BHAGAT CONSTRUCTION PRIVATE LIMITED v. DELHI DEVELOPMENT AUTHORITY
1999-11-19
M.K.SHARMA
body1999
DigiLaw.ai
DR. M. K. SHARMA, J. ( 1 ) THE respondent gave a contract to the petitioner for construction of 400 housesin SFS at Rajouri Garden, New Delhi. White executing the aforesaid contract certaindisputes arose between the parties. The said disputes in terms of clause 25 of theagreement were referred to the sole arbitration of Shri S. Nagarajan, Additionaldirector General (Retd.), for adjudication and decision. The Arbitrator entered intothe reference and upon hearing the parties made and published his award by orderdated 8. 5. 1992. The a foresaid award was placed before this court for making thesame a Rule of the Court, as against which objections were filed by Delhi Developmentauthority, the respondent herein. ( 2 ) I have heard the learned counsel appearing for the parties in respect of theaforesaid objections and also on the issue about making the award a Rule of thecourt. I have also perused the records placed before me including the recordsmaintained by the Arbitrator as also his award and on appreciation thereof I proposeto decide the matter-claimed. CLAIM NO. 1: ( 3 ) CLAIM No. 1 was a claim for an amount of Rs. 2 lac being the amount due to thepetitioners towards final bill including labour escalation. During the proceedingsbefore the Arbitrator the petitioners reduced their claim to an amount of Rs. 1,61,587. 00-as per Ex. C-39. The petitioners have admitted that there is a clerical mistake in theaward so far the present claim is concerned. On perusal of the records I find that thetotal amount as awarded by the arbitrator in respect of the aforesaid claim shouldhave been Rs. 1,13,552. 68 and not Rs. 1,59,495. 66. The aforesaid mistake is anadmitted mistake appearing on the face of the record and therefore, could becorrected and the award could be modified to the aforesaid extent in terms of theprovisions of Section 15 (b) of the Arbitration Act. The amount of Rs. 24,261. 00 wasrecovered on account of secured advance and therefore, the said amount is to bededucted from the final bill as submitted by the petitioners which was for Rs. 1,59,495. 66and therefore, the said amount is to be deducted from the modified amount. Totalamount payable on this account is admittedly Rs. 1,13,568. 60 and therefore, theaward is modified to the aforesaid extent holding that the petitioners would beentitled to receive an amount of Rs. 1,13,566. 38 as against claim No. 1 instead ofrs. 1,59,495.
1,59,495. 66and therefore, the said amount is to be deducted from the modified amount. Totalamount payable on this account is admittedly Rs. 1,13,568. 60 and therefore, theaward is modified to the aforesaid extent holding that the petitioners would beentitled to receive an amount of Rs. 1,13,566. 38 as against claim No. 1 instead ofrs. 1,59,495. 66 which has been awarded by the Arbitrator. CLAIM NO. 2: ( 4 ) SO far claim No. 2 is concerned the aforesaid claim relates to payment of anamount of Rs. 25,000. 00 for increase in price of bricks. The arbitrator considered theaforesaid claim and after considering the pleadings of the parties and the recordsfound that a balance amount of Rs. 11,828. 75 was still due and payable to thepetitioners. On considering the records I find that the respondents have not deniedthe liability to make payment for the increase in price of bricks to the petitioner. Thepetitioner claimed the aforesaid amount of Rs. 11,828. 75, on the basis or increase inprice of bricks on two occasions i. e. 29. 5. 1981 and 11. 5. 1982, basing their claim onsuch statutory increases in the price of bricks. After perusal of the records and afterdue and proper calculation the arbitrator found the same due and payable by therespondents. The said findings are based on appreciation offacts and therefore, thesaid award in respect of claim No. 2 is not liable to be interfered with. Counselappearing for the respondent however, submitted that the element of thought processof the arbitrator is not indicated in the aforesaid award. The said contention is withoutany basis, for the arbitrator has given the element of thought process in giving hisaward. Reliance sought to be placed on the decision of this court in M/s. Anant Rajagencies Vs. Delhi Development Authority; reported in 1998 (76) DLT page 747is misconceived. CLAIM N0. 3: ( 5 ) THIS claim of the petitioners was for payment of Rs. 15 lac due to increase inmarket rate of materials and labour during the prolonged period of the contract.
Delhi Development Authority; reported in 1998 (76) DLT page 747is misconceived. CLAIM N0. 3: ( 5 ) THIS claim of the petitioners was for payment of Rs. 15 lac due to increase inmarket rate of materials and labour during the prolonged period of the contract. Thepetitioners claimed the aforesaid amount on the ground that the respondents defaultedbadly in their obligation under the contract to supply materials such as cement, pipesand door shutters and also for the delay in making available the site for the workwhich resulted in considerable delay in the work and therefore, there was a breach ofthe contract and as such the petitioners are entitled to loss and damages in terms ofthe provisions of Sections 53,70 and 73 of the Contract Act. It was also pleaded bythe petitioners that as soon as the stipulated date of contract was over the petitionersdemanded a higher rate of 98% above the estimated rates, against their contractrates which were pending and therefore, they are entitled to claim the aforesaiddamages. It is the case of the respondents that there was general shortage of cementat the relevant time. It was also pleaded that if there be any delay on the part of therespondents the petitioners are entitled to extension of time for completion of thecontract and that since respondents have already taken notice of and paid theincrease in labour escalation and bricks which are part of claims 1 and 2 therefore, thepetitioners were not entitled to any payment towards loss and damages. ( 6 ) THE arbitrator on consideration of the records however, found that the respondentsare liable to pay damages and loss due to continuous rise in prices of materials andlabour, and therefore, awarded an amount of Rs. 9,08,000. 00. Counsel for the respondentvehemently objected to the aforesaid award passed by the arbitrator awarding Rs. 9,08,000. 00 as against claim No. 3. He submitted that the arbitrator did not take intoconsideration the reason of delay which was on account of short supply or non-supplyof the stipulated material. He submitted that such loss is already taken notice andcare of in respect of claims No. 1, 2 and 5 and therefore, the arbitrator was notjustifidin allowing the aforesaid clams. He also drew my attention to the provisions of claus (1) of Specifications and Conditions and clause 10 of the Contract. The contractual period was from 3. 3. 1981 to 2. 3.
He also drew my attention to the provisions of claus (1) of Specifications and Conditions and clause 10 of the Contract. The contractual period was from 3. 3. 1981 to 2. 3. 1982 and the work was actualcompleted on 1. 10. 1984 with a delay of 31 months. The time for completion of thework was extended by the respondent from time to time. According to the aforesaidprovisions of the contract in the event of delay in the completion of the work duenon-supply or short supply of the stipulated material the petitioner was entitled onlyextension of time and for no compensation. It is stipulated as follows:"provided the contractor shall in no case be entitled to any compensation ordamages on account of any delay in supply or non-supply of all or any suchmaterials or stores. "reference may also be made to clause (1) of Specifications and Conditions. Therelevant provision reads thus-"lf part of site is not available for any reason or there is some unavoidabledelay in supply of materials stipulated by the department, the programmer ofconstruction shall be modified accordingly and the contractor shall have noclaim for any extra or compensation on this account. "in this connection reference may be made to the Division Bench decision of thecourt in Grandly Electricals (India) Ltd. and others Vs. Vidya Batra and otherreported in 1999 (1) Arbitration Law Reports page 88 wherein this court held that toarbitrator has to act in accordance with the terms of agreement settled between theparties and cannot award anything more than what is agreed to be paid. When tocontractor specifically agreed in the contract not to claim for any compensation aextra for delay in handing over site and also for delay in handing over materials, arbitrator could not have awarded compensation for such delay in contraventionagreed stipulation. Besides claim No. 1,2 and 5 also include claims on simiaccount namely- escalation in the price of bricks and labour rates and therefore, claim made herein is over-lapping with that of claims No. 1,2 and 5. In this connection reference may be made to the case of Associatedengineering Company s. Govt. of Andhra Pradesh and another; reported1991 (2) Arb. L. R. 180 wherein it was observed by the Supreme Court asfollows:"these four claims are not payable under the contract. The contract does notpostulate - in fact it prohibits - payment of any escalation under Claim no.
In this connection reference may be made to the case of Associatedengineering Company s. Govt. of Andhra Pradesh and another; reported1991 (2) Arb. L. R. 180 wherein it was observed by the Supreme Court asfollows:"these four claims are not payable under the contract. The contract does notpostulate - in fact it prohibits - payment of any escalation under Claim no. lllfor napa-slabs or Claim No. VI for extra lead of water or Claim No. 1x forflattening of canal slopes of Claim No. 1t for escalation in labour chargesotherwise than in terms of the formula prescribed by the contract Thisconclusion is reached not by construction of the contract duty by merelylooking at the contract. The umpire traveled totally outside the permissibleterritory and thus exceeded his jurisdiction in making the award under thoseclaims. This is an error going to the root of his jurisdiction. See Jivarahbhaiujamshi Sheth and others Vs. Chintamanrao Balaji and others. We arein complete agreement with Mr. Madhav Reddy s submissions on the point. "in the light of the aforesaid provisions of the contract namely clause (1) of thespecifications and Conditions and clause 10 of the agreement and also the Divisionbench decision of this court, I hold that the arbitrator was not justified in awarding lossand damages which amounted to acting contrary to the provisions of the contract. Incoming to the aforesaid conclusion I am also fortified by another decision of thesupreme Court in New India Civil Erectors (P) Ltd. Vs. 0/7 and Natural Gascorporation; reported in JT (1997) 2 SC page 633, wherein it was held that thearbitrator cannot act contrary to the specific stipulation/condition contained in theagreement. The Supreme Court held that in view of clear stipulation in the agreementthe arbitrator could not have awarded any amount on the count that the contractormust have incurred extra expenses in carrying out construction after the stipulateddate. It is needless to reiterate here that the parties have already envisaged asituation where there could be some delay in the completion of the work due to shortsupply and non-supply of the material and both the parties have signed the agreementbeing conscious of the fact and having agreed that in such an eventuality thepetietitioner will be entitled to extension of time but the petitioner can not claim anyloss or damages.
In that view of the matter the aforesaid claim is not maintainableand the award passed by the arbitrator stands set aside in respect of the aforesaidclaim. CLAIM N0. 4: ( 7 ) THIS claim relates to a claim for payment of Rs. 40,000. 00 which was wronglyrecovered for rebates in running bills. In respect of the aforesaid claim an amount ofrs. 5,591. 00 has been directed to be paid by the respondent to the petitioner by thearbitrator. Upon going through the records I find no error apparent on the face of therecord in the aforesaid award passed by the arbitrator and therefore, the said awardis upheld. CLAIM N0. 5: ( 8 ) CLAIM No. 5 relates to claim of Rs. 2 lac by the petitioner for their establishmentand labour out of contractual obligations. The arbitrator, after consideration of thepleadings of the parties and the evidence adduced, awarded a sum of Rs. 43,020. 00in settlement of the claim. In respect of the aforesaid claim discussion at some lengthhas already been made while deciding the claim in respect of claim No. 3. In supportof the aforesaid claim the petitioner stated that there establishment and labour had tofinger on for 1-1/2 years. On consideration of the evidence on record the arbitraterfound that the petitioner had to linger on with the quarters till March, 1985 when the balance quarters were allotted and therefore, the petitioners were forced to keeptheir establishment and labour for about 6 months. The aforesaid claim for a period ofsix months only was found admissible and on the basis thereof an amount of Rs. 43,020. 00 was awarded by the arbitrator. The said findings have been arrived at by thearbitrator after considering the evidence on record and on the basis of calculationsand I do not find any error apparent on the face of the record to interfere with the saidconclusions. The said award is accordingly, upheld. CLAIM N0. 6: ( 9 ) THIS claim relates to pendentelite interest. The Arbitrator awarded pendenteliteinterest at 15% per annum to the claimants on Rs. 1,52,654/ i. e. the award amount ofclaims1,2and4and excluding claims No. 3and5 w. e. f. 1. 11. 1988 upto the date of theaward i. e. 30. 4. 1992 assessing the same at Rs. 80,143. 00. The arbitrator, however,did not award any pre-suit interest.
The Arbitrator awarded pendenteliteinterest at 15% per annum to the claimants on Rs. 1,52,654/ i. e. the award amount ofclaims1,2and4and excluding claims No. 3and5 w. e. f. 1. 11. 1988 upto the date of theaward i. e. 30. 4. 1992 assessing the same at Rs. 80,143. 00. The arbitrator, however,did not award any pre-suit interest. The arbitrator has also awarded post-suit interestallowing the respondents two months time to pay the awarded amount, falling whichthe amount awarded would carry interest at 15% per annum from the date of theaward uptil date of payment. I find no reason to interfere with the aforesaid awardpassed by the arbitrator. The arbitrator has also awarded costs of Rs. 5,000. 00. I do notfind any reason to interfere with the said award also. ( 10 ) IN terms of the aforesaid order the award passed by the Arbitrator in respect ofclaims No. 1,2,4,5,6 and 7 are upheld and they are made a Rule of the Court. So farthe award in respect of Claim No. 3 is concerned the same stands set aside. Decreebe accordingly drawn in terms of this order.