Delhi High Court

Municipal Corporation Of Delhi vs Sh. Jagbir Singh Sharma on 30 March, 2012

Author: S. Muralidhar

         IN THE HIGH COURT OF DELHI AT NEW DELHI
                                          (Not reportable)
                     OMP No.375/2006

                                            Reserved on: March 15, 2012
                                            Decision on: March 30, 2012

 MUNICIPAL CORPORATION OF DELHI                ..... Petitioner
              Through: Mr. Nalin Tripathi with
                       Mr. Anurag Sharma, Advocates.

                    versus

 SH. JAGBIR SINGH SHARMA                        ..... Respondent
                Through: Mr. Sandeep Sharma with
                         Ms. Kanika Singh, Advocates.

 CORAM: JUSTICE S. MURALIDHAR

                             JUDGMENT

30.03.2012

1. In this petition under Section 34 of the Arbitration and Conciliation

Act, 1996 ('Act'), the Municipal Corporation of Delhi ('MCD') challenges

an Award dated 3rd May 2006 of the learned Sole Arbitrator in the disputes

between it and the Respondent in respect of the award of work of widening

and improvement of road from Outer Ring Road to APJ School, Malviya

Nagar by an agreement dated 4th January 2002.

2. The start date of the work was 6th January 2002. The work was

completed on 24th December 2002 even before the stipulated date of

completion of 5th January 2003. The Respondent states that after

completing the work of the value of Rs.21.5 lakhs on 29th October 2002 he

submitted his first Running Account ('RA') Bill for a sum of

Rs.21,36,500.40. The bill was passed for a sum 41.41% below the billed

amount i.e. for a sum of Rs.12,51,775,61. Thereafter a net amount of

Rs.10,61,761, after deducting income tax, surcharge and sales tax, was

paid. After completing further work of the value of more than Rs.18 lakhs,

the Petitioner submitted his second RA bill on 20th February 2003 in the

sum of Rs.29,86,471.91. Again, the bill was cleared only after deducting

41.41%, for a sum of Rs.17,49,774. After deductions including for security

deposit, a sum of Rs.3,82,624/- was paid. According to the Respondent, of

the total work of the value of Rs.61,22,119.27, after accounting for the

amount paid to him, a sum of Rs.38,45,492 was payable by the MCD.

3. It was submitted by the Respondent that the work was performed under

the supervision of MCD's engineers and there was no dispute about its

completion on 24th December 2002. The defect liability period expired on

23rd December 2003. Thereafter, the security deposit of Rs.2,98,647 also

became refundable. Additionally, it was claimed that Rs.1 lakh towards

earnest money, and Rs.1,98,647 recovered from the first and second RA

bills, were also payable. According to the Respondent, despite his visiting

the office of the MCD on several occasions, the payment was not made. A

letter dated 18th September 2004 demanding payment was delivered by him

personally to the office of the Executive Engineer ('EE') of the MCD on

20th September 2004. When despite several reminders no payments were

forthcoming, the Respondent invoked the arbitration clause on 4th January

2005. Thereafter, he filed a petition in this Court under Section 11 of the

Act. By an order dated 20th May 2005, this Court appointed the sole

Arbitrator.

4. Claim No.1 was for a sum of Rs.21,02,454 in respect of the work done

and not paid for. Claim No.2 was for a sum of Rs.3,78,457 being the

interest for the period from 24th December 2003 to 31st December 2004 at

18% per annum. Claim No.3 was for a sum of Rs.2,98,647 towards refund

of security deposit. Interest thereon at 18% per annum from 24th December

2003 to 31st December 2004 in the sum of Rs.64,560 was claimed under

Claim No.4. Claim No.5 was for interest on Claim Nos.1 to 4 from 1st

January 2005 till payment at 18% per annum. Claim No.6 was for a sum of

Rs.1 lakh being the cost of the arbitration proceedings.

5. As regards Claim No.1, the case of the MCD was that while the work of

widening of carriage way was awarded to the Respondent, the work of

widening/improvement of road from S-Bend to the nearby entry of Swami

Nagar was got constructed from another agency, M/s. Sharma

Construction. Therefore, widening of this stretch of the road was beyond

the scope of the work of the Respondent.

6. In order to resolve the controversy, the learned Arbitrator took a site

visit on 28th December 2005. Despite the learned Arbitrator requiring the

MCD to produce the drawings only a sketch was produced. It was

concluded that the work on both the roads, except the portion of 200 metres

in respect of the work under the Work Order dated 31st October 2001 had

been executed by the Respondent under the supervision of MCD's

engineers. After deducting the contractual work amount of Rs.3,13,484,

the learned Arbitrator awarded to the Respondent a sum of Rs.17,88,970

under Claim No.1 and under Claim No.2 awarded interest thereon at 12%

per annum. Claim No.3 for refund of the security deposit in the sum of

Rs.2,98,647 was allowed and interest thereon at 12% from 1st April 2004

upto 31st December 2004 was awarded. Post-Award interest was granted at

12% per annum. The counter claims of the MCD were rejected.

7. It is submitted by the learned counsel for the Petitioner that under

Clause 25 of the contract, the claim had to be made within 120 days,

whereas the Respondent preferred the claim beyond the said date. A

perusal of the petition under Section 34 of the Act shows that no such

ground has been urged therein. This Court, therefore, does not permit it to

be raised at this stage.

8. It is next submitted that under Clause 7 of the Contract, the Engineer

In-charge ('EIC') had to prepare the final bill. In the absence of such a step,

no claims for bills or for interest were maintainable. It is pointed out by

learned counsel for the Respondent that EIC never fixed any date for the

preparation of the final bill and, therefore, no final bill as such could be

prepared. This submission was unable to be countered by the learned

counsel for the Petitioner. The objection in this regard is rejected.

9. It is then submitted by counsel for the Petitioner that the claim of the

Respondent was beyond the scope of the Work Order as well as the

agreement. Further, the Respondent never disputed the measurements

recorded by the MCD in the Measurement Book ('MB'). It is pointed out

by learned counsel for the Respondent that no plan or drawings were given

indicating the locations of the road where the work was to be executed.

There was no question of performing the work beyond the scope of the

contract. It was only under the supervision of the engineers of the MCD

that the entire work was undertaken and completed on 24th December 2002.

There was no justification for withholding the amounts from the RA bills.

10. With the learned Arbitrator having undertaken the site visit, this was a

purely factual issue about the extent of the work performed by the

Respondent. The Respondent also filed an affidavit dated 22nd August

2005 with regard to the amounts to be payable for the work already

performed. The relevant portion of the Award which talks of the site

inspection reads as under:

"During inspection respondent pointed out that from the entry of the Outer Ring Road upto Dust Bin (M.C.D.'s flats in the middle) upto 200 metrs. The work was executed as per the work order dated 31st October 2001 by M/s. Sharma Construction. On enquiry about the agency, which executed

the work beyond Dust Bin (M.C.D.'s Flats) upto Dust Bin (Naalah) Chirag Delhi, The respondent could not name any such agency."

11. The findings of the learned Arbitrator are based on his observations

during the site visits undertaken by him. This being a pure question of fact

and appreciation of evidence, no interference under Section 34 is called for.

There was no justification for disallowing the amount withheld from the

bills of the Respondent.

12. The plea that the work was not upto the requisite quality and had to be

got completed through another agency was not believed by the learned

Arbitrator. Moreover, the Respondent had never been informed of any

defect. Even after the defect liability period expired, no such defect was

pointed out.

13. This Court is satisfied that the amount awarded is based on the correct

appreciation of the evidence and is not contrary to any of the provisions of