Delhi Development Authority vs M/S Jagdish Chander Khanna & Sons ...
2012 Latest Caselaw 2093 Del

       IN THE HIGH COURT OF DELHI AT NEW DELHI

                               O.M.P. 158/2009

                                    Reserved on: 28th February 2012
                                    Decision on: 27th March 2012

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

                               Versus

       M/S JAGDISH CHANDER KHANNA AND SONS
       ENGINEERS AND CONTRACTORS                 ..... Respondent
                     Through: Mr. S.K. Jain with Mr. Rajeev
                              Kapoor, Advocates.


                                    AND
                               O.M.P. 159/2009
       DELHI DEVELOPMENT AUTHORITY                ..... Petitioner
                    Through: Mr. Bhupesh Narula, Advocate.
                               Versus
       M/S JAGDISH CHANDER KHANNA AND SONS
       ENGINEERS AND CONTRACTORS                 ..... Respondent
                     Through: Mr. S.K. Jain with Mr. Rajeev
                              Kapoor, Advocates.

       CORAM: JUSTICE S. MURALIDHAR

                               JUDGMENT

27.03.2012

1. These are two petitions under Section 34 of the Arbitration and

Conciliation Act, 1996 ('Act') against an Award dated 31st October 2008

passed by the sole Arbitrator in the disputes arising between the Delhi

Development Authority ('DDA') and M/s. Jagdish Chander Khanna & Sons

Engineers and Contractors ('Claimant') which was awarded by the DDA for

the work of construction of a Local Shopping Centre at Ashok Vihar, Phase-

III, Pocket-B under the Agreement No.2/EE/ND-10/DDA/94-95.

2. The date of the start of the work was 23rd June 1994. It was to be

completed within 15 months i.e. by 22nd September 1995. According to the

Claimant the work remained incomplete as a result of the breaches

committed by the DDA. The DDA rescinded the contract by a letter dated

15th May 1996 and decided to get the remaining work executed at the risk

and cost of the Claimant. Compensation in the sum of Rs.3,69,578 was also

levied. Before the learned sole Arbitrator the Claimant filed seven items of

claim and the DDA filed five of its counter-claims against the Claimant.

3. By the first impugned Award, disposing of the Claimant's claims, the

learned Arbitrator awarded against Claim No.1, a sum of Rs.21,125 as part

rates of different items of work. Against Claim No.2 for a sum of Rs.46,519

towards the work done but not paid, the Claimant was awarded Rs.30,208.

Against Claim No.3 for Rs.52,000 as part rates in extra items, the learned

Arbitrator awarded Rs.11,493. Against Claim No.4 for refund of security

deposit of Rs.60,000 was allowed. Against Claim No.5 for Rs.80,000 under

Clause 10-CC, the learned Arbitrator awarded Rs.79,437. Against Claim

Nos.6 & 7 a for sum of Rs.2,50,000 on account of loss and profit and

Rs.2,00,000 on account of damages, the learned Arbitrator awarded

Rs.4,17,263. Against Claim No.8, the learned Arbitrator awarded simple

interest at 12% per annum pendente lite together with costs of Rs.50,000.

4. By the second impugned Award in deciding the DDA's claims, the

learned Arbitrator rejected Claim No.1 for recovery of Rs.15,01,011 on

account of differential increase of the balance work to be done at the risk

and cost of the Claimant. Claim No.2 for Rs.24,053 for defective work was

also rejected. Claim No.3(a) for sum of Rs.1,62,185 on account of tor steel

not returned by the Claimant and Claim No.3(b) for Rs.4,000 on account of

cement used in the work more than the permissible limit, were also rejected.

He also rejected DDA's Claim No.4 for the sum of Rs.9,000 on account of

non-deployment of graduate engineer and Claim No.5 for the sum of

Rs.3,69,578 towards the compensation levied under Clause 2 of the

agreement were also rejected.

5. It is contended by the DDA that the site for work had been handed over

to the Claimant on 23rd June 1994. The Claimant was to construct a godown

for the stocking of cement, steel etc. and to make arrangement of water for

drinking and construction purposes. The architectural and structural

drawings were made available to the Claimant. However, the Claimant

failed to show the required progress of the work. Despite directions of the

Executive Engineer ('EE') on 2nd September 1995, the Claimant did not

submit a programme for completion of the work. The inspection by the

Chief Engineer (Quality Control) revealed that the work was extremely

poor. The work performed was highly defective. These were communicated

to the Claimant by the letter of the EE dated 29th February 1996. The

Engineer In-charge ('EIC') inspected the site on 5th October 1995.

According to the DDA on 1st December 1995, the Claimant abandoned the

work site and had by then completed only 10% of the work. On 13th March

1996, the EE issued a show cause notice to the Claimant as to why the work

should not be rescinded and got executed at the risk and costs of the

Claimant. A final notice was served on 12th April 1996. Finally, the contract

was rescinded on 15th May 1996.

6. The above facts are, however, disputed by the Claimant. It is pointed out

that no site was handed over to the Claimant and only a site was shown on

23rd June 1994. Even till 25th January 1995 a clear site was not handed over.

Therefore, there was a wastage of six months. There was no possibility of

starting the work before 3rd December 1994. According to the Claimant the

provisional extension of time granted to it was unilateral without any

request made in that behalf by it to the DDA. It was denied that the

Claimant had abandoned the work site. The receipt of the letter dated 21st

March 1996 is also denied.

7. The learned Arbitrator observed that the work had to be executed as

multi-storey building and single storey stalls. The failure on the part of

DDA to issue to structural drawings of the site resulted in non-completion

of the work. Consequently, the original time limit of 15 months for

completion of the work could not be adhered to. The record also showed

that provisional extension of time was granted by the DDA to the Claimant

just to keep alive the contract so that it could ultimately terminate the

contract.

8. As regards Claim No.1, the learned Arbitrator held that DDA failed to

issue the complete structural drawings in good time and this resulted in the

non-completion of the work. This is a finding of fact. The DDA has been

unable to show when the complete structural drawings were ultimately

issued, if at all, to the Claimant. The Award cannot be said to be contrary to

the evidence on record or to the contractual provisions. The reliance placed

by the DDA on Clause 13 of the agreement was misconceived, since the

question was not one of change of drawings but non-supply of the complete

structural drawings. As there had been extension of time granted by the

DDA till 31st May 1996 it could not be said that time was still the essence of

the contract. As regards Claim No.1, it was on the basis of the admission of

the DDA that the sum of Rs.21,125 was withheld from the Claimant's bill.

After rescinding the contract, the DDA failed to undertake joint

measurement of the work done in the presence of the Claimant. The

measurements were recorded by DDA unilaterally. In the circumstances,

while the DDA's claim in this regard was rejected, the admitted sum of

Rs.21,125 was awarded to the Claimant. The above findings are factual,

based on the evidence on record, and do not call for interference.

9. Claim No.2 was awarded on the basis of an admission by the DDA that

Rs.30,208 was due to the Claimant. Claim No.3 for part rates in extra items

was allowed only to the extent of 11,493 to the extent admitted by the DDA.

Claim No.4 towards refund of security deposit had to follow the finding that

the termination of the contract by the DDA was illegal. As Regards Claim

No.5 on account of Clause 10-CC, DDA objected only to the index adopted

by the Claimant. However DDA did not supply the correct index. The

learned Arbitrator found that the Claimant was entitled to Rs.79,347. The

award of Rs.4,17,263 against Claim No.6 (loss of profit) and Claim No.7

(damages) was also based on a proper analysis of the evidence on record.

The reasons given are cogent. This Court, therefore, does not find any

ground having been made to set aside the impugned Award to the extent it

allows the claims of the Claimant.

10. As regards the claim of the DDA, Claim No.1 for the differential

increase of balance work had to be rejected in view of the finding that it was

the DDA which was in breach of the agreement and had illegally terminated

the contract. As regards claim No.2 for defective work, the learned

Arbitrator found that the inspection was carried out by the SE on 16th

August 1995 and the reduction item was approved by the SE on 22nd

September, 1999. It was conveyed to the Claimant on 8th October 2008.

DDA failed to justify the claim and even in the demand notice it was not

mentioned. Rejection by the learned Arbitrator of this claim cannot be held

to be unjustified. DDA's Claim Nos.3(a) & (b) about the Claimant not

handing back for steel used it was held that the notice required to be issued

under Clause 42 of the agreement was in fact not issued. Consequently, the

rejection of this claim also cannot be held to be unjustified. As regards

Claim No.4 of the DDA, the learned Arbitrator found that the site order

book did not record anything about the non-deployment of a graduate

engineer and, therefore, not recorded in the 4th R.A. bill which was paid. As

regards Claim No.5, since it was concluded that the termination of the

contract was illegal, the question of awarding compensation to the DDA did

not arise. This finding too does not call for interference.

11. This Court finds no ground having been made out by the DDA for

interference with either of the impugned Awards. Both petitions are

accordingly dismissed but in the circumstances, no order as to costs.

S. MURALIDHAR, J.

MARCH 27, 2012 bs