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1996 DIGILAW 203 (DEL)

BABU LAL BARWA v. DELHI DEVELOPMENT AUTHORITY

1996-02-23

ARUN KUMAR

body1996
Arun Kumar, J. ( 1 ) THE respondent DDA has filed objections under Sections 30and 33 of the Arbitration Act against the Award dated 17/07/1990 vide I. A. No. 11384 of 1990. The learned Counsel for the objector has challenged the Award so faras it relates to Claims No. 1 and 2 of the contractor/petitioner herein. Under claimno. 1, the claimant had claimed a sum of Rs. 30,000. 00 on account of under paymentdue to part rates for the work executed and completed till rescision of the work. Inthe Award on this point the Arbitrator has noted that the respondent DDA hadadmitted that a sum of Rs. 20,506. 00 had been withheld in part rates. The plea of therespondent regarding justification for withholding the said amount was rejected bythe Arbitrator after considering the same on merits. At this stage, this Court is notsitting in appeal over the decision of the Arbitrator. I find no ground to interfere withthe findings of the Arbitrator with respect to Claim No. 1 under which a sum of Rs. 20,506. 00 has been awarded by the Arbitrator in favour of the claimant. ( 2 ) THE objection of the respondent DDA regarding Claim No. 2 is based onclause No. 2 of the agreement between the parties. It is submitted that under Clause2, the decision of the Superintend ing Engineer regarding levy of penalty is final and,therefore, cannot be subject matter of arbitration. Clause No. 2 of the contract isreproduced below: "clause 2.-The time allowed for carrying out the work as entered in thetender shall be strictly observed by the contractor and shall be deemed to beof the essence of the contract on the part of the contractor and shall be reckonedfrom the Tenth Day after the date on which the order to commence the workis issued to contractor. The work shall throughout the stipulated period of thecontract be proceeded with all due diligence and the contractor shall pay ascompensation an amount equal to one percent, or such smaller amount as thesuperintending Engineer, Delhi Development Authority (whose decision inwriting shall be final) may decide on the amount of the estimated cost of thewhole work as shown in the tender, for every day that the work remainsuncommenced or unfinished, after the proper dates. And further, to ensuregood progress during the execution of the work, the contractor shall be boundin all cases in which the time allowed for any work exceeds, one month (savefor special jobs) to complete one-eight of the whole of the work before one-fourth of the whole time allowed under the contract has elapsed; three-eightof the work, before one half of such time has elapsed, and three-fourth of thework, before three-fourth of such time has elapsed. However for special jobsif a time-schedule has been submitted by the Contractor and the same has beenaccepted by the Engineer-in-Charge, the contractor shall comply with the saidtime-schedule. In the event of the contractor failing to comply with thiscondition, he shall liable to pay as compensation an amount equal to onepercent or such smaller amount as the Superintending Engineer, Delhidevelopment Authority (whose decision in writing shall be final) may decideon the said estimated cost of the whole work for every day that the duequantity of work remains incomplete; provided always that the entire amountof compensation to be paid under the provision of this clause shall not exceedten percent, on the estimated cost of the work as shown in the tender. " ( 3 ) IT is settled law that if the decision of an authority is treated as final on someaspect of the contract as per the provisions of the contract, such a matter cannot bereferred TO to arbitration. Such a provision deprives the Arbitrator of any jurisdictionto adjudicate upon the controversy. Reference may be made to Delhi Developmentauthority v. Sudhir Brothers, 57 (1995) D. L. T. 474. In the present case, the discussionin the Award on Claim No. 2 itself shows that the Superintending Engineer hadthrough his letter dated 3/05/1990 levied a penalty of Rs. 29,963. 00. The levy ofpenalty and the amount of the penalty were thus beyond the scope of jurisdictionof the Arbitrator and the Award of the Arbitrator awarding a sum of Rs. 29,963/in favour of the contractor is, therefore, without jurisdiction. The Award with respect to claim No. 2 is liable to be set aside. ( 4 ) THE result is that the Award dated 17/07/1990 is modified to the extentthat the Award with respect to claim No. 2 is set aside. The Award so far as it relatesto claim No. 1 for a sum of Rs. 20,506. The Award with respect to claim No. 2 is liable to be set aside. ( 4 ) THE result is that the Award dated 17/07/1990 is modified to the extentthat the Award with respect to claim No. 2 is set aside. The Award so far as it relatesto claim No. 1 for a sum of Rs. 20,506. 00 is made a rule of the Court and a decree ispassed in terms thereof to that extent. Besides this, the claimant will be entitled tointerest on the said amount of Rs. 20,506. 00 at the rate of 12 per cent per annum fromthe date of the Award till realisation. ( 5 ) THE suit as well as the I. A. 11384/90 stand disposed of. No costs. ( 6 ) THE learned Counsel for the DDA has objected to my awarding interest onthe amount of the Award upheld by me from the date of Award till realisation. Shesubmits that in view of the provisions of Section 29 of the Arbitration Act, this Courtcan award interest only from the date of decree passed on the basis of the Awardand not from a prior date. In this behalf, the learned Counsel has also relied on Unionof India v. fain Associates and Another, Vol. 20 Arbitration Law Reporter p. 494. This judgment proceeds on the basis of Section 29 of the Arbitration Act. Section 34cpc which gives powers to the Court passing a money decree to grant interestpendente lite and future till the date of realisation was noted and the distinctionbetween Section 34, Civil Procedure Code and Section 29 was pointed out. It was held that in viewof the Section 29 of the Arbitration Act, the Court could not grant interest from adate prior to passing of a decree on the basis of the Award. ( 7 ) ON the other hand, the learned Counsel for the petitioner submits that thiscourt is empowered to grant interest from the date of Award till realisation. He hasinvited my attention to a decision of the Supreme Court in Gujarat Water Supllyand Sewerage Board v. Unique Erectos (Gujarat) (P) Ltd. and Another, AIR 1989 SC973. In para 14 of this judgment, the Supreme noted that reference to arbitration wasmade in that case after the commencement of the Interest Act, 1978. The Court alsonoted its earlier decision in Abnaduta Jena s case, ( AIR 1988 SC 1520 ). In para 14 of this judgment, the Supreme noted that reference to arbitration wasmade in that case after the commencement of the Interest Act, 1978. The Court alsonoted its earlier decision in Abnaduta Jena s case, ( AIR 1988 SC 1520 ). It wasobserved that so far as interest for the period from the date of the Award till the dateof the decree is concerned, the question was not specifically considered in Abnadutajena s case. It was held that interest should be allowed from the date of the Awardtill the date of the decree on the principle that once proceedings under Sections 15to 17 are initiated, the Court can grant interest pendente lite. The Court expresseda doubt about interest from the date of Award till decree being within the powerof the Court to award in cases arising before the Interest Act, 1978 in view of therestricted scope of Section 29 of the Arbitration Act. However, it was expressly laiddown that there can be no doubt about the Court s power to grant this interest incases governed by the Interest Act, 1978 as Section 3 (1) (a) which was applied byabnaduta Jena to Arbitrators will equally apply to enable this Court to do this. Itis to be noted here that Section 2 (a) of the Interest Act, 1978 provides that Court includes a Tribunal and a Arbitrator . Thus for purposes of application of theprovisions of Interest Act, an Arbitrator has been placed at par with the Court. ( 8 ) MY attention has also been drawn to a later decision of the Supreme Courtin Renusager Power Co. Ltd. v. General Electric Company, AIR 1994 SC 860 . The relevant paras in the said decision are following : "134. In an international commercial arbitration, like any domestic arbitration,the award of interest would fall under the following periods : (i) Period prior to the date of reference to arbitration; (ii) Period during which the arbitration proceedings were pending beforethe Arbitrators; (iii) Period from the date of award till the date of institution of proceedingsin a Court for enforcement of the award; (iv) Period from the date of institution of proceedings in a Court till thepassing of the decree; and (v) Period subsequent to the decree till payment. 135. 135. The interest in respect of the period covered by item (i), namely, prior tothe date of reference to arbitration would be governed by the proper law ofthe contract and the interest covered by Items (ii) and (iii), i. e. , during thependency of the arbitral proceedings and subsequent to the award till the dateof institution of the proceedings in the Court for the enforcement of the awardwould be governed by the law governing the arbitral proceedings. These arematters which have to be dealt with by the Arbitrators in the award and theaward in relation to these matters cannot be questioned at the stage ofenforcement of the award. At that stage the Court is only required to deal withinterest covered by items (iv) and (v ). The award of interest in respect of theseperiods would be governed by lex fori, i. e. , the law of the Forum where theaward is sought to be enforced. According to Alen Redfern and Martin Hunter"once an arbitral award is enforced in a particular country as a judgment ofa Court, the arbitral post-award interest rate may be overtaken by the rateapplicable to civil judgments. " (See; Redfern and Hunter, Law and Practice ofinternational Commercial Arbitration, 2nd Edition, page 406 ). 137. Unlike Section 34 of the Code of Civil Procedure whereunder the Courtcan award interest for the period of pendency of the suit as well as for theperiod subsequent to the decree till realisation. Section 29 of the Arbitrationact empowers the Court to award interest from the date of decree only. It has,however, been held that while passing a decree in terms of the award, thecourt can award interest for the period during which the proceedings werepending in the Court, i. e. , the period from the date of institution of proceedings for the enforcement of the award in the Court till the passing of the decreein cases arising after the Interest Act, 1978. (See: Gujarat Water Supply andsewerage Board v. Unique Erectors (Gujarat) (P) Ltd. , AIR 1989 SC 973 atp. 978 ). " ( 9 ) THUS, the aforesaid two decisions of the Supreme Court make it absolutelyclear that the Court has power to grant interest from the date of Award till decreeand from the date of decree till realisation. (See: Gujarat Water Supply andsewerage Board v. Unique Erectors (Gujarat) (P) Ltd. , AIR 1989 SC 973 atp. 978 ). " ( 9 ) THUS, the aforesaid two decisions of the Supreme Court make it absolutelyclear that the Court has power to grant interest from the date of Award till decreeand from the date of decree till realisation. Basing myself on these decisions of thesupreme Court, I reject the contention of the learned Counsel for the respondentthat the interest cannot be awarded by this Court from the date of Award till the dateof passing of a decree.