Delhi Development Authority vs M/S. Satya Prakash & Brothers
2017 Latest Caselaw 2970 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         FAO No.44/2007

%                                                       3rd July, 2017

DELHI DEVELOPMENT AUTHORITY              ..... Appellant
                Through: Mr. M.K. Singh, Advocate.
                          versus

M/S. SATYA PRAKASH & BROTHERS                         ..... Respondent

Through: None.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?

VALMIKI J. MEHTA, J (ORAL)

1. This first appeal has been filed under Section 39 of the

Arbitration Act, 1940 (hereinafter referred to as „the Act‟) impugning

the judgment of the court below dated 1.4.2003 whereby objections

filed by the appellant under Sections 30 and 33 of the Act have been

dismissed.

2. The facts of the case are that the appellant awarded the

respondent/claimant working of providing and laying "dense asphaltic

concrete works" in J.J. colony at Kalkaji, New Delhi. With regard to

this work awarded, disputes and differences arose between the parties

which were referred to arbitration by the letter dated 27.11.1990 of the

competent authority. The Arbitrator entered into the reference on

30.11.1990 and after hearing the parties and considering the evidence

passed the impugned Award dated 28.7.1992. By the impugned award,

the respondent/claimant has been awarded under claim no.1 an amount

of Rs.1,94,696.84/- towards balance payment due for work done and

an amount of Rs.14,444/- under claim no.2 by releasing of security of

the respondent/claimant with the appellant. Claim no.3 of damages was

dismissed and claim no.4 with respect to interest was awarded at 12%

per annum simple in favour of the respondent/claimant instead of 18%

per annum as claimed by the respondent/claimant. Interest has been

awarded from 2.12.1987 till the date of the Award. The court below

by the impugned judgment has awarded interest at 8% per annum

simple from the date of the Award till realization.

3. As regards claim no.1, the issue was as to whether or not

any work was done by the respondent/claimant after 7.10.1980. In this

regard, the Arbitrator has referred to the Measurement Book of the

appellant itself which held that the work was done after 7.10.1980 as

shown by the entries in the Measurement Book on 10.10.1980 and

13.10.1980. In fact the entry in the Measurement Book no. 722 on

13.10.1980 shows the work having been completed. The Arbitrator in

the Award also notes that the claim of the appellant was that the work

was defective but this defence was unjustified because there was no

notice issued of defective work and that in fact payment was also

released with respect to the first running bill at reduced rates and which

would not have been done if the work was defective i.e the first

running bill payment was made at part rates only. The relevant

observations of the Arbitrator with respect to claim no.1 reads as

under:-

"My findings are as under:

The contention of the respondents to the effect that since no work was executed after 7.10.80 as there was no entry of issue of bitumin in bitumin register, and, further no bitumen was available at site, and also that the work was not completed by the claimants are found to be factually incorrect in view of the following:

Firstly the entries of tack coat made on 10.10.80 in M.B. no.722 at pages 75-76 for final bill (Ext.R-4) prove that the work was certainly executed after 7.10.80, which in turn means that bitumin had to be there at site after 7.10.80.

Secondly, the entry on page-78 of M.B. No.722 says that the work was complete on 13.10.80 (Ext.R-4) whereas in their C.S.F. the respondents have stated that the work had not been completed. Apart from the above, in their C.S.F. dt. 15.3.91, the respondents have said that final bill was being prepared whereas the final bill eventually produced by the respondents on 21.8.91 shows that it had long been prepared on 2.4.81. The claimants vide their letter dt.18.9.84 (Ext.C-2) demanded balance payment of Rs.1,95,000/- on the basis of the final bill submitted by them in the year 1982 which was neither refuted nor questioned. The respondents‟ argument to the effect that the final bill not paid because of the defects also no legs to stand because, apart from no notice for defects being there, the final bill eventually submitted by the respondents says that the work had been done as per specification. This is also evident from the fact that the amount retained in 1st R/A bill by way of part rates has been released.

In view of the above, I am inclined to believe that it is a clear case of execution of the work by the claimants which has been supported by documentary evidence and detailed measurements as well as levels etc. On the other hand the respondents have failed to place on record any cogent document/evidence in support of their denial of the claim. Rather the statements made by them have been found to be factually incorrect and contrary. So much so they, the respondents, were unable to produce the

levels on the basis of which the bills were prepared besides, other very vital documents as already discussed in the beginning.

Under the circumstances and considering carefully the evidence and arguments advanced by both the parties, I find the claim to be justified and, I award a sum of Rs.1,94,696.84 in favour of the claimants."

4. (i) It is settled law that Courts do not sit as an appellate court

over the Awards passed by the Arbitrators. Once the Arbitrator on the

basis of existing evidence takes one possible and plausible view then a

Court hearing objections under Sections 30 and 33 of the Act will not

set aside such an Award. In my opinion, the Arbitrator has relied upon

the evidence being the Measurement Book of the appellant itself to

hold that not only work was done after 7.10.1980 but more importantly

that in fact work was completed on 13.10.1980. Arbitrator has also

rightly held that there was no issue of defective work because whatever

was the work as per the first running bill was not paid as it is but was

only paid as per the part rates. Arbitrator also notes that final bill

though was in fact prepared by the appellant itself way back on

2.4.1981, but the same was only much subsequently produced on

21.8.1991. Accordingly, in my opinion, the Arbitrator has given

sufficient reasons for holding that work was done by the

respondent/claimant and which had to be paid for in terms of the

entries of the Measurement Book of the appellant itself and as per the

final bill prepared by the appellant itself.

(ii) Since claim no.1 was allowed of work done hence the claim no.2

has been rightly allowed by the Arbitrator as it was for the return of the

security deposit repayable on the completion of the work.

(iii) Once claim nos.1 and 2 were payable with respect to the balance

due, then, respondent/claimant was entitled to interest and Arbitrator

has given 12% interest. Though in my opinion grant of interest by the

Award is justified, however, in my opinion the rate of interest of 12%

per annum is very high in current banking finance scenario inasmuch

as Supreme Court has observed in various judgments that in view of

the consistent fall in the interest rates, Courts should not award high

rates of interest. The judgments of the Supreme Court in this regard

are Rajendra Construction Co. v. Maharashtra Housing & Area

Development Authority and Others, (2005) 6 SCC 678, McDermott

International Inc. v. Burn Standard Co. Ltd. and Others, (2006) 11

SCC 181, Rajasthan State Road Transport Corporation v. Indag

Rubber Ltd., (2006) 7 SCC 700, Krishna Bhagya Jala Nigam Ltd. v.

G. Harischandra Reddy and Another, (2007) 2 SCC 720 & State of

Rajasthan and Another Vs. Ferro Concrete Construction Private

Limited (2009) 12 SCC 1. Accordingly, in my opinion, interest instead

of 12% should be at 8% per annum simple from 2.12.1987 and right till

payment is made by the appellant to the respondent/claimant and it is

ordered accordingly.

5. In view of the above, while the appeal is dismissed with

respect to making of the Award as rule of the Court by the impugned

judgment dated 1.4.2003, however, the appellant is granted relief of

reduction of the rate of interest of 12% as granted by the Arbitrator to

8% per annum simple. Appeal is accordingly dismissed but partly

allowed to the extent of reduction of interest as stated above. Parties

are left to bear their own costs.

JULY 03, 2017                                VALMIKI J. MEHTA, J
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