Delhi High Court
Mcd vs M/S Vinod Kumar & Sons on 27 October, 2014
$~R-41
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO 295/2005
Decided on 27th October, 2014
MCD ..... Appellant
Through : Mr. Parvinder Chauhan, Adv.
versus
M/S VINOD KUMAR & SONS ..... Respondent
Through : Mr. Avinash Trivedi, Adv.
CORAM:
HON'BLE MR. JUSTICE A.K. PATHAK
A.K.PATHAK, J.(ORAL)
1. By the judgment impugned in this appeal, learned Additional District
Judge, Delhi has dismissed the objections under Section 34 of the
Arbitration and Conciliation Act, 1996 ("the Act" for short) of the appellant.
2. Briefly stated facts are that Government of N.C.T. of Delhi proposed
to construct multipurpose community centres and halls in different villages
within the territory of Delhi. The work of construction was assigned to
appellant as the executing agency. Executive Engineer (Project) Rural of
appellant invited tenders for execution of different works, in anticipation of
FAO 295/2005 Page 1 of 7
administrative approval of expenditure sanction and on assurance of site to
be handed over by the Block Development Officers to the executing agency.
Respondent responded to invitation of tender in respect of multi-storey
community centre at Village Bakhatawarpur and submitted its offer.
Respondent, being lowest tenderer, was awarded work for construction vide
work order dated 8th July, 1995. Subsequently, a formal contract was
executed between the respondent and appellant on 8 th December, 1995. It
appears that site was not handed over, thus, work was not executed.
However, respondent mobilised its resources for executing the work.
3. Disputes arose between the parties regarding payment in respect of
the awarded work, which were referred to the Sole Arbitrator Mr. C.M. Vij,
who entered upon the reference and after affording opportunity to the parties
to file pleadings and lead evidence, vide award dated 31 st July, 2002 held
that respondent was entitled to `27,000/- against claim no. 1; `30,000/-
towards claim no. 2; `40,000/- towards claim no. 3; `1,20,000/- against
claim no. 5 (iv); interest @12% per annum on `2,17,000/- with effect from
1st April, 1996 against claim no. 6 and `20,000/- along with interest @ 12%
per annum towards claim no. 8. As regards claim nos. 4, 5(i) to 5(iii) and 7
are concerned, same were rejected. Learned Arbitrator has passed a
FAO 295/2005 Page 2 of 7
speaking Award giving reasons for awarding the amounts against claim nos.
1, 2, 3, 5(iv), 6 and 8. Appellant filed objections under Section 34 of the Act
before the trial court, which have been dismissed by the judgment impugned
in this appeal.
4. Trial court has held that findings of the Arbitrator on the factual
matrix cannot be interfered with as the Court does not sit in appeal and the
Courts have to refrain from re-appreciating or re-evaluating the evidence or
the material before the Arbitrator to substantiate its view. Unless perversity
is writ large on the face of the award or the award suffers from the vice of
jurisdictional error, sanctity of award should always be maintained.
Reliance has been placed on M/s. Bharat Heavy Electricals Limited vs. M/s.
Globe Hi-Fabs Limited, 112 (2004) DLT 205 and M/s. MSJ Construction
Pvt. Limited vs. DDA 2013 (2) Arbitration Law Report 432 (Delhi). Trial
court has also considered the finding of learned Arbitrator on each claim and
has held that there was no perversity in the view taken by the Arbitrator.
Claim no. 1 was for the loss of profit amounting to `3,25,215/-; whereas
Arbitrator awarded `27,000/-. Trial court held that finding of Arbitrator
cannot be termed as perverse in this regard. Appellant had taken a plea that
respondent himself showed his desire to abandon the work vide letter dated
FAO 295/2005 Page 3 of 7
20th July, 1995, and requested for refund of security amount, thus, was not
entitled to any claim. Learned trial court has held that this letter was of no
consequence since subsequent thereto a contract was executed between the
appellant and respondent on 8th December, 1995. Meaning thereby,
respondent was keen to execute the work, inasmuch as appellant had entered
into a written contract subsequent to letter dated 20th July, 1995. Trial court
has noted that vide letter dated 8th July, 1995 appellant asked the respondent
to commence the work at once and thereafter entered into a written formal
contract indicating desire of respondent to execute the work. Trial court has
noted that though respondent claimed 15% loss of profit amounting to
`3,25,215/- on the tender amount of `2,16,81,000/-, however, only
`27,000/- was awarded in view of the fact that cement and steel valuing
`7,95,743/- was to be supplied by the appellant. Duration of the work was
six months. Accordingly, Arbitrator has rightly held that respondent was
liable to have reserve of `3,00,000/- for execution of work for a period of
six months. Loss of profit was calculated @ 18% per annum on `3,00,000/-
and not on the total value of work. Trial court has held that no perversity
can be found in the approach adopted by the Arbitrator. I do not find the
view taken by the trial court to be perverse or contrary to law. The award on
FAO 295/2005 Page 4 of 7
this point cannot be said to be beyond jurisdiction or contrary to the
agreement entered into between the parties. Claim no. 2 was with regard to
the reimbursement of amounts paid by the respondent to the labourers.
Respondent had placed on record the bills evidencing payment to labour
contractors. No contrary evidence was adduced by the appellant, inasmuch
as claim was supported by the documentary evidence and was accepted by
the learned Arbitrator. Trial court has rightly held that no perversity can be
found in the approach adopted by the learned Arbitrator. As regards claim
no. 3 of `40,000/- is concerned, same was also duly supported by the
documentary evidence. Respondent had placed on record vouchers to
substantiate this claim. Trial court has rightly held that no perversity could
be found in awarding the said amount as well, which was based on the
documentary evidence. Claim no. 5(iv) amounting to `1,20,000/- was also
supported by the documentary evidence in the shape of vouchers.
Respondent had claimed `1,75,000/- but had produced vouchers amounting
to `1,20,000/- with regard to hire charges of machinery steel plates of
centering, shattering, ballies challies etc. Accordingly, trial court has rightly
held that no perversity could be found in awarding the said claim as well.
Appellant has also failed to point out any of the grounds as envisaged under
FAO 295/2005 Page 5 of 7
Section 34 of the Act so as to claim setting aside of the award on such
grounds.
5. It is trite law that civil court does not sit in appeal against the award
and the power of the court when award is challenged is rather limited. The
award of the arbitrator is ordinarily final and conclusive as long as the
arbitrator has acted within the authority and according to the principle of fair
play. If the dispute is within the scope of the arbitration clause it is no part
of the province of the court to enter into the merits of the dispute. If the
award goes beyond the reference or there is an error apparent on the face of
the award it would certainly open to the court to interfere with such an
award and not otherwise. In Delhi Development Authority vs. R.S. Sharma
and Co., New Delhi, JT 2008 (9) SC 362, Supreme Court has held thus:
"From the above decisions, the following principles
emerge:
(a) An Award, which is
(i) contrary to substantive provisions of law ; or
(ii) the provisions of the Arbitration and
Conciliation Act, 1996 ; or
(iii) against the terms of the respective contract ; or
(iv) patently illegal, or
(v) prejudicial to the rights of the parties, is open to
interference by the Court under Section 34(2) of the
FAO 295/2005 Page 6 of 7
Act.
(b) Award could be set aside if it is contrary to :
(a) fundamental policy of Indian Law; or
(b) the interest of India; or
(c) justice or morality;
(c) The Award could also be set aside if it is so
unfair and unreasonable that it shocks the
conscience of the Court.
(d) It is open to the Court to consider whether the
Award is against the specific terms of contract and
if so, interfere with it on the ground that it is
patently illegal and opposed to the public policy of
India."
6. The claim before the learned Arbitrator is based on appreciation of
evidence, more particularly the documentary evidence. It cannot be said that
the award is based on no evidence or is against the public policy. It is not
the case that Arbitrator has misconducted the proceedings or had gone
beyond the terms of contract.
7. Appeal is, accordingly, dismissed.
A.K. PATHAK, J.
OCTOBER 27, 2014
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