Delhi Development Authority vs H.S. Khanna
2012 Latest Caselaw 3647 Del

         IN THE HIGH COURT OF DELHI AT NEW DELHI

                      O.M.P. No. 439 of 2004

                                             Reserved on: May 3, 2012
                                             Decision on: May 31, 2012

         DELHI DEVELOPMENT AUTHORITY       .....Petitioner
                      Through: Ms. Geeta Mehrotra with
                               Mr. Rahul Tomar, Advocates.

                                Versus

         H.S. KHANNA                          ..... Respondent
                          Through:    Mr. Vivekanand, Advocate.

         CORAM: JUSTICE S. MURALIDHAR

                              JUDGMENT

31.05.2012

1. Although this petition was filed under Section 34 of the Arbitration

and Conciliation Act, 1996 ('1996 Act') to challenge the Award dated 6th

July 2004 passed by the sole Arbitrator, inasmuch as the disputes

commenced before coming into the of the 1996 Act, a preliminary issue

arose as to whether the present proceedings should be under the

Arbitration Act, 1940 ('1940 Act'). I.A. No. 9572 of 2006 was filed by

the Delhi Development Authority ('DDA') for this purpose. The said

application was disposed of on 21st July 2009 with the Court clarifying

that the present case was under the 1940 Act and that the present petition

should be treated as objections under Sections 30 and 33 of the 1940 Act.

Accordingly the present petition has been considered as such by the

Court.

2. The disputes between the parties arose out of a contract awarded by

the DDA in favour of the Respondent for construction of 148 houses on

36 sq.m. plots including services in Shalimar Bagh, Block A, Pocket G.

An agreement dated 7th April 1980 was executed between the parties

wherein the date of commencement of the work was 5th April 1980 and

the date of completion was indicated as 4th October 1980. The work was

actually completed on 17th November 1984. Disputes that arose between

the parties were referred to arbitration by a sole Arbitrator who was

appointed by an Engineer-Member, DDA by his letter dated 1st August

1985. When the Respondent objected to the said appointment and filed

OMP No. 29 of 1989 under Sections 5, 8, 11 and 12 of the 1940 Act, this

Court by an order dated 24th August 1994 appointed Justice G.C. Jain

(retired), as Arbitrator. On the expiry of Justice G.C. Jain, a learned

Advocate of this Court was appointed as the sole Arbitrator and the

impugned Award was pronounced by him on 6th July 2004.

3. Of the twelve items of claims, the learned Arbitrator rejected Claim

Nos. 1, 5, 8, 9 and 10. The Respondent was awarded a total sum of Rs.

3,55,833 with pendente lite and future simple interest at 9% from the date

of proceedings till the date of payment.

4. Claim No. 2 was for an additional sum of Rs.75,000 under Clause

12(v) of the Agreement for the extra works executed. The case of

Respondent was that the previous contractor had not completed the work

awarded to him and the balance work was thereafter awarded to the

Respondent. By various letters, the Respondent informed the DDA about

the extra work that was executed and had also claimed extra payment.

The case of the DDA, on the other hand was that the additional work

alleged to have been executed by the Respondent had been paid for in the

Running Account bills ('RA bills') as extra works and these RA bills had

been accepted by the Respondent without protest. Secondly, it was

pointed out that since the Respondent had restricted its claim to Rs.

75,000 instead of Rs. 83,698 as originally claimed, it was apparent that

the claim was fictitious and was an afterthought. It was further

contended that the Respondent was supposed to maintain a day-to-day

record and the fact that the site order book was not made available by the

DDA to the Respondent, was not relevant to the execution of the alleged

extra works. By a letter dated 24th April 1981 the DDA informed the

Respondent that he had never been directed to execute any

extra/substituted items. However, the Respondent filed details of the

extra work exhibited as Ex. C-29.

5. The learned Arbitrator found that the items claimed by the

Respondent had not been included in the running bills. It was apparent

from the bill of the previous contractor that no payment had been made

for the various items. The second factor was that only some of the

measurement books ('MBs') could be produced by the DDA, and that too

after a considerable period. The Respondent also took a stand that there

were no MBs maintained which would show the extra work done by the

Respondent. Since the relevant records had not been produced by the

DDA, an adverse inference was drawn against it on a preponderance of

probabilities and it was held that the version of the Respondent was more

probable. Accordingly, Claim No. 2 was allowed in favour of the

Respondent.

6. The contention of DDA is that no reasons have been given by the

learned Arbitrator in coming to the above conclusion and that it is based

on surmises and conjectures. This Court does not find any merit in the

above contention for the simple reason that a perusal of the Award shows

that there is a detailed discussion in paras 16.1 to 16.5 of the Award as

regards Claim No. 2. The reasons are comprehensive and clear. If

indeed the DDA was unable to produce MBs to prove its claim that no

extra work was performed by the Respondent, then an adverse inference

had necessarily to be drawn against the DDA. This Court, therefore,

rejects DDA's objection to the Award as regards Claim No. 2.

7. Claim No. 3 was for a sum of Rs. 85,000 for the work executed but

not measured. Originally the Respondent had claimed a sum of Rs.

97,131.41 as per the details given in Ex. C-30. Later this claim was

restricted to Rs. 85,000. The work executed but not measured pertained

to "centering and shuttering; cement slurry; excavation in trenches;

dismantling of brick work; wrongful deduction; providing grooving in

plaster; reinforcement of overweight steel etc." The learned Arbitrator

referred to the correspondence between the parties and to the fact that

before the previous Arbitrator the DDA had sought opportunities from

time to time to carry out the measurement but failed to do so. On the

other hand, when the Respondent sought production of the site order

book, the overweight steel record and the day-to-day record of the

balance work maintained by the DDA, the DDA simply informed the

Respondent by a letter dated 6th January 1996 that the site order book and

steel register were not traceable, that the previous contractor's bill had

not been finalized and that it was not necessary to maintain a day-to-day

register. It was in those circumstances that the learned Arbitrator again

drew an adverse inference against the DDA since despite seeking several

adjournments it was unable to produce the relevant records. After

considering the amount of Tor Steel, the claim was restricted to Rs.

81,297.97 and learned Arbitrator awarded a sum of Rs. 81,298.

8. The objection of the DDA as far as the above Award is that all RA

bills have been accepted by the Respondent and that the Respondent

failed to submit any documents to support his claim. As already pointed

out, the failure by the DDA to produce relevant records, which could

have actually demonstrated its defence that it had paid for the work that

was measured, resulted in the learned Arbitrator drawing an adverse

inference. This was but natural considering that much of the

Respondent's claim was dependent on the records maintained by the

DDA itself. Therefore, there is no merit in this objection and it is

accordingly rejected.

9. Claim Nos. 4 and 5 were adjudicated together. Claim No. 4 was for

the restoration of a sum of Rs. 85,000 held under part rate statement and

extra and substituted items, and Claim No. 5 was for Rs. 15,000

wrongfully withheld by the DDA. While the Respondent contended that

the work was completed on 15th December 1981, the DDA relied on the

letter dated 17th November 1984 to show that the work was not

completed satisfactorily. During the course of arbitration the DDA

produced the 17th RA bill (Ex. R-28) from which it was apparent that an

amount of Rs. 1151.28 and Rs. 20,000 have been withheld on account of

rectification of defect vide M.B. No. 1084 on or about 1st June 1983.

Certain entries showed that a sum of Rs. 1651.20 was withheld. Further,

a sum of Rs. 2302.80 was withheld for anticipation of cement recovery.

10. The learned Arbitrator found that the fact that the work was

completed was demonstrated by the certificates issued by the officials of

the DDA. Ex. C-37 was one such certificate which not only recorded that

the work had been completed satisfactory but recommended that the

work of a bigger magnitude could be entrusted to the Respondent. It was

observed by the Arbitrator that in the facts and circumstances, the burden

was on the DDA to show that the work performed by the Respondent

was defective and not in accordance with the CPWD specifications.

Further, the Respondent had been paid only part of the rate without any

basis and the reduction of the rates by the DDA could not be done

unilaterally. In the circumstances, the claim in the sum of Rs. 29,506.16

was found to be justified. After accounting for the withheld sums, a total

sum of Rs. 51,157 was awarded against Claim No. 4.

11. The contention of the DDA in regard to the above claim was that the

completion certificate produced by the Respondent was a "procured one"

and is not correct and genuine. The learned Arbitrator has referred to Ex.

C-37 and C-38 which were certificates issued by the Engineer-in-Charge,

DDA. If indeed, it was DDA's case that the said certificate is not

genuine, it would have not only made an averment to that effect in its

reply to the statement of claim but also produced the concerned Engineer

to prove it. It did not do either of these things. It is not possible,

therefore, to determine at the present stage under Sections 30 and 33 of

the 1940 Act whether in fact the said certificates are genuine. This is a

matter of evidence which had to be led by the DDA before the Arbitrator,

and which it failed to do so. The objection in regard to Claim No. 4 is

therefore rejected.

12. Claim No. 6 was for a sum of Rs. 23,876 on account of removal and

disposal of excavated earth dumped on the lanes and inside the houses.

Again, from the letters written by the Respondent to the DDA on various

dates which were referred to by the learned Arbitrator, it was found that

the Respondent had excavated the earth to the extent of 1458.16 cubic

meter. Here again the relevant MBs which could have shown the

performance of this work by the Respondent, were not produced by the

DDA despite being granted various opportunities by the learned

Arbitrator. If the earth was excavated by the earlier contractor and he

was not paid for its removal and disposal, then it was probable that it

must have been removed by the Respondent. The learned Arbitrator

referred to the letters written by the Respondent giving the details of the

earth removed from different portions of the work. In particular the

learned Arbitrator referred to Annexure E of C-22 which gave the total

amount expanded on this account as Rs. 23,873.07. Therefore, there is

no merit in the objection that this claim was based on probabilities or that

the learned Arbitrator overlooked the correspondence relied upon by the

DDA. This is a matter of appreciation of evidence and the learned

Arbitrator cannot be faulted for arriving at the conclusion that the

Respondent was entitled to a sum of Rs. 23,873.

13. Claim No. 7 was for a sum of Rs. 94,505 being the amount paid

short on account of steel doors, windows and ventilators. The

Respondent was claiming this amount for cost of fixing and welding and

had written various letters to the DDA in this behalf. The case of the

DDA was that the payments had been made in the 17th RA bill. The

Respondent pointed out that the said bill only showed the payment of a

sum of Rs. 50,100.42 whereas the total claim was for a sum of Rs.

1,44,605.69 for the entire work of fixing of steel doors, windows and

ventilators.

14. After discussing the letters written by the Respondent to the DDA, it

was concluded by the learned Arbitrator that the facts stated in those

letters remained unrebutted. A perusal of 17th RA bill also showed that

the plea of the DDA that the entire amount was paid to the Respondent,

was not sustainable. Since the Respondent had been paid a sum of Rs.

50,100.42, the learned Arbitrator held that the balance amount is payable

to the Respondent. This again is a question of appreciation of evidence

and this Court is not expected to sit in appeal over the determination of

the learned Arbitrator in that behalf. This Court is unable to discern any

error apparent on the face of the Award in regard to Claim No. 7.

15. Claim No. 11 was for a sum of Rs. 30,000 on account of theft of

material against the secured advance. The material handed over to the

DDA was placed in the lock and key of the DDA. The goods were stolen

after the possession was taken from the Respondent. Nevertheless a sum

of Rs. 30,000 was recovered/deducted from the bill of the Respondent.

Reliance was placed on a letter dated 8th September 1981 (Ex. C-13)

whereby the DDA was informed by the Respondent that the material was

lying in DDA's custody and the Respondent should not be held liable for

the loss of that material. The contents of the said letter are not denied by

the DDA. The learned Arbitrator rightly observed that since the material

comprised of brass bib cocks and other materials which were prone to

theft and pilferage, the Respondent rightly did not install them and gave

them to the DDA. In the circumstances, it was held that the sum of Rs.

30,000 was wrongly deducted from the bill of the Respondent. The only

defence of DDA in regard to this claim was that it was the responsibility

of the Respondent to protect the material from theft. It cannot be said

that the conclusion drawn by the learned Arbitrator was an improbable

one. The inference drawn on a reading of letters written by the

Respondent to the DDA was plausible and cannot be faulted.

16. The award of simple interest at 9% under Claim No. 12 cannot be

said to be unreasonable.

17. There are no grounds made out for interference with the impugned

Award of the learned Arbitrator. The objections are hereby rejected.

The Award dated 6th July 2004 is made rule of the Court. The decree

sheet be drawn up accordingly.

18. The petition is disposed of.

S. MURALIDHAR, J MAY 31, 2012 akg