J. N. CONSTRUCTIONS v. NEW DELHI MUNICIPAL CORPORATION
1993-10-06
V.B.BANSAL
body1993
DigiLaw.ai
V. B. Bansal ( 1 ) M/s. J. N. Constructions, plaintiff, filed this suitunder Section 14 and Section 17 of the Arbitration Act (hereinafter referredto as the act ) with the prayers that Shri C. Rama Rao, the sole Arbitrator,defendant No. 2 may be asked the file the original Award alongwith the-proceedings in Court and, thereafter, to make Award the Rule of the Courtand to pass a decree in terms of the Award alongwith interest at the rate of15 per cent per annum from the date of the Award till realisation. ( 2 ) BRIEFLY stated, the facts leading to the filing of this suit are thatthe work for the Construction of Residential School for Mentally Retardedchildren "anchal" at Kautilya Marg, New Delhi, SH: Construction of Dining Hall, Servants Quarters s . ld Lilypool was entrusted to the plaintiff bythe New Delhi Municipal Committee, defendant No 1. The work wasexecuted by the plaintiff but certain disputes arose between the parties whichwere referred to Shir C. Rama Rao, defendant No. 2, by the Administrator,new Delhi Municipal Committee, vide his letter dated 11. 12. 1989. Thearbitrator was directed to make a reasoned Award in respect of the disputesraised by the claimant. ( 3 ). The Arbitrator entered upon the reference on 28. 12. 1989 and theclaimant filed claims statement in respect of eight claims to which the replywas filed by defendant No. 1. Time for making the Award was extendedby the parties from time to time and, ultimately, the Award dated 25. 10. 1990was made by Shri C. Rama Rao, regarding which intimation was given to theparties. ( 4 ). On 9. 11. 1990 a notice was issued to the defendant No. 2, Arbitrator, directing him to file the Award alongwith the proceedings in Court. After the receipt of the Award and the proceedings notice of filing of theaward was given to the parties. Objections, viz. IA 2018/91 have been filed bythe defendant No. 1 wherein it has been stated that the notice of filing of theaward was received by defendant No. 1 on 25. 1. 1991 and, so, objectionsfiled on 19. 2. 1991 were within time. Reply to the objections was filed bythe plaintiff wherein preliminary objections have also been taken to theeffect that the Arbitrator had filed the Award in Court vide his letter dated19. 11. 1990 and that vide letter dated 21. 11.
1. 1991 and, so, objectionsfiled on 19. 2. 1991 were within time. Reply to the objections was filed bythe plaintiff wherein preliminary objections have also been taken to theeffect that the Arbitrator had filed the Award in Court vide his letter dated19. 11. 1990 and that vide letter dated 21. 11. 1990 the defendant No. 1 hadinformed the plaintiff about the filing of the Award and the proceedings bythe Arbitrator. The objections have also been contested on merits and aprayer is made that the objections be dismissed and the Award be made therule of the Court. ( 5 ). Pleadings of the parties gave rise to the following issues whichwere framed on 20. 12. 1991: (I) Whether the objections filed by the respondent are barred bytime ? (II) Whether the award is liable to be set aside in view of the objections raised by the respondent ? ( 6 ). Both the parties were asked to file affidavits by way of evidence. The plaintiff filed affidavit of Shri P. K. Jain, partner of the plaintiff anddocuments Exhibit P/l and P/2 have been filed alongwith the same. Noaffidavit has, however, been filed by the defendants in spite of opportunitieshaving been given. ( 7 ). I have heard Shri G. N. Aggarwal, learned Counsel for the plaintiff and Shri H. P. Sharma, learned Counsel for the defendant No. 1. Ihave also gone through the record. Issue No. 1: ( 8 ). Learned Counsel for the plaintiff has submitted that after thefiling of the suit in Court in which notice was issued to the Arbitrator forfiling the Award and the proceedings before 11. 11. 1991, the date fixed incourt, an application was moved by the plaintiff, viz. IA. 10495/90, undersection 151, Civil Procedure Code. in which a prayer was made that noticeof filing of the Award may be issued to the defendant No. 1 since the Awardhad already been filed in Court by defendant No. 2. He has also submittedthat before filing this application in Court on 21. 11. 1990 its copy was servedon defendant No. 1. He has further submitted the Counsel for defendantno. 1 appeared in Court on 27. 11. 1990 and 3. 12. 1990. In this way, he has submitted that the defendant No. 1 should be deemed to have been servedabout the filing of the Award in Court on 27. 11. 1990.
11. 1990 its copy was servedon defendant No. 1. He has further submitted the Counsel for defendantno. 1 appeared in Court on 27. 11. 1990 and 3. 12. 1990. In this way, he has submitted that the defendant No. 1 should be deemed to have been servedabout the filing of the Award in Court on 27. 11. 1990. He has, thus, submitted that the objections having been filed on 19. 2. 1991 are hopelesslybarred by time and, thus, prayed that this issue may be decided in favour ofthe plaintiff. ( 9 ). Learned Counsel for defendant No. 1 has, however, submittedthat the information with regard to the filing of the Award in Court wasreceived by the New Delhi Municipal Committee only on 25. 1. 1991 and theobjections having been filed within 30 days of the service of notice, it cannotbe said that these are filed beyond limitation. He has further submittedthat no notice was given to defendant No, I about the filing of the Awardon 27. 11. 1990, 3. 121990 or any other date before 25. 1. 1991. He has, thus,submitted that the plaintiff has not been able to prove this issue and prayedthat it may be decided against the plaintiff. ( 10 ). I have given my thoughtful consideration to all these submissions and am clearly of the view that the objections have been filed by thedefendant No. 1 within time. ( 11 ). The basic authority on the subject is Nikantha Stdramappaningashetti v. Kashinath Somama Ningashetti and Others, (AIR1962s. C. 666) where it has been held that the time for moving an application forgetting the Award set aside begins from the date of the service of the noticeof filing of the Award. It was also held that there was no ground to construe the expression date of service of notice to mean only a notice inwriting served in a formal manner.
It was also held that there was no ground to construe the expression date of service of notice to mean only a notice inwriting served in a formal manner. When the Legislature used the word notice it must be presumed to have borne in mind that it means not onlya formal intimation but also an informal one and that to construe the expression as meaning only a written notice served formally on the party to beaffected, will leave the door open to that party, even though with full knowledge of the filing of the award he has taken part in the subsequent proceedings to challenge the decree based upon the award at any time upon theground that for want of a proper notice his right to object to the filing ofthe award had not even accrued. It was also held that notice given to theparty through a pleader in Court was sufficient notice to the party. ( 12 ). Indian Rayon Corporation Ltd. v. Raunaq and Company Pvt. Ltd. , (AIR 1988 S. C. 2054) is another judgment on the subject. It hasbeen observed that in order to be effective both for the purposes of obtaining the judgment in terms of the Award and for setting aside the same,all that is required to be proved is filing of the award in the proper Court;service of the notice by the Court or its office to the parties concerced andsuch notice need not necessarily be in writing and it is upon the date ofservice of such notice that the period of limitation begins to run. In thecase aforesaid, the Award was filed in the High Court on 4. 2. 1977 whereinan affidavit was filed by a party to an Award on 4. 2. 1978 slating therein thatthe Award had been wrongly filed in the High Court and it should be takenoff the file. Notice under Section 14 (2) of the Arbitration Act about thefiling of the Award was served on 30. 7. 1981. The question for consideration was as to when the objections could be filed. It was held that theparty had the notice when it filed the affidavit dated 4. 2. 1978 and that theperiod of limitation would not start from the date on which another noticewas served. ( 13 ).
7. 1981. The question for consideration was as to when the objections could be filed. It was held that theparty had the notice when it filed the affidavit dated 4. 2. 1978 and that theperiod of limitation would not start from the date on which another noticewas served. ( 13 ). Lachman Dass and Others v. M/s. Veer Finance Company, Newdelhi and Others, (AIR 1983 Delhi 397) is another authority of this Courton the subject wherein it has been held that the starting point of limitationunder Section 14 (2) is the date of service of notice of filing of the Awardand, thus, where parties have knowledge and are present and appear andapply for leave to examine the award and pray for time to file the objections, the service of notice becomes unnecessary. In such cases the date ofappearance in the proceedings was deemed to be the date of service ofnotice though actually no notice bad been served. ( 14 ). Submission of the learned Counsel for the plaintiff has beenthat copy of IA. 10495/90 was served upon the defendant No. 1 by theplaintiff on 21. 11. 1990 and it was in pursuance of the same that Counsel fordefendant No. 1 appeared in Court on 27. 11. 1990 and 3. 12. 1990 and, so, itshould be presumed that notice of the filing of the Award was given to thedefendant No. 1 by Court at least on 27. 11. 1990. I do not agree with thissubmission. A perusal of the file shows that the Presiding Officer was onleave on 27. 11. 1990 and, so the case was adjourned for 3. 12. 1990 and onthat date the case was again adjourned. It may also be noted that on11. 1. 1991 Counsel for the plaintiff appeared while no one was present fordefendant No. 1 and notice of filing of the Award was ordered to be issuedto defendant No. 1 for 20. 1. 1991. The application, viz. IA. 10495/90,moved by the plaintiff was dismissed as infructuous on account of the noticehaving already been given. In these circumstances, it cannot be said thatany notice was given by the Court to the defendant No. 1 about the filingof the Award at any time prior to 25. 1. 1991. In these circumstances, I holdthat the objections filed by the defendant No. 1 are within time and decidethis issue against the plaintiff.
In these circumstances, it cannot be said thatany notice was given by the Court to the defendant No. 1 about the filingof the Award at any time prior to 25. 1. 1991. In these circumstances, I holdthat the objections filed by the defendant No. 1 are within time and decidethis issue against the plaintiff. Issue No. 2: ( 15 ) IT is the admitted cane of the parties that the Arbitrator was required to give a reasoned Award and in compliance of this requirement awell-reasoned Award running into 33 pages has been made by him. It isalso the admitted case of the parties that Shri C. Rama Rao, the Sole Arbitrator, defendant No. 2, retired as Director General of Works, Centralpublic Works Department. Before discussing the objections with regard tothe claims made by the plaintiff claimant, it would be necessary to refer tothe law on the subject. ( 16 ) IN the case Delhi Development Authority, New Delhi v. M/s. Alkaram, New Delhi, (AIR 1982 Delhi 365), it has been held that sufficiencyand quality of evidence is a matter for the Arbitrator to decide and whenan Arbitrator gives a reasoned Award he is not required to right a detailedjudgment, setting out each logical step of his reasoning. It is sufficient ifhe indicates the trend of his thought process so that error can be eliminatedand arbitrariness avoided. ( 17 ). In case Hindustan Tea Company v. M/s. K. Shashikant and Company and Another, (AIR 1987 S. C. 81) it has been held that the Arbitrator ismade the final arbiter of the disputes between the parties and the Award isnot open to challenge on the ground that the Arbitrator has reached a wrongconclusion or has failed to appreciate facts. If the view taken by an Arbitrator is possible and plausible, it cannot be set aside or substituted by thecourt with its own view and merely because if the Court was to decide thematter it would have taken a view different from the view taken by thearbitrator is not a ground to interfere with the Award. It has been so heldin the case U. P. Hotels etc. v. U. P. State Electricity Board, (JT 1988 (4) S. C. 471 ).
It has been so heldin the case U. P. Hotels etc. v. U. P. State Electricity Board, (JT 1988 (4) S. C. 471 ). To the same effect is the judgment in the case Hind Builders-v. Union of India (AIR 1990 S. C. 1340), The jurisdiction of the Court hearingobjections under the Arbitration Act is not an appellate jurisdiction. It iswell settled that an Award can be set aside only for the reasons specified insection 3. In case Jagdish Chander v. Hindustan Vegetable Oils Corpora-lion (1989 (2) A. L. R. 189) the Arbitrator appointed was a senior officer of thegovernment of India and an expert in the field. He gave an Award afterconsidering the claims, counter claims, oral and documentary evidence andalso after hearing arguments. It was held that the jurisdiction of the Courthearing objections under the Arbitration Act was not an appellate jurisdiction and it could not be said that the Arbitrator had misconducted theproceedings. ( 18 ). The Court is not required to examine the correctness of theclaim on merits with reference to the material produced before the Arbitrator as the Court cannot sit in appeal. The scope for setting aside the Awardis very much limited to the grounds available under the Arbitration Act. Reference in this regard can be made to the case Puri Construction Pvt. Ltd. v. Union of India, (JT 1989 (1) S. C. 132 ). ( 19 ). The net result from all the aforesaid decisions is that an Awardcannot be interfered with unless the objector proves on record that thearbitrator has misconducted himself or the proceedings or that their was amistake apparent on the record. Beyond these facts no relief can be givento an objector. ( 20 ). I would now be considering the objections of the defendantregarding the claims of the plaintiff/claimant. Claim No. 1: ( 21 ). The plaintiff/claimant bad claimed a sum of Rs. 55,4701- as dueto them in the final bill for the work done by them. The claimants hadpleaded that the work was completed on 7. 7. 1988, which fact was not controverted by the objector. It was also pleaded by the claimants that the finalbill should have been settled on 7. 1. 1989 and as no action was taken by thedefendant, the claimant had himself prepared the final bill, giving all thedetails and, thus, claimed the aforesaid amount. ( 22 ).
7. 1988, which fact was not controverted by the objector. It was also pleaded by the claimants that the finalbill should have been settled on 7. 1. 1989 and as no action was taken by thedefendant, the claimant had himself prepared the final bill, giving all thedetails and, thus, claimed the aforesaid amount. ( 22 ). Detailed reply was considered by the arbitrator who had alsoheard arguments of both the parties. The Arbitrator had gone through allthe items-and came to the conclusion that a sum of Rs. 46,923. 00 was due tothe claimants. It may also be noticed that in the objections of the defendantit has been pleaded that only a sum of Rs. 44,047/22 was due and thearbitrator had allowed a sum of Rs. 46,923. 00 and, thus, an excessiveamount. Learned Counsel for the objector has not been able to point outany mistake in the totalling which could be taken note of. The Arbitratorhaving taken all the facts into consideration before giving the aforesaidclaim on Rs. 46,923. 00, it cannot be said that this claim is not justified orthat it calls for any interference. Claim No. 2: ( 23 ). The plaintiff/claimant has claimed a sum of Rs. 4,003. 00 towardsthe refund of the balance of the security deposited with the defendant No. 1. In the objections filed by the defendant all that has been stated was thatthis claim was not in order. Nothing could be argued against this claimand learned Counsel for the defendant submitted that the objection againstthis claim is not being pressed. Claim No. 3: ( 24 ). The claimant had put forward a claim of Rs. 45,551. 00 onaccount of non-payment/inadequate payment for extra/substituted itemsexecuted at the site. Learned Counsel for the defendant-objector has submitted that the New Delhi Muncipal Committee had submitted detailedarguments with regard to the non-admissibility of the claims, but the Arbitrator has committed a mistake in giving an Award for a sum of Rs. 34. 077. 00, which was not justified. Learned Counsel for the defendant hasfurther submitted that nothing was due against this claim and the Arbitratorhas committed a mistake in not agreeing with the contention of the defendant. I am afraid no case has been made out by the defendant within theparameters so as to hold that the Arbitrator has misconducted himself or theproceedings. ( 25 ).
Learned Counsel for the defendant hasfurther submitted that nothing was due against this claim and the Arbitratorhas committed a mistake in not agreeing with the contention of the defendant. I am afraid no case has been made out by the defendant within theparameters so as to hold that the Arbitrator has misconducted himself or theproceedings. ( 25 ). A perusal of the Award shows that as against the claim of Rs. 45. 551. 00 an Award has been made only for sum of Rs. 34,077. 00 after discussing individual items and due application of mind. Learned Counsel forthe objector was not in a position to elaborate as to how this claim wasbeing objected to by the defendant. I, thus, find no reason to interfere withthe conclusion arrived at by the arbitrator regarding this claim. Claim No. 4: ( 26 ). The claimant had claimed a sum of Rs. 7,854. 00towards nonreimbursement of statutory increase in minimum wages of labour with effectfrom 16. 3. 1988. After hearing arguments and considering the calculationsfurnished by the defendant No. 1, the arbitrator allowed a claim of Rs. 4. 433. 00. In the objections filed by the defendant No. 1, averments weremade that this claim was not in order. However, learned Counsel for thedefendant submitted during arguments that this claim is not being opposed. He was, even otherwise, not able to point out anything wrong so as toenable this Court to interfere with this claim. Claim No. 5: ( 27 ). The claimants had put forward a claim for Rs. 1,19,800. 00 towards the escalation in cost of material and labour for the work executedbeyond the stipulated period of the contract. Both the parties had putforward their documents and after hearing both the parties and taking intoconsideration all the material the Arbitrator allowed a sum of Rs. 62,41 I/to the claimant. The Arbitrator has given the details as to how this amountwas arrived at. In the objections it was pleaded that there was duplicationof the amount in this claim and that it was not justified. Learned Counselfor the defendant No. 1 has not been able to put forward any arguments soas to hold that the Arbitrator has misconducted himself or the proceedingscalling for interference in the conclusion arrived at by the Arbitrator. Nocase, therefore, has been made out for interfering with this claim allowedby the Arbitrator. Claim No. 6: ( 28 ).
Learned Counselfor the defendant No. 1 has not been able to put forward any arguments soas to hold that the Arbitrator has misconducted himself or the proceedingscalling for interference in the conclusion arrived at by the Arbitrator. Nocase, therefore, has been made out for interfering with this claim allowedby the Arbitrator. Claim No. 6: ( 28 ). A sum of Rs. 48,068. 00 was claimed as damages by the claimants,stated to have been suffered by them for the under utilisation of their capacity in the execution of the work. As against this amount of claim, anamount of Rs. 32,045. 00 has been allowed by the Arbitrator. It was pleadedin the objections that no proof was available on behalf of the claimant toshow that his resources were lying idle and that contractor was required toadjust his resources as per actual site position and necessity. It was, thus,pleaded that no amount was payable against this claim. Learned Counselfor the defendant No. 1 has not been able to submit anything over andabove what has been referred to above. I am afraid the submission of thelearned Counsel for the defendant No. 1 cannot be accepted for the samereasons, i. e. no misconduct has even been alleged against the Arbitrator,who has given reasons for coming to the conclusion and no case has beenmade out to interfere with the conclusion arrived at by him. Claim No. 7: ( 29 ). The arbitrator has awarded interest at the rate of 15 per centper annum on a sum of Rs. 89. 436. 00 found due to the claimant from7. 1. 1989 till the first date of hearing, i. e. 26. 6. 90, which comes to Rs. 19,700. 00. No interest was allowed during the pendency of the arbitrationproceedings and the Arbitrator directed that if the amount of the Awardwas not paid within two months the claimant would be entitled to simpleinterest at the rate of 15 per cent per annum on a sum of Rs. 1,83,892. 00 tillthe date of publication of the Award or till the actual payment of decree,whichever was earlier. ( 30 ). Learned Counsel for the defendant No. 1 has submitted thatthe rate of interest was higher and it ought not to have been at the rate of15 per cent.
1,83,892. 00 tillthe date of publication of the Award or till the actual payment of decree,whichever was earlier. ( 30 ). Learned Counsel for the defendant No. 1 has submitted thatthe rate of interest was higher and it ought not to have been at the rate of15 per cent. I do not find any ground to interfere with the discretion exercised by the Arbitrator in awarding simple interest at the rate of 15 percent. No case, therefore, is made out for interference in the discretionexercised by the Arbitrator. ( 31 ). Keeping in view the aforesaid discussion I am clearly of theview that the defendant No. 1 has not been able to prove on record that theaward was liable to be set aside or modified. The objections contained inia. 2018/91 are, thus, dismissed and Issue No. 2 is decided against thedefendant. ( 32 ). Since the objections have been dismissed, the Award dated25. 10. 1990 is made Rule of the Court. Decree sheet be prepared accordingly. The A ward shall from part of the decree sheet. The claimant shall also beentitled to get interest at the rate of 15/o from the date of decree tillrealisation. Appeal dismissed.