JAGAN NATH ASHOK KUMAR v. DELHI DEVELOPMENT AUTHORITY
1994-08-01
USHA MEHRA
body1994
DigiLaw.ai
Ms. Usha Mehra, J. ( 1 ) M/s. Jagan Nath Ashok Kumar entered into a contractwith Delhi Development Authority (in short D. D. A. ) for the construction ofshoping-cum-resiential block at Turkman Gate. The said agreement also containedarbitraion clause which provided that in case of any dispute arisen between theparties, the same shall be referred to the sole Arbitrator to be appointed by theengineer Member of the D. D. A. ( 2 ) DISPUTE arose between the parties in respect of the work executed by thepetitioner, which was refuted by the D. D. A. , hence the claims were preferred to theengineer Member of the D. D. A. , who in turn appointed Shri Banarsi Dass,respondent No. 2 herein as the sole Arbitrator to adjudicate the claims and counterclaims of the parties. ( 3 ) THE Arbitrator after going through the record and after hearing the partiesmade and published his award dated 21/10/1991. The said award wasordered to be filed in the Court. Notice of the filing of the award was issued to theparties. Petitioner did not file any objection. However, on behalf of the respondent/d. D. A. objections have been filed which are listed as IA. No. 9278/92. ( 4 ) THERE were Approx. 11 claims besides additional claim and counterclaimsreferred to the Arbitrator. However, the D. D. A. has assailed the award primarilyagainst claim No. 1, claim No. 11 read with additional claim No. 5 besides assailingadditional claim No. 4 and counter claim No. 1. ( 5 ) VIDE claim No. 1, petitioner claimed a sum of Rs. 1,60,000. 00 towards thefinal bill. D. D. A. before the Arbitrator submitted that the gross amount payablewas Rs. 51. 617. 00 subject to recoveries mainly on the ground of stipulated material,income tax, final recovery of stipulated material, risk and cost. The petitioner hadalso claimed a sum of Rs. 28,247. 84 paise for the work done but not paid. As aginstwhich D. D. A. admitted an amount of Rs. 6,367. 16 paise, petitioner also pointed outmathematical mistake to the tune of Rs. 1,596. 00 in item Nos. 3 for 2 sq. meter. Thiserror was accepted by the Arbitrator as well as D. D. A. As against the claim of Rs. 1,60,000. 00, the arbitrator awarded a sum of Rs. 46,920. 00. This was subject to issueof certificate of income tax for an amount of Rs. 1,033. 00.
1,596. 00 in item Nos. 3 for 2 sq. meter. Thiserror was accepted by the Arbitrator as well as D. D. A. As against the claim of Rs. 1,60,000. 00, the arbitrator awarded a sum of Rs. 46,920. 00. This was subject to issueof certificate of income tax for an amount of Rs. 1,033. 00. The challenge of the D. D. A. is primarily on the ground that the Arbitrator arbitrarily dis-allowed the finalrecovery on stipulated material in the sum of Rs. 5,692. 98 paise. According to thed. D. A. , this recovery was pursuance to Clause 42 of the Agreement. Clause 42 ofthe Agreement stipulates that the contractor was to see that only the requiredquantities of materials are got issued. It was further the term of the Agreement thatthe difference in quantity of cement actually issued to the contractor and thetheoratical quantity including the authorised violation, if not returned by thecontractor, shall be recovered at twice the issue rate without prejudice to theprovision of the relevant conditions regarding return of materials governing thecontract. So, relying on this clause, Mr. Sharma contended that the Departmentrightly recovered the penal rate for the excessive use of material. On the otherhand, Mr. Mittal contended that the difference between the actual consumptionand theoretical as pointed out under Clause 42 had been gone into by thearbitrator. He found that the actual loss has not been proved, meaning thereby thatthe Arbitrator on the basic of the record provided before him was not satisfied withthe calculations arrived at by the Department and, therefore, disallowed thedouble recovery. The Arbitrator has given reasons for not accepting the doublerecovery as the D. D. A. failed to prove the loss. The contention of the Counsel forthe petitioner merits consideration because once the Arbitrator gives reasons and those reasons do not appear to be absurd in that case, his decision on the point oflaw as well as on facts cannot be gone into nor can be re-evaluated by this Court. . because this Court is not sitting as a Court of appeal. The reference by the Counselfor the D. D. A. to the decision of the Supreme Court in Continental Construction Co. Ltd. v. State of Madhya Pradesh reported in AIR 1988 SC 1166 is of no help.
. because this Court is not sitting as a Court of appeal. The reference by the Counselfor the D. D. A. to the decision of the Supreme Court in Continental Construction Co. Ltd. v. State of Madhya Pradesh reported in AIR 1988 SC 1166 is of no help. There is no quarrel with the proposition of law laid down that the Arbitrator is nota conciliator and cannot ignore the law or mis-apply it in order to do what he thinksis just and reasonable. He is a tribunal selected by the parties to decide theirdisputes according to law and is bound to follow and apply the law. Theseobservations in no case help the respondent, particularly when the arbitrator aftergoing through the record concluded that D. D. A. failed to prove that it actuallysuffered any loss on account of differences between actual consumption of materialand the theoretical. Hence, relying on Section 74 of the Indian Contract Act heconcluded that the respondent since could not prove loss hence not entitled torecover any amount on this account. For a double recovery, the D. D. A. was to leadevidence and satisfy the Arbitrator. But D. D. A. failed to do so. In the case ofcontinental Construction Co. Ltd. (Supra), the claim of the contractor was based onsome vague plea of equity and not as per the stipulated rates. In that case there wasspecific clause in the contract which barred extra claim in the event of priceescalation. It was despite this prohibition contained in the agreement that thearbitrator awarded the escalation price. It was in this back-ground that the awardwas set aside. But that is not the case in hand. Mr. Sharma also relied on anotherdecision of the Supreme Court in Vishwanath Sood v. Union of India and Anr. reported in AIR 1989 SC 952 . I am afraid this decision is also of no help to the D. D. A. because in that case the Court was dealing with an "exception" clause whichprovided that "except where otherwise provided in the contract" meaning therebythat the compensation determined either by the Engineer-in-Charge or on furtherreference by the Superintending Engineer could not be called in question before thearbitrator. This is not the issue here. It is not the case of the D. D. A. that doublerecovery as envisaged under Clause 42 falls under the "excepted matter" and,therefore, could not be referred to Arbitrator.
This is not the issue here. It is not the case of the D. D. A. that doublerecovery as envisaged under Clause 42 falls under the "excepted matter" and,therefore, could not be referred to Arbitrator. In fact Clause 42 does not envisagethat the decision with regard to double recovery would be final. In this view of thematter, the authority relied by Counsel for the D. D. A. is of no help to the D. D. A. For the above reasons, I find that the objections of the D. D. A. regarding Claim No. 1 is not sustainable and award on this account cannot be set aside. ( 6 ) THE next objectin which has been raised by the D. D. A. pertains to the awardof interest in favour of the petitioner. According to objector/ D. D. A. no reasonshave been assigned for awarding interest w. e. f. 31/05/1984. In this regard, Mr. Sharma Counsel for the D. D. A. contended that since reasons have been assignedhence, award is bad in law. In order to strengthen his argument, he placed relianceon the decision of the Supreme Court reported in AIR 1991 SC 1026 and of Delhihigh Court reported in 1988 RLR 421 besides Gujarat Water Supply and Sewarageboard v. Unique Erectors and Ors. AIR1989 SC 973. All these judgments in a waywere considered by the Supreme Court in the case of Secretary, Irrigation Department, Government of Orissa v. G. C. Roy, AIR 1992 SC 732 . The objection of thed. D. A. that the arbitrator in the absence of the agreement, usage or trade could nothave awarded interest, pre-suit as well as pendente lite. Even the rate of interest i. e. 12% was not awarded under the Interest Act nor the Arbitrator could award thefuture interest as it was not within his competence and jurisdiction. Thesesubmissions are without merits. The question of interest came up before thesupreme Court at various stages and finally by the judgment in the case ofsecretary, Irrigation Department, Government of Orissa v. G. C. Roy, it has beenheld that the Arbitrator enjoys the same power as a Civil Court in awarding interestunder Section 34 of the Code of Civil Procedure.
Thesesubmissions are without merits. The question of interest came up before thesupreme Court at various stages and finally by the judgment in the case ofsecretary, Irrigation Department, Government of Orissa v. G. C. Roy, it has beenheld that the Arbitrator enjoys the same power as a Civil Court in awarding interestunder Section 34 of the Code of Civil Procedure. In the words of Supreme Court,where the agreement between the parties does not prohibit grant of interest andwhere a party claims interest and that dispute is referred to an Arbitrator, he shallhave the same power to award interest as Civil Court. A person deprived of the useof money to which he is legitimately entitled as a right to be compensated for thedeprivation, call it by any name. It may be called interest, compensation ordamages. This basic consideration is as valid for the period the dispute is pendingbefore the Arbitrator as it is for the period prior to the Arbitrator entering upon thereference. This is the principle of Section 34 of the Code of Civil Procedure andthere is no reason or principle to hold otherwise in the case of Arbitrator. Anarbitrator is an alternative form for resolution of disputes arising between theparties. If so, he must have the power to decide all the disputes or differencesarising between the parties. If the Arbitrator has no power to award interestpendente lite, the party claiming it would have to approach the Court for thatpurpose, even though he may have obtained satisfaction in respect of other claimsfrom the Arbitrator. This would lead to multiplicity of proceedings. For doingcomplete justice between the parties, such power has always been inferred. Theinterest is an implied term of the agreement between the parties and, therefore,when the parties refer all their disputes or refer the dispute as to interest as suchto the Arbitrator, he shall have the power to award interest. It is a matter withinhis discretion to be exercised in the light of all the facts and circumstances of thecase. Mr. Sharma further placed reliance on the decision of the Supreme Court inthe case of Gujarat Water Supply and Sewerage Board v. Unique Erectors (Gujarat) (P) Ltd. , AIR 1989 SC 973 and contented that the Arbitrator had no power to grantpendente lite and pre-suit interest. Therefore, the award of interest w. e. f. 31stmay,l 984 was beyond the perview and power of the Arbitrator.
Therefore, the award of interest w. e. f. 31stmay,l 984 was beyond the perview and power of the Arbitrator. I am afraid in viewof the latest Supreme Court judgment referred to above in the case of Secretary,irrigation Department, Govt. of Orissa v. G. C. Roy (Supra) where it has been madeclear that the Arbitrator had the power to grant interest pendente lite as well asprior to the Arbitrator entering upon reference. Therefore, this objection is alsowithout force. ( 7 ) MR. Mittal explained that the written notice claiming interest is dated 3 1/05/1984 and, therefore, while awarding the pre-suit interest, the Arbitrator tookthat date i. e. 31/05/1984 when the notice claiming interest was served. Thereasonableness is such of an award unless the award is per sc preposterous orabsurd is not a matter for the Court to consider. Law permitted the Arbitrator toaward interest presutr pendente lite as well as future. The Arbitrator after takinginto consideration all the relevant facts and circumstances including the documentary and oral evidence produced before him awarded interest. Re-appraisement ofsuch evidence which was appraised by the Arbitrator is ordinarily not to beinterfered by this Court. In the words of Supreme Court "reason varies in itsconclusions according to the idiosyncrasy of the individual and the times and thecircumstances in which he thinks". Therefore, simply because the Arbitrator tookinto consideration the date of notice while granting the pre-suit interest will notmake his award bad. I find force in these submissions of Counsel for the petitioner. The objection with regard to the grant of interest against Award No. II andadditional Claim No. 5 is without force and, therefore, rejected. ( 8 ) THE other objection which has been raised by the D. D. A. pertains toadditional Claim No. 4 i. e. awarding of Rs. 6,000. 00 on account of over weight insteel issued by weight to the petitioner. Mr. Sharma contended that the Arbitratorwhile awarding Rs. 6,000. 00 has applied the rule of thumb. No basis has been given. In the absence of any proper record having been maintained by the Executiveengineer, how could the Arbitrator award 50% of the claimed amount. On theother hand, Mr. Mittal contended that the Arbitrator took into consideration thesubmissions made before him and the documents relied and thereafter came to theconclusion that the contention of the claimant was justified.
In the absence of any proper record having been maintained by the Executiveengineer, how could the Arbitrator award 50% of the claimed amount. On theother hand, Mr. Mittal contended that the Arbitrator took into consideration thesubmissions made before him and the documents relied and thereafter came to theconclusion that the contention of the claimant was justified. The petitioner hadbeen issuing the steel on weight basis whereas the payment was made by thed. D. A. on length basis. Thereby converting the weight by multiplying withtheoretical co-efficient and thus on account of this conversion short payment wasmade for which the evidence was laid before the Arbitrator. The conditions of thecontract also provide that the measurements for re-enforcement shall be done onthe actual weight basis but the D. D. A. did not do so and, therefore, committed thebreach. Since, the Department did not maintain the record, therefore, the Arbitra-tor relying on the record produced by the claimant found that the claim was partlyjustified and awarded Rs. 6,000. 00. The bare reading of the award against Addi-tional Claim No. 4 shows that the Arbitrator took into consideration the recordproduced before him and then awraded the amount. It is not the case of theobjector/ D. D. A. that the D. D. A. produced the documents to prove that there wasno short payment and the Arbitrator ignored the same. So, in the absence of anyrecord produced by the D. D. A. , Arbitrator relying on the record produced by theclaimant awarded the amount, I see no error apparent on the face of the award norany reason to interfere with the same. The objection is found to be without meritsand hence rejected. ( 9 ) MR. Sharma then challenged the award against Counter Claim Nos. I and3 whereby the D. D. A. had claimed an amount of Rs. 1,04,000. 00 on account ofdifference of escalation on the item yet to be executed by the claimant as well as asum of Rs. 1,04,500. 00 on account of delay involved in the work in the shape ofpenalty at the rate of 10%. Against both these counter claims, the Arbitrator foundthat the claims were not justified. He has given reasons for arriving at thisconclusion.
1,04,500. 00 on account of delay involved in the work in the shape ofpenalty at the rate of 10%. Against both these counter claims, the Arbitrator foundthat the claims were not justified. He has given reasons for arriving at thisconclusion. Take for example, award against counter claim No. 1 for not allowingthis claim, the Arbitrator took into consideration the fact that D. D. A. failed to givedesigns and drawings at the proper time to enable the claimants to complete thework within the stipulated period. Similarly, D. D. A. failed to make regularmonthly payments to the claimant and that the D. D. A. failed to supplythestipulated material at proper time and even after expiry of the period, no time wasfixed for completion of balance work and thus essence of the time was not kept bythe D. D. A. Taking these factors which attributed to the breach of the contract onthe part of the D. D. A. , the Arbitrator dis-allowed the amount on account of thework got done by the D. D. A. at the risk and cost of the contractor. The Arbitratorhas given due consideration to the matter and the material placed before him beforerejecting this claim. It is not open to this Court to re-assess that evidence. I find noerror apparent on the face of the award, particularly, when the Arbitrator had onthe basis of evidence placed before him has arrived at a proper conclusion. ( 10 ) NOW coming to the Counter Claim No. 3, the levy charged by the D. D. A. was considered to be not justified as the same was imposed after six years of therescinding of the contract. In fact the matter was pending before the Arbitratorwhen penalty clause was invoked. This is against the law. Relying on variousjudgments cited before him, he rejected this claim. Besides the various judgments,he also considered the material placed before him and came to the conclusion thatthe breach was on the part of the D. D. A. He found that the D. D. A. failed to givethe working and structural drawings and the electrical contractor "did not laycondued pipes etc.
Relying on variousjudgments cited before him, he rejected this claim. Besides the various judgments,he also considered the material placed before him and came to the conclusion thatthe breach was on the part of the D. D. A. He found that the D. D. A. failed to givethe working and structural drawings and the electrical contractor "did not laycondued pipes etc. He also found on the basis of the record produced before himthat the execution of work was delayed because of fault of the D. D. A. and henceconcluded that the claimant was not responsible for the delay and the breach wason the part of the D. D. A. coupled with the fact that the D. D. A. forfeited its right totake action under the terms of the agreement after six years. Therefore, on law aswell as on merits he did not find the counter claim of the Department justified. Itis not right to say that the Arbitrator did not apply his mind or that the reasoninggiven by him after considering evidence produced before him is erroneous or thatthe reasoning is preposterous or absurd. ( 11 ) FOR the reasons stated above, I find no merits in the objections. Theobjection petition is accordingly dismissed. The award made and published by thesole Arbitrator, respondent No. 2 dated 21/10/1991 is hereby made rule ofthe Court. If the awarded amount is paid within one month from the date of thejudgment, no further interest would be payable, but in case the decretal amount isnot paid within one month from the date of the judgment then respondent/d. D. A. will be liable to pay interest at the rate of 12% per annum from the date of decreetill realisation.