1940
(hereinafter referred to as "Act, 1940") challenging the arbitral Award
dated 12th May, 1992 passed by the Sole Arbitrator, Mr. S.S. Juneja.
2. The facts of the present case are that petitioner-claimant was
awarded the work of construction of Transit Hostel for Scientist
Department in Sector-X, R.K. Puram, New Delhi.
3. On 14th January, 1985, work under the Agreement commenced.
Though 13th July, 1986 was the stipulated date of completion, work was
actually completed on 18th July, 1988 with repeated extensions, which
were found justified by the respondents-objectors.
4. Mr. Anuj Aggarwal, learned counsel for respondents-objectors
submits that the impugned Award is based on incorrect finding of facts
and on misinterpretation of the provisions of the Agreement executed
between the parties.
5. Mr. Aggarwal further submits that the Arbitrator has allowed
Claims No. 3, 6 and 7 in violation of specific provisions of the
Agreement.
6. Mr. Aggarwal points out that Glass Mosaic Veneering is within
the purview of Item No. 9.14 of the original Agreement executed
between the parties. He states that though the quantity of 660 sq. mtr.
has been stipulated in the Agreement, petitioner-claimant has only
executed 124.39 sq. mtr., that means, less than 20% of the agreed
quantity. Mr. Aggarwal states that petitioner-claimant had no intention
to carry out this particular work right from the inception of the
Agreement, as it is an abnormally low rated item. In this context, he
refers to petitioner-claimant‟s letter dated 26th December, 1984 wherein
petitioner-claimant had voluntarily offered rebate of 1.30% on the
tendered rates, in exchange for not executing said item.
7. Mr. Aggarwal states that the Arbitrator could not have allowed
the difference in cost of white and ordinary/grey cement as Schedule of
Supplies to the Agreement only specified the word „cement‟. He
submits that the term „cement‟ did not include white cement.
8. Mr. Aggarwal further submits that the Arbitrator has wrongly
awarded Rs. 50,000/- under Claim No. 7 on the ground that the
Agreement did not specifically stipulate that mild steel shall be supplied
only for execution of Agreement Item No. 3.11.1. The relevant portion
of the Agreement reads as under :-
"Schedule showing approximate quantity of materials to be
supplied by the CPWD under clause 10 of the conditions of
the contract for work contracted to be executed and rates at
which they are to be charged for:
Particulars Qty. Unit Rate Place of
delivery
Cement 1775 M.T. 926/-
M.T.
Central Store I
Mild steel 16.8 M.T. 5200/- & II, C.P.W.D.
M.T. Netaji Nagar,
New Delhi
Cold twisted 542 M.T. 5800/-
bars. M.T.
xxxx xxxx xxxx xxxx
3.11.1 Mild steel 16786 6.10 Kgm. 102395/-
and medium Kg. (Rs. Six
tensible & Paisa
steel bars. Ten only)
3.11.2 Cold twisted 542736 6.70 Kgm. 3636331/-
bars. Kg. (Rs. Six
& Paisa
seventy
only)
9. On the other hand, Ms. Manindra Acharya, learned counsel for
petitioner-claimant submits that the impugned Award is not liable to be
interfered with in Sections 30 and 33 proceedings. She states that
petitioner-claimant was not bound to execute the balance quantity of
Glass Mosaic Veneering as the same was based on revised drawing
issued after the stipulated date of completion. In this connection, she
places reliance upon the reasoning given in the impugned Award,
which reads as under:-
"On consideration of documents filed and arguments
advanced by parties, I find that Claimants' main contention is
that they executed the work of Agmt. item No. 9.14 as per
drawing supplied during stipulated period and as such,
rebate of 1.3% cannot be recovered (Condition no.6 at page
217 of Agmt.) and they were not responsible for doing any
extra quantity beyond stipulated date at agreement rates. On
perusal of Exhibit R-221, R-222 and R-234 (sheets 2, 30 and
41), I find what Respondents have recovered is the risk and
cost amount for extra quantity executed.
As is clear from above, the work got prolonged during
stipulated period due to various hindrances by Respondents
and claimants claimed extra rates for execution of different
items beyond stipulated period of completion. On facts and
circumstances, it is held that Respondents are not entitled to
execute the work at risk and cost of claimants after stipulated
date of completion especially when claimants were claiming
market rates for execution of this item after the stipulated
period. The counter claim of the Respondents is, therefore,
not justified. Since the amount has already been recovered
from final bill (Exh. R-234) and the recovery is held to be not
justified, amount of Rs. 2,03,063/- stands refundable to
claimants, and the same is awarded in their favour for claim
No.3 of claimants and Counter Claim No.3 of Respondents."
10. Ms. Acharya further submits that the term „cement‟ in the
Agreement includes all types of cement including white and grey
cement as no such distinction has been made in the Agreement. She
states that the Arbitrator has rightly interpreted the Agreement and held
that the Agreement provided for issue of cement without any specific
reference to ordinary or grey cement. Therefore, according to her,
respondents-objectors were also under an obligation to supply white
cement.
11. Ms. Acharya similarly states that the term „steel‟ used in the
Agreement includes both mild and hard steel. She states that the
Arbitrator has correctly held that it is nowhere mentioned in the
Agreement that mild steel would be supplied only against Item No.
3.11.1. She states that respondents-objectors were under an obligation
to supply mild steel for Agreement Items No. 5.10, 10.1 and 10.2 and
also for extra and substituted items.
12. Having heard the parties, I am of the view that before I deal with
the rival contentions, it would be appropriate to first outline the scope
of interference by this Court with an arbitral award rendered under the
Act, 1940.
13. Section 30 of Act, 1940 stipulates that an arbitral award shall not
be set aside except for the grounds as mentioned therein, namely, (i)
that an arbitrator or umpire has misconducted himself or the
proceedings; (b) that an award has been made after the issue of an order
by the Court superseding the arbitration or after arbitration proceedings
have become invalid under Section 35; and (c) that an award has been
improperly procured or is other-wise invalid.
14. It is now well settled that an arbitrator is the sole judge of quality
as well as quantity of the evidence and a Court cannot sit in appeal over
the arbitrator‟s views by examining and reassessing the materials. In
fact, the Supreme Court in Arosan Enterprises Ltd. Vs. Union of India
& Anr. reported in (1999) 9 SCC 449 has observed as under :-
"36. Be it noted that by reason of a long catena of cases, it
is now a well-settled principle of law that reappraisal of
evidence by the court is not permissible and as a matter of
fact exercise of power by the court to reappraise the evidence
is unknown to proceedings under Section 30 of the
Arbitration Act. In the event of there being no reasons in the
award, question of interference of the court would not arise at
all. In the event, however, there are reasons, the interference
would still be not available within the jurisdiction of the court
unless of course, there exist a total perversity in the award or
the judgment is based on a wrong proposition of law. In the
event however two views are possible on a question of law as
well, the court would not be justified in interfering with the
award.
37. The common phraseology "error apparent on the face of
the record" does not itself, however, mean and imply closer
scrutiny of the merits of documents and materials on record.
The court as a matter of fact, cannot substitute its evaluation
and come to the conclusion that the arbitrator had acted
contrary to the bargain between the parties. If the view of the
arbitrator is a possible view the award or the reasoning
contained therein cannot be examined. .........
(emphasis supplied)
15. The Supreme Court in State of U.P. Vs. Allied Constructions
reported in (2003) 7 SCC 396 has held that "interpretation of a contact,
it is trite, is a matter for the arbitrator to determine." In fact, it is
settled law that if on a view taken of a contract, the decision of the
arbitrator on certain amount awarded, is a possible view though perhaps
not the only correct view, the award cannot be examined by the Court.
16. Keeping in view the aforesaid parameters, I am of the view that
the impugned Award insofar as it awards Claims No. 1, 5, 10, 11, 13,
15, 18, 19, 20 and 21 requires no interference.
17. As far as Claim No. 3 with regard to Glass Mosaic Veneering is
concerned, I am of the view that the Arbitrator, contrary to the
provision of Agreement and in particular Agreement Item No. 9.14, has
held that the said work was an extra work/quantity. In my opinion,
once the petitioner-claimant has accepted extension of time, it cannot
say that it will not execute a particular item while executing the other
items.
18. However, as delay in execution of work is entirely attributable to
respondents-objectors, they could not have issued a risk purchase
contract at the cost of petitioner-claimant. Consequently, in my view,
the ends of justice would be met if petitioner-claimant is directed to
offer a rebate of 1.30% on the tendered rates. Accordingly, I direct
Claim No. 3 to be reduced by an amount of Rs. 1,16,480/-.
Consequently, award under Claim No. 3 stand reduced to Rs.86,583/-
(being Rs. 2,03,063/- minus Rs. 1,16,480/-).
19. As far as Claim No. 6 is concerned, I am of the opinion that the
expression „cement‟ used in the Agreement would include both white
and ordinary/grey cement. In fact, this issue is no longer res integra in
view of a judgment of this Court in the case of Villayati Ram Mittal
Vs. The Union of India and Ors. reported in 1986 (1) Arb. L.R. 328
wherein it has been held as under :-
"5. In the contract documents it is mentioned that white
glazed tiles are to be affixed with white cement slurry. Under
the contract cement is one of the items to be supplied by the
Union of India. Though it is mentioned that 1800 cement bags
would be supplied and even the rate of Rs. 400/- per M.T. is
mentioned, it can not be denied that white cement was, in
fact, used. Mr. Bagai, learned counsel for Union of India
submitted that the cement in the contract referred to only grey
cement. But then Arbitrator has returned a finding that white
cement was, in fact, used and that was at the instance of the
Union of India and that no distinction was made between the
white cement and ordinary cement in the contract. The
Arbitrator was, therefore, of the view that non-supply of white
cement by the respondent Union of India was a failure at
their hand. There is, thus, no error apparent in the reasoning
of the Arbitrator and the objection of the Union of India to
the claim No. 5 is also rejected."
20. As far as the issue of Claim No. 7 is concerned, I agree with
learned counsel for respondents-objectors that the impugned Award is
contrary to the provision of the Agreement inasmuch as mild steel is
mentioned only against Agreement Item No. 3.11.1 both in the
Schedule of Supplies and in the quantities mentioned in the Agreement.
Consequently, award of Claim No. 7 being contrary to the provisions of
the Agreement is disallowed.
21. As far as the award of interest is concerned, I deem it appropriate
to reduce the rate of interest to 9% per annum simple interest, provided
the respondents-objectors pay the awarded sum within a period of three
months from today. In this connection, I may refer to observations of
the Supreme Court in Krishna Bhagya Jala Nigam Ltd. vs. G.
Harischandra Reddy & Anr. reported in (2007) 2 SCC 720 wherein the
Supreme Court has held as under :-
"11. ...... here also we may add that we do not wish to
interfere with the award except to say that after economic
reforms in our country the interest regime has changed and
the rates have substantially reduced and, therefore, we are of
the view that the interest awarded by the arbitrator at 18%
for the pre-arbitration period, for the pendente lite period
and future interest be reduced to 9%."
22. Consequently, keeping in view the aforesaid judgment and the
current rate of interest, interest on the awarded sum is reduced to 9%
per annum simple interest from the date of award till its realisation.
However, it is made clear that in case the awarded sum is not paid
within the period of three months from today, respondents-objectors
will be liable to pay simple interest at the rate of 12% per annum from
the date of Award till its realisation.
23. With the aforesaid modifications in the rate of interest as well as
Items 3 and 7, the impugned Award dated 12th May, 1992 is made rule
of the Court and Registry is directed to prepare a decree in terms
thereof. Petition and application stand disposed of accordingly.
MANMOHAN, J.
MARCH 16, 2010
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