NARAIN DASS ISRANI v. DELHI DEVELOPMENT AUTHORITY — 1988 DIGILAW 331 (DEL)

Y. K. Sabharwal ( 1 ) THE respondent, Delhi Development Authority (the dda ) awarded a contract for construction of Govt. H. S. School for 960 students at Sadiq Nagar, New Delhi to petitioner (the contractor ). The agreement dt. 20. 10. 81 was entered into between DDA and the Contractor. Certain disputes arose between the parties and the same were referred to the sole arbitration of Sh. V. R. Vaish in terms of arbitration clause as contained in the agreement between the parties. The arbitration clacse provides that in all cases where the amount of claim in dispute is Rs. 50,000. 00 and above, the arbitrator will give reasons for the award. Sh. V. R Vaish made and published his awaed on 22. 3. 86 ( 2 ) THE award and the proceedings have been filed in this Court. DDA has challenged the award by filing objections u/s 30, Arbitration Act, 1940. Following issue was framed: "whether the award is liable to be set aside on the grounds as stated in the objection petition" ? ( 3 ) THE parties have filed evidence in the form of affidavits. The DDA has filed affidavit of its Secretary Mrs. Janak Juneja where as the Contractor has filed his own affidavit. ( 4 ) THE DDA has challenged the award in respect of Claims No. 1,5,8 toll and 13 on the ground that the reasons given by the arbitrator in his award are no reasons in law and the arbitrator has given his award without applying his mind to the facts of the case and without considering the evidence and the material placed before him and in respect of some of the claims he has ignored the provisions of the agreement between the parties and has exceeded his jurisdiction and that the award is perverse. ( 5 ) CLAIM No. 1 made by the Contractor was for Rs. 11,497. 00 on account of deductions made by DDA as a rebate. The contractor challenged before the arbitrator the said deductions of rebate as being illegal. Claim No. 1, to the extent of Rs. 6353. 00, was allowed by the arbitrator, the reason given in the award being that the final bill was not passed within six months of the date of the completion. It is not disputed that in terms of the agreement DDA was entitled to a rebate of 0. Claim No. 1, to the extent of Rs. 6353. 00, was allowed by the arbitrator, the reason given in the award being that the final bill was not passed within six months of the date of the completion. It is not disputed that in terms of the agreement DDA was entitled to a rebate of 0. 25% of the estimated cost of finalisation of the bill within six months of the date of completion recorded by the department for undisputed items. It is also not disputed that date of completion as recorded by DDA is 8. 11. 82. However, there is a dispute as to whether the bill was finalised within six months of the date of completion. Learned counsel for DDA submitted that the bill was finalised within the period of six months and as such DDA was entitled to the rebate and the award of the arbitrator is illegal. The date of completion being 8. 11. 82, final bill was required to be finalised by 7. 5. 83 so as to entitle DDA of the rebate. The reason given in the award is that the final bill was not passed within six months of the date of completion, The arbitrator is the final arbiter both of fact and law and the present proceedings are not in the nature of appeal from the award of the arbitrator. It is not the jurisdiction of these proceedings to delve into records to find out when the final bill was passed. The arbitrator is entitled to decide rightly or wrongly and the court will not interfere with the award except when there is an error apparent on the face of the award or when the arbitrator is found guilty of misconduct. The reason given by the arbitrator are not extraneous. It also cannot be said that there is any error apparent on the face of the award. Even otherwise the objection raised by the DDA to this claim is misconceived as from the proceedings and the record it appears that the Project Engineer signed the final bill on 31. 5. 83 which was beyond the period of six months. The objection that the contractor was delaying the acceptance of the final bill besides being outside the scope of the review ability is also misconceived on facts. The arbitration record shows that the contractor had signed the final bill on 5. 5. 83. 5. 83 which was beyond the period of six months. The objection that the contractor was delaying the acceptance of the final bill besides being outside the scope of the review ability is also misconceived on facts. The arbitration record shows that the contractor had signed the final bill on 5. 5. 83. Looking the matter from any angle it cannot be said that the award of the arbitrator under this claim is illegal, perverse or that there is any error of law apparent on the face of the award. ( 6 ) [in para 6, claim no. 5 is modified with parties consent], ( 7 ) UNDER Claim No. 8 the contractor has claimed refund of deductions and reductions from bills amounting to Rs. 21458-75p. Under this claim DDA has been directed to refund Rs. 19356. 00 to the Contractor. The reason given by the arbitrator is that DDA was unable to produce any record to show that defects in the work were pointed out to the contractor and that the measurements of the defective work were recorded on 3. 1. 83, much after completion of the building. It has further been noticed in the award that number of works could not be measured on 3. 1. 83 and full rate for those items had been paid upto the last running bill. However, the contention of the contractor that the rate for 152mm X 152mm tile and 108mm X 108mm tiles is same was not accepted by the arbitrator as the contractor had not produced any document to show that DDA had agreed to pay the contractor the same rates for different sizes of the tiles. Taking into consideration. all these factors Rs, 19356. 00 was awarded to the contractor. The learned counsel for the DDA has raised two objections to the award of Claim No. 8. The first objection is that the arbitrator has not given the basis or reasons how the amount of Rs. 19356. 00 was arrived at when the claim of the contractor was for Rs. 21458-75. As stated above the claim pertains to deductions and reductions on account of alleged defects in the work and the rates of the tiles. The arbitrator did not accept the contention of DDA in so far as it relates to the deductions and reductions made on account of defect in work. 21458-75. As stated above the claim pertains to deductions and reductions on account of alleged defects in the work and the rates of the tiles. The arbitrator did not accept the contention of DDA in so far as it relates to the deductions and reductions made on account of defect in work. The arbitrator, however, did not give the rates for the tiles as claimed by the contractor. The arbitrator has given reasons for accepting the claim of the contractor. The requirement to give reasons does not mean that the arbitrator must state every mathematical calculation in the award which led him to arrive at the awarded figure. The arbitrator is not required to state out every process of reasoning but is only required to give reasons to show how he came to a particular conclusion. That has been amply done and the objection is misconceived. ( 8 ) THE second objection to award of Claim No: 8 is that the disputed subject matter of this claim was an excepted matter and, therefore, under provisions of clause 25 (b) of the agreement the decision of the Chief Project Engineer (C. P. E.) regarding the quantum of deduction as well as justification thereof was final and not arbitrable. It is submitted that the decision of the C. P. E. having been made final the arbitrator had no jurisdiction to sit over his judgment and thus exceeded his jurisdiction in awarding the amount under the said head. The argument of learned counsel proceeds on misconceived assumption that the C. P. E. had taken a decision was brought to the notice of the arbitrator. From the award it does not appear to be so, even from the arbitration record and the proceedings. On the other hand it is apparent from the record that on the date of the completion the work had not even been measured. This objection is again misconceived. ( 9 ) THE next item of claim to which objection has been raised by D. D. A. is in respect of claim No. 9. The only objection is that the arbitrator has not given the reasons as to how the amount of Rs. 39,678. 00 has been worked out. Ample reasons have been given and as already held above the arbitrator is not required to give and state every mathematical calculation which led him to arrive at the figure. The only objection is that the arbitrator has not given the reasons as to how the amount of Rs. 39,678. 00 has been worked out. Ample reasons have been given and as already held above the arbitrator is not required to give and state every mathematical calculation which led him to arrive at the figure. No fault can be found out with the amount awarded under claim No. 9. ( 10 ) UNDER Claim No. 10 the D. D. A. was directed to refund to the contractor Rs. 5,000. 00 of security deposit. The reason given is that the D. D. A. was unable to produce any proof that defective work was noticed by Delhi Adm. PWD. The D. D. A. had claimed that Rs. 3,500. 00 had been paid by it o Delhi Adm. , PWD for rectification of defects. No serious objection could be pointed out to the award of this amount to the contractor. ( 11 ) THE next obejection of D. D. A. relates to award of Rs. 28,917. 00 to the contractor under Claim "no. 11. The contractor had claimed Rs. 70,600. 00 under this claim on account of short payment for cartage of earth. The case of the contractor before the arbitrator was that he brought earth from 14 kms but the department paid cartage from 2 kms. It is also recorded by the arbitrator that during the execution of work no letter was written by the contractor stating that he has to bring earth from such a long distance. It is further noticed by the arbitrator that D. D. A. could also not produce any proof that earth was carted from 2 kms. The arbitrator came to the conclusion that the rate sanctioned was low and awarded Rs. 28,917. 00. What reasons led to the arbitrator to come to the conclusion that the rates sanctioned was low have not been indicated in the award. The rates sanctioned being low are merely a conclusion and not the reasons. One could have appreciated the conclusion that the rates sanctioned are low if the arbitrator had given any reason for arriving at such a conclusion. It is well settled that the arbitrator is not a conciliator. He is to decide on the basis of the evidence on record. One could have appreciated the conclusion that the rates sanctioned are low if the arbitrator had given any reason for arriving at such a conclusion. It is well settled that the arbitrator is not a conciliator. He is to decide on the basis of the evidence on record. The arbitrator does not say that any evidence was produced that the earth was carted from more than 2 kms of distance. It cannot be said from the reading of the award as to what led the arbitrator to come to the conclusion that the rate sanctioned was low. Some reasons or basis for arriving at such a conclusion had to be given although not the mathematical calculations. It cannot be held that as arbitrator had considered all evidence, oral and documentary, as stated in the recital of the award, he is not required to give reasons when agreement between the parties and terms of reference require him to give reasons. Where agreement requires an arbitrator to give reasons and the arbitrator merely says that he has considered all the evidence it will be non compliance of the requirement to give reasons and such an award will have to be set aside for want of reasons. It was for the con- tractor to produce such evidence as he may have been advised before the arbitrator to substantiate his claim that the earth had been carted from a distance of more than 2 kms. No such evidence appears to have been produced by the contractor. It is not possible to read any reasons in the award for the conclusion that rate sanctioned for cartage of earth was low. In the absence of reasons the award under Claim No. 11 cannot be substained and has to be set aside. ( 12 ) UNDER Claim No. 13 Contractor claimed damages to the tune of Rs. 85,000. 00 under various heads. The claim of the contractor for idle labour and idle T and P was rejected while a sum of Rs. 20,000. 00 was awarded to him for establishment during extended period. The objection of D. D. A. is that the award under this head is contrary to clause 10 of agreement. ( 13 ) MR. Malhotra, learned counsel for the D. D. A. submits that in view of Cl. 20,000. 00 was awarded to him for establishment during extended period. The objection of D. D. A. is that the award under this head is contrary to clause 10 of agreement. ( 13 ) MR. Malhotra, learned counsel for the D. D. A. submits that in view of Cl. 10, for delay in supply of any material and stores, the contractor is not entitled to any compensation or damages. He submits that the arbitrator had no jurisdiction toignore the specific provisions of the contract and award the amount under claim No. 13. The claim of the contractor for compensation/damages, however, is not only on ground of delay in supply of material and stores. The break up of the damages and losses as claimed by the contractor is given in Ex. C-29. The damages and losses have been claimed for prolongation of contract by 50% extra time under four heads given in the said document. As stated above, the claim in respect of idle labour and idle T and P was rejected by the arbitrator. Clause 10 does not forbid grant of compensation and damages on every account. The amount of Rs. 20,000. 00 has been awarded for establishment during extended period. It cannot be said that the said award is contrary to clause 10 referred to above. In view of the above discussion it is not possible to accept the contention of learned counsel for D. D. A. that the award of this claim is in respect to matter already provided for in the contract or contrary to the terms of the contract. The claim is not barred under any specific clause of the contract and as such the judgment in the case of Continental Cons. Co. vs. State of M. P. AIR 1988 SC 1166 has no applicability to facts and circumstances of the present case. ( 14 ) FOR the reasons stated above the award dt. 22. 3. 86 in respect of Claim No. 11 is set aside and in respect of claim No. 5 is modified with the consent of the parties as indicated above. All other objections to the award are dismissed. Accordingly, I pass decree in terms of the award dt. 22. 3. 86 except for claim No. 11 and subject to modification of Claim No. 5. All other objections to the award are dismissed. Accordingly, I pass decree in terms of the award dt. 22. 3. 86 except for claim No. 11 and subject to modification of Claim No. 5. The Contractor will be entitled to interest at the rate of 10% from the date of the decree till payment.