Delhi High Court
M/S Uppal Engg. Co. Pvt. Ltd. vs Bharat Immunologicals And ... on 12 October, 2015
Author: V. Kameswar Rao
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on April 9, 2015
Judgment delivered on October 12, 2015
+ CS (OS) No. 2343/2007
M/s UPPAL ENGG. CO. PVT. LTD.
..... Plaintiff
Through: Mr. M.S. Vinaik, Adv. with
Mr. Akhil Verma, Adv.
versus
BHARAT IMMUNOLOGICALS AND BIOLOGICALS
CORP. LTD.
..... Defendant
Through: Mr. R.B. Singhal, Sr. Adv.
with Mr. Anshuj Dhingra and
Mr. Janender Mahajan, Advs.
CORAM:
HON'BLE MR. JUSTICE V.KAMESWAR RAO
V.KAMESWAR RAO, J.
1. By this order, I shall dispose of CS (OS) No.2343/2007 for
making Rule of the Court, the Award passed by Brigadier V.K. Sawhney
(Retd). Sole Arbitrator dated October 31, 2007 in dispute between the
parties and the objections filed by the defendant to the said Award. The
dispute between the parties relate to a work for construction of Housing
Complex at Village Gangerwa, Bulandshahar, U.P which was awarded
by the defendant to the plaintiff. The Letter of Intent was dated
December 4, 2001. The total cost of the work was for Rs.200 Lacs and
the time of completion was 15 months. The date of commencement was
to be reckoned from January 10, 1992 and the date of completion as
April 1993. As noted from the Award, the LOI stipulates escalation of
prices would be paid as per clause 10 CC of CPWD; 75% secured
advance would be paid against material brought at site of work. It is also
noted that a bank guarantee at 5% of the total contract value was to be
tendered by the plaintiff to the defendant. Para 5 of the LOI stipulates,
that a copy of the agreement signed by the defendant with the Architect
namely M/s S.D. Sharma & Associates, was binding on the contract as
well. A formal agreement dated December 5, 1991 was executed
between the parties. The plaintiff raised claims vide letter dated August
7, 1995, which was also in the nature of serving notice for arbitration.
2. From the pleadings of the parties, the following issues were
framed by the learned Arbitrator:-
a. Whether the Claimant has breached the contract
and failed to comply with the terms and conditions of the
contract.
b. Whether the respondent has breached the contract
and failed to comply with the terms and conditions of the
contract.
c. Whether the claims of the Claimant are in
consonance with reference order; and whether the claims
can be raised at all.
d. Whether the respective claims/counter-claims are
legally tenable.
e. Which party has breached the contract and whether
the breach goes to the root of the contract. If so, the
injured party is entitled to what compensation in respect of
each of its claims.
3. The learned Arbitrator was of the view that all the issues framed
above, hinge on the fact as to how the contract was executed and whether
the parties have carried out their respective contractual and reciprocal
obligations in letter and spirit of contract. He accordingly considered the
following aspects in that regard:-
a. Whether Bulandshahar Khurja development
Authority (BKDA) clearance was required, who was to
arrange it, and if it was obtained.
b. Whether the drawings good for construction were
issued in time to the Claimant.
c. Whether the Payments were made in time by the
Respondent.
d. Whether the Respondent was required to provide
electricity to the Claimant.
e. Whether the Respondent was within its rights to
delay the decision regarding the extension for time,
requested by the Claimant.
f. Whether site Organisation was properly manned by
the parties, and whether sound decisions were given at
site.
g. Whether the Respondent had the right to terminate
the contract and was this power actually exercised in
terms of the contract.
h. Whether there is any legal bar to the parties raising
the claims in the present proceedings.
i. My impressions after the site visit.
4. On „a‟ above, the learned Arbitrator was of the view that the
responsibility to get the clearances from BKDA was of the
employer/architect. He was also of the view, giving partial clearances or
piecemeal availability of site as was the stand of the defendant herein,
does not satisfy the contractual obligation of the employer. He held that
the defendant was in breach of Contract in getting delayed sanctions,
which was a hindrance preventing the completion of the project within
the time frame fixed in the agreement between the parties, which goes to
the root of the Contract and the plaintiff was entitled to damages from
the defendant.
5. On „b‟ above, the learned Arbitrator, on examination of the
drawings submitted before him and on interpretation of the clauses of the
agreement between the parties and the architect‟s agreement, was of the
view that most of the drawings, if not all of them, were dated after the
date of completion of the project. The drawings issued belatedly were
not finished drawings but structural drawings and without which no
worthwhile construction could be organized on the ground. He was also
of the view, most of the drawings were in a disjointed manner. He
would conclude that the site instructions are no substitute to good for
construction drawings, required to be issued by the Architect. In fact, I
note that the defendant, in his letter dated May 24, 1993, treated the
drawings issued earlier by the defendant as void. The learned Arbitrator
was of the view, no such (finished) drawings have been brought on the
record of the Arbitrator, though a complete set of drawings were asked
for and because of which, he did not give any credence to the statement
of the defendant in that regard and was of the view, there is a major
breach of Contract by the defendant, which goes to the root of the
Contract for which the plaintiff was entitled to damages.
6. Insofar as „c‟ above is concerned, the learned Arbitrator was of the
view that the defendant failed to device or enforce measures by which
bills could be prepared and certified in time. The payments have been
delayed often inordinately, which cannot be justified. He was also of the
view that the deductions made from the bills were arbitrary. The value
of work accepted by the defendant during the arbitration proceedings of
about Rs.34.5 lacs, does not tally with the accepted figure of Rs.41 lacs
plus escalation under Clause 10 cc of the CPWD. According to the
learned Arbitrator, the shortfall leads to inescapable conclusion, that the
work executed was not properly recorded or if recorded, it was
incorrectly omitted in compilation of the assessment of the value of
work. It was also his conclusion that if to the figure of Rs.41 lacs, the
value of escalation is also added then it is clear that the payments made
to the plaintiff by the defendant were not made in consonance with the
work executed from time to time and amounts becoming payable
thereafter. The conclusion of the Arbitrator was that the defendant was
in breach of Contract as there was a failure to make timely and full
payments, which is an essential requirement of contractual work for
which the plaintiff was entitled to damages from the defendant. The
learned Arbitrator did not accept the claim of the plaintiff that it had
executed work to the tune of Rs.60 lacs as no supporting details have
been provided and accepted the figure of Rs.41 lacs.
7. Insofar as „d‟ above is concerned, the learned Arbitrator was of the
view that on conjoint reading of Article 29, Article 18, Sub-para (ix) of
the NIT and clause 6.45 give a clear meaning to the Contract. In that the
responsibility for providing electricity to the plaintiff remained entirely
with the defendant. However, the supply was not to be free as submitted
by the plaintiff and the plaintiff was required to pay for it after arranging
the distribution from the terminal to be provided by the defendant.
Failure to provide electricity was a major breach of Contract on the part
of the defendant, which goes to the root of the Contract as the absence of
electricity inevitably hampered the progress of the work drastically for
which the plaintiff was entitled to damages.
8. Insofar as „e‟ above is concerned, the learned Arbitrator was of the
view that there are two facets on this issue. Firstly, whether it is justified
and secondly, the time frame and the manner in which decision has to be
taken by the employer. As regards the merit in the present matter, the
time had got delayed and set at large, by the delays caused by the
defendant. There were adequate and justifiable reasons for grant of
extension to the plaintiff. As regard the time frame for decision, it was
held by him that the same was to be before the expiry of the Contract.
According to him, the same is primarily for the reason that if the same
was granted within the period of Contract, the contractor had the option
to either rescind the Contract or work under compensation or work
without prejudice to his right to claim damages. According to the
learned Arbitrator, the defendant has not met its contractual obligation to
decide the extension in time and thus defaulted and breached the
Contract. Furthermore, as the completion date, initially or revised is
very essential feature of any Contract, its absence is a breach, which goes
to the root of the Contract for which plaintiff was entitled to damages
from the defendant.
9. Insofar as „f‟ above is concerned, the learned Arbitrator was of the
view that Special Condition 6.38 clearly lays down that the consultant
will furnish in writing to contractor, the name and designation of the
official who shall serve as its duly authorised representative for the
works. Likewise, the contractor too was to do the same. According to
the learned Arbitrator, the consultant never provided the name of its
representative while the plaintiff did so. He was of the view that the
plaintiff has been corresponding with the defendant‟s Architect to
arrange proper supervisory staff but the same was not heeded to. At
best, ad-hoc arrangements were made by the defendant, which denoted
lack of purpose on defendant‟s behalf. He held that the defendant failed
to establish proper site supervisory establishment. He held that the
plaintiff was not at fault.
10. On „g‟ above, the learned Arbitrator held that the defendant had
the un-conditional right to terminate whole or part of the Contract vide
Article 28, in which case, the Contractor has to cease all activities,
cancel all provisioning contracts and labour arrangements etc. The
defendant was obliged to pay for the services rendered and material
brought on site. This clause was not invoked by the defendant. The
learned Arbitrator was also of the view that where the Contract is not
terminated, the contractor can be asked to stop the work in terms of
Article 12. According to him, as per this clause in the event of default
on the part of the contractor, the defendant can get the work executed by
any other agency at the risk and cost of the contractor by using its plant,
material and other equipment lying on site. Thus the term „Termination‟
cannot be applied to this clause. He was also of the view, that the
Company Secretary was not the designated authority to take action
terminating the contract. He was also of the view, that the action of the
defendant is highly questionable and cannot be justified. On merits as
well, he would state that the termination cannot be justified due to
serious breaches of the contract by the defendant. That apart, he held
that the defendant took no action whatsoever at site to get the balance
work completed through another agency. No documents were executed
in that regard. He refers to his site visit and has stated that the activity at
the site remained dormant even after 12 years after the plaintiff has left
the site. The defendant had no intention to get the work completed. The
reasoning given by the defendant that it could not finish the work as
lintels had not been cast is a frivolous engineering statement. The tools
and equipment were not permitted to be removed from the site. Mere
statement that it has no objection to get the same removed does not aid
the defendant or mitigate the seriousness of the matter. The defendant
has breached the contract and breach goes to the root of the contract for
which the plaintiff is entitled to damages.
11. On „h‟ above, the learned Arbitrator was of the view that the
plaintiff cannot increase the claim from the amount which it had initially
claimed vide letter dated August 7, 1995 and held, there is no bar for the
plaintiff to agitate its claim in the present proceedings.
12. Insofar as „i‟ is concerned, he held that; (i) no construction has
taken place after the contract with the plaintiff was terminated; (ii) There
was no technical impediment existing at the site in respect of the
plaintiff‟s work which can prevent completion of unfinished structure.
13. The quality of construction made by the plaintiff was quite good
with hardly any deterioration in the structures though they were lying
unattended for almost 12 years. He also held that the restrictions put by
the defendant on the movement of the staff and materials had caused
unnecessary delays and extra expense to the plaintiff. The learned
Arbitrator was of the view that as per the contract, the defendant was
required to provide the land near the site for labour hutments and for
offices, stores etc. free of charge, for the entire period of contract and
since the defendant failed to provide the plaintiff the same, the plaintiff
used a portion of the land for the purpose of labour hutments etc, in the
vicinity of the location of the building. However, from October 25,
1992, security staff of the defendant ordered the labour and staff of the
plaintiff, not to stay at the site and they were turned out of the site after
working hours. No alternative land was provided by the defendant,
which not only caused unnecessary harassment but also extra expense to
the plaintiff. No satisfactory answer has been furnished in its pleadings
or during the site visit to justify non provision of site or not allowing the
labour camp to remain within the site, particularly as nothing else was
coming up, or has come up till date at the site. In any case, the learned
Arbitrator held that the issue was academic. Finally, he held that in the
absence of any maintenance/upkeep the condition of the unfinished
construction will inevitably deteriorate, and also the fate of the
aggregate/construction material as well as the plaintiff‟s plant and
machinery will lie at the mercy of the villagers/miscreants. Since the
defendant has not taken any steps till date to implement the provision of
Article 12 of the Agreement, he found no justification whatsoever on the
part of the defendant to determine the contract with the plaintiff and the
plaintiff was entitled to damages from the defendant.
14. The plaintiff, in all, had raised 14 claims and the following
amounts have been awarded by the learned Arbitrator.
Sl. No.
Particulars of Claim Awarded Amount
1. Loss of profit Rs.15,90,000/-
2. In respect of preliminary works vis temporary Rs.1,70,130/-
offices, temporary store,water storage tank, temporary
water distribution lines and labour hutments.
3. In respect of 25% costs of the materials against which Rs.1,93,945/-
75% secured advance has been paid and the materials
are in the custody of the defendant.
4 In respect of payment for the work done, Rs.5,00,000/-
measured and approved for payment by the Architect
to the defendant but short paid amounting to Rs.5 Lacs.
5 The claim regarding the work done but not measured Rs.9,97,067/-
& and paid for and reimbursement of escalation in prices
6 for the work done as per clause 10cc of the CPWD.
7 In respect of infructuous expenditure on central Rs.1,90,000/-
offices/site over heads.
8 In respect of infructuous expenditure on tools & Rs.3,60,000/-
plants and shuttering materials etc.
9 Compensation for shifting of labour/workmen hutments Claim rejected.
from old location.
10 Theft of shuttering materials from the site of work. Claim rejected
11 In respect of tools, plants, machinery, equipment and Rs.9,00,000/-
shutting materials,taken possession by the defendant
on the wrongful termination of the contract.
12 Refund of retention money withheld from R.A. Bills 1,33,275/-.
of the plaintiff.
13 Materials lying at site for which no secured advance Rejected
was paid but was taken into custody by the defendant
after the wrongful termination of the contract.
14 Interest and costs @ 18% per annum compounded 12% interest per annum
for the period of pre-reference, pendentelite and with effect from 7.8.1995
future and Rs.50,000/- respectively. till date of award,
claim for cost rejected.
15. The learned Arbitrator was of the view that the un-recovered
mobilisation advance made by the defendant to the plaintiff and
verifying the details, the amount arrived at was Rs.15,95,019/-.
Allowing the set off for the same the net amount payable by the
defendant to the plaintiff was Rs.34,39,398/- plus interest.
16. Insofar as counter-claims of the defendant were concerned, the
defendant had made three counter-claims which are as under:-
(i) Counter-claim No.1 In respect of pending mobilisation advance
recovery, the learned Arbitrator refer to para 37.2, that the amount of
Rs.15,95,019/- has been granted in favour of the defendant by allowing
set off. Nothing is due to the defendant under this claim.
(ii) Counter-claim No.2. Penalty for an amount of Rs.15 lacs under
Article 24 of the Agreement, the learned Arbitrator was of the view no
breach or levy against the plaintiff is established and rejected this
counter-claim.
(iii) Counter-claim No.3. In respect of costs, the learned Arbitrator
has directed the parties to bear their own costs, the said claim was
rejected.
17. The learned Arbitrator further held, the defendant to pay the
amount awarded with interest @ 12% per annum to the plaintiff within
three months and in case of default, the defendant was to pay the amount
alongwith interest at the rate of 18% from the date of the award till
payment.
18. Mr. R.B. Singhal, learned Senior Counsel for the defendant would
challenge the Award by making the following submissions.
Clearances from BKDA:-
19. Mr. R.B. Singhal, learned Senior Counsel for the defendant on the
aspect of clearances from BKDA, would submit that the learned
Arbitrator has given a finding contrary to the submissions made by the
parties and even also contrary to the admissions made by the plaintiff in
its pleadings inasmuch as it is the own admission of the plaintiff in para
3.5 (b) of the Statement of Claims wherein, the plaintiff inter-alia stated
"In or about April 92, it would appear that the defendant got the
sanction from the competent authority i.e Bulandshahar Development
Authority for the plans". It is also the objection of the defendant that the
learned Arbitrator for the reasons best known to him while arriving at the
above conclusion, had overlooked the admitted documents of the
plaintiff Ex.C-16 which is a letter dated February 13, 1993 issued by the
plaintiff to defendant seeking extension of time wherein the plaintiff has
recorded "this position was confirmed by the CMD, BIBCOL in the kick
off meeting held in his office on 04.01.1992 stating however, the
approval of the construction plans are still awaited from BKDA for
which Architect and the contractor will take necessary follow up action.
Refer para-1 of the minutes of the meeting held on 04.01.1992. Approval
of the plans by the BDA were not conveyed to us until 08.04.92".
20. It is also the case of the defendant that the learned Arbitrator while
arriving at the finding, has ignored the defence and evidence placed on
record that it was the plaintiff which did not proceeded with the work
despite repetitive reminders and upon consecutive failure on its part, it
was only on September 1, 1995, the agreement was terminated by the
defendant. Significantly, the approval of the BKDA was conveyed to the
plaintiff on April 8, 1992 and the contract was terminated on September
1, 1995 and there was no occasion for the learned Arbitrator to hold the
defendant responsible for the breach of the contract. The learned
Arbitrator also fell in error in accepting the submission of the plaintiff
that the work could not be started at the project site due to pending
BKDA approval. However, the plaintiff in its own letter dated April 8,
1992 has admitted that despite the pending BKDA approval, the plaintiff
had mentioned that the excavation of 80% blocks stood completed.
Further, the plaintiff had never sought the approval from BKDA as a pre-
requisite to start the work.
21. On the other hand, Mr.M.S.Vinaik would submit that the
defendant had failed to obtain the requisite clearances of drawings from
the statutory authority viz BKDA which was a pre-requisite for any
construction activity to take place. Besides, no formal
clearance/approval of the employer was obtained as has been stipulated
in the Architect‟s contract at Schedule 3. He would also state, that as per
the minutes of the meeting, the construction activity was to be restricted
to the north side of the plot only beyond 220 ft from the Bulandshahar
Khurja Road for some time till the approval of the BKDA is accorded. It
was the case of the plaintiff that in the absence of any approval by the
BKDA, the work would have been illegal. Even the work at the rear of
the plot could not have been taken up in the absence of specifically
marked modified layout plan which was never furnished by the
defendant and it is his submission that obtaining these clearances was not
the responsibility of the plaintiff even if the plaintiff had agreed to
accord any assistance for that purpose.
Issue of Drawings:-
22. It is the submission of Mr. R.B. Singhal that there was no delay on
the part of the defendant in issue of drawings. According to him, the
drawings were issued in time or progressively keeping in view the pace
of the work. He would reiterate that getting approvals of BKDA or
employer was irrelevant as far as the plaintiff is concerned. The
defendant entirely dependent on its engineer for reading of drawings at
site and further transformation of work at site due to non-deployment of
the technical personnel at the site by the plaintiff. According to the
learned Senior Counsel, the defendant never allowed the work to be
interrupted for want of supply of drawings and where required,
instructions were given by the site staff if any detailed drawing was not
readily available. He states, that the plaintiff could have completed the
housing complex of block ABCD within the stipulated date of
completion or the extension required for 3-6 months if any. No pressure
was put by the defendant for the construction of ABCD block or for that
matter the block of Dy. CGM and CMD. He would state, the learned
Arbitrator failed to appreciate that the defendant in its statement of
defence filed in the proceedings in para 3.5 (c) has clearly mentioned
that the drawings required for the work were issued well in advance of
the requirement of the plaintiff for the use at site. It was also mentioned
that all the foundation drawings were issued to the plaintiff on February
21, 1992. The defendant had also placed on record along with the
defence statement letter dated February 22, 1992 where under four
constructional drawings and six architectural drawings were issued to the
plaintiff. Significantly, the minutes of the meeting dated March 07, 1992
records that the plaintiff had mentioned that the set of excavation
drawings also contained foundation plans and structural details and they
wanted to go ahead with the work. It is the submission of learned Senior
Counsel that the learned Arbitrator while arriving at the above finding
has failed to consider the minutes of the meeting dated January 4, 1992
wherein it was pointed out that the following drawings were handed over
to Sh. Deepak Uppal by S.D. Sharma Architect:-
(i) Layout plan of site;
(ii) Ground Floor, first floor, second floor and terrace plan of Type
„B‟ Housing;
(iii) Details of stair case;
(iv) Details of doors and windows;
(v) Structural design of foundation of Type „B‟ Housing.
23. He would state, that the defendant vide letter dated February 11,
1992 had sent drawings of Master Plan; Excavation Plan (Type A to D);
vide letter dated February 22, 1992, defendant has also supplied
Constructional Drawings (Excavation Plan) and Architectural Drawings.
He would further state, that vide letter dated June 11, 1992 the defendant
further provided to the plaintiff the drawings of CMD residence, CGM
residence and Dy. CGM residence; vide letter dated November 23, 1992
the defendant provided to the plaintiff further drawings. It is his
submission, regrettably, the learned Arbitrator ignored the documents,
papers and evidence available on record and without any reasoning or
basis has held under para 14.3 of the Award that no drawings have been
brought on the record of the Tribunal by the defendant. According to
him, this conclusion of the learned Arbitrator is absolutely perverse since
the defendant during the course of the proceedings has exhibited
drawings Ex.201 to 239, and the witness B.C. Dass during cross
examination on August 21, 2007 has categorically stated that the
drawings exhibited in R-201 to R-239 were issued to the plaintiff from
December 17, 1991 to August 31, 1993 as per the requirement of work at
site. The witness also deposed that the plaintiff has started the work on
the basis of the drawings issued to the plaintiff at the time of kick off
meeting and subsequently. The learned Senior Counsel also states that
while deciding the issue of availability of the working drawings, the
learned Arbitrator has failed to appreciate that the witness of the
defendant in para F of the affidavit of evidence filed during the course of
the proceedings had stated that "....the works to be executed under the
scope of LOI was properly designed by the defendant through their
architects well in advance with a set of drawings of proposed block to be
constructed has been annexed in the tender document and detailed
information regarding proposed project has been described in the tender
document". The learned Senior Counsel would state that the conclusion
of the learned Arbitrator was absolutely extraneous to the present
dispute. He would also state, the learned Arbitrator while arriving at a
finding could not have gone beyond the terms of the agreement and any
reference to the terms of the Architect‟s agreement was absolutely
unjustified. He would also state that the learned Arbitrator while
arriving at the finding under the Award had not only described the vital
correspondence between the parties but also failed to return to any
finding on the actual work done by the plaintiff on the project site vis-a-
vis the drawings already released to the plaintiff/contractor. He would
state, that during the minutes of the meeting, there was not even a
whisper from the plaintiff‟s side complaining non provision of the
drawings. Rather, it was the defendant who was complaining of the
delay in execution of the work, stoppage of work, insufficient
manpower, sub-standard quality of goods etc. He also states, that the
drawings are issued stage wise considering the progess achieved under
the previous work schedule which condition has been satisfied in this
case.
24. On the other hand, Mr. M.S.Vinaik, learned counsel for the
plaintiff would support the conclusion of the learned Arbitrator in this
regard inasmuch as the acceptance letter dated December 4, 1991
embodies at para 5 of the letter, copy of the agreement signed between
the defendant and the Architect M/s S.D. Sharma & Associates for
guidance. According to him, the work could not be proceeded smoothly
as defendant/objector failed to furnish approved drawings in time and
there were other lapses on their part. The plan supplied by the defendant
vide letter dated December 17, 1991 was neither signed by the Architect
nor approved by the employer. The same was not duly marked. They
were preliminary drawings and not good for construction. There were
no directions in the letter dated December 17, 1991 to carry out the work
in a phased manner or to initially concentrate on A,B,C & D blocks.
Even the drawings given during the meeting on January 4, 1992 were
only preliminary drawings. The same were neither signed by the
Architect nor approved by the employer as per the requirement of the
contract. No sections or elevation were furnished. Drawings were not
fully dimensioned and the same were not good for construction. Mr.
Vinaik would deny that the scope of work of the contract was covered by
the drawings so issued on January 4, 1992.
Release of Payment to Plaintiff:-
25. On the issue of release of payment to the plaintiff, it is the
submission of learned Senior Counsel for the defendant that no default
has taken place on behalf of the defendant. The delay, if any, resulted
due to lacunae on the part of the plaintiff in its functioning. The Bank
Guarantee of Rs.20 lacs was submitted by the plaintiff by way of 10
Bank Guarantees of Rs.2 lacs each expiring on different dates, which
was a breach of Contract. The preparation of bills got delayed primarily
due to the fact that the plaintiff had not deployed qualified technical
personnel at the site to prepare its bills and submit to the defendant.
Rather, the plaintiff was dependant upon the defendant for preparation of
the bills. The plaintiff never submitted the measurement details and
arbitrarily claimed more amount in abstract cost and secured advance
which created a ground for the plaintiff to blame the defendant for
paucity of funds at a later date. The first RA bill, submitted by the
plaintiff on June 15, 1992, was for Rs.7,63,854/-. The plaintiff did not
submit its own measurement. But still the defendant had forwarded the
first RA bill by recording in the measurement book and getting consent
from the plaintiff towards the acceptance of measurement for work done
and getting it approved from the Architect. Since the amount claimed
was excessive, the payment was released as per the measurements
recorded by the defendant. The Architect passed a bill for Rs.3,77,725/-
on June 29, 1992 and the defendant had released the payment of
Rs.1,82,561/- after deducting the mobilization advance, security deposit,
rebate offered 2.5% of quote value, TDS and amount of Rs.2 lacs on
account of the expiry of Bank Guarantee No.207/92 which expired on
June 24, 1992. The defendant‟s Architect did not entertain secured
advance bill as neither entries were made in measurement book nor the
indemnity bond has been furnished by the plaintiff. Plaintiff submitted
second RA bill on September 8, 1992 for net value of Rs.6,08,674/-.
The plaintiff had calimed an amount of Rs.10,34,594/- up to work value
completed up to second RA bill and secured advance against material for
Rs. 1,43,437/-. The defendant‟s Architect certified the bill for
Rs.5,43,306/-. On the basis of the certification, the defendant released
an amount of Rs.3,93,500/- after effecting statutory deductions. The 3rd
RA bill for Rs.11,15,476/- was submitted on December 11, 1992, where
the work executed was valued at only Rs. 6 lacs and secured advance
against material was as about Rs.5,07,608/-. The Architect certified the
work for Rs.4,16,121.40 and secured advance against material for
Rs.4,80,608/-. On the basis of this certification, the defendant released
the payment for Rs.8,96,789/- on January 13, 1993. The 4th RA bill was
for Rs.7,29,000/- lacs inclusive of secured advance against material
amounting to Rs. 4,54,710/-. The Architect certified the bill, the
defendant released an amount of Rs.4,31,661/-, after valuing the work
done as Rs.3,02,266.75 and Rs.1,29,376 towards secured advance
against material and after effecting statutory deductions on April 15,
1993. The plaintiff submitted the first escalation bill for Rs.1,88,277/-
on April 24, 1993 as the bill furnished by the plaintiff was without any
index and required documents. After certification from the Architect, a
payment of Rs.93,120/- was released. Similarly against the 5th RA bill
for Rs.11,23,376/- in which the plaintiff had claimed an amount of
Rs.6,88,012/- towards secured advance against material. Defendant‟s
Architect certified the 5th RA bill for Rs.4,20,899/- for execution of work
value only, and accordingly the defendant released Rs.4,20,899/- to the
plaintiff. It is his submission that all the payments released were
certified by the Architect. All the payments made against secured
advances have to be adjusted in the subsequent bills and which was duly
done by the defendant. The plaintiff was in the habit of inflating the
bills, creating an impression that the defendant was unnecessarily
effecting deductions. In the 5th RA bill, the defendant had denied the
payment against material advance since advance paid in the 3 rd RA bill
remained adjusted at the time of payment due in the 5 th RA bill. Due to
lack of interest on the part of the plaintiff to complete the work,
defendant preferred to deduct the secured advance against materials due
from plaintiff while passing the bill of 6th RA bill.
26. On the other hand, Mr. Vinaik would submit there was paucity of
funds with the defendant to continue with and complete the project and
the same was noticeable till March 1994. It is his submission, that the
payments were regularly delayed from mobilization advance stage.
Mobilization advance payable was Rs.20 lacs, within 15 days of the
furnishing of the Bank Guarantees but the same was released in two
stages of Rs.10 lacs each of more than 30 days after the Bank Guarantees
were submitted. The RA bills payable within 15 days of submission
were inordinately delayed and invariably paid in instalments. Drastic
unwarranted deductions were made in respect of the bills submitted to
the defendant. Despite a decision that the measurement of the work
already done be carried out on 1st and 15th of each month, the same was
not implemented. On April 25, 1992, the plaintiff requested the
Architect on telephone, to prepare the 1st RA bill. The Architect
promised, his representative would reach the site by February 1, 1992.
On the date fixed, the plaintiff‟s representative was present but no one
came from the Architect‟s side. Finally, the Architect‟s representative
carried out the measurement only on May 15, 1992. The defendant
informed the plaintiff that the 1st RA bill would be prepared by the
defendant and sent to its consultants. The defendant, however, did not
inform the plaintiff as to whether the bill has been prepared, sent or
passed by the defendant. It was only on June 15, 1992, the plaintiff
finally submitted its 1st RA bill for Rs.7,63,854.74/-. The defendant
however paid only a sum of RS.1.67 lacs on July 22, 1992 and Rs.1.96
on August 4, 1992. With respect to 2nd RA bill, which was for
Rs.6,08,874.50, the defendant paid an amount of Rs.3.93 lacs on
September 30, 1992 and October 6,1992. The defendant promised to
pay the balance amount later. The 3rd RA bill was of December 11, 1992
for the net value of RS.11,15,474.60. The Architect approved the bill for
Rs.9,10,723/- but the same was not fully paid and also amount paid was
in instalments. Against the 4th RA bill, which was for Rs.7.29 lacs, the
respondent paid only about 4.31 lacs on April 14, 1993 and promised to
pay the balance later. Against the first escalation bill of Rs.1,88,277/-, a
payment of Rs.93,000/- was made only on November 26, 1993 i.e seven
months after the date of submission. On or about May 10, 1993, the
plaintiff submitted its 5th RA bill for Rs.11,23,376/- against which an
amount of Rs.4.21 lacs was paid on August 23, 1993. Similarly, against
6th RA bill for an amount of Rs.14.26 lacs was reduced to Rs.8,14,288/-.
Even the said amount was not paid. Only a sum of Rs.55,511/- was paid.
As per commitment made by the defendant in the meeting held on July
11, 1994, at least Rs.2.50 lacs should have been released by July 18,
1994 but was not released and the remaining Rs.5,08,777/- lacs should
have been but was not released soon thereafter nor at the time of
invocation or even thereafter. According to him, the defendant had
admitted that the quantum of the work done by the plaintiff was for
Rs.41 lacs and if an amount of escalation of Rs.8,44,795/- is added then
the amount would be Rs.49,44,795/-. Against this, the defendant had
allowed a sum of Rs.34,47,728/- only to the plaintiff. In any case,
against this claim, the learned Arbitrator has allowed an amount of
Rs.9,97,067/-.
Provision of Electricity:-
27. The submission of Mr. Singhal on the aspect of electricity was, the
defendant was liable to provide electricity for site security only.
According to him, Article 29 of the Contract clearly says that the
contractor shall arrange the power required for the construction only and
the reason given by the plaintiff is false and with ulterior motive.
28. On the other hand, Mr. Vinaik, would state that the electricity was
to be provided by the defendant in terms of the agreement, which it
failed to do till the termination of the contract. The plaintiff has been
reminding the defendant about this essential requirement as work could
not progress smoothly without electric power and had put the defendant
to notice to the effect that it would liable to pay compensation for delay
in this behalf. He would refer to letters dated March 3, 1992, September
3, 1992 and February 13, 1993. On March 21, 1993, the default on the
part of the defendant was taken up with the CMD which figures in the
minutes of the meeting. Even till the date of termination, the defendant
neglected and defaulted in making available the required electricity
power at the site. According to Mr. Vinaik, the NIT clearly stipulate,
electric power required for construction shall be arranged by owner to
the contractor at his own cost which imply that the electricity was to be
provided by the defendant to the plaintiff free of cost. The defendant did
not arrange for electric power till September 12, 1995. For want of
electricity, the work could not progress sufficiently as the equipment
could not operate.
Issue of Extension:-
29. Insofar as the issue of extension is concerned, it is the submission
of learned Senior Counsel for the defendant that the learned Arbitrator
while passing the Award had ignored the documents filed by the
defendant which clearly and unequivocally suggests that the plaintiff was
afforded time to time extensions which were duly recorded in not only
the correspondence between the plaintiff and the defendant but also
forms part of the subject of the letters written by the plaintiff to the
architect and importantly, has been an agenda of the meeting between the
senior officials of the defendant and the plaintiff recorded in the minutes
of the meeting placed on record. The evidence placed on record clearly
suggests that the plaintiff despite repetitive and umpteen extensions
afforded by the defendant abandoned the work at the project site which
constrained the defendant to finally terminate the agreement on
September 1, 1995. He would state that;
(1) the learned Arbitrator had ignored the documents of the plaintiff
seeking extension of time as per Ex.C-16, C-42 and C-43;
(2) the plaintiff suspended the execution of the work with effect from
February 28, 1994, the defendant arranged meeting and taking note of
the lapses on the part of the plaintiff (i) Non renewal of the Bank
Guarantee; (ii) Poor performance of work (iii) suspension of work from
February 1994; (iv) non posting of any technical staff and non-
appointment of an authorized representative;
(3) The plaintiff replied to the aforementioned in affirmative and
promised to commence the work in a week (s) time and making it fully
mobilized in 15-20 days;
(4) Desptie the failure of the plaintiff to mobilize resources, the
defendant released payment of the 6th running bill when outstanding
mobilization advance was over 17 lakhs and there was no performance
bank guarantees;
(5) On November 21, 1994 the authorized representative of the
plaintiff sought 10 days time for mobilization of the site and was
informed of their failure to revalidate the Bank Guarantees and next
meeting was fixed for December 7,1994 which was not attended by the
plaintiff and also the Bank Guarantees were also not revalidated;
(6) In the next meeting on January 13, 1995 when the Bank
Guarantees were not revalidated, the plaintiff was given time to
revalidate the Bank Guarantees by January 16, 1995 and for the complete
year did not get Bank Guarantees revalidated and further time till
December 31, 1995 was given and the plaintiff without any further
mobilization or execution of work sought extension uptil May 10, 1996;
(7) On August 7, 1995 the plaintiff called upon to pay imaginary
claims, the defendant called upon the plaintiff to finally resume the work
within 7 days vide letter dated August 21, 1995;
(8) On failure of the plaintiff to either resume work or revalidate the
Bank Guarantees, the defendant determined the contract vide letter dated
September 12, 1995.
30. On the issue of extension Mr. Vinaik had stated that the plaintiff
was entitled to extension of time because the work was impeded on
account of hindrance caused by the defendant, which aspect has been
considered and found to be correct by the learned Arbitrator in the
Award. He would also state, that another reason for the delay was, the
defendant was to get the treatment of anti-termite from a specialized
agency and the defendant did not nominate any particular agency and the
plaintiff itself negotiated with the pest control company for execution of
the work. There was another undue delay in taking a decision to allow
the use of river borne aggregates instead of crushed aggregates. Another
hindrance was caused when defendant introduced Special Security
Checking Systems installing barriers and controlling the entry and exit of
all workers thereby causing undue wastage of time. The defendant was
to provide an alternate site for labour hutments, offices, stores but due to
the non-availability of spaces, there was undue delay in the execution of
the work.
Termination of the Contract:-
31. It is the submission of learned Senior Counsel for the defendant
that the learned Arbitrator has travelled beyond the submissions and the
pleadings. It was not the case of the plaintiff that (a) termination was
under a wrong clause; (b) signing of the termination letter by alleged
non-authorized person. The Arbitrator had no power to initiate any
roving inquiry over the award of contract for the balance works to any
third party and any observations of the learned Arbitrator in that regard
were totally extraneous. He would state, that the company secretary was
within its competence to issue the termination letter since the company
secretary was inherently authorized by the CMD of the defendant
company to sign and execute the documents on behalf of the defendant.
According to him, clause 1(iii) mandates employer‟s representative to be
the Chairman-cum-Managing Director or any person authorized by him
as would be In-charge of the work. He would also state, that Article 12
of the agreement between the parties provides a specific power to
terminate the contract with the contractor and get the work executed at
the risk and cost of the contractor. The power under Article 12 is
independent of the power under Article 28 of the agreement, which
provides for the termination of the agreement.
32. Mr.M.S.Vinaik would submit that the termination was not only
unjustified but also illegal. Under Article 12 of the agreement, the
owner was to give a notice in writing to the contractor asking him to
make good the reasonable orders of the owner with regard to failure or
neglect or contravention of the contract. It is only on failure to comply
with the reasonable orders of the owner, the owner may proceed against
the contractor. In this case, no such notice under Article 12 was issued
to the plaintiff but a letter dated August 21, 1995 was issued by the
company secretary to the plaintiff, which was not a proper notice as the
same was not signed by the owner or the representative in terms of item
1(iii). According to him, there was no contractual lapse on the part of
the plaintiff. He would state, that the direction of the defendant to the
plaintiff to resume the work, though the plaintiff had not stopped the
work at the site without extension of time limit was unreasonable. He
would justify the conclusion of the learned Arbitrator in this regard.
33. Insofar as the claims made by the plaintiff before the learned
Arbitrator are concerned, it is the submission of learned Senior Counsel
for the defendant that no reasons have been given by the learned
Arbitrator and while deciding the quantum of the claims. He would also
state that Arbitration ought to have allowed the claim of the defendant of
liquidated damages. He would state, that, the Arbitrator once allowed
loss of profit, he could not have allowed other claims. Further,
escalation could not have been allowed, because of non-submission of
bills on that account. The defendant relied upon the following
judgments; State of Kerala vs. K. Kurien P. Paul AIR 1992 (Kerala)
180; Indian Oil Corporation vs. Indian Carbon Ltd. 1988 (3) SCC 36
and K.P Poulose vs. State of Kerala and Anr. 1975 (2) SCC 236; and
Kuldip Kumar Suri Vs. Delhi Development Authority, AIR 1995 Delhi
82.
34. On the other hand, Mr. Vinaik would justify the claims as granted
by the learned Arbitrator in the following manner:-
Claim No.1 (Loss of Profit):-
35. The total cost of the work was Rs.200 lacs. The defendant
admitted the plaintiff having done work for Rs.41 lacs. Hence, he had
allowed profit of 10% is Rs.159 lacs (balance) by awarding an amount of
Rs.15,90,000/-.
Claim No.2 (In respect of preliminary works vis temporary offices,
temporary store,water storage tank, temporary water distribution lines
and labour hutments):-
36. It was the contention of Mr. Vinaik that the learned Arbitrator has
held that the defendant was obliged to provide suitable site for labour
camp of the plaintiff. As per Article 29(ii) (2), failure to do so amounts
to breach of the contract and breach goes to the root of the matter.
According to him, in the claim statement, the plaintiff had submitted that
it had to carry out the following preparatory work:-
(a) Construction of temporary offices and stores for storage of
cements, other articles to be incorporated in the works and for locating
tools and plants;
(b) Construction of hutments was required by the contract. It was
accordingly done;
(c) Construction of the tank for storage of water.
37. According to the plaintiff, the aforesaid items have costed a sum
of Rs.2 lacs to the plaintiff. It was his submission in the defence
statement, the defendant admitted (a) and (b) above. Regarding (c), the
defendant had stated that for the amount of these items, the plaintiff be
put to strict proof. He would state, the learned Arbitrator has assessed
the award amount of Rs.1,70,130/- which is justified.
Claim No.3 (In respect of 25% costs of the materials):-
38. The claim was for an amount of Rs.4,47,475/-. According to him,
in the reply, the defendant did not deny the claim except stating that the
defendant has no objection if the plaintiff take away the material from
the site after proper inventories are prepared and plaintiff furnishes
security against the outstanding mobilization advance. According to him,
by inference, the claim was admitted. According to him, inadvertently in
the reference letter dated August 7, 1995, the plaintiff had mentioned the
claim for Rs.1,93,945/-. In other words, the plaintiff voluntarily reduced
the claim to Rs.1,93,945,- and the Arbitrator upheld the same. According
to him, there is an adequate reasoning for grant of the said amount.
Claim No.4 (In respect of work done, measured and approved but short
paid):-
39. The claim relates to an amount of Rs.5 lacs payable to the plaintiff
against 6th R/A bill. He would rely upon the proceedings of the meeting
held on July 11, 1994, wherein, it was stated as under:-
"Managing Director BIBCOL informed Sh. Uppal
of M.s Uppal Engineering Company Pvt. Ltd that 50%
of Rs.5 lacs due against 6th R/A Bill would be released
and the balance amount will be released after the check
of the detailed estimate between M/s S.D. Sharma &
Associates Pvt. Ltd and BIBCOL. It was agreed that
Rs.2.5 lacs would be released on 18th July, 1994 after
the return of G.M. (F and "A") from tour".
According to him, the aforesaid would justify the claim granted.
Claim Nos.5 & 6 (In respect of work done but not measured):-
40. Insofar as claim Nos.5 & 6 are concerned, it is his submission that
the value of work done was Rs.41 lacs. The value of work paid to the
plaintiff on the basis of architect certification as admitted by the
defendant was Rs.31,02,933/-. (Total amount paid against R/A bill 1 to
5 with escalation was Rs.26,02,933/-. Amount to be paid against RA bill
No.6 as per claim No.4 was Rs.5 lacs). The balance to be paid was
Rs.41,00,000 - 31,02,933 = Rs.9,97,067/-, which has been granted by
the learned Arbitrator.
Claim No.7 (In respect of expenditure on central offices/site overheads):-
41. Insofar as the claim No.7 is concerned, in terms of the reference
letter dated August 7, 1995 was in the amount of Rs.3,80,000/-. So was
the final claim as consented by the plaintiff during arguments. The plea
that the said claim does not find mention in the reference letter dated
August 7, 1995 was rejected by the learned Arbitrator at para 29.1 (page
36 of the Award). According to him, the learned Arbitrator allowed the
compensation probably for the central staff and not for site staff at
Rs.1,90,000/- only which according to Mr. Vinaik is a finding of fact and
cannot not be interfered by this Court. He would also state, that the
defendant had not raised any objection to the amount of the Award.
Claim No.8 (In respect of expenditure on tools and plants and shuttering
materials etc):-
42. Claim No.8 is for under utilization of plant and machinery during
construction period, on account of delays attributable to the defendant.
Initially the plaintiff had mentioned the damages in the amount of
Rs.7,20,000/- as per the reference letter dated August 7, 1995 but had
raised to Rs.15,78,000/- in the claim statement. In the defence
statement, the defendant stated that it was willing for adjudication of the
claim in the amount of Rs.7,20,000/- only. The plaintiff agreed to the
said amount. He would justify the Arbitrator assessing the damages at
Rs.3,60,000/- more particularly when there is a conclusion in favour of
the plaintiff that the delay that has caused to the work was attributable to
the defendant.
Claim No.11 (In respect of tools, plants, machinery, equipment and
shuttering materials taken possession by the defendant):-
43. With regard to award of this claim, it is the submission of Mr.
Vinaik, learned counsel for the plaintiff that the claim was to cover the
cost of tools, plants, machinery, equipment and shuttering materials
taken over by the defendant at the time of wrongful termination of the
Contract. In the reference letter, a claim for Rs.28 lacs was made. The
plaintiff had demanded return of machinery valuing Rs.28 lacs. In the
claim statement, the value of the machinery was reduced to Rs.18 lacs.
In the defence statement, the defendant did not refute the inventory of
the articles nor the valuation thereof but took a plea that this was not the
part of the dispute referred to the Arbitrator. The said plea was rejected
by the Arbitrator by holding that this claim corresponds to narration at
page 6 of the reference letter. The learned Arbitrator after taking into
consideration the material on record revealed during arguments, allowed
an amount of Rs.9 lacs in favour of the plaintiff which according to him
is a finding of fact and the Court would not interfere. He would state
that the learned Arbitrator has allowed a set off claim of Rs.15,95,019/-
in favour of the defendant.
Claim No.12 (In respect of refund of retention money withheld from RA
bills):-
44. With regard to claim No.12, it is the submission of Mr. Vinaik,
learned counsel for the plaintiff that the initial claim was for
Rs.1,33,275/- but during arguments, it was revised to Rs.1,72,186/-. The
defendant admitted the claim in the amount of Rs.1,07,021/- in reply on
page 19 of the defence statement. According to him, the learned
Arbitrator did not allow the upward revision of the claim amount by the
plaintiff but granted an amount of Rs.1,33,275/- in favour of the plaintiff.
Claim No.14 (In respect of interest):-
45. With regard to this claim, learned counsel for the plaintiff would
justify the interest granted by the learned Arbitrator and relied on the
following judgments in support of its contention:-
(i) D.C. Kapoor, proprietor M/s Dipson and Co. vs. DDA-1996 (2)
Arb-LR349;
(ii) M/s Hindustan Tea Co. vs. M/s K. Shashi Kant & Co. and anr AIR
1987 SC 81;
(iii) M/s Sundasan Trading Co. vs. The Govt. of Kerala and anr. AIR
1889 SC 890;
(iv) Firm Madan Lal Roshan Lal Mahajan vs. Hukum Chand Mills
Ltd. Indore AIR 1967 SC 1030;
(v) Puri Constitution Private Limited vs. Union of India AIR 1989
777;
(vi) Goa, Daman & Diu Housing Board vs. Ramakant V.P. Darvotkar
AIR 1991 SC 2089;
(vii) Hindu Builders vs. UOI AIR 1990 SC 1340;
(viii) Indian Oil Corporation vs. Indian Carbon (1988) 3 SCC 36;
(ix) DDA vs. Alkaram AIR 1982 Delhi 365;
(x) Chaudhary Construction Co. vs. MCD 1995 (34) Arb LR 428;
(xi) DDA vs. Uppal Engineering Const Co. AIR 1982 Delhi 425.
Conclusion:-
46. Before I deal with the respective contentions of the learned
counsel for the parties on the issues and the claims decided by the
learned Arbitrator, I would deal with the judgments referred to by them.
47. Insofar as the judgments relied upon by the defendant in its
submissions are concerned, in the case of K.P.Poulose (supra), the
Supreme Court held, under what circumstances, the award can be set
aside inasmuch as if the Arbitrator, on the face of the award arrives at an
inconsistent conclusion, even on his own finding or arrives at a decision
by ignoring the very material documents, which throw abundant light on
the controversy to hold a just and fair decision. It is in a sense that the
Arbitrator has misconducted the proceedings in the case. The Supreme
Court has set aside the award of the Arbitrator, remaining back the
matter for completing the proceedings after considering the relevant
documents.
48. In State of Kerala and Anr. Vs. K. Kurien P.Paul, AIR 1992
(Kerala) 180 wherein according to him, the Arbitrator misconducts the
proceedings when; (a) there is a defect in the procedure followed by him;
(b) Arbitrator commits breach and neglect of duty and responsibility; (c)
acts contrary to the principles of equity and good conscience; (d) acts
without jurisdiction or exceeds it; (e) acts beyond reference; (f) proceeds
on extraneous circumstances; (g) ignores the material documents; (h)
basis the award on no evidence .
49. The reliance placed by the defendant in the case of the Supreme
Court in Indian Oil Corporation Vs. Indian Carbon Ltd. (1988) 3 SCC
36 is concerned, the Supreme Court has held that if there is no evidence
to support the conclusions or if the award is based on legal proposition,
which is erroneous, the award can be set aside.
50. In the case of Kuldip Kumar Suri (supra), this Court on a finding
that the learned Arbitrator based his finding only on the documents R-2
to R-5, without considering the document C-22 and R-46, which
according to this Court, was the material document and non
consideration of the same makes the award of the Arbitrator suffer from
an error apparent on the face of the record. To that extent, this Court had
remanded the matter back to the Arbitrator for reconsideration.
51. Insofar as the judgments relied upon by the learned counsel for the
plaintiff are concerned, in the case of D.C.Kapoor (supra), this Court
was of the view that the Arbitrator is the sole judge of the quality as well
as the quantity of the evidence and it is not for the Court to take upon
itself the task of being a judge of the evidence before the Arbitrator. The
Court held, it may be possible on the same evidence the Court might
have arrived at a different conclusion than the one arrived at by the
Arbitrator, but that by itself, is no ground for setting aside the award of
the Arbitrator.
52. In the case of Hindustan Tea Co. (supra), the Supreme Court, in
the given facts, has held that the award was a reasoned one and was not
open to challenge on ground that the Umpire had reached at a wrong
conclusion or failed to appreciate facts or acted contrary to Section 70 of
the Contract Act, 1872.
53. In the case of M/s. Sudarsan Trading Co. (supra), the Supreme
Court made a distinction between the excess of jurisdiction and the error
apparent on the face of the award. The Supreme Court held, award in
excess of the jurisdiction is open to judicial review by appreciating the
evidence not appearing on the face of the award. But, in a case the
award is within jurisdiction mode of exercise of jurisdiction is not open
to the judicial review. The Supreme Court further held that in case of
non-speaking order, the Court cannot probe into the reasoning of the
award. Even where reasons given by the award, the Court cannot
appreciate the evidence to examine the reasonableness of the reasons.
The Court was also of the view that the award can be set aside on the
ground when there is any erroneous legal proposition in the award or in
any documents incorporated in it, on which award is based, but not when
a specific question is referred even though answered to the question
involved an erroneous decision on point of law.
54. In the case of Firm Madanlal Roshanlal Mahajan (supra), the
Supreme Court held that the Arbitrator‟s award, on both fact and law, is
final and there is no appeal from his verdict. The Court cannot review
the award or correct any mistake in its adjudication unless the legality of
the award is apparent on the face of it. When Arbitrator has given no
reason for award, nor there is any legal proposition as basis of award,
contention that there are errors of law on the face of award, must be
rejected.
55. In the case of Puri Construction Pvt. Ltd. (supra), the Supreme
Court held that the Court deciding the objections against the award,
cannot examine the correctness of award on merits by re-appreciating the
evidence. The Court held, the Arbitrator, a highly respectable and
competent person and his integrity not doubted by the parties, the Court
in the facts, rejected the objections.
56. In the case of Goa, Daman and Diu Housing Board (supra), the
Supreme Court held, in the given facts, the Arbitrator recorded reasons
and has committed no misconduct.
57. In the case of Hind Builders (supra), the Supreme Court rejected
the contention of error apparent on the face of the award and that the
Arbitrator has exceeded the authority conferred by the terms of the
contract. The Supreme Court on facts held, no error could be found in
the award as the Arbitrator has not ignored or overlooked any term of
the contract or, on the contrary acting upon a particular interpretation of
certain clauses of the contract on which two views were possible.
58. In the case of Indian Oil Corporation Ltd. (supra), the Supreme
Court held that the award should at least indicate the mind of the
Arbitrator as to how and why he acted in a specific manner. The
Supreme Court held, mentioning of factors in the award on the basis of
which Arbitrator reached his conclusion is sufficient compliance with the
requirement to state reasons; and in the absence of any error of law and
fact, held, such award is unassailable.
59. In the case of Delhi Development Authority (supra), this Court
held, where the Arbitrator mistake a fact either on law or fact, but such a
mistake does not appear on the face of the award, the award is good
notwithstanding the mistake and will not be remitted or set aside.
60. Similarly, in the case of Chaudhary Construction Co. (supra),
this Court rejected the challenge to the award on the ground that there
was no evidence before the Arbitrator to arrive at the findings as returned
by him by holding that the Court cannot sit in appeal over the award and
can set aside only if it is a apparent from the award itself that there was
no evidence to support the conclusion. The Courts are reluctant to
interfere with the decision of the expert, who has chosen as an Arbitrator
by the parties. In the absence of any error on the face of the award, no
interference is called for. It also held that the Arbitrator is not required
to give a detailed judgment but only to indicate his mind as to how, he
arrived at a decision in the award.
61. Similarly, in the case of Delhi Development Authority Vs. Uppal
Engineering Construction (supra), this Court held that if the Arbitrator
makes a speaking award and given reasons, the Court cannot set aside
the award merely because the Court have to give to a different
conclusion. The Court cannot re-examine and re-appreciate the evidence
and sit in an appeal over the conclusion of the Arbitrator in the
proceedings to set aside the award.
Clearances from BKDA:-
62. Having heard the learned counsel for the parties and perused the
written submissions made, insofar as the submission made on the
clearances from BKDA is concerned, the requirement under the
agreement to get the approval of the BKDA was not on the plaintiff. The
statutory approval is mandatory for any construction activity. The stand
of the defendant that the issue of statutory approval is not relevant for the
execution of the work nor the plaintiff ever demanded the same is
concerned, suffice to state that for the construction activity, the approval
must be in place. It is noted that as per defendant‟s own stand that the
approval of the BKDA was conveyed to the plaintiff on April 8, 1992,
would demonstrate that the approval, which was to be in place within 7
weeks (1 month 3 weeks), was secured only after 3-4 months of the zero
date which was in breach of the stipulation in the contract. It only
shows, that the defendant did not approach the work in a systematic
manner. No doubt, the defendant had called upon the plaintiff to carry
out the construction activity to the North side (rear) of the plot only
beyond 220 feet from the Bulandshahar Khurja Road till such time the
approval is granted by the BKDA. It appears that the said work also
could not be carried out for want of specifically marked modified layout
plan. The learned Arbitrator has rightly rejected the stand of the
defendant by referring to Article 8(B) of Schedule II and Schedule III
that obtaining the requisite clearances was the responsibility of
employer/Architect. It is noted, that, the Arbitrator, was also of the view
giving partial clearances or piecemeal availability of site does not satisfy
the contractual obligation of the employer. He rejected the stand of the
defendant, that the non-obtaining of the requisite clearances within time,
was no hindrance or breach of contract. I agree with this conclusion.
Surely this delay, coupled with delay caused by other factors
cumulatively delayed the work beyond the last date. Suffice to state,
there is no breach on the part of the plaintiff.
Issue of Drawings:-
63. Having heard the learned counsel for the parties and considered
the submissions made by them, the stand of the defendant that there was
no delay on its part in issuance of drawings to the plaintiff and the
drawings were issued in time or progressively keeping in view the pace
of work by placing reliance on the drawings issued from time to time on
December 17, 1991, January 4, 1992, February 22, 1992, March 7, 1992,
June 11, 1992, November 23, 1992 for that matter till May 24, 1993 and
the amendments thereon carried out were minor and as and when the
drawings were updated, the previous drawings were termed as void and
heavy reliance placed by the defendant on the statement filed by it
showing the number of drawings issued by the defendant would fall flat
in view of the letter dated May 24, 1993 which was noted by the learned
Arbitrator, wherein the defendant has taken a stand that all previous
drawings issued may be treated as void and the work be carried out as
per the fresh drawings. The particulars of the drawings sent by the
defendant are as under:
"The following up-to-date drawings received from M/s. S.D.
Sharma & Associates, Chandigarh on 24.5.93 are sent
herewith. As informed by the architects all previous
drawings issued may be treated as void. The work may
kindly be carried out as per fresh drawings (now issued).
Kindly intimate if all the drawings are in order.
Drawing No.
1. Type „A‟ Structural drawing.
1. Ground Floor S-002
2. First Floor S-003
3. Second Floor S-004
2. Type „B‟
1. Ground Floor S-002
2. First Floor S-003
3. Second Floor S-004
3. Typical stair case detail for Type „A‟, „B‟, „C‟ & „D‟:
Houses SC/S/01
4. Plan, elevation, sector, Type „D‟ WD-11
5. Elevation & Section WD-03
6. Plan Ground Floor, First Floor, Second
Floor & Terrace, Type „A‟ WD-02
7. Plan elevation & section, Type „C‟ WD-08
8. Plan elevation & section, Type „B‟ WD-06
9. Public Health & electrical layout
(services) Type „B‟ WD-07
10. Plan Ground Floor, First Floor,
Second Floor & Terrace, Type „B‟ WD-05
11. Services drawing, Type „A‟ WD-04
12. Services drawing, Type „C‟ & „D‟ WD-10"
64. The date of the letter is relevant, which in this case is the date,
after the expiry of the last of completion of work. The letter reveals up-
to-date drawings received from the Architect with a clear stipulation, the
work be carried out as per fresh drawings. The drawings included
structural drawings. It can be concluded as rightly did by the learned
Arbitrator that the drawings issued were structural drawings and not
finished drawings without which no worthwhile construction can be
organized on the ground.
65. The submission on behalf of the defendant based on Exh. 201 to
Exh. 239 also need to be rejected inasmuch as the said Exhibits includes,
if not at all, most of them, the drawings which were given to the plaintiff,
but were later treated as void in terms of letter dated May 24, 1993. The
submission based on the affidavit of the defence witness is also need to
be rejected in view of the letter dated May 24, 1993, which speaks
otherwise. Similarly, the submission that drawings were timely released,
also needs to be rejected as they were later treated as void. It is also
clear that the drawings, if at all, fit for construction, can be said to have
been issued only on May 24, 1993 and not before that date, which is
after the last date of completion of work as per the contract. The learned
Arbitrator‟s finding on the aforesaid aspect is pursuant to examination
made by him on the drawings submitted during the arbitration
proceedings. As per the Architect‟s agreement, he was required to
prepare the working drawings, details of work including architectural
and structural, water supply, sanitary and electrical installations
drawings, external sewerage, furniture, furnishings and interior
decoration designs and obtaining the approval from the employer. It is a
finding of the learned Arbitrator that most, if not all of them, were dated
after the date of completion of the project. It is also his conclusion that
most of the drawings were in a disjointed manner. The Arbitrator comes
to a conclusion that there is a major breach of contract by the defendant
by supplying drawings belatedly, which aspect goes to the root of the
contract. These are findings of fact. I do not find any infirmity in the
conclusion of the learned Arbitrator. This Court is of the view that the
letter dated May 24, 1993 is conclusive which proves that drawings
given between December 1991 to at least till May 1993 were treated as
void and fresh set of drawings were given so as to carry the construction
activity as per the said drawings.
Release of Payments to the Plaintiff:-
66. Insofar as release of payments to the plaintiff is concerned, the
parties have justified their respective positions. Be that as it may, the
conclusion of the learned Arbitrator, primarily was that against the work
of Rs. 41 lacs done by the plaintiff and admitted by the defendant only
an amount of Rs.34.5 lacs was paid to the plaintiff and the learned
Arbitrator has also concluded that the plaintiff was entitled to the
escalation in terms of clause 10cc of the CPWD. He has given a finding
that the shortfall leads to an inescapable conclusion that the work
executed was not properly recorded or if recorded it was incorrectly
omitted in compilation of assessment of the value of work. He proceeds
to grant the difference of the amount, so also the escalation in terms of
clause 10cc of CPWD. The finding of the Arbitrator in this regard
would be relevant for the purpose of claim made by the plaintiff for
payment for the balance of work done, and not paid including the
escalation. To that extent, the finding of the learned Arbitrator needs to
be upheld. The argument of the defendant that the finding of the learned
Arbitrator does not have any reasonable basis, documentary evidence on
record, is liable to be rejected, for two reasons; (1) the same is based on
accepted position of the defendant; (2) the figures of Rs. 34.51 lakhs and
Rs. 41 lakhs have not been contested by the defendant in the
objections/submissions.
Provision of Electricity:-
67. On the aspect of electricity, the submission of the learned Senior
Counsel based on Article 29 of the Contract to contend that the
defendant was liable to provide electricity for site security only was
rejected by the learned Arbitrator by stating that the same was
misquoted. I reproduce the relevant Article i.e Article 29 as noted by the
learned Arbitrator as under:-
"The owner shall make available to the contractor
land, electricity, access to job site and site security for overall
plant, site boundaries so far as they are applicable to the
contract, power required for construction shall be arranged
by the contractor"
68. Article 18 (ix) of NIT, as quoted by the learned Arbitrator reads as
under:-
"The contractor shall be entitled to use such supplies
of electricity and water as are arranged by the owner under
the terms of this contract at the site for the purpose of the
works and shall at his own expense receive such supply at the
point or location provided by the owner/other
contractors/vendors"
Clause 6.45 of the contract/NIT reads "Electric Power required for
construction shall be arranged by owner to the contractor at his own
cost".
69. The learned Arbitrator was of the view that a conjoint reading of
Article 29, Article 18, Sub-para (ix) of the NIT and clause 6.45 give a
clear meaning to the Contract, in that the responsibility for providing
electricity to the plaintiff remained with the defendant. However, the
supply was not to be free. The plaintiff was required to pay for it after
arranging the distribution from the terminal to be provided by the
defendant. I note that the plaintiff had written letters dated March 3,
1992, September 3, 1992 and February 13, 1993; C-14, C-15 and C-16
respectively to which no response denying the liability to provide
electricity was given by the defendant. At least, nothing has been pointed
out by the defendant. On this, the learned Arbitrator was justified in
coming to the aforesaid conclusion.
Issue of Extension:-
70. Having heard the learned counsel for the parties, from the facts as
noted above and also taken into consideration by the learned Arbitrator,
it is clear that the delays occurred because of the defendant, which were
justifiable grounds for the extension of time. The conclusion arrived at
by the learned Arbitrator on the aspect of delay is not only confined to
delay in issue of drawings but also delay in payment to the plaintiff,
approval from BKDA, on the aspect of anti-termite treatment, inability
to provide electricity, under such circumstances, the defendant was
required to take a decision on the extension, which it failed to do.
71. Insofar as the submission of the defendant that the Arbitrator has
ignored the admitted documents of the plaintiff‟s seeking extension of
time is concerned, suffice to state, the documents have to be read in
perspective inasmuch as the plaintiff has not accepted that the delays are
attributable to it. The plaintiff in the letter dated February 13, 1993
(Exh. C-16) would state that the extension of time limit due to
hindrances beyond the control of the contractual agency, is justified.
The plaintiff did not say that the delays were attributable to it. Similarly,
the letter dated March 2, 1995 (Exh. C-42) would reveal that the plaintiff
has stated that the work could not be completed within the stipulated
period for various reasons including that the defendant did not have
sufficient funds to support the project. There is nothing in the Exh.C-16,
Exh.C-42 and Exh. C-43 which would have a bearing on the conclusion
of the learned Arbitrator under this head. It is clear that the extension of
time was necessitated for the delays attributable to the defendant.
72. On the aspect of non-renewability of bank guarantees and failure
on the part of the plaintiff to execute/commence the work, which was
stopped on February 28, 1995 is concerned, the same would not justify
non extension of contract by the defendant. Surely the past conduct of
the defendant has been such, there was apprehension. That apart, the
said reasons are primarily grounds in relation to the termination of the
contract by the defendant which have no bearing on the conclusion of the
Arbitrator, that the defendant breached the contract by not granting
extension of time to the plaintiff before the expiry of the period in April
1993, otherwise, contractor had the option to rescind the contract, work
under compensation or work without prejudice to claim damages.
73. According to the learned Arbitrator, the bargaining position could
not have been adopted by the defendant. The Arbitrator was of the view
that the defendant had not met its contractual obligation to decide the
extension of time and has thus defaulted and breached the contract. The
conclusion of the learned Arbitrator is justified in that regard.
Termination of Contract:-
74. Having heard the learned counsel for the parties, in view of the
conclusion above, be that on the aspect of approval from BKDA, on the
aspect of supply of drawings, on the aspect of provision of electricity, on
the aspect of payment of bills, on the aspect of issue of extension, the
conclusion necessarily be that the defendant cannot justify the
termination as there was no fault on the part of the plaintiff. Even
assuming that the plaintiff had stopped work much before the
termination of the contract, the same is justifiable for the reasons
aforementioned. The defendant was at liberty to get the balance work
executed by a third party, which according to the Arbitrator, the
defendant did not got executed, which is clear from the narration in the
award of his visit to the site. The justification given by the defendant
that it was technically not feasible was not believed by the learned
Arbitrator.
75. Insofar as the illegality pointed by the defendant on the finding of
the learned Arbitrator is concerned, meaningfully read, the Arbitrator
award must be read to mean the power of the defendant to terminate the
contract, could not have been exercised in the given facts, more-so, when
there is no extension of time.
76. It would not be relevant to go into the aspect of competency of the
Company Secretary to terminate the contract, when on merit the
termination was held to be unjustified.
77. The learned Arbitrator on each issue framed was of the following
view:
(i) The claimant has not breached the contract and did not fail
to comply with the terms and conditions of the contract;
(ii) The defendant has breached the contract and did not
comply with the terms and conditions of the contract;
(iii) The claims of the claimant are in consonance with the
reference order and there is no bar to the claimant raising its
claims;
(iv) The respective claims/counter-claims are legally tenable;
(v) The defendant has breached the contract and the breach
goes to the root of the contract, the claimant is entitled to
compensation/damages.
Insofar as the stand of the defendant that the learned Arbitrator has not
considered the following submissions of the defendant is concerned;
(i) Failure to set up testing laboratory;
(ii) Inadequate man power;
(iii) Failure to submit chart;
(iv) Submission of analysis of date for supply and consolidation
of soil inside campus;
(v) Supply of indemnity bond;
(vi) Attempt to use material which were not in conformity with
the specification;
(vii) Failure to submit proper Bank Guarantee for mobilization
advance and security deposit etc.
suffice to state, the plaintiff has some explanation to give inasmuch as
insofar as the anti-termite treatment is concerned, its stand was, the
defendant did not nominate any particular agency. The plaintiff
negotiated with pest control company for executing the work and
brought it to the notice of the defendant, who was at liberty to accept the
said agency or nominate another agency of its own. The defendant took
no action for almost three months in the matter, thereby causing
disruption in the work. The plaintiff relied on its letters dated March 30,
1992 and April 8, 1992 in that regard. The defendant ultimately, allowed
the plaintiff to carry out the anti-termite work itself, but the work got
delayed. Even on the aspect of shingle is concerned, it was the stand of
the plaintiff which has been noted by the learned Arbitrator that there is
undue delay by the defendant in taking decision to allowing the use of
river borne aggregates instead of crushed aggregates. The specification
in the agreement permitted use of coarse aggregate other than crushed
stones conforming to provisions of specifications under specific
conditions, if permitted by the Engineer-in-Charge. There were serious
problems in the availability of crushed stone. Ultimately, it resulted in
litigation before the Supreme Court. The Supreme Court prohibited
quarrying/crushing activities. Therefore, the plaintiff requested the
defendant to permit the use of river bed shingle instead of crushed stone
aggregate. This substitute items was also provided in the specifications
items 15(b)(i) of the N.I.T./contract. The defendant had to expeditiously
decide in the matter, but failed and neglected to do so for over a period
of 34 days. The defendant finally accorded permission vide letter dated
July 4, 1992. Similarly, insofar as the aspect of the deployment of
manpower by the plaintiff is concerned, there is a finding of the learned
Arbitrator that the consultant never provided the name of its
representative while the plaintiff did so. The plaintiff has been
corresponding with the defendant/architect to arrange proper supervisory
staff but the same was not heeded. At best, ad-hoc arrangements were
made perfunctorily by the defendant, which denoted the lack of response
on defendant‟s behalf. It is also a finding of the learned Arbitrator that
the defendant failed to establish proper supervisory establishment. In
any case, I note that there is an answer of the learned Arbitrator on issue
No. (a) i.e. whether the plaintiff had breached the contract and failed to
comply with the terms and conditions of the contract. The answer was in
the negative. That apart, on issue No. (b) i.e. whether the defendant has
breached the contract and failed to comply with the terms and
conditions, the learned Arbitrator answered the issue in affirmative. In
view of the findings of the learned Arbitrator on different aspects, as
noted above, which are in the nature of substantive compliances and not
procedural which resulted in the delay in execution of work, this stand of
the defendant needs to be rejected.
78. Insofar as the tenability of the claims are concerned, it is the
submission of the learned Senior Counsel for the defendant that the
claims have been decided by the learned Arbitrator on his whims and
fancies and without any reasons or basis. He states, the learned
Arbitrator while deciding the quantum of the claims has failed to give
any specific reason for allowing or partially allowing the same and if the
same have been partially allowed, the basis of the claims to be paid in
that ratio.
79. I note in the written submissions filed by the defendant against
every claim, it is the submission of the defendant that no reasons
afforded for allowing a particular claim.
Claim No.1 (Loss of Profit):-
80. The claim No.1 is in respect of loss of profit on account of
wrongful termination of the contract by the defendant. The learned
Arbitrator has granted the loss of profit at 10% of the balance remaining
work taking into consideration the total work done was for Rs.41 lacs i.e
Rs.200 lacs - Rs.41 lacs = Rs.159 lacs, 10% of 159 lacs= 15,90,000/-.
There is no dispute on the quantum of profit to be earned and the amount
of work done. I do not find any infirmity in the Award.
Claim No.2 (In respect of preliminary works vis temporary offices,
temporary store,water storage tank, temporary water distribution lines
and labour hutments):-
81. Insofar as claim No.2 is concerned, the claim of the plaintiff was
premised on the ground that it had to carry out preparatory works for;
(a) Construction of temporary offices and stores for storage of cements,
other articles to be incorporated in the works and for locating tools and
plants;
(b) Construction of hutments was required by the contract. It was
accordingly done;
(c) Construction of the tank for storage of water.
82. The case of the plaintiff was that it had incurred an expenditure of
Rs.2 lacs. In fact, the plaintiff had also stated that it had incurred much
more cost for supply of materials, making of service roads etc. It is
noted that in reply to the said claim, the defendant has, in its reply,
admitted the fact, the construction of temporary offices and stores for
storage of cement, other articles to be incorporated in the works and for
locating tools and plants. It also admitted that the construction of
hutments was required by the contract. No doubt, the defendant has
denied the construction of tank for storage of water on the ground that
the amount of Rs.2 lacs reflected in the claim, the claim be put to strict
proof. The defendant‟s witness has, in his affidavit stated that the claim
is admitted by the respondent to the tune of Rs.2,50,000/- and he
qualifies the same by stating, it is the jurisdiction of the Arbitrator to
adjudicate. The defendant witness has only objected to the construction
of tank for storing water and laying of GI pipes. Be that as it may, even
though the learned Arbitrator has not given any reasoning, as has been
contended by the plaintiff that the reason for the learned Arbitrator to
award Rs.1,70,130/- was, the learned Arbitrator after noting the claim is
for Rs.2,14,000/- has reduced the claim of the plaintiff in the ratio of
159/200 considering the petitioner had taken the benefit of preparatory
works while carrying out the works of Rs.41 lacs out of total Rs.200 lacs
and for the balance amount, had granted an amount of Rs.1,70,130/- in
terms of calculation - 2,14,000 x 159/200. It does give a reasonable
basis for the learned Arbitrator to award the amount and being a
plausible view, this Court would not like to interfere with the said award.
Claim No.3 (In respect of 25% costs of materials):-
83. Insofar as claim No.3 is concerned, which relates to 25% cost of
the materials against which 75% secured advance was given, the case of
the plaintiff was that it bought materials costing Rs.7,85,780/- and was
given a secured advance of Rs.5,81,835/- as 75% of the cost. I note, the
defendant witness Bishnu Chandra Das, as in his affidavit, has stated as
under:-
"Submissions made against claim No.2 are reiterated subject
to the claimant‟s refund the balance mobilization advance
outstanding against them. The respondents have no objection
to the claimant taking away their material from the site after
proper inventories are prepared as per details available with
the respondents"
84. I note, the learned Arbitrator noted that the defendant had
modified its claim. He calculated 75% of the balance cost of the material
by dividing 5,81,835/- to arrive at an amount of Rs.1,93,945/- which is
25% of 7,85,780/-. I do not find any infirmity in the award. The
objection is rejected.
Claim No.4 (In respect of payment for the work done, measured and
approved for payment):-
85. Claim No.4 relates to Rs.5 lacs payable to the petitioner against
the 6th RA bill. The bill was approved by the Architect. This amount of
Rs.5 lacs was short paid to the plaintiff, which has been granted by the
learned Arbitrator. I do not find any infirmity in the award. The
objection is rejected.
Claim Nos.5 & 6 (In respect of work done but not measured and paid
for):-
86. These claims relate to work done but not measured and paid
amounting to Rs.31,79,000/- and in respect of escalation of prices for the
work done as per clause 10cc of the CPWD manual amounting to
Rs.22,81,880/- respectively total of which comes to Rs.54,60,880/-. The
learned Arbitrator referred to reference letter. The plaintiff had revised
the claims during arguments to the extent of Rs.17,10,449/- and
Rs.8,44,749/- totalling to Rs.25,55,198/-. The learned Arbitrator
awarded an amount of Rs.9,97,067/-. Even though, no basis has been
given but the plaintiff justified it by contending that the total work
executed by the plaintiff as admitted by the defendant was for
Rs.41,00,000/-, the total amount paid to the plaintiff for the work was
Rs.31,02,933/-. The break-up being against RA bills 1 to 5 with
escalation Rs.26,02,933/-, against Bill No.6 (awarded against claim
No.4) Rs.5 lacs. So, Rs.41,00,000 - 31,02,933 = Rs.9,97,067/-. The
basis appears to be reasonable. I do not find any infirmity in the award.
The objection is rejected.
Claim No.7 (In respect of expenditure on central offices/site overheads):-
87. The claim No.7 relates to the expenditure on central offices/site
overheads. Even though the claim was for Rs.27,92,000/-. The plaintiff
revised the claim to Rs.3,80,000/- during arguments. The Arbitrator
awarded an amount of Rs.1,90,000/- i.e 50% of the claim made. There is
no dispute that the contract went beyond the normal term of 18 months,
more particularly, on a finding that the delay that has occurred is
attributable to the defendant with which I have concurred, I do not find
any infirmity in the award. The objection with regard to this claim is
rejected.
Claim No.8 (In respect of expenditure on tools and plants and shuttering
materials etc):-
88. The defendant in its reply to this claim had stated, that the plaintiff
having originally included in the list of disputes, a claim of Rs.7,20,000/-
the Arbitrator can adjudicate the claim to that extent only. The same is
not an admission. The Arbitrator even though does not give any
reasoning, has allowed/granted an amount of Rs.3,60,000/- (50% of the
claim amount). The awarded amount has to be looked from the
perspective that the contract got delayed for the reasons attributable to
the defendant and that till the termination was effected, the material
remained at the site, and remained unutilized. The defendant does not
dispute that such a claim is not maintainable. In the facts, the Arbitrator
having awarded the said amount, which is a plausible view, no
interference is called for.
Claim No.11 (In respect of tools, plants, machinery, equipment and
shuttering materials taken possession by the defendant):-
89. This is a claim in respect of tools, plants, machinery, equipment
and shuttering materials taken possession by the defendant pursuant to
the termination of the contract. The defendant did not refute the
inventory of the Articles nor the valuation thereof but took a plea, that
this was not originally claimed, which plea was rejected by the learned
Arbitrator. I note, in the reference letter dated August 7, 1995, the
plaintiff/claimant had requested the defendant to remove the machinery,
equipment, tools and plants, shuttering, scaffolding and other materials,
the same appears to have not been allowed by the defendant, which
resulted in the raising of claim No. 11. Further, the learned Arbitrator
has held that the claim, corresponds to narration at page 6 of the
reference letter. The plaintiff revised the claim to Rs.18 lacs. The
learned Arbitrator has awarded an amount of Rs.9 lacs against this claim.
The awarded amount is a plausible conclusion. This is a finding of fact
and the Court would not like to interfere with the same.
Claim No.12 (In respect of refund of retention money withheld from RA
bills):-
90. Even though, initial claim was for Rs.1,33,275/- which was
revised to Rs.1,72,186/- which was disallowed. The defendant in the
reply to the claim petition, has admitted that amount of Rs.1,07,021/-
was deducted from the running bills paid upto April 15, 1993, the date of
expiry of the contract, and it appears an amount of Rs.26,254/- deducted
from the 5th RA Bill, and not accounted for by the defendant, as is seen
from the submissions filed by the plaintiff in these proceedings, the
amount of Rs.1,33,275/- was granted by the learned Arbitrator. The
amount of Rs.26,254/- has not been disputed by the defendant. The
award for Rs.1,33,275 is justified. The learned Arbitrator has allowed an
amount of Rs.1,33,275/-. I do not find any infirmity with the award. The
objection with regard to this claim is rejected.
Claim No.14 (In respect of interest):-
91. It is noted that the learned Arbitrator has granted an interest of
12% per annum with effect from August 7, 1995 till the date of the
Award i.e October 31, 2007 on the amounts awarded in favour of the
plaintiff. On failure to pay to the plaintiff within three months, the
defendant has been directed to pay an interest @ 18% from the date of
award till payment. In other words, w.e.f August 7, 1995 till October 31
2007, the learned Arbitrator has granted an interest @ 12% per annum
and future interest @ 18% in the eventuality the defendant fails to pay
the amount within three months. The interest rate on deposits in terms of
the notification issued by the RBI from time to time varied between 12%
to 13% in the year 1995-96, thereafter it had shown a downward trend
and in the year 2006-07 the interest rate on deposits varied between
7.50% to 9% and in 2007-08 it varied between 8.25% to 9%. The
amount of interest granted by the learned Arbitrator of 12% per annum
w.e.f August 7, 1995 till October 31, 2007 is on the higher side, so also
the future interest granted by the learned Arbitrator. Both the interest
rates are not justifiable. I reduced the interest w.e.f August 7, 1995 till
payment at 9% per annum on the awarded amount. The award is
modified to that extent.
Counter Claim No.1 (In respect of mobilisation of advance recovery):-
92. The same has been held to be pending and set off of
Rs.15,95,019/- has been allowed by the learned Arbitrator. He has also
held rightly that nothing is due to the defendant. The conclusion needs
no interference.
Counter Claim No.2 (In respect of penalty for an amount of Rs.15 lacs):-
93. The same was rejected by the learned Arbitrator on the ground that
no breach or levy against the plaintiff has been established. The
conclusion is justified, calls for no interference.
Counter Claim No.3 (Payment of costs):-
94. The learned Arbitrator has not granted costs to the defendant. I
note the cost was not granted to the plaintiff as well. Rejection of the
counter claim for the costs is justified.
The objections of the defendant are disposed of in terms of the
above.
CS (OS) No. 2343/2007
95. The award dated October 31, 2007 of Brigadier V.K. Sawhney
(Retd.) as modified above, is made Rule of the Court. Decree sheet be
drawn accordingly. The parties to bear their own costs.
(V.KAMESWAR RAO)
JUDGE
OCTOBER 12, 2015
ak/akb
