Union Of India vs M/S Ved Prakash Mithal And Sons
2017 Latest Caselaw 3126 Del

*           IN THE HIGH COURT OF DELHI AT NEW DELHI

+                       FAO No. 286/2017

%                                                      10th July, 2017

UNION OF INDIA                                         ..... Appellant
                        Through:     Mr.    Satyawan       Shekhawat,
                                     Advocate for Mr. Saurav
                                     Agarwal, Advocate with Mr. Jai
                                     Inder     Sharma,       Executive
                                     Engineer, AIIMS PD CPWD.

                        versus

M/S VED PRAKASH MITHAL AND SONS           ..... Respondent

Through: Mr. Peeyoosh Kalra, Mr. Shiva Sharma and Ms. Swati, Advocates.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not? YES

VALMIKI J. MEHTA, J (ORAL)

C.M. Appl. Nos. 23615/2017, 23616/2017 (for exemptions)

Exemptions allowed, subject to all just exceptions.

The CMs stand disposed of.

FAO No. 286/2017 and C.M. Appl. No. 23614/2017 (for stay)

1. This first appeal under Section 37 of the Arbitration and

Conciliation Act, 1996 (hereinafter referred to as „the Act‟) impugns

the judgment of the court below dated 30.5.2017. By the impugned

judgment the court below by relying upon the judgment of the Division

Bench of this Court in the case of M/s Prakash Atlanta JV Vs.

National Highways Authority of India, 227 (2016) DLT 691 has held

the objections filed under Section 34 of the Act were time-barred. M/s

Prakash Atlanta's case (supra) holds that the period of limitation for

filing objections under Section 34 of the Act commences not from the

date of receiving of the copy of the amended award or the order passed

under Section 33 of the Act but from the date of passing of the order

under Section 33 of the Act. It may be noted that after an award is

passed, the provision of Section 33 of the Act entitles a party to the

arbitration proceedings to move an application to correct

administrative mistakes etc in the award. The Act provides vide

Section 34 (3) that the objections which are filed under Section 34 of

the Act are to be from the date of disposal of the application under

Section 33 by the Arbitration Tribunal.

2. The appellant argues before this Court that the judgment

of the Division Bench relied upon by the court below has no

application whatsoever to the facts of the present case because the

issue which was decided in the case of M/s Prakash Atlanta (supra)

by the Division Bench was whether the period of filing objections to

the award under Section 34 of the Act commences from the date of the

disposal of the application under Section 33 of the Act or from the date

of receiving of the order passed under Section 33 of the Act, and the

Division Bench held that the date of receiving of the order passed

under Section 33 of the Act is not material and that the limitation

would commence, in view of the language of Section 34 (3) of the Act,

for filing of the objections from the date of disposal of the application

under Section 33 of the Act, whereas in the present case the admitted

facts are that the award was passed by the Arbitrator on 30.10.2015,

the certified copy of the award was received by the appellant on

7.11.2015, the appellant filed an application under Section 33 of the

Act on 16.11.2015 and which application was disposed of by the

Arbitrator vide order dated 14.12.2015, and objections were filed by

the appellant under Section 34 of the Act before the court below within

the limitation period on 11.3.2016 i.e if the period of limitation of

ninety days is to be taken to have commenced from 14.12.2015 when

the order under Section 33 was passed, and in accordance with the ratio

of the Division Bench judgment in the case of M/s Prakash Atlanta

(supra), the period of ninety days would expire on 14.3.2016, and that

the objections under Section 34 of the Act were already filed on

11.3.2016 by the appellant and hence were clearly within the period of

ninety days prescribed for filing of the objections under Section 34 of

the Act.

3. The opinion of this Court in view of the aforesaid

admitted position, and applying the ratio of the judgment in the case of

M/s Prakash Atlanta (supra) that limitation for filing of objections

under Section 34 of the Act should be taken from the date of disposal

of the application under Section 33 of the Act, the objections filed on

11.3.2016 being within the period of ninety days from the date of

decision/disposal of the application under Section 33 of the Act on

14.12.2015, the court below has clearly erred in holding that the

objections under Section 34 of the Act were time-barred.

4. Learned counsel for the respondent has placed great stress

on the judgment of the Supreme Court in the case of State of

Arunachal Pradesh Vs. M/s Damini Construction 2007 (3) SCALE

576 to argue that a Court before holding that the limitation period

commences from the date of disposal of the application under Section

33 of the Act has to ensure that the application which is filed under

Section 33 of the Act is actually one within the scope of Section 33 of

the Act, and that even if on merely because the application is titled as

under Section 33 of the Act, but if the same is in fact in the nature of a

review petition or an application which does not fall within the four

corners of Section 33 of the Act, then the disposal date of such an

application will not be the date of commencement of limitation period

of ninety days for filing of the objections under Section 34 of the Act,

and that the application filed under Section 33 of the Act which was

disposed of on 14.12.2015 was not an application falling within

Section 33 of the Act. In view of the argument so raised by the

respondent, we have to examine whether the application filed by the

appellant under Section 33 of the Act fell within the boundaries as

required by Section 33 of the Act for limitation period of ninety days to

commence on the disposal thereof.

5. There were two parts to the application filed by the

appellant under Section 33 of the Act before the Arbitrator. It is

conceded on behalf of the appellant before this Court that the first part

of the application was in the nature of review, and in such situation the

first part of the application seeking the relief of review would not fall

under Section 33 of the Act, however, it is argued that the second part

of the application pleading administrative mistake with respect to

allowing by the Arbitrator of claim no. 13 fell within the limits of

Section 33 of the Act, and therefore, it is when this issue of claim no.

13 was decided by the Arbitrator on 14.12.2015, it is then that the

limitation period of ninety days commenced for filing of the objections

by the appellant under Section 34 of the Act.

6. In order to understand the issue, this Court would set out

here under the relevant portion of the award of the Arbitrator dated

30.10.2015 below with the relevant portion of the application filed by

the appellant under Section 33 of the Act, however, a limited preface is

required to be given with respect to claim no. 13 which was dealt with

in the arbitration proceedings. The contract in question awarded in

favour of the respondent by the appellant pertained to construction of

auditorium/business centre (Blocks C and D) and Block E for

International Centre of Alternative Dispute Resolution at plot No. 6,

Vasant Kunj, Institution Area, Phase II, New Delhi. Claim no. 13 was

the claim filed by the respondent/claimant for amounts to be awarded

with respect to extra items having been done by the respondent beyond

the scope of the contract. One such extra item is with respect to

polishing and machine cutting of marble work. With respect to various

such extra items claim no. 13 was filed and we are only concerned with

a part of the claim no. 13 pertaining to the serial nos. 11(a) and 11(b)

of cutting and polishing of marble work. The dispute which the

Arbitrator decided was as to the rate to be awarded with respect to

these items 11(a) and 11(b) under the head of „extra items executed‟.

Arbitrator in this regard held as per the relevant discussion in para 13

of the award that the respondent/claimant should not be prejudiced by

granting the lesser rate than the rate as awarded by the running account

bills. The Arbitrator held that the respondent was entitled to the rate of

Rs.8,019.71 with respect to the extra items of work under serial nos.

11(a) and 11(b). The appellant was aggrieved by the figure of

Rs.8,019.71 in this relevant portion of the award because as per the

appellant there was an ex-facie error inasmuch as the running account

bills gave a rate of Rs.5,000/- as per the common provisional rate

statement which was signed by the parties after submitting of the 8 th

running account bill but the Arbitrator instead of allowing the rate as

granted by the running account bill of Rs.5,000/- granted the rate of

Rs.8,019.71/- and hence the appellant filed an application under

Section 33 of the Act stating that there is a clear cut error being an

administrative error in observing that the approved rate of running

account bills was Rs.8,019.71/- whereas it was Rs.5,000/- as this was

the agreed full rate of items 11(a) and 11(b) as per the agreed full rate

of these items in terms of the agreed provisional rate statement jointly

signed by the parties after submission of the 8 th running account bill by

the respondent/contractor.

7. Now let me reproduce the relevant portion of the award

pertaining to claim no. 13 as also the relevant portion of the application

filed by the appellant under Section 33 of the Act, and which reads as

under:-

(i) Relevant portion of the award with respect to claim no. 13:-

"13.0 Claim No.13: Less payment made for Extra Items substituted Items- Rs.15,00,000/-

Claimant has filed details of claim for Rs.1613779/- vide C-5(page 58- 64/CD-1) Claimant has demanded rate of extra items already paid in RA bills but reduced in final bill.

Respondent submitted that claimant did not follow provisions of clause 12.2 to claim rates of extra items within 15 days of its occurrence and claimant vide letter dt. 31.03.2012 (R-22/RD-2) has given undertaking that he will accept rates of extra items as per DSR 2012 and now he cannot turn around to claim different rates. As such, claimant is stopped to make such claim.

Claimant submitted that such letter was given under economic duress as their large capital was locked with respondents.

I decline to accept the pleading of duress raised first time during arbitration hearing held on 13.04.2015 as no such issue of duress was raised by claimant in his rejoinder filed in Jan. 2015. Except making bald statement that he has claimed rate of extra items with analysis of rates no evidence has been led by claimant that rate of extra items were claimed during execution of work. It is observed that rate of items listed at Sl. No.1,6, 10, 12 to 16 are only available in DSR 2012 and rest of the items are non- scheduled items not available in DSR 2012. I, therefore allow DSR 2012 rates for items listed at Sl. No.6, 10, 12 to 16. DSR-2012 rate of item listed at Sl. No.1 comes at Rs.231/- per cum against the rate of Rs.217.95 per cum paid in final bill but I allow the rate of Rs.226/- per cum as demanded by claimant.

Rest of the items are not available in DSR-2012. I find no force in the argument advanced by respondents that claimant has never claimed rate of extra items under clause 12.2 of the agreement. In fact, claimant is not claiming some different rates other than the rates allowed by respondents in intermediate payments. I decide that rate of extra items paid once in RA bills cannot be reduced at later stage because these conveys contractor in unmistakable terms that this is the rate is going to be paid to him as approved by Engineer-in-Charge. I have referred the part rate statement attached with 7th, 8th, 9th & 10th RA bills and rates paid in respective RA bills where EE has indicted full rate against extra items and part rate as allowed in respective RA bills. I hold that rate of extra items paid in RA bills cannot be reduced in final bill. This view of arbitrator has been held by Delhi High Court in the case of UOI Vs. N.N. Buildcon Pvt. Ltd.

(OMP No.259/2015 decided on 21.04.2015). It is also interesting to note that two rates has been paid against one extra items listed at Sl. No.11. I find no reason to pay two rates for one extra item. The amount payable to claimant is listed below in Table 4.

                                               Table-4
       Sl. No.     Oty.         No. of Full Rate Rate paid Rate                 Balance
                   Executed RA bill as                  in    final allowed     Amount
                                            indicated bill                      to be paid
                                            in     Part
                                            Rate
                                            Statement
       1           11958.27 9th             226         217.95      226         96264
                                  th
       2.          89.29        7           350         289.97      350         5360
       3.          39.68        7th         650         484.17      650         6580
                                  th
       4.          351.79       9           6958.05     4464.5      6958.05     877206
                                  th
       5.          88           9           1558        1280.47     1558        24423
       6.          244.35       10th        73          65.92       65.92       00
                                  th
       7.          25           9           13488.2     12986.05 13488.2        12554
       8.          1756.96      9th         271         157.7       271         199064
                                  th
       9.          26.5         8           950         573.4       950         9980
       10.         74           9th         816.12      579.75      579.75      00
                                  th
       11(a).      26           8           8019.71     6061.85     8019.71     50904
                                  th
       11(b).      37.95        8           8019.71     6445.35     8019.71     59747
       12.         14.6         9th         243.15      243.15      243.15      0
                                  th
       13.         80.57        9           296.5       296.5       296.5       0
       14.         1.6          9th         364.1       364.1       364.1       0
                                  th
       15.         295.68       9           453.65      453.65      453.65      0
       16.         978.56       9th         86.45       86.45       86.45       0
                                                                    Total:      1342082

I award Rs.1342082/- to the claimant against claim No.13."

(ii) Relevant portion of the application under Section 33 of the Act filed by the appellant:-

"Claim No. 13:-

The full rate for extra item at sl. no. 11(a) and 11(b) as per part rate statement of 8th RA is Rs.5000/- and not Rs8019.71/- as mentioned in table no. 4 at page no. 18 of award letter. The copy of said part rate statement of 8th RA bill is enclosed herewith under Annexure II. Therefore, in pursuance of Section 33 (a) of the Arbitration and Conciliation act, the Respondents respectfully make prayer that the Ld. Arbitrator may be please review the facts as stated above in respect of claim no. 6 and give the make amendment in the award accordingly."

(emphasis added)

8. Parties have filed before this Court the 8th running account

bill along with the attached provisional rate statement signed by both

the parties. In this provisional rate statement, it is clearly found that for

the extra work pertaining to polishing and machine cutting of marble

work specifies the full rate at Rs.5,000/- and the provisional interim

payment rate at Rs.4,500/-. Therefore, this provisional rate statement

signed by both the parties herein, the appellant as also the

respondent/contractor shows that with respect to the disputed rate of

marble work the full rate was agreed at Rs. 5,000/- and the provisional

part rate of payment under the 8th running account bill was Rs.4,500/-.

Therefore, in the opinion of this Court the appellant was entitled to

believe that there was an error apparent in the nature of an

administrative mistake in the award referring the full rate at

Rs.8019.71/- for claim no.13, because, the full rate indicated in the

agreed provisional rate statement signed by both the parties was

Rs.5,000/- and not Rs.8019.71/-. Further, in my opinion even

assuming that there is some strength in the argument urged on behalf

of the respondent that the full rate is Rs.8019.71/-, and though which

rate amount I do not find in the provisional rate statement signed by

both the parties after submission of the 8th running account bill, in any

case, there were therefore two views possible as per the record with

respect to what was the full rate for the extra item of marble work i.e

Rs.5,000/- as stated in the agreed provisional rate statement or

Rs.8,019.71/- as contended and originally claimed by the respondent

and so held by the Arbitrator. In law, if an application is ex facie not

maintainable under Section 33 of the Act then limitation would not

commence after the disposal of the application as held by the Supreme

Court in the case of M/s Damini Construction (supra), but once it is

found that two views are possible from the situation, with one view

being in favour of the party who files an application under Section 33

of the Act, it cannot be held that the filing of the application under

Section 33 of the Act was wholly misconceived and the application

under Section 33 of the Act was completely beyond the provisions of

Section 33 of the Act.

9. I may note that the Arbitrator while dealing with the claim

no.13 in para 13 of the Award at internal page 18 of the Award gives a

finding that the Arbitrator has to allow the rates to the

respondent/claimant as per the interim rates allowed in the intermediate

payments and that such rates granted as per the intermediate payments

of running account bills cannot be reduced at a later stage in the final

bill, and after so holding the Arbitrator however wrongly refers to the

interim rate in the running account bills including the 8th running

account bill as Rs.8,019.71/- instead of the agreed interim payment rate

of Rs. 5,000/-. If the reasoning of the Arbitrator is correct that the rates

should be allowed as per the interim full rate allowed in the running

account bills then the rate had to be allowed at Rs.5,000/- per month in

terms of the agreed and jointly signed provisional rates statement

prepared after the submission of the 8th running account bill. The

Arbitrator however has wrongly taken the interim payment rate under

the running account bill as Rs.8019.71/-. The appellant therefore was

entitled to have a bonafide belief that this is clearly an administrative

mistake because in the admitted provisional rates statement prepared

after the 8th running account bill the full rate payable with respect to

the items in question was of Rs.5,000/-at which the work in question

was to be paid. Putting it differently, the respondent agreed to receive

the full rate of Rs.5000/- with respect to the polishing and machine

cutting of extra marble work and as per the provisional rates statement

prepared after the 8th running account bill taking the full rate of

Rs.5000/- in the running account bill and that the interim running

amount released to the respondent was at the provisional rate of

Rs.4,500/-. Once the Arbitrator gave a finding that the amount should

be paid at the full rate of Rs.5,000/- as the rate at which item was paid

under the running account bills, the appellant had rightly applied under

Section 33 of the Act for correction of the Award mentioning the full

rate at Rs.8019.71/- instead of the full rate of Rs.5,000/- as mentioned

in the admitted provisional rates statement signed by both the parties.

10. Once the application under Section 33 of the Act was

validly filed, the limitation period as per the case of M/s Prakash

Atlanta (supra) for filing of objections commences from the date of

disposal of this application under Section 33 of the Act. The

application under Section 33 of the Act having been disposed of on

14.12.2015, the objections filed by the appellant on 11.3.2016 were

thus very much within limitation i.e within the period of ninety days of

the passing of the order under Section 33 of the Act.

11. In view of the aforesaid discussion, the impugned

judgment of the court below dated 30.5.2017 is set aside. However,

the observations made by this Court with respect to the merits of the

matter of what should be the rate allowed under claim no.13 of items

11(a) and 11(b) will be taken as prima facie in nature only and the

court below will decide the issue on merits as to the rate entitled to the

respondent/claimant with respect to item nos. 11(a) and 11(b) in terms

of the objections filed by the appellant and duly replied to by the

respondent/claimant.

12. Since the impugned judgment is set aside any

consequential orders passed of attachment in execution proceedings in

favour of the respondent would also stand vacated.

13. The appeal is accordingly allowed, leaving the parties to

bear their own costs

14. The court below will now decide the objections under

Section 33 of the Act in accordance with law.

15. Parties to appear before the District and Sessions Judge

(Saket Courts), New Delhi on 18th August, 2017 and the District and

Sessions Judge will mark the objections under Section 34 of the Act

for disposal to a competent court in accordance with law.

JULY 10, 2017                               VALMIKI J. MEHTA, J
AK/ib