Delhi Development Authority vs Associated Builders
2015 Latest Caselaw 7945 Del

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*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                                        Decided on: 15.10.2015
+      FAO(OS) 480/2013 & CM No. 7632/2014
       DELHI DEVELOPMENT AUTHORITY                       ..... Appellant
                            Through:   Mr. Rajiv Bansal, Advocate
                                       alongwith Mr. Vaibhav
                                       Agnihotri, Mr. Anukrit Gupta,
                                       Mr. Sidharth Gupta and Mr.
                                       Srinivas Jai Kumar, Advocates.
                    versus
       ASSOCIATED BUILDERS                          ..... Respondent

                    Through:           Mr. Bhavesh Kumar Sharma,
                                       Advocate.
       CORAM:
       HON'BLE MR. JUSTICE S. RAVINDRA BHAT
       HON'BLE MS. JUSTICE DEEPA SHARMA

MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT)
%

1. The present appeal is directed against the judgment and order of the learned Single Judge rendered on 09.10.2012 in CS(OS) No. 2222/2007. The learned Single Judge decided objections filed under Sections 30/33 of the Arbitration Act, 1940 (hereinafter referred to as 'the Act'), to an award dated 20.08.2007 made by a learned sole Arbitrator in the disputes between the respondents (hereinafter referred to as 'claimants') and the Delhi Development Authority (DDA) i.e. the appellant.

2. The brief facts are that the claimant was awarded work to construct 1088 LIG Dwelling Units (NP) at Dilshad Garden, Pocket

FAO No480/2013 Page 1 C, Zone E-6, Sub head: Construction of 320 LIG dwelling units in Phase 1. The learned Arbitrator's award dealt with 18 heads of claim and some counter claims. The claimant preferred objections with respect to some of the heads of claim i.e. Nos. 2 to 8, 11 to 14 and 16 and the DDA's counter claim to the extent they were allowed by the award. The learned Single Judge by the impugned order allowed the objections partially and set aside the Award in respect of claims 3-7, 8 ,11,12,13,14,16 (to the extent disallowed) and all the counter claims.

3. On behalf of DDA, Mr. Rajiv Bansal has made several submissions with respect to various heads of claim. He submitted that the learned Single Judge's findings with respect to Claim Nos. 4,5,8,11,12 and 13 and the setting aside of findings with respect to counter claim are unsustainable. Elaborately, it was submitted that the Arbitrator's findings with respect to Claim Nos. 4 and 5 clearly show that the award appreciated the terms of the Contract embodied in Clauses 3.7 and 3.8. It was submitted that given these circumstances and the limited scope of interference under Section 30/33 of the Act, the Single Judge erred in interfering with bare findings of fact - the claims were for Rs. 95414.46 and Rs.59675.33 and had been rejected by the Arbitrator. It was next urged that the interference with the award with respect to rebate payment in respect of item no. 8 was unwarranted. Learned Counsel commended to the Court the reasoning of the Arbitrator who he submitted went into detail in considering whether and if so what details have been furnished by the claimant and in a sense, apportioned the blame to both parties and made a balanced award. The sum in issue under this head of claim is

FAO No480/2013 Page 2 Rs. 53699.73. It was submitted in addition that the award is a reasoned one and the Single Judge should not have interfered with it.

4. Learned counsel for DDA next submitted that the findings with respect to Claim No. 11 were unwarranted. He highlighted that under this head, the sum of Rs. 88723.41 was claimed but rejected by the Arbitrator. The claimant had urged that the drawings furnished did not indicate provisions for glazing bars and have relied upon a letter of 31.08.85 written by the Executive Engineer. It was submitted that the learned Single Judge over-looked the fact that the claimant failed to establish by any objective evidence that such standard specifications have been deviated from, warranting the award and amounts in question. Learned counsel next submitted that the Single Judge also erred in granting the sums of Rs. 123230 and Rs. 132066. It was contended here that the Single Judge failed to note that in fact the calculation for working out Clause 10(cc) had been made on quarterly basis. Learned counsel emphasised that the Single Judge has not recorded any findings as to the error in the award which has taken note of the proper methodology for calculating the amounts i.e. quarterly basis and instead appears to have assumed that monthly rate was actually adopted.

5. It was lastly submitted on behalf of the DDA that the rejection of the counter claim on the ground that it was time barred, cannot also be sustained. Here, it is submitted that the occasion to prefer a counter claim itself arose only on 30.06.1998 when the final bill was drawn. By then, the Arbitrator had lost his mandate since the time for making

FAO No480/2013 Page 3 of the award had not been extended and the parties had to approach the Court under Section 28 of the Act. It was submitted that the extension led to the revival of the arbitral proceedings only on 15.01.2002. It was submitted that this was soon followed by the expiry of the mandate on 15.04.2002 and was revived much later in 2004. The counter claim that was preferred on 26.02.2005 therefore could not have been rejected by the Arbitrator.

6. Counsel for the claimant urges that the appeal is bereft of merits and that the impugned judgment should not be interfered with. He submitted that so far as Claim Nos. 4 and 5 are concerned, the award merely recites Clauses 3.7 and 3.8 and does not in any manner deal with Ex. C8, which was taken into account by the learned Single Judge. It was urged that to the extent that there was no appreciation and discussion of the relevant material relied upon by the claimant, the award was a non-speaking one and required interference. With respect to Claim No.8, it is urged that the Single Judge's order does not disclose any error. Counsel highlights that the final bill was submitted in 1987 and finalised only in 1997 and for these reasons, the deductions directed by the Arbitrator were unwarranted. It is submitted that the claimant had offered that if the payments were made within the agreed time, a rebate would be given. Since the DDA concededly did not make the payment and finalised the bill much later, the question of granting rebate did not arise.

7. Learned counsel defended the findings of the learned Single Judge and the interference with respect to claim nos. 11, 12 and 13 and submitted that glazing was not part of the original specification

FAO No480/2013 Page 4 and that this aspect was submitted before the Arbitrator but was not properly appreciated by him. Likewise, it was submitted that while there could not be a dispute that quarterly basis was the premise on which Clause 10 (cc) calculations were made up to a point of time, after the final bill was finalised, the amounts were finalised on the monthly basis. It was lastly urged that the fact that the final bill was approved by the DDA in 1999 did not in any manner detract from its obligations to prefer counter claims in the arbitral proceedings within the period of limitation. The fact that arbitral proceedings were in hiatus on account of non- extension of time did not relieve the DDA's obligations to approach the Court under Section 11 (6) of the new Arbitration and Conciliation Act, 1996.

8. This Court has considered the submissions. So far as Claim Nos. 4 and 5 are concerned, the award records as follows:-

"Claim No.4 Rs. 95,414.46 payable extra on account of wrong specification as the as the work was done in RCC Fins and Facia but paid as Walls.

The claimants submitted that the fins and facia were provided at site but the respondents has considered in RCC walls and paid accordingly. The item is covered under clause 12(ii) of the Agmt. It was further stated that vide letter dt. 15.04.87 the claim was agitated but payment denied by the respondents. Further explanation was given in the written arguments and payment was sought as per item available in the agreement as item No. 3.8.

FAO No480/2013 Page 5 The respondents denied that the work for fins and facia were executed. It was stated that the work was executed as per agreement item no.3.7 which is for RCC in walls and has been paid accordingly. It was further stated that the claimant never raised this point during the progress of the work and while accepting the bills and measurements.

After carefully examining the submissions by both parties it is seen that the portion of RCC hanging below the slab at 5th and 6th floor level has been paid as RCC fins and at lower levels RCC railings have been paid as walls. I find this in order. Therefore, I reject the claim."

9. The learned Single Judge interfered with these findings on the footing that a conjoint reading of the two conditions i.e. Item Nos. 3.7 and 3.8 showed that they are related to RCC works in walls and RCC work in vertical and horizontal fins. It was noted that this work entailed higher rate of consumption of the cement in the work of fins and facia at 4.74 quintals/cu m, whereas for concrete in wall it was 3.51 quintal/cu m. Significantly, the Single Judge noted that the claimant had provided the justification for the claim for higher rates of RCC in fins and facia towards these items. The DDA apparently did not give any reply which could be termed as satisfactory according to the learned Single Judge. The learned Single Judge also took note of the letter of 15.04.1987 which is produced as Ex. C-8 in the arbitral proceedings where the claimant had protested that despite the work involved i.e. RCC payment was made on the basis of RCC Invoice. It was further noted that payment for 5th and 6th floors were made by DDA on the basis of RCC fins and facia. The finding was that the

FAO No480/2013 Page 6 Arbitrator had not considered the relevant material and did not discuss or disclose any justification for denying payment in regard to the rest of the floors. We have considered the submissions of the DDA on this aspect and find them to be unsubstantial. There is no denial that the work was done in the remaining floors; C8 demanded that the proper payment in terms of the Contract for the same action of work, DDA admitted its liability only partially. Considering the overall circumstances and the facts, we are of the opinion that the award is an unreasoned one in the sense that though it notes the relevant clauses, it does not discuss the relevant material.

10. Likewise, the submission of the DDA with regard to the Claim No.8, in our opinion, is without substance. As noticed in the award itself, the bill was made in 1987 though the award discusses details with respect to various bills, at the same time, the Arbitrator appears to have deducted 50% of the amounts which were claimed on the ground that the claimant in turn have furnished bills belatedly. Whether the bills were furnished belatedly or otherwise, the fact remains that the bills were finalised after the work was completed 10 years later. The condition on which the claimant had agreed to give rebate for timely payment therefore is clearly inapplicable. We see no error in the findings of the learned Single Judge on this aspect.

11. As far as Claim No. 11 is concerned, the Arbitrator had denied sum of Rs. 88873.41 sought by the claimant. This was towards glazing work which was allegedly not part of the Contract. Although, the claimant sought this amount, and relied upon certain letters, the fact remains that there was nothing on record to indicate what the

FAO No480/2013 Page 7 specifications were and how they were accepted. The mere circumstance that certain letters (disputed by the DDA and not admitted by it in the course of the arbitration) that were relied upon by the claimant were not referred to by the Arbitrator ought not to, in our opinion, have persuaded the learned Single Judge to interfere with the award of the Arbitrator who went into the facts and held that the claim had not been established. On this aspect, we find that the learned Single Judge erred in interfering with the award.

12. So far as the Claim Nos. 12 and 13 go, they are concerned with the issue of payments made in terms of Clause 10 (cc) towards amounts due on account of work done and not paid for towards escalation. The initial claim was for Rs. 432689 (under Claim 12). It was revised downwards to Rs. 269180. This included the sum of Rs. 132060, stated to have been wrongly inducted on account of final bill preparation, which allegedly was based on the monthly indices. The Arbitrator granted Rs. 98805 but denied the rest of the amount. Likewise, in Claim No. 13, the difference or variation between the final bill amount and the amount claimed was Rs. 123230. In respect of both these, since the calculations pertained to the appropriate method of working out of the Clause 10(cc) benefits; the Arbitrator noted, after going through the documents, that the DDA had made final adjustments for actual measured quantity which was accepted by the claimant in the 29th RA Bill. The Arbitrator further held that on a perusal of documents, payment against Clause 10(cc) of Agreement were made till 12th quarter ending October 1987 including final bill. The revision was later made. However, the claimant appears to have

FAO No480/2013 Page 8 failed to satisfy the arbitrator "as to how the payment made by the respondent is wrong." The Arbitrator holds that the indices adopted by the respondents were on the basis of average of indices of three months previous to the months in which quarterly payment was made. He therefore found that the basis of payment in the final bill adopted by the respondent in respect of payment under Clause 10(cc) was in order.

13. This Court has also considered the relevant material which is part of the final bill. It clearly shows that the calculation was made on quarterly basis rather than on monthly basis as was alleged by the claimant. In these circumstances, the findings and the award for Rs. 132066 and Rs. 123230 are unsustainable. They are accordingly set aside.

14. The last aspect urged was with respect to the DDA's counter claim. Here, we are not inclined to interfere with the findings of the learned Single Judge. The earliest point in time for DDA's counter claim was when the final bid was prepared, viz 30.06.98. Though, DDA's argument that there was a hiatus in the pending arbitration proceedings appear to be convincing, yet the fact remains that the limitation provisions embody public policy and such enactments are essentially statutes of repose. They operate inexonerably and preclude enforcement of claims which are pressed beyond the period permitted by law. Even though the DDA could not have preferred its counter claim in the arbitral proceedings that had been initiated before the final bill was prepared, the fact remains that this cause of action arose on preparation of final bill. Nothing prevented it from seeking a

FAO No480/2013 Page 9 reference towards its counter claim which are independent of the claims made by the respondents, in terms of Section 11(6) of the Arbitration and Conciliation Act, 1996. In these circumstances, this ground urged by DDA is without merit.

15. Though the DDA has urged that the findings of the Single Judge on Claim Nos. 14 and 16 are in error, Court finds no ground to interfere with the impugned order on that aspect since they are factual.

16. In view of the foregoing, the appeal is partly allowed; the findings of the learned Single Judge with respect to Claim Nos. 11, 12 and 13 are hereby set aside.

The appeal is allowed in the above terms.

                                            S. RAVINDRA BHAT, J



                                             DEEPA SHARMA, J

       OCTOBER 15, 2015/sapna




FAO No480/2013                                             Page 10