Delhi High Court
M/S Shipra Estate Ltd & Jai Krishan ... vs M/S Wishwa Mittar Bajaj & Sons on 4 July, 2017
IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 04.07.2017
+ O.M.P. (COMM) 191/2017
M/S SHIPRA ESTATE LTD & JAI KRISHAN
ESTATES DEVELOPERS PVT LTD ..... Petitioner
Versus
M/S WISHWA MITTAR BAJAJ & SONS ..... Respondent
Advocates who appeared in this case:
For the Petitioner: Mr Amit Mahajan, Mr Kabir Chhilwar, Ms
Sonali Jaitley, Mr Jaiyesh Bakshi, Mr Ravi
Tyagi, Mr Tarpit Patni and Mr Akshay
Sharma.
For the Respondent: Mr Raghvendra M. Bajaj, Mr Samar S.
Kachmaha and Mr Shreyas Mehrotra.
CORAM
HON'BLE MR JUSTICE VIBHU BAKHRU
JUDGMENT
VIBHU BAKHRU, J
1. M/s Shipra Estate Ltd & Jai Krishan Estates Developers Pvt.
Ltd. (hereafter „Shipra‟) has filed the present petition under Section 34
of the Arbitration and Conciliation Act, 1996 (hereafter „the Act‟)
assailing the arbitral award dated 03.01.2017 (hereafter „the impugned
award‟) made by the sole arbitrator. By the impugned award, the
arbitrator adjudicated the disputes that had arisen between the parties
in respect of a Work Order dated 19.11.2005 (as subsequently
amended) issued by Shipra (and accepted by the respondent) for
construction of a multi-storeyed residential building at Ghaziabad.
2. The impugned award has been challenged mainly on two
grounds: (i) that no arbitration agreement exists between the parties as
the letters dated 10.11.2005, 20.02.2006 and 27.03.2006, as relied
upon by the respondent are fabricated; and (ii) that the impugned
award is contrary to the terms of the agreement between the parties
inasmuch as the agreement was for the payment of a lump sum
amount and not on item rates as claimed by the respondent.
Factual background
3. Shipra is a partnership concern engaged in the business of real
estate development. The respondent is also a firm engaged in the
business of construction and maintenance works on contract basis. The
respondent was awarded the contract for „Construction of Multistory
residential Complex- 3 bedrooms (Blocks B6 & B7) {(B+G+10+Pent
House), (B+G+6+Pent House)} at Plot No. 4, Phase IV, Indirapuram,
Ghaziabad (Civil, Electrical, Public Health & other Works)‟ by the
letter dated 19.11.2005 (hereafter „the Agreement‟) issued pursuant to
an offer submitted by it. The consideration as initially agreed was
₹7,07,66,614/-, however, the Agreement was later amended by letters
dated 11.07.2007, 06.09.2008 and 27.04.2009 (which were accepted
by the respondent) and the agreed consideration was increased to
₹8,15,40,250/-. The term of the Agreement was for a period of sixteen
months, starting from December 2005. There were also five other
contractors engaged by Shipra for the same project.
4. Certain disputes arose between the parties as Shipra alleged that
the respondent had failed to mobilize the requisite resources at the site
within the stipulated time. Shipra stated that despite there being no
contractual stipulation providing for mobilization advance, an amount
of ₹45,00,000/- was given to the respondent at its request. Further, the
progress schedule was submitted by the respondent belatedly on
13.03.2007, that is, after 15 months of taking possession of the site.
The respondent disputed the said allegations and alleged that Shipra
had failed to release full and timely payment of the running bills (RA
bills), supply sufficient quantity of cement and steel and give timely
drawings and decisions, leading to inordinate delays in the
performance of the Agreement.
5. Thereafter, in December 2010, the respondent stopped work.
Shipra alleges that the respondent abandoned the site; the respondent
alleges that it could not continue with the works as Shipra was not
making the necessary payments. Shipra claimed that it incurred
additional financial outlay to get the project completed from other
contractors.
6. On 28.05.2014, the respondent filed a petition (Arb. P.
302/2014) under Section 11 of the Act in this Court for appointment of
an arbitrator. This Court, by order dated 15.01.2015, appointed Justice
J M Malik (retired) as the sole arbitrator to adjudicate the disputes that
had arisen in connection with the Agreement.
7. The respondent filed a statement of claims before the arbitrator,
inter alia, raising the following claims:-
Sl.No. Description of Claims Amount (In Rs.)
1. Claim No.1 for payment of Residual amount of 2,54,64,400.00
work done at site, i.e. the unpaid Final Bill.
2. Claim No. 2 for payment of compensation @ 2,01,34,000.00
18% P.A. for the damages suffered on account of
delay in Payment/Under Payment in R.A. Bills &
Final Bill.
3. Claim No.3 for payment of extra expenditure 2,75,19,800.00
incurred by the Claimant on additional monthly
overhead expenses due to default on the part of
Respondent.
4. Claim No.4 for payment of loss of profit due to 76,39,197.55
reduction in turnover on account of default on
the part of Respondent
5. Claim No. 5 for reimbursement of payment made 10,20,900.00
to labour, which remained idle due to acts of
omission and commission on the part of
Respondent
6. Claim No.6 for payment of expenditure incurred 84,02,800.00
on idle Machinery and Equipments due to
defaults on the part of Respondent
7. Claim No.7 for payment of price escalation on 79,61,600.00
work done during extended contract period
8. Claim No.8 on account of any other relief which To be intimated.
may accrue during the period when claims are
settled.
9. Claim No.9 for payment of interest as per @ 18% P.A. as
Section 31 Sub Section 7 (a) & 7(b) of per Para 9.4
Arbitration and Conciliation Act-1996
10. Claim No. 10 for cost of Arbitration & 5,00,000.00
Conciliation Act-1996
8. Against the aforesaid claims, the arbitrator has awarded a sum
of ₹1,28,75,517/- against claim no.1 and a lump sum amount of `10
lacs against claim no.2. Claim nos.3 and 4 were not pressed by the
respondent. Against the remaining claims, the arbitrator has awarded
interest at the rate of 18% p.a. on `1,28,75,517/- with effect from
14.05.2011 till realization of the entire amount. In addition, the
arbitrator awarded costs of `5 lacs, ₹5 lacs towards harassment and
mental agony; `10 lacs for delay in payment of RA bills and interest at
the rate of 18% p.a. on the aforesaid amounts, if not paid within a
period of 90 days from the date of the award.
9. Before the arbitrator, Shipra claimed that the Agreement dated
19.11.2005 did not contain an arbitration clause and there was no
arbitration agreement between the parties. This was contested by the
respondent by claiming that it had initially sent an offer letter dated
10.11.2005 which culminated in execution of the Agreement. The said
offer letter contained an arbitration clause which was acceptable to the
parties. However, since the Agreement did not contain an arbitration
clause, the respondent sent a letter dated 20.02.2006 requesting for
amending the Agreement to include certain terms contained in the
offer letter including the arbitration clause. The respondent claimed
that this was accepted by Shipra and it issued a letter dated 27.03.2006
amending the Agreement, which was accepted by the respondent, thus
resulting in a binding contract.
10. Shipra also contested the claims raised by the respondent on
merits. It, inter alia, contended that the Agreement between the parties
provided for a lump sum consideration for each floor based on the
floor area. The Agreement did not provide for payment of separate
rates for each item or work comprised within the scope of works
awarded to the respondent.
11. Since the authenticity and genuineness of several letters
including the letter dated 27.03.2006 amending the Agreement was
challenged, Shipra filed an application seeking forensic examination
of the letters disputed by it. The said application was rejected by the
arbitrator by an order dated 17.10.2016. By the said order, the
arbitrator also unequivocally held that the documents in question -
being (i) offer letter dated 10.11.2005 sent by the respondent to
Shipra; (ii) letter dated 20.02.2006 sent by the respondent to Shipra;
(iii) letter dated 27.03.2006 amending the Agreement and
incorporating the arbitration clause; and (iv) protest letters dated
20.07.2007, 15.09.2008 and 30.04.2009 sent by the respondent to
Shipra - were genuine and were admissible in evidence. Resultantly,
the arbitrator held that an arbitration agreement existed between the
parties and proceeded to examine the disputes on merits. The
arbitrator passed the impugned award on 03.01.2017.
Submissions
12. Mr Amit Mahajan, learned counsel appearing for Shipra
assailed the impugned award on two fronts. First, he submitted that
there was no arbitration agreement between the parties and the
impugned award was wholly without jurisdiction. He contended that
the letter dated 27.03.2006 was forged and fabricated and this was
evident from the subsequent correspondence between the parties. He
pointed out that the Agreement was amended thrice: first on
11.07.2007; second on 06.09.2008; and for the third time on
27.04.2009. None of the aforesaid letters amending the Agreement
referred to the alleged amendments stated to have been carried out by
the agreement letter dated 27.03.2006. He also submitted that there
was no reference to the said letter in all the five years that the
respondent was executing the works.
13. Second, Mr Mahajan contended that the impugned award was
contrary to the terms of the Agreement. He referred to the Agreement
and pointed out that it provided for payment on a lump sum basis and
not on the basis of any item comprised in the works. The subsequent
amendments to the Agreement also provided for lump sum rates;
nonetheless, the arbitrator had partly accepted the claim and awarded a
sum of `1,28,75,517/- on the basis of item rates, which were not a part
of the Agreement. He further submitted that no agreed schedule of
item rates on the basis of which the awarded amount has been
computed was placed on record. He submitted that the respondent had
been submitting various RA bills that were paid from time to time
except a balance sum of `5,10,922/-. He submitted that the demand for
payment of over `10 crores was made for the first time on 14.02.2011
and was wholly beyond the terms of the Agreement.
14. Mr Bajaj, learned counsel appearing for the respondent
countered the submissions made on behalf of Shipra. He contended
that the arbitrator had examined the evidence on record and had
concluded that an arbitration agreement existed between the parties
and the said finding could not be faulted. He stoutly contested the
contention that the Agreement between the parties did not provide for
payment on item rates. He submitted that the lump sum amounts as
initially agreed were based on item rates and quantities. He referred to
an e-mail dated 28.12.2010 sent by Mr Rastogi (of Shipra) to the
respondent alleging that extra amounts had been paid to the
respondent. In support of the said allegation, Mr Rastogi had attached
comparative statement which indicated the quantities and rates for
various items of work. He submitted that this clearly indicated that the
lump sum rates as referred to in the Agreement and in the subsequent
amendments thereto were based on analysis of rates. He contended
that in terms of paragraph 2 to clause 22 of the Agreement, as inserted
by the letter agreement dated 27.03.2006, the rates as mentioned in the
Agreement were required to be adjusted based on the actual quantity
of work executed.
15. He referred to the decision of the Supreme Court in Associate
Builders v. Delhi Development Authority: 2015 (3) SCC 49 in
support of his contention that the arbitrator was the ultimate master of
the quality and quantity of evidence and his findings are not amenable
to judicial review in proceedings under Section 34 of the Act.
16. He relied upon the letters dated 03.01.2011, 14.02.2011,
12.04.2011 and 14.05.2011 sent by the respondent wherein details of
the work done by the respondent were forwarded to Shipra. The said
details were claimed to have been worked out on the basis of the
jointly agreed item rates.
Reasoning and Conclusion
17. The first and foremost question to be addressed is whether there
exists an arbitration agreement between the parties. The arbitration
agreement is contained in an arbitration clause stated to be
incorporated in the Agreement by the agreement letter dated
27.03.2006. The said letter is signed by one Sh. S. K. Aggarwal who
was admittedly the employee of Shipra and was the project head at the
material time. The witnesses produced by the respondent had affirmed
that the said amendment letter dated 27.03.2006 was signed by Sh. S.
K. Aggarwal in their presence. The respondent had also produced a
letter from Sh. S. K. Aggarwal confirming that he had signed the said
letter and had handed over the records to Shipra on leaving his
employment. Although, it is not disputed that the letter dated
27.03.2006 was not referred to in any of the correspondence or
subsequent amendments carried out to the Agreement - which
undoubtedly raises a doubt as to the genuineness of the said letter - the
onus to prove that the said letter was fabricated lay squarely on Shipra.
However, Shipra did not produce any material evidence to establish
that the said letter was fabricated. It neither produced its records nor
any credible evidence to establish its case.
18. Shipra‟s contention that Sh. S. K. Aggarwal was not authorized
to execute the said letter, was plainly unsustainable as the Agreement
was also signed by Sh. S. K. Aggarwal on behalf of Shipra and thus he
was undeniably authorized to execute agreements between the parties.
In view of the evidence available on record, this Court is not
persuaded to accept that there was no arbitration agreement between
the parties and the impugned award is without jurisdiction.
19. The next question to be examined is whether the impugned
award runs contrary to the Agreement between the parties. At the
outset, it is relevant to observe that claim no.1 (which has been partly
awarded in favour of the respondent) was not a claim in the nature of
damages but for contractual payments for work done. In order to
establish the said claim, it was incumbent upon the respondent to
establish that (i) it had completed the work done as claimed and (ii)
that the parties had agreed on the consideration claimed for such work.
20. At this stage, it is necessary to refer to the offer letter dated
10.11.2005, submitted by the respondent. The relevant extracts of the
said letter are as under:-
"Dear Sir,
We are pleased to submit our best rates for construction
of subject work for completion as per specifications,
items and conditions laid down in tender documents
Sl.No. Name of Floor Rate per sqft.
1. Basement 755.00
2. Ground floor 375.00
3. Typical floor (1 to 10) 570.00
4. Pent House (Jpper) - 12th floor 570.00
5. The House (Jpper)-12th floor 570.00
6. Terrace floor - 11th& 12th floor 210.00
7. Terrace floor - 12th floor roof level 210.00
8. Terrace floor at G.F. level 110.00
Terms and conditions
xxxx xxxx xxxx
5. There will be no major change in Drawings, alteration in
specifications or site conditions.
6. The rates given above are based on list of items
maintained in your office, the items included shall not be
excluded.
xxxx xxxx xxxx
10. Payment of Bills will be on or within 7 working days of
submission of the same and regularity in payment will be
ensured.
11. All disputes or differences in respect of scope of work,
substituted, increased, altered, additional work, etc during
execution of work, abandonment or completion of work
shall be resolved in terms of Arbitration and Conciliation
Act-1996 by a Sole Arbitrator and Delhi Courts alone shall
have exclusive jurisdiction over the same."
21. The aforesaid letter was initially denied by Shipra, however, it
was subsequently conceded that the said letter was received by Shipra
and was the subject matter of discussion between the parties which
culminated in execution of the Agreement.
22. The relevant extract of the Agreement (Work Order dated
19.11.2005) is set out below:-
"1. The rates given below include all items of civil,
electrical, sanitary, plumbing, television, telephone,
conduiting for fire detection & related works, etc. and
are for ensure completion of the project as per the
specification, detailed drawings, items and conditions
of tender documents/drawings, drawings issued by
consultant for execution/completion of building/project
and as per the direction of our Engineer-in-charge given
to you from time to time.
Sl. Name of Floor Area (Sq.ft) Rate (Rs.) Amount (Rs.)
No.
1. Basement 18792 618.00 11613456.00
2. Ground Floor 13638 297.00 4050486.00
3. Typical Floor (1 to 10) 114277 408.00 46625016.00
th
4. Pent House (Lower) - 11 Floor 8484 408.00 3461472.00
th
5. Pent House (Upper) - 12 Floor 6314 408.00 2576112.00
th th
6. Terrace Floor - 11 & 12 7818 140.00 1094520.00
th
7. Terrace Floor - 12 Floor Roof 6894 143.00 985842.00
level
8. Terrace Floor at G.F. level 5534 65.00 359710.00
Total 70766614.00
2. a. No mobilization/secured advance shall be paid
under this contract.
b. The areas are only indicative and the quantity
may increase or decrease as par actual at
site/drawings/direction of consultant/Engineer-
in-Change. However, the quoted rates per Sq. ft.
shall remain same. Covered area shell be as per
calculation in consultation with the Consulting
Architect, and will be considered for payment.
c. The rates agreed upon are for complete turnkey
work and no escalation, extra items, substitute
items etc. are payable till successful completion
of the above said work, unless and until
expressly directed and approved in writing by the
Architect/Engineer-in-charge and nothing extra
in any form will be payable to the contractor.
Payment shall be made as per tender stipulations.
xxxx xxxx xxxx
22. The extra/substitute items shall be derived on the
basis of DSR-2002 or market rates. The decision of
Engineer-in-charge shall be final and binding to the
contract.
xxxx xxxx xxxx
28. The quoted rates shall be firm till the completion of
work and no escalation whatsoever shall be
applicable."
23. The Agreement was amended by the letter dated 27.03.2006,
the relevant part of which reads as under:-
"Dear Sir,
In continuation of your work order Ref.:
SEL/JKEDPL/WMBS/05-06/51 date: 19.11.2005 and
in reply to your letter dated 20.02.2006 the following
amendment is carried out:-
Add: Sl. No. 29 & 30 as under:-
29. Payment against running bill shall be made
within 15 days of submission or 7 days of
verification and checking of the same, whichever is
earlier.
All disputes in relation to the Subject Contract
Agreement shall be resolved as per the provisions
contained in Arbitration & Conciliation Act 1996,
through appointment of a sole arbitrator by the High
Court at Delhi who alone shall have exclusive
jurisdiction in the subject matter.
Clause „b‟ and „c‟ at Sl. No. 2 is deleted and substituted
for the same be added be added to Sl. No. 22 as Para 2.
The areas are only indicative. In case the quantities of
items increase or decrease, after measurement, as per
actual at site, as per drawings, as per directions by
Engineer-In-Charge, Consultant, the quoted rates shall
also stand revised from as shown in Clause 1 of the
work order. Covered area shall be as per actual
calculations and will be considered for payment.
All other terms and Conditions will remain same as per
provisions of the Work Order, dated, 19.11.2005."
24. The Agreement was subsequently amended on 11.07.2007,
06.09.2008 and 27.04.2009 whereby the lump sum rates as provided in
the Agreement were increased. The relevant extract of the letter dated
27.04.2009 whereby the Agreement was amended for the third and the
last time, reads as under:-
"In continuation of your work order no:
SEL/JKEDPL/WMBS/05-06/51 dated 19.11.2005,
SEL/JKEDPL/WMBS/07-08 dated 11.07.2007 &
SEL/JKEDPL/WMBS/08-09 dated 08.06.2009. The
cost of work will increase from Rs.74225285.37 to Rs
81540250.54. As detailed below:-
Sl. No. Name of Floor Area (Sq. ft) Rate (Rs.) Amount(Rs.)
1. Basement 18123.17 668.00 12106277.56
2. Ground Floor 14860.09 360.00 5349632.40
3. First Floor 13927.96 508.00 7075403.68
4. Typical Floor (2 to 94207.88 508.00 47857603.04
10)
5. Lower Pent House 7650.14 508.00 3886271.12
6. Upper Pent House 5827.82 508.00 2960532.56
7. Terrace
a) Lower Terrace & 7850.17 140.00 1099023.80
Upper Terrace
b) Top Terrace 6253.71 143.00 894280.53
c) G.F. & F.F. Terrace 4788.09 65.00 311225.85
Total 81540250.54
Terms and conditions will be same as per your previous
work order dated 19.11.2005.
Thanking you,
Yours faithfully I/We accept the terms and
conditions as Mentioned above.
For SEL/JKEDPL
Sd/- For M/s Wishwa Mittar Bajaj & Sons.
Authorized Signatory
Sd/-
(Authorized Signatory)"
25. Admittedly, the said amendments were duly accepted and
signed by the respondent. This was expressly recorded in each letter of
amendment as is apparent from the above. However, the respondent
claims that after signing each of the amendment letters, it sent protest
letters (three in number). All the protest letters are to a similar effect
wherein the respondent stated that the amendments were not
reasonable and justified as per actual measurement at site and that they
were accepting the amendments under protest with a request to further
amend the rates based on actual analysis and actual quantities of each
item to be worked out jointly by them.
26. These protest letters were disputed by Shipra. However, the
arbitrator had accepted the same to be genuine. Be that as it may, the
said letters would be of little consequence insofar as the claim
awarded is concerned as the claim awarded is not one for damages but
for work done on alleged agreed rates. The only conclusion that can
possibly be drawn from the protest letters is that the respondent was
not happy with the rates as agreed, as according to it, the same were
liable to be increased based on actual analysis of work executed.
However, the consideration finally agreed to be paid by Shipra was as
recorded in the amendment letter dated 27.04.2009, as there is no
other material which would establish that Shipra had agreed to rates
other than as reflected in the letter dated 27.04.2009.
27. A plain reading of the Agreement and the subsequent
amendments indicate that the rate per sq. ft. of area for different floors
had been increased. The respondent claimed that such rates were
revised on adhoc basis and were not reasonable in view of
details/actual measurements at site and thus were required to be
further reconciled.
28. It is apparent from the above that the respondent essentially
seeks to claim an amount larger than what was agreed under the
Agreement (as subsequently amended). This would be plainly
impermissible as the respondent had agreed to the lump sum rates and
it was not open for the respondent to claim a higher amount than as
agreed merely on the basis of unilaterally claiming that the rates were
not reasonable or justified. The protest letters sent after expressly
accepting the rates as specified in the amendment letters would be of
little consequence. Since the claim awarded is on the basis that the
amount awarded was contractually payable to the respondent, it would
be essential for the respondent to establish that Shipra had agreed to
pay the amounts claimed or at least the basis on which such amounts
were computed.
29. It is essential to understand the nature of the claim awarded to
the respondent under the impugned award. According to the
respondent, the rates as indicated in the Agreement were based on
item rates for various items comprised in the works and the amounts to
be paid were arrived at by multiplying the quantities of items of works
with the agreed rates. It is claimed that the lump sum consideration as
specified in the Agreement was arrived at between the parties on the
aforesaid basis. It is the respondent‟s case that the actual quantities of
items of work involved were larger and therefore the rates as specified
in the Agreement as amended on 27.04.2009 were required to be
reworked. In other words, it was the respondent‟s case that the rates as
accepted by it, by signing the amendment letter dated 27.04.2009 was
not applicable and was required to be reworked.
30. Plainly, in order to sustain such claim, it was necessary for the
respondent to establish (a) that Shipra had agreed to certain item rates
for various items of work; (b) that Shipra had agreed that the scope of
works would involve specified quantities of item works; (c) that the
quantities of item works executed were in excess of the specified
quantities of work and consequently the lump sum rate per sq. ft. of
the specified floor was required to be revised; and (d) the amount paid
by Shipra to the respondent for work done fell short of the amount
payable on such revised rates.
31. During the course of the arguments, the learned counsel for the
respondent was pointedly asked whether there was any material on
record to establish the analysis of item rates and quantities providing
the break-up of the rate per sq. ft. as initially agreed under the
Agreement and as subsequently revised. He had fairly conceded that
apart from the e-mail dated 28.12.2010 sent by Mr Rastogi, wherein
Shipra had alleged that excess payments had been made to the
respondent, there was no other document on record which could
establish the item work quantities and the rates used to calculate the
amount payable on the basis of item rates and quantities. He also
added that the item rates as indicated in the said e-mail were also
incorrect and did not take into account subsequent increases.
32. This Court finds it difficult to accept that the e-mail dated
28.12.2010 sent by Mr Rastogi (of Shipra) establishes that the parties
had agreed that the respondent would be paid on the actual quantity of
item works executed on item rates basis as per the Agreement, as the
subsequent amendments signed by the parties indicate that payments
were to be made on a lump sum basis. However, even if it is accepted
that this was so, there is nothing on record which would establish the
various item rates allegedly agreed to by Shipra considering that the
respondent claims that the item rates as mentioned in the annexures to
the said e-mail were not correct.
33. It is relevant to observe that the offer made by the respondent
was also on a lump sum basis. The respondent had quoted rates on per
sq. ft. basis for different floors. These rates were obviously subject to
negotiations and the rates as finally agreed between the parties were
recorded in the Agreement executed on 19.11.2005. All subsequent
revisions only revised the agreed rate per sq. ft. Even if it is accepted
that the initial offer and the Agreement were based on an analysis of
rates and quantities, it would be essential for the respondent to not
only establish the quantities of item works but also the item rates
justifying the rate per sq. ft. as agreed to by the parties in the
Agreement. In addition, the respondent would have to establish that
the parties had agreed to revise the item rates since the respondent was
not accepting the item rates as indicated in Mr Rastogi‟s e-mail dated
28.12.2010 (which as stated earlier is concededly the only document
emanating from Shipra which records any separate rate for item
works).
34. Further, not only was it necessary for the respondent to establish
the revised item rates agreed to by Shipra but it was also necessary for
the respondent to project an agreed modified rate per sq. ft. for each
floor. This is so because even as per the respondent, in terms of
paragraph 2 to clause 22 of the Agreement - as amended by the letter
dated 27.03.2006 - the rates as quoted in the Agreement were required
to be revised. Concededly, no such revised rate was projected by the
respondent. To further illustrate this point one may refer to the
consideration payable for the basement floor. The rate per sq. ft. of the
basement floor was agreed at `618 per sq. ft. This was revised
subsequently and in terms of the amendment agreed to by the parties
on 27.04.2009, the said rate was increased to `668 per sq. ft.
According to the respondent, such rates were required to be revised on
the basis of analysis of actual quantities executed. Thus, the
respondent was required to establish a revised rate (per sq. ft.) on the
basis of which its claim could be computed. However, no such rate has
been projected by the respondent. More importantly, there has been no
determination by the arbitrator as to what rates (per sq. ft.) were to be
applied in terms of the Agreement between the parties while partly
awarding claim no.1 in favour of the respondent. The arbitrator has
merely accepted the statement of work done as claimed by the
respondent in its letter dated 14.05.2011. It is relevant to mention that
in the said letter, the respondent had claimed that it had executed
various quantities of items of work for which it was entitled to be paid
at specified rates. There is no document or evidence on record which
would establish that Shipra had agreed to pay the revised item rates as
indicated in the said letter. A perusal of the impugned award also
indicates that there has been no clear determination by the arbitrator of
the item rates as indicated in the said letter being agreed to by Shipra.
The least that was required was that a determination/ adjudication be
made as to (a) the quantities of items of work executed by the
respondent and (b) the agreed rates of such items of work. This Court
is unable to find that there has been any such clear determination by
the arbitrator.
35. Concededly, there is no material on record which would
indicate that Shipra had agreed to any revised item rates of item
works. Further, it is the respondent's case that the lump sum rates were
amended thrice but such revision was adhoc and without any basis,
thus concededly, the said revisions were not on the basis of any rate
analysis of separate item of works. However even if it is assumed that
Shipra had agreed to a revision of item rates which were evidenced by
the amendments to the Agreement, it was still necessary for the
respondent to establish the item rates for separate items of work or at
least establish that the revised per sq. ft. rates translated to item rates
as claimed by the respondent in its letter dated 14.05.2011, but no
such exercise was carried out by the respondent or by the arbitrator.
36. Whilst, there can be no quarrel to the proposition that an
arbitrator is the final fact finding authority and his decisions on
questions of fact are final and binding on the parties, it is essential that
there has to be a reasoned determination. A mere award without
determination/adjudication of the facts necessary to return findings
would render the arbitral award susceptible to challenge under Section
34 of the Act.
37. This Court has also examined the impugned award and it is
apparent that the arbitrator has not determined the real questions
involved in partly awarding claim no.1 in favour of the respondent.
There is no determination of the agreed item rates for various items of
works and when and how such rates were agreed to by Shipra; there is
no determination of the quantities of separate item works to be
executed under the Agreement and the quantities which were actually
executed by the respondent; and there is no determination regarding
the applicable revised rate (per sq. ft.) for each floor in terms of the
Agreement, considering it was the respondent's case that such rate was
to be revised based on actual analysis.
38. In view of the above, this Court is unable to sustain the
impugned award, first of all for the reason that the claim awarded is
not in terms with the Agreement (as subsequently amended) on record
and secondly, there is no reasoned determination of the necessary
components required for such award; thus, rendering the impugned
award, arbitrary and clearly opposed to the fundamental policy of
Indian Law.
39. Accordingly, the impugned award is set aside and the petition is
allowed.
40. The parties are left to bear their own costs.
VIBHU BAKHRU, J
JULY 04, 2017
pkv
