Municipal Corporation Of Delhi vs M/S Prabhat Construction & Anr
2010 Latest Caselaw 1500 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                          CS(OS)No. 228/2003


                                                    17th March, 2010
MUNICIPAL CORPORATION OF DELHI                            ... Petitioner

                           Through:     Mr. Aaditya Vijay Kumar and Mr. Gaurang
                                        Kanth, Advocates


               VERSUS


M/S PRABHAT CONSTRUCTION & ANR                             ....Respondents

                           Through:     Mr. Raman Kapur, 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)


VALMIKI J. MEHTA, J

I.A.7/2007 in CS(OS) No. 228/2003

1. By these objections under Sections 30 and 33 of the Arbitration Act, 1940,

the respondent/applicant challenges the impugned Award dated 29.10.2002 passed CS(OS) 228/2003 Page 1 by the sole Arbitrator. The disputes arose between the parties with respect to

construction of 88 Nos. Type A Staff Quarters at Seelampur Housing Complex

Part-III, Delhi and which was the subject matter of the Agreement dated 6.7.1988.

2. The counsel for the objector has very fairly argued his objections only with

respect to Claim Nos.1 and 3 as dealt with by the Award.

3. Claim No.1 is in effect a declaratory Award with respect to entitlement of

the MCD/non-applicant/petitioner to withhold amounts on account of the claim of

liquidated damages under Clause 2 of the Agreement. The counsel for the

applicant contends that by virtue of Clause 2 read with Clause 25, this was an

excepted matter and consequently, on such excepted matter no Award could have

been passed by the Arbitrator. Before proceeding ahead I must clarify that what I

mean by a declaratory Award, is that the monies are already with the

petitioner/non-applicant and the Award, in fact only in effect justifies the action of

the petitioner and not that by the Award, there is a decree for recovery of this

amount against the applicant/objector. Mr. Kapur has relied upon a Division

Bench judgment of this court reported as Delhi Development Authority Vs. M/s

Sudhir Brothers, 1995 (2) Arb. LR 306 to contend that since the issue was an

excepted matter, the Arbitrator could not have decided the same. I agree that since

similar clauses were in issue in the case of Sudhir Brothers (supra), and thus the

Arbitrator could not have pronounced upon the merits of the imposition of the

CS(OS) 228/2003 Page 2 liquidated damages under Clause 2 inasmuch as this is an excepted matter by

virtue of Clauses 2 and 25 of the Contract. The Award to this extent is set aside.

However, I make it clear that this should not be construed as a direction to the

petitioner to refund and pay the amount(if any) as appropriated by it under Clauses

2 and 25, and, if the objector seeks to recover such amount, the objector will be

entitled to file such proceedings in accordance with law as available to it.

4. Claim No.3 dealt with by the Award pertains to the claim of the objector for

recovery of the amount of Rs.1,39,000/- which has been withheld by the petitioner

on account of various defects which had cropped up in the work. The defects in

this case are as pointed out in Annexure-F to the written statement of the petitioner

filed before the Arbitrator. A reference to the aforesaid Annexure-F shows that

the cost which was incurred was partly towards rectifying the defective work and

partly towards completion of certain work left incomplete by the objector. Since

the non-objector already had Rs.1,00,000/- with it, the Award has held the non-

objector entitle to the balance amount of Rs.39,000/-.

Mr. Kapur on behalf of the objector contended that there was absolutely no

proof which was filed by the petitioner in the arbitration proceedings and

consequently, the Arbitrator was not justified in awarding this amount. Before I

refer to Annexure-F, I may only state that the strict rules of the Evidence Act,

CS(OS) 228/2003 Page 3 1872 do not apply to arbitration by virtue of Section 19 of the Arbitration &

Conciliation Act, 1996 . What the Arbitrator has to see is that whether reasonable

material was available before him so that a legal conclusion can be arrived at.

Viewed in this regard, when we see the contents of Annexure-F, it becomes clear

that the contents are basically towards labour charges and a labour rate is given.

Labour rate is a fixed rate or statutory rate for which only routine statement is

enough. Further, another item as found in Annexure-F is cement and the rate of

cement has been taken. I may note that cement was one of the items which was

supplied by the petitioner to the objector for performance in the contract at a

particular rate and thus the rate of cement is also such a thing for which no

additional proof is required. Similarly, other items have been given by a specific

rate. In my opinion, the expenses incurred for rectification of the defective and

incomplete work is enough evidence, in the facts of this particular case, because of

the nature of the expenditure being such, the Arbitrator was entitled to consider

the evidence in the form of rates which was filed before him. In my opinion,

therefore, there is no merit in objection with regard to Claim No.3.

5. As already stated by me above, Mr. Kapur, on instructions from of Mr.

Arvind Grover the partner of the respondent firm, does not press any other

objection. With these observations, the application stands disposed of . The

CS(OS) 228/2003 Page 4 Award is made rule of the Court. Let a decree be drawn in terms of the Award

subject to the modification as given qua Claim No.1.

                                                  VALMIKI J. MEHTA, J

March 17, 2010
ib




 CS(OS) 228/2003                                                        Page 5