Delhi High Court
Prasar Bharati vs M/S Eisa Lifts Pvt Ltd on 25 January, 2019
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. (COMM) 190/2016
Reserved on: 13.11.2018
Date of decision : 25.01.2019
PRASAR BHARATI ..... Petitioner
Through Mr.Virag Gupta and Mr.Gaurav
Pathak, Advs.
versus
M/S EISA LIFTS PVT LTD ..... Respondent
Through Mr.Anil Airi, Sr. Adv. with
Mr.Sunil K.Chandwani, Mr.Ravi
Krishan Chandna, Mr.Sameer
Chandwani and Ms.Sadhana
Sharma, Advs.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
1. This petition under Section 34 of the Arbitration and Conciliation
Act, 1996 (hereinafter referred to as the „Act‟) has been filed by the
petitioner challenging the Award dated 07.07.2014(hereinafter referred to
as the „Impugned Award‟) passed by the Sole Arbitrator rejecting the
counter claims of the petitioner, while granting the claims of the
respondent to the extent of Rs.24,44,500/- plus interest thereon.
2. The petitioner by Letter of Award dated 31.10.2008 awarded the
work for „Construction of Soochna Bhawan Phase-V at New Delhi (SH-
supplying, installation, testing and commissioning of 4 nos. 20 passenger
lifts)‟ to the respondent. The lifts were numbered as Lift Nos. 3, 4, 5
OMP (Comm.) No.190/2016 Page 1
and 6. The period of completion of the work as per the Letter of Award
was eight months, commencing from 18.11.2008 till 17.07.2009. The
contract amount for the said work was Rs.1,01,00,000/-.
3. The petitioner placed a deviation order dated 29.01.2009 with the
respondent for replacement of two more Lifts, that is, Lift no. 7 and 8.
The petitioner agreed to pay Rs.25,00,000/- for each of these lifts, in
addition to Rs.80,000/- for dismantling each of the existing lifts.
4. The petitioner released a sum of Rs.1,26,25,000/- in favour of the
respondent upto 30.03.2010.
5. On 27.04.2011, the petitioner issued a show cause notice to the
respondent alleging delay/suspension of work by the respondent. The
petitioner, vide its letter dated 27.07.2011, terminated the Agreement and
also forfeited the Earnest Money Deposit, Security Deposit and the
Performance Bank Guarantee of the respondent as also put the
respondent to notice that it would be taking services of another contractor
to complete the balance work.
6. The respondent, however, raised various claims against the
petitioner and the same were referred to the Arbitrator.
7. The petitioner, apart from resisting the claims of the respondent,
also raised its own counter claims before the Arbitrator.
8. The Arbitrator, by the Impugned Award has allowed certain claims
of the respondent, while rejecting the counter claims of the petitioner.
The summary of the Award is as under:
OMP (Comm.) No.190/2016 Page 2
Summary of Award
Claim No. Amount Claimed in Amount Awarded in
Rs. Rs.
1. 16,56,400/- 9,56,250/-
2. 18,74,000/- Nil
3. 22,65,000/- Nil
4. 5,05,000/- 5,05,000/-
5. 5,05,000/- 5,05,000/-
6. 5,70,000+ 148826+ 2,18,250+0+160000+0
160000 + 300000
7. 2,00,000/- 1,00,000/-
8. 1,05,600/- Nil
9. Intt. @ 18% p.a. Intt. @ 10% p.a. on
amounts
10. 5,00,000/- Nil
C.C. No.1 to 7 154.84 lakh Nil
C.C.No.8 Intt. @ 18 % p.a. Nil
9. The learned counsel for the petitioner submits that the Arbitrator
has erred in awarding a sum of Rs. 9,56,250/- in favour of the respondent
under Claim no. 1 in spite of the fact that the respondent could complete
only four out of six lifts and had not brought all the material to the site.
10. I do not find any merit in the said objection. The Arbitrator, in
awarding the above amount, has relied upon the measurement conducted
by the petitioner itself while passing the final bill in December, 2012, that
is, after the termination of the Agreement. The Arbitrator, therefore,
cannot be faulted.
11. The learned counsel for the petitioner further challenges the Award
of Claim no. 4 (refund of security deposit inclusive of earnest money
OMP (Comm.) No.190/2016 Page 3
deposit) and Claim no. 5 (refund of the amount received on forfeiture of
bank guarantee).
12. The learned counsel for the petitioner submits that the Arbitrator
having held that in the later stages of the work, the delay was on part of
the respondent in attending to rectification of defects in the four installed
Lifts and in the installation and commissioning of Lifts Nos.6 and 7, has
erred in holding that the termination of the Agreement by the petitioner
was not valid and consequently in awarding release /refund of the
security deposit and the Performance Bank Guarantee in favour of the
respondent. He submits that the findings of the Arbitral Tribunal are
based on its assumption that the time was last extended only up to
31.05.2011 whereas, as a matter of fact, the same had been extended till
31.07.2011 vide letter dated 01.07.2011.
13. The learned senior counsel for the respondent, on the other hand,
submits that the letter dated 01.07.2011 had not been filed by the
petitioner before the Arbitrator and therefore, cannot be relied upon in the
present proceedings. He further submits that the termination of the
Agreement was illegal as it was the petitioner who was in default and
such defaults had been repeatedly brought to the notice of the petitioner,
including by the letter dated 22.07.2011 that is, just prior to the letter of
termination.
14. I have considered the submissions made by the counsels for the
parties.
15. The Arbitrator has given the following findings on the issue of
default /delay:
OMP (Comm.) No.190/2016 Page 4
"There is evidence to prove that both parties contributed to
delay. In view of a large no. of letters exchanged and entries
in Hindrance Register (HR) and Site Order Book (SOB),
their mutual contentions can't be dismissed as entirely
baseless arid irrelevant. As per entries in the HR referred
above, the initial delay was on the part of respondent in
handing over lift-shafts after attending to civil works; in the
later stages the delay was on the part of claimant in
attending to rectification of defects in the 4 installed lifts
and in the installation and T&C of lifts no. 6 and 7 as
revealed from letters of material time from the respondent to
the claimant referred above, leading to termination of
contract. In fact on 4 occasions respondent had issued show
cause notices u/c 3 of the contract for determination of
contract on account of delay on the part of claimant (Exh Pg
R90 dated 10/6/10, Pg R91 dated 13/8/10 and Pg R92 dated
27/4/11 and on 4/5/11 Exh Pg R93).
xxxx
"As stated by me under claim no. 2 and 3 above, there is
sufficient evidence on record to conclude that in the later
stages of the work i.e. from 2nd half of year 2010 onward, the
claimant delayed execution of lifts no. 6 and 7. The reasons
given by claimant for non-completion of these 2 lifts are
flimsy. So much so that the respondent had to issue show
cause notices for determination of contract on 4 occasions
viz on 16/6/10 (Exh Pg R90), on 13/8/10 (Exh Pg R91), on
27/4/11 (Exh Pg R92) and on 4/5/11 (Exh Pg R93). There is
also sufficient evidence on record to conclude that the lifts
already installed by the claimant were not working
satisfactorily and despite attempts by claimant to repair the
defects, the lifts continued to give problems. From letter
dated 11/11/10 (Exh Pg R81) of AE in-charge and letter
dated 10/11/10 of EE-incharge (Exh Pg R82) of respondent,
it is apparent that a serious accident due, to defective
material and /or workmanship could have taken place. List
of 21 notices from respondent to claimant spread over from
June '09 to April, '11 is exhibited at Pg R3-4. Further it is
also on record that the Joint Secretary (P&A) of the
OMP (Comm.) No.190/2016 Page 5
Ministry of I&B and the Director, DAVP, who are not
connected with the parties to the contract, but in their
capacity as the Chairman/ Member of the Monitoring
Committee i.r.o. construction of Soochna Bhawan and as
users of the lifts, commented repeatedly adversely about the
functioning of the said lifts even after claimant claimed to
have repaired the lifts (Exh Pg R84 dated 16/11/10, Pg R87
dated 26/4/11, Pg R89 dated 31 /5/11 and Pg R80 dated
14/7/11). I am of the opinion that their critical observations
constantly made over a long period of time cannot be
ignored. It is also on record (Exh Pg R125) that after
determination of the subject contract, respondent engaged
another contractor to rectify the defects in the said lifts. It is
therefore apparent that neither the work on the remaining 2
lifts was progressing nor was there any improvement in
functioning of the already installed lifts'. Under these
circumstances, the decision of the respondent to take away
work from the claimant can't be faulted with.
16. In view of the above findings, the contention of the learned senior
counsel for the respondent that it was the petitioner who was in default,
cannot be accepted.
17. In spite of the above finding, the Arbitrator has ordered the refund
of the Security Deposit and the Performance Bank Guarantee amount
holding as under:
"However, it is also observed that when the final notice u/c
3 of the contract for determination of contract was served on
27/7/11 (Exh Pg R94), the validity of the contract had
already expired. The contract was last extended on 20-4-
11/25-4-11 upto 31/5/11 (Exh Pg C32) and was not extended
thereafter which had the effect of time being set at large. In
other words, the respondent issued notice of determination
of contract when time was no more the essence of the
contract. In view of these facts and circumstances, I am
OMP (Comm.) No.190/2016 Page 6
unable to uphold the determination of contract by
respondent on legal grounds.
As I have not upheld the determination of contract by the
respondent, the consequential forfeiture of SD and PBG by
the respondent, the subject matter of claim nos. 4 and 5
respectively, is not upheld. I therefore award release/refund
of SD amounting to Rs 505000/- and also release/ refund of
PBG amounting to Rs 505000/- against claim no. 4 and 5
respectively."
18. In my view, even assuming that the letter dated 01.07.2011 had not
been placed on record, the Arbitrator is incorrect in reaching the above
finding. The Arbitrator himself noticed that the petitioner had issued as
many as four Show Cause notices before issuing the letter of termination.
The Arbitrator further found that the delay in execution of the work was
attributable to the respondent and the lifts installed by it were
malfunctioning and in fact, the petitioner had to engage another
contractor to rectify the said defects. Even assuming that time was not
the essence, the work had to be completed by the respondent in a
reasonable time. Having found that the respondent had abandoned the
work and caused delay, apart from doing defective work, the termination
of the contract by the petitioner could not have been faulted.
Consequently, the award of refund of Security Deposit and the
Performance Bank Guarantee cannot be upheld.
19. The learned counsel for the petitioner further challenges the Award
under sub Claim no. 6A of the respondent towards extra/additional items
and Claim no. 6C of the respondent towards dismantling of two lifts. The
learned counsel for the petitioner submits that such amount could not
have been awarded as the respondent had not supplied the complete
OMP (Comm.) No.190/2016 Page 7
material for the lift and even the lifts installed by it were not functioning
properly.
20. I find no merit in the submission made by the learned counsel for
the petitioner. The Arbitrator has awarded the said claim on the basis of
the measurement conducted by the petitioner itself while processing the
final bill of the respondent. Award of such claim, therefore, cannot be
faulted.
21. Counsel for the petitioner further challenges the award of Rs.1 lac
under Claim no.7 towards retention of tools, scaffolding etc. He
submits that the quantification of such claim has been done by the
Arbitrator in an arbitrary manner and without any proof thereof. The
award in relation to the said claim is reproduced hereinbelow:
"7.1 Award
The respondent has admitted to availability of 12 barricades at
site. I also find from photographs of lift no. 7 (Exh Pg R138 to 140)
and from reply to claim no. 4 by respondent (Exh Pg R20) and
from respondent's letter dated 9/9/13 (Exh Pg C122) that
scaffoldings and brackets were also left in the shaft no.7. I assess
the number of brackets and scaffoldings as 80 each. The claimant
has not been able to substantiate his claim i.r.o. small tools and
tackles. In absence of any mention of rates of these items by either
party, I value the 12 no. barricades, 80 no. of scaffoldings and 80
no. of brackets at Rs 1 lakh and award this amount to the claimant
against this claim. "
22. The Arbitrator has relied upon the correspondence exchanged
between the parties as also the photographs produced before him while
awarding the said claim in favour of the respondent.
OMP (Comm.) No.190/2016 Page 8
23. The above being a matter of appreciation of evidence by the
Arbitrator, deserves no interference by this Court in exercise of its
powers under Section 34 of the Act.
24. Counsel for the petitioner further submits that the Arbitrator has
wrongly rejected the counter claims of the petitioner. He submits that the
material supplied by the respondent for Lift No.7 being proprietary items,
had been released back to the respondent for installation but had never
been installed. An advance payment of Rs.18,25,000/- had been made by
the petitioner to the respondent towards the said material. The petitioner
was therefore, entitled to a refund of the said amount.
25. The Arbitrator has rejected the said Counter Claim no. 1(i) holding
as under:-
"10.1.1 Regarding item (i) above, there is no evidence on
record to show that at the time of determination of the contract,
respondent rejected the materials of lift no. 7 or asked the claimant
to remove his said lift materials from the site. Making recovery at
the time of finalization of bill on the plea of the lift material not
being usable and at the same time not asking the claimant to
remove his material is not justified. I therefore reject this counter
claim."
26. I find merit in the submission made by the learned counsel for the
petitioner. The Contract in question was for supply, installation, testing
and commissioning of the Lifts. As held by the Supreme Court in Kone
Elevator India (P) Ltd. v. State of Tamil Nadu, (2014) 7 SCC 1, such
Contract cannot be said to be one for sale of goods/chattel simpliciter.
Such Contract is, infact, in the nature of the work contracts. The relevant
extract from the judgment of the Supreme Court is as under:-
OMP (Comm.) No.190/2016 Page 9
"70. Coming back to Kone Elevators, it is perceivable that the
three-Judge Bench has referred to the statutory provisions of the
1957 Act and thereafter referred to the decision in Hindustan
Shipyard Ltd., and has further taken note of the customers'
obligation to do the civil construction and the time schedule for
delivery and thereafter proceeded to state about the major
component facet and how the skill and labour employed for
converting the main components into the end product was only
incidental and arrived at the conclusion that it was a contract for
sale. The principal logic applied i.e. the incidental facet of labour
and service, according to us, is not correct. It may be noted here
that in all the cases that have been brought before us, there is a
composite contract for the purchase and installation of the lift. The
price quoted is a composite one for both. As has been held by the
High Court of Bombay in Otis Elevator, various technical aspects
go into the installation of the lift. There has to be a safety device.
In certain States, it is controlled by the legislative enactment and
the rules. In certain States, it is not, but the fact remains that a lift
is installed on certain norms and parameters keeping in view
numerous factors. The installation requires considerable skill and
experience. The labour and service element is obvious. What has
been taken note of in Kone Elevators is that the company had
brochures for various types of lifts and one is required to place
order, regard being had to the building, and also make certain
preparatory work. But it is not in dispute that the preparatory work
has to be done taking into consideration as to how the lift is going
to be attached to the building. The nature of the contracts clearly
exposits that they are contracts for supply and installation of the
lift where labour and service element is involved. Individually
manufactured goods such as lift car, motors, ropes, rails, etc. are
the components of the lift which are eventually installed at the site
for the lift to operate in the building. In constitutional terms, it is
transfer either in goods or some other form. In fact, after the goods
are assembled and installed with skill and labour at the site, it
becomes a permanent fixture of the building. Involvement of the
skill has been elaborately dealt with by the High Court of Bombay
in Otis Elevator and the factual position is undisputable and
irrespective of whether installation is regulated by statutory law or
OMP (Comm.) No.190/2016 Page 10
not, the result would be the same. We may hasten to add that this
position is stated in respect of a composite contract which requires
the contractor to install a lift in a building. It is necessary to state
here that if there are two contracts, namely, purchase of the
components of the lift from a dealer, it would be a contract for sale
and similarly, if a separate contract is entered into for installation,
that would be a contract for labour and service. But, a pregnant
one, once there is a composite contract for supply and installation,
it has to be treated as a works contract, for it is not a sale of
goods/chattel simpliciter. It is not chattel sold as chattel or, for
that matter, a chattel being attached to another chattel. Therefore,
it would not be appropriate to term it as a contract for sale on the
bedrock that the components are brought to the site i.e. building,
and prepared for delivery. The conclusion, as has been reached
in Kone Elevators, is based on the bedrock of incidental service for
delivery. It would not be legally correct to make such a distinction
in respect of lift, for the contract itself profoundly speaks of
obligation to supply goods and materials as well as installation of
the lift which obviously conveys performance of labour and
service. Hence, the fundamental characteristics of works contract
are satisfied. Thus analysed, we conclude and hold that the
decision rendered in Kone Elevators does not correctly lay down
the law and it is, accordingly, overruled."
27. Even otherwise, a bare perusal of the Minutes of Meeting dated
26.04.2011 of the Monitoring Committee of the petitioner show that the
Lift provided by the respondent did not fall under "A" category and
therefore, its improvement through other reputed agencies was difficult.
This was reiterated in the Minutes of Meeting dated 31.05.2011 as well.
28. In view of the above, as even the installation work for lift no. 7 had
not been started by the respondent except providing scaffolding and
brackets, the material for the said Lift was completely useless for the
petitioner and the petitioner could not have been called upon to make the
payment for the same. The petitioner while passing the final bill had
OMP (Comm.) No.190/2016 Page 11
accordingly made the deduction of Rs.18,25,000/- towards the payment
made by it for Lift no. 7. The Arbitrator having relied upon the said bill,
therefore, has erred in not allowing the said Counter Claim in favour of
the petitioner. The Award, insofar as it denies the Counter Claim no. 1(i)
is therefore, set aside and the petitioner is held entitled to the same.
29. Counsel for the petitioner further challenges the rejection of the
Counter Claim no. 1(iii) for penalty of Rs.1,01,000/- imposed by SE(E)
against the extension of time granted to the respondent.
30. The Arbitrator has rejected the said claim holding as under:-
"10.1.3 Regarding item (iii) above, no copy of any notice/order
levying such compensation (termed as penalty by the respondent
on Exh Pg R19) has been exhibited/produced by the respondent.
The respondent has imposed the said penalty when time was no
more the essence of the contract as held by me under claim nos. 4
and 5 above. In view of above, levy of such penalty is held as
unjustified on legal grounds.
I therefore award nil amount against counter claim no. 1."
31. The Arbitrator has held that as the petitioner had failed to produce
any notice / order levying such penalty on the respondent, the demand of
penalty cannot be sustained. Such finding cannot be faulted. Reliance of
the petitioner on the final bill in support of such penalty cannot be
sustained. The final bill had been prepared after the termination of the
contract. It is not shown by the petitioner if at the time of grant of
extension of time, the petitioner had levied any penalty on the respondent
for the delay in execution of the work. In absence of such proof, the
Arbitrator has rightly rejected the said claim.
32. Counsel for the petitioner further challenges the rejection of
Counter Claim no.2, which was a claim of amounts spent on rectification
OMP (Comm.) No.190/2016 Page 12
of four Lifts installed by the respondent. The Arbitrator has rejected the
said counter claim observing as under:
"11.1Award
There is sufficient evidence on record relied on by the respondent
as quoted hereinabove and also held by me under claim no. 4 and
5 above (which need not be reproduced here) that the lifts installed
by the claimant continued to malfunction throughout the warranty
period and thereafter. List of 21 such notices from respondent to
claimant, spread over from June, '09 to April, '11 is exhibited at Pg
R3-4. But it is also observed that the respondent did not serve, any
prior notice for carrying out the rectification of lifts at the risk and
cost of the claimant. Even while, finalizing the bill as late as in
December '12, the respondent did not include the amount on
account of rectification of defects. It is apparent from above that
this CC is an afterthought. I therefore reject this counter claim on
legal grounds."
33. The learned senior counsel for the respondent submits that in the
final bill prepared by the Engineers of the petitioner, it had been certified
that the work had been carried out as per CPWD specification. Further,
the deductions for the missing material in these lifts had already been
allowed by the Arbitrator in Claim no.1. The petitioner had also failed to
produce the defect or the final copies of the bills paid to M/s Omega
Elevators from whom it allegedly got the defects removed.
34. I have considered the submissions made by the counsels for the
parties.
35. The Arbitrator has taken note of the twenty one notices from the
petitioner to the respondent spread over June, 2009 to April, 2011
complaining about malfunctioning of the lifts. Therefore, there was
sufficient proof of the defects in the four lifts. There was also proof that
the petitioner had placed an order to M/s Omega Elevators for
OMP (Comm.) No.190/2016 Page 13
rectification of the defects in the lifts installed by the petitioner. In light
of such overwhelming evidence, the rejection of the Counter Claim no.2
of the petitioner was totally incorrect and cannot be sustained.
36. Such claim of the petitioner was even otherwise justified under
Section 73 of the Indian Contract Act, 1872. The petitioner was entitled
to claim the damages suffered by it due to the faulty work done by the
respondent. The damages had been duly proved by the petitioner through
the orders placed by it on M/s Omega Elevators for rectification of the
defects. No further proof in favour of the actual nature of defects and the
bills raised was required to be proved on record, especially when the
Arbitrator himself notes that over a period of time there were more than
twenty one notices issued by the petitioner regarding the malfunctioning
of the lifts in question.
37. Counsel for the petitioner further challenges rejection of Counter
Claim no.3 which was on account of non-completion of the work in Lift
no.6 by the respondent. He submits that as the work in the Lift was not
completed, a new lift had to be installed in its place for which the
petitioner incurred an expense of Rs.3 lacs towards dismantling of the
earlier lift and Rs.35 lacs for installation of the new lift. He submits that
the petitioner had also produced the quotation received from M/s Johnson
in support of this claim.
38. The Arbitrator has rejected the above counter claim holding as
under:-
"12.1 Award
Respondent have not quoted any provision in the contract in
support of their entitlement for this claim. No notice has been
served on the claimant. The work has neither been actually got
OMP (Comm.) No.190/2016 Page 14
executed by respondent from some other agency nor even any
contract entered into for the same. I therefore reject this claim as
the same is not established."
39. As noted above, at the time of determination of the Agreement, the
petitioner had not called upon the respondent to remove its material from
the site. The notice of termination also did not warn the respondent that
the balance work would be carried out at its cost and expenses. Even in
the final bill that has been cleared by the petitioner, the petitioner had
allowed the payment for the supply of lift no. 6. If at all, the petitioner
was therefore, entitled to claim only such amount as may be required to
make the said Lift operational. Having not led such evidence, the said
Counter Claim has been rightly rejected by the Arbitrator.
40. The counsel for the petitioner further challenges the rejection of
the Counter Claim no. 4 which was for the non installation of lift but
material taken on USR (unstamped receipt). The learned counsel for the
petitioner submits that the Arbitrator has completely misconstrued the
said Counter Claim. The said Counter Claim was premised on the fact
that as the respondent had failed to install Lift no. 7, the petitioner was
entitled to the differential amount that it would have to spend for getting
the said Lift installed through a third party. In this regard the petitioner
had led evidence in form of quotation from M/s Johnson Lifts (P Ltd.)
who had quoted a price of Rs. 35 lakhs as the cost of the lift. As the price
payable to the respondent was Rs. 25 lakhs, the differential amount of Rs.
10 lakhs was being claimed under the said Counter Claim.
OMP (Comm.) No.190/2016 Page 15
41. I find merit in the submission made by the learned counsel for the
petitioner that the Arbitrator has misconstrued Counter Claim no. 4 of the
petitioner.
42. Counter Claim no. 4 of the petitioner reads as under:-
4. Claim on account for non-installation of lift but material taken
on USR
The 6th lifts (designed as lift no. 7) material was supplied by M/s
EISA which was in their custody taken on USR for installation but
no action was taken by the agency for installation of lifts except
providing scaffolding and some brackets. Hence claim of
difference of amount to provide new lift due to price escalation i.e.
Rs. 35,00,000- 25,00,000/-=10,00,000/-. (Refer Annexure XXVII
& XXVIII-a & b)
Rs. 10,00,000/-
43. The Arbitrator has rejected the said Counter Claim holding as
under:-
"13.1 Award
This CC is in respect of lift no. 7. The arguments of both the
parties for this counter claim are same as for CC no. 1 (i) and CC
no. 3. For the reasons stated by me under CC no. 1 (i) and CC no.
3 above, this claim on account of non-installation of lift but
material taken against USR is rejected."
44. A reading of the above finding of the Arbitrator clearly shows that
the Arbitrator has completely misconstrued the Counter Claim of the
petitioner. He has denied the same by relying upon the findings under
Counter Claim no.1 (i) and Counter Claim no. 3. As discussed above, the
finding of the Arbitrator as far as Counter Claim no. 1(i) is incorrect and
has been set aside. As far as Counter Claim no. 3 is concerned, the same
was towards the Lift that had actually been installed by the respondent,
OMP (Comm.) No.190/2016 Page 16
though not made operational and therefore, was a claim totally distinct
from Counter Claim no. 4.
45. Once it is held that the respondent had breached the terms of the
Agreement in not supplying the Lift no. 7, the petitioner was entitled to
claim damages for the same. Under Section 73 of the Contract Act, such
damages can be claimed on the basis of the cost that may have been
incurred for obtaining the thing contracted for from a third party.
46. The petitioner in support of this claim had filed a quotation
received from M/s Johnson Lifts (P) Ltd. However, the petitioner has not
placed on record the final order, if any, placed on M/s Johnson for supply
of the Lift. Mere price quotation received by a party cannot be a proof of
actual loss differed. It is not shown by the counsel for the petitioner if any
other evidence in form of a firm order was placed before the Arbitrator. It
is also not shown whether the specifications of the two lifts were
identical. In the absence of such proof, Counter Claim no. 4 cannot be
awarded to the petitioner.
47. The learned counsel for the petitioner further challenges rejection
of Counter Claim no. 5 by the Arbitrator. Counter Claim no. 5 was on
account of hardship faced by the staff due to malfunctioning of the lift.
The Arbitrator has rightly rejected the said Counter Claim as being
indirect and remote. I, therefore, find no merit in the objection raised by
the petitioner to the rejection of the said Counter Claim.
48. The learned counsel for the petitioner further challenges the
rejection of Counter Claim no. 6 which was on account of operators
engaged for operation of the lifts.
OMP (Comm.) No.190/2016 Page 17
49. The Arbitrator has rejected the said Counter Claim holding as
under-
"15.1 Award
I observe that the lift operators were engaged by the respondent on
their own during the currency of the subject contract for which no
prior notice was given to the claimant. As per contract, operation
of lift was not the responsibility of the claimant. The respondent
have not quoted any provision in the contract in support of their
entitlement for this counter claim. The claim is therefore
unsubstantiated and unjustified and I reject the same."
50. The counsel for the petitioner has been unable to show how the
above finding of the Arbitrator can be said to be incorrect in any manner.
51. The counsel for the petitioner further challenges the rejection of
Counter Claim no. 7, which was on account of supervision departmental
staff charges. The Arbitrator has rejected the said Counter Claim on the
ground that the same has not been substantiated.
52. The learned counsel for the petitioner has placed reliance on a
chart showing the designation of the officers and monthly salary. A chart
so prepared cannot take place of the proof of the Counter Claim. The
Arbitrator has therefore, rightly rejected the same as having been not
proved.
53. The counsel for the petitioner has further challenged the Award of
interest as well. I do not find any merit in the said objection. Infact, no
reason has even been supplied by the petitioner for challenging the same.
54. In view of the above, the Impugned Award insofar as it allows the
claim nos. 4 and 5 and rejects Counter Claim nos. 1(i) and 2 of the
petitioner is set aside.
OMP (Comm.) No.190/2016 Page 18
55. The petition is partially allowed in the above terms. The parties
shall bear their own cost for the present proceedings.
NAVIN CHAWLA, J
JANUARY 25, 2019
RN/rv
OMP (Comm.) No.190/2016 Page 19
