J. N. CONSTRUCTIONS v. NEW DELHI MUNICIPAL CORPORATION
1993-09-07
SAT PAL
body1993
DigiLaw.ai
SAT PAL, J. ( 1 ) THIS suit has been filed by M/s. J. N. Constructions (hereinafter referred toas the claimant )undersections 14and 17 of the Arbitration Act, 1940 (hereinafter referrred to as the Act ) and in this suit it has been prayed that the arbitrator be directed to file the original award, the arbitration proceedings etc. and after receipt of the award a decree may be passed in terms of the award. It has further been prayed that interest at the rate of 15 per cent per annum may also be awarded in favour of the claimant from the date of the award till realisation. ( 2 ) BRIEFLY stated the facts of the case are that certain disputes arose between the claimant and the NDMC concerning the work of construction of residential school for mentally retarded children at Kautilya Marg. New Delhi arising out of the agreement No. EE (Subways/27/1986-87. The aforesaid disputes were referred to the arbitration of Shri C. Ramarao (the arbitrator) under reference letter dated 13th July, 1989. The arbitrator gave his award dated 25th July, 1990. ( 3 ) THE claimant has controverted these objections. The following issues were framed:- 1) Whether the objections are barred by limitation? 2) Whether the award is liable to be set aside on the grounds as mentioned in the objection petition? 3) Relief. ( 4 ) AS directed by this Court, both the parties have filed the affidavit in support and opposition to the objections against the award. It may be pointed out here that the NDMC vide their objections coained in IA No. 8002/90 has challenged the award only with regard to claims No. 3,6,7,9 and 13. ( 5 ) ELABORATE arguments were addressed by the learned counsel for the parties. First of all I would deal with issue No. 1, namely, whether the objections are barred by limitation. ( 6 ) ISSUE No. 1 Mr. Aggarwal, the learned counsel appearing on behalf of the petitioner submitted that the claimant vide letter dated 17th August. 1990 had informed the NDMC that the learned arbitrator had filed the award and proceedings in this Court on 13th August 1990 vide diary No. 11286 but the objections have been filed by the NDMC after 20th September, 1990andassuch the objections were barred by limitation.
1990 had informed the NDMC that the learned arbitrator had filed the award and proceedings in this Court on 13th August 1990 vide diary No. 11286 but the objections have been filed by the NDMC after 20th September, 1990andassuch the objections were barred by limitation. The learned counsel submitted that it is not necessary that the notice regarding service of filing of the award in the High Court should be communicated by the High Court itself. He submitted that even such a notice could be communicated through the opposite party and the limitation will start from the date of the service of communication from the opposite party. In support of his contention the learned counsel placed reliance on ajudgment of the Supreme Court in Nilkaiitha Sidramappu Nigashetti vs Kashinath, Somartna Ninga shetii and others, AIR 1962 SC 666 , a judgment of this Court in Lachman Dass and others vs. M/s. Veer Finance Company, New Delhi and others, AIR 1983 Delhi 397 and a judgment of Calcutta High Court in State of West Bengal vs. Mondan and Co. , 1984 (2) ALR 310. ( 7 ) MR. Nayyar, the learned counsel appearing on behalf of the NDMC, however, submitted that the limitation would commence only from the date of service of the notice received by the party from the High Court. In support of his contention he placed reliance on a decision of this Court in the case of M/s. J. N. Constructions vs. NDMC, Suit No. 2940a of 1990 decided on 30th July, 1991. ( 8 ) I have given my thoughful consideration to the submissions made by the learned counsel for the parties and I am of the view that the limitation will commence only from the date of the service of the notice received from the Court and not from any other party. In case of Indian Rayon Corp. Ltd. vs. Raunaq and Company Pvt. Ltd. AIR 1988 SC 2054 the Supreme Court has held as follows:- "if the substance is clear, the form of the noice is irrelevant but the notice of the award having been filed in the Court, is necessary. The filing in the Court is necessary and the intimation thereof by the Registry of the Court to the parties concerned, is essential. Beyond this there is no statutory requirement of any technical nature under S. 14 (2) of the Act.
The filing in the Court is necessary and the intimation thereof by the Registry of the Court to the parties concerned, is essential. Beyond this there is no statutory requirement of any technical nature under S. 14 (2) of the Act. " ( 9 ) FROM the abovejudgment it is clear that the intimation of notice by the Registry of the Court to the parties concerned is essential and the notice must be served by the Court. Accordingly the limitaiton shall commence from the date of service of the notice received from the Court. In view of the law laid down by the Supreme Court, the judgment in the case of Mondan and Co. (supra) stands over-ruled. The ratio of the judgment in the case of Nilkantha Sidramapa (supra) is not relevant to the facts of the present case inasmuch as in that case the Court was concerned only with regard to the question as to whether the notice regarding filing of the award given by the Court should be in writing or it could be given orally. The ratio of the judgment in the case of Lachhman Das (supra) is again of no assistance to the claimant as in that case it was held that where the parties appear in the Court and pray for time to file objections, the service of notice becomes unnecessary. Since the objections admitteldy have been filed within thirty days from the date of service of notice of the filing of award in Court issued by this Court, I do not find any merit in the contention urged by the learned counsel for the claimant. Accordingly, this issue is decided in favour of the NDMC and against the claimant. ( 10 ) ISSUE No. 2. As stated earlier the NDMC has confined its objections only with regard to the amount awarded in respect of claim Nos. 3,6,7, 9 and 13. Before making his submissions with regard to these objections, the learned counsel for the NDMC submitted that the award in the present case is a speaking one and the Court can set aside such an award if there is no evidence to support the conclusion or the award is based upon any legal proposition which is erroneous. He further submitted that the reasons must be such as are acceptable.
He further submitted that the reasons must be such as are acceptable. He contended that in respect of the claims mentioned hereinabove, there was error of law in the reasons given by the arbitrator and those reasons were not as could beacceptable and as such the award in respect of those claims was liable to be set aside. In support of his contention he placed reliance on a judgment of the Supreme Court in Indian Oil Corporation Ltd. vs Indian Carbon Ltd. , AIR 1988 SC 1340 and a judgment of this Court in Bharat Fumishing Co. vs. D. D. D. A and another, 1992 (1) ALR 327. ( 11 ) WITH regard to claim No. 3, the learned counsel submitted that against the claim forrs. lo,485. 00 the learned arbitrator has awarded a sum of Rs. 5,540. 00 being the refund of the recovered amount towards the payment of testing charges for conducting various tests. In this connection he drew my attention to clause 27 of the General Conditions and Specifications. In terms of this clause if at any time before the finalisation of the contract it is found that the materials/goods/articles used in the execution of the work do not conform to the prescribed specifications the engineer incharge may get the samples of the materials in the nearest testing laboratory and the cost of samples and of testing etc. shall be borne by the contractor. Relying on this clause, the learned counsel submitted that the amount awarded inrespect of this claim pertains to the cost of testing which was required to be borne by the claimant. ( 12 ) MR. Aggarwal, learned counsel for the claimant, however, submitted that clause 27 mentioned hereinabove was applicable only incase the samples of the materials etc. was tested before the execution of the work but in the present case the testing of the material was conducted before the actual execution of the work and as such this claim was covered byclause 1 and in terms of page 28 of CPWD Specifications 1977,thecostoftestingwas to be borne by the NDMC.
was tested before the execution of the work but in the present case the testing of the material was conducted before the actual execution of the work and as such this claim was covered byclause 1 and in terms of page 28 of CPWD Specifications 1977,thecostoftestingwas to be borne by the NDMC. The learned counsel further submitted that in the present case the learned arbitrator, who was a retired Director General of Works CPWD, New Delhi, was an expert and the interpretation given by such an expert should be accepted in terms of the law laid down by the Supreme Court in M/s. Hind Builders vs. Union of India, AIR 1990 SC 1340 . ( 13 ) AFTER giving my thoughtful consideration to the submissions made by the learned counsel for the parties and to clauses referred to hereinabove and also after examining the reasons given by the learned arbitrator, I am of the view that there is error of law in the reasons given by the arbitrator. Admittedly the arbitrator is an expert and he has given cogent reasons for awarding this amount. The Supreme Court in the case of Municipal Corporation of Delhi vs. Jagan Nath Ashok Kumar, AIR 1987 SC 2316 held, "the arbitrator in our opinion is the sole judge of the quality as well as quantity of evidence and it will not be for this Court to take upon itself the task of being ajudge of the evidence before the arbitrator, It may be prossible that on the same evidence the Court might have arrived at a different conclusion than the one arrived at by the arbitrator but that by itself is no ground in our view for setting aside the award. " Since the arbitrator has given cogent reasons in support of awarding the amount under this claim, I do not find any merit in the submissions made by the learned counsel for the NDMC. ( 14 ) AS regards claim No. 6, the NDMC has confined its claim to claim No. 6 (b) and 6 (d ). Under claim 6 (b) against the claim of Rs. 29,799. 10 the learned arbitrator has awarded a sum ofrs. 26,904. 00. This claim pertains to extra work for wax polishing of Kota stone flooring, lnrespectofclaim6 (d) the claimant had claimed a sum of Rs. 35,516.
Under claim 6 (b) against the claim of Rs. 29,799. 10 the learned arbitrator has awarded a sum ofrs. 26,904. 00. This claim pertains to extra work for wax polishing of Kota stone flooring, lnrespectofclaim6 (d) the claimant had claimed a sum of Rs. 35,516. 64 for extra work for providing jointless laminated sheet on flush door shutters and against this claim the learned arbitrator has awarded a sum of Rs. l4,119. 00. The learned counsel for NDMC submitted that NDMC had never asked for any wax polishing and as such the claimant was not entitled to any amount for this work. With regard to the claim for providing jointless laminated sheets, the learned counsel submitted that the claimant did not hand over the wastage of laminated sheets as required in terms of clause 33 of the agreement and as such the claimant was not entitled to claim any amount for this work. ( 15 ) I may point out here that in terms of clause 33 of the agreement where any material for the execution of the work are procured with the assistance of the NDMC either by issue from the NDMC stock or purchases made under orders or permit licences by the NDMC, all surplus or unserviceable material that may be left with the contractor after the completion of the contract has to be returned to the NDMC. But in the present case it is not the case of the NDMC that jointless laminated sheets were either provided from he stock of NDMC or were procured with the permit licences given by the NDMC. lam, therefore, of the view that clause 33 is not applicable to this claim. As regards claim 6 (b) the award itself shows that the work was inspected by the arbitrator himself and it was observed by him that wax polishing was done and NDMC never objected to the wax polishing being done. Since the learned arbitrator has given cogent reasons for awarding the amount underclaims 6 (b) and 6 (d) I do not find any merit in the submissions made by the learned counsel for the NDMC in respect of this claim. ( 16 ) CLAIM No. 7 was for a sum of Rs. 6,00,156.
Since the learned arbitrator has given cogent reasons for awarding the amount underclaims 6 (b) and 6 (d) I do not find any merit in the submissions made by the learned counsel for the NDMC in respect of this claim. ( 16 ) CLAIM No. 7 was for a sum of Rs. 6,00,156. 00 towards escalation in cost of material and labour for the work executed beyond the stipulated period of contract and the learned arbitrator has awarded a sum of Rs. 3,98,405. 00 against this claim. The learned counsel for the NDMC drew my attention to clause IO-C of the agreement and submitted that the claimant was enetitled for escalation in the wages of the labour only in terms of the said clause and there is no provision for payment of escalation incase of materials. He further contended that any reimbursement could be made if increase is more than 10 per cent of the said price/wages and the reimbursement shall be made only on the excess over 10 per cent. ( 17 ) MR. Aggarwal, learned counsel for the claimant, however, submitted that clause IO-C is not applicable in this case as the work could not be executed within the stipulated period. He further submitted that the claimant was not responsible for the delay in execution of the work. He, therefore, contended that the claimant was entitled to the amount awarded. In support of his contention he placed reliance on two judgment of this Court in M/s. Metro Electric Co. vs. Delhi Development Authority, AIR 1980delhi 266 and Delhi Development Authority vs. M/s. Alkaram, AIR 1982 Delhi 365. ( 18 ) A mere reading of clause IO-C shows that the payment under clause 10-C is admissible not only for escalation in wages of labour but also for increase in the price of the materials. I also find merit in the contention of the learned counsel for the claimant that clause 10-C is not applicable in case the contract is not completed during the agreed period of contract A Division Bench of this Court in the case of M/s. Metro Electric Co. (supra) has clearly held that clause IO-C presumes that the contract is completed during the agreed period of contract and is applicable only during the progress of the work within that period.
(supra) has clearly held that clause IO-C presumes that the contract is completed during the agreed period of contract and is applicable only during the progress of the work within that period. Besides, the learned arbitrator has given various reasons for delay in the completion of work in para 7. 3 of the award and he has stated that all the hinderances had not been attributable to the claimant. In view of the valid reasons given by the learned arbitrator I do not find any merit in the contentions ade by the learned counsel for the NDMC. ( 19 ) CLAIM No. 9 is for a sum of Rs-44,928. 77 towards none reimbursement of the statutory increase in minimum wages of labour and the learned arbitrator has awarded a sum of Rs. 19,856. 00 against this claim. The learned arbitrator has given valid and cogent reasons for awarding of this amount. The contention of the learned counsel for the NDMC that this amount has also been awarded under claim No. 7 is without any force as page 50 of the award clearly shows that this amount ofrs. 19,856. 00 has been specificaly deducted under claim No. 7. Accordingly. I do not find any merit in this contention also. ( 20 ) THE claimant had claimed pre-suit and future compound interest at the rate of 21 percent per annum on the amount due to them and against this claim the learned arbitrator has disallowed the claim for pre suit interest. He further held that if the respondent NDMC does not pay the awarded amount to the claimants within two months from the date of the publication of the award, the NDMC will be liable to pay interest (simple interest) at the rate of 15 per cent per annum on the awarded amount with effect from the date of the ( 21 ) MR. Nayyar, the learned counsel for the NDMC submitted that during the pendency of this case, an application bearing IA No. 8923/90 was filed on behalf of the NDMC and it was prayed that a cheque dated 5th October, 1990 for Rs. 9,56,491. 00 drawn on the State Bank of India, New Delhi be ordered to be given to the contractor against a valid receipt and bank guarantee for securing the interest of the Committee and to avoid the payment of future interest.
9,56,491. 00 drawn on the State Bank of India, New Delhi be ordered to be given to the contractor against a valid receipt and bank guarantee for securing the interest of the Committee and to avoid the payment of future interest. He submitted that since the claimant chose not to accept this cheque, he was not entitled to any interest. He, therefore, contended that the claimant is not entitled to any interest after 5th October, 1990. Alternatively the learned counsel submitted that the rate of interest awarded by the learned arbitrator was quite high and the claimant was entitled to the interest at the rate of 12 per cent per annum. In support of his contention he placed reliance on ajudgment of this Court in Suit No. 2528/87 decided on 13th August, 1993 where this Court allowed interest at the rate of 12 per cent per annum to the contractor. Mr. Aggarwal, learned counsel for the claimant, however, submitted that the interest at the late of 15 per cent per annum awarded by the learned arbitrator was quite reasonable. He submitted that in a case between the same parties, Suitno. 2940-A/90, decided on 6th April, 1992 a learned Single Judge of this Court had awarded interest at the rate of 15 per cent per annum. He also referred to a judgment of this Court in Puri Constructions (P)Ltd. vs Union of India and another, 1987 (1)ALR 264 where interest at the rate of 18 per cent per annum was awarded. ( 22 ) I have given my anxious consideration to the submissions made by the learned counsel for the parties and have perused the record. From the file I find that IA 8923/90 was disposed of on 11th March, 1991 and the application was rejected as NDMC was not prepared to make the payment of the awarded amount without any condition. In view of the rejection of this application, NDMC is not entitled to any relief for the aforesaid offer regarding the payment of the inetrest. I also find that the rate of interest that is 15 per cent per annum ) (simple interest) awarded by the learned arbitrattor is quite reasonable and does not call for any interference by this Court. Accordingly, the contention of the learned counsel for the NDMC is rejected.
I also find that the rate of interest that is 15 per cent per annum ) (simple interest) awarded by the learned arbitrattor is quite reasonable and does not call for any interference by this Court. Accordingly, the contention of the learned counsel for the NDMC is rejected. ( 23 ) IN view of the above discussion, issue No. 2 is decided against the NDMC and in favour of the claimant and objections contained in IA No. 8002 of 1990 are dismissed. ( 24 ) OBJECTIONS against the award having been dismissed, the award dated 25th July, 1990 is made a rule of the Court. Adecree maybe drawn in terms of the award. The award will form a part of the decree. It is further ordered that in case the decretal amount is not paid by the NDMC to the claimant within two months from the date of decree, the claimant will be entitled to interest at the rate of 15 per cent per annum from the date of decree till realisation. ( 25 ) THE parties are, however, left to bear their own costs.