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2006 DIGILAW 1186 (DEL)

R. K. SHARMA v. NDMC

2006-07-18

MANJU GOEL

body2006
MANJU GOEL, J. ( 1 ) THIS is a petition under Section 14 of the Arbitration Act, 1940 (hereinafter referred to as 'the Act') for a direction to file the original Award dated 1. 12. 1995 passed by the sole Arbitrator-respondent No. 2 and objections under Sections 30 and 33 of the Act against the Award. Respondent No. 1 entrusted the work titled'improvement of Piazza of Connaught Place from A to F' Blocks' to the petitioner vide a letter dated 28/7/1989 and Agreement No. 8/pm (Cont. Place)/89-90. On account of the disputes arising in respect of the contract at work, the petitioner asked the Administrator of respondent No. 1 to appoint an Arbitrator and respondent No. 1 having failed to do so, the petitioner filed an application under section 20 of the Act, beingsuitno. 2555 A/1991, which was allowed vide an order dated 6/1/1995 and respondent No. 1 appointed respondent No. 2 as the sole arbitrator to adjudicate the claim of the petitioner. The Arbitrator thereafter announced the Award on 1/12/1995 for a sum of Rs. 5,000. 00 against the claim of rs. 5,15,560. 00. Since the Arbitrator was appointed pursuant to an order of this court, an application under Section 14 is presented to this Court for a direction to the Arbitrator to file the Award. ( 2 ) THE Award deals with eight claims of the petitioner. Claim No. 1 was for a sum of Rs. 12,700. 00 for putting up infrastructure by way of a site godown and barricading, apart from deploying site Engineer, Chowkidars, etc. NDMC admitted that only a symbolic sort of a godown had been set up without any barricades. The Arbitrator awarded a sum of Rs. 1,000. 00 to the claimant towards the cost of the symbolic godown. Claim No. 2 was towards the cost of barricading, which was declined by the Arbitrator as no sufficient proof of the expense allegedly incurred towards the barricading was adduced before the Arbitrator. Claim No. 3 was for rs. 13,095/- towards the cost of samples of Dholpur and Red Sand Stone which were to be laid. On account of termination of the work, the petitioner claimed, the samples went waste causing this damage. The Arbitrator found that no proof of the cost incurred forthose stones had been furnished. Since thendmc, i. e. respondent no. 1, did not deny having received some samples, a sum of Rs. On account of termination of the work, the petitioner claimed, the samples went waste causing this damage. The Arbitrator found that no proof of the cost incurred forthose stones had been furnished. Since thendmc, i. e. respondent no. 1, did not deny having received some samples, a sum of Rs. 4,000. 00 was allowed on this account. Claim Nos. 4, 5 and 6 were on account of loss of profit, non-utilisation of tools and plants and ungainful engagement of staff amounting to rs. 3,08,913. 00, Rs. 81,640. 00 and Rs. 73,612. 00 respectively. The Arbitrator observed that the total value of the work was Rs. 7. 87 lacs and, therefore, a profit of over rs. 3. 00 lacs could not have been expected. Further, there was no evidence to show mobilisation of tools and plants, etc. Further, the Arbitrator found that since no work was done, there was no ground for claiming salary of an engineer. The claimant/petitioner himself was found to be in breach and, therefore, not entitled to any of the three claims. Thus, claim Nos. 4, 5 and 6 were totally declined. Claim no. 7 was for a sum of Rs. 10,000. 00 towards the cost of the arbitration proceedings, which the Arbitrator declined on the ground that the claimant himself was in breach and, hence, not entitled to the cost of the arbitration. Claim No. 8 was for pre-suit, pendente lite and future interest @ 21% per annum compounded annually. The arbitrator held that there was no provision in the agreement for payment of interest and no interest was payable. The Arbitrator, therefore, awarded a total sum of rs. 5,000. 00 only. ( 3 ) ON the Arbitrator's Award on claim No. 1, the petitioner submits in his objection that since it was admitted by respondent No. 1 that the petitioner had set up a godown, the entire claim on this account should have been allowed. On the arbitrator's Award on claim No. 2, the petitioner reiterates that the petitioner had submitted a document which was Annexure 2 which the Arbitrator misread. On the arbitrator's Award on claim No. 3, it is contended that the Arbitrator failed to give any reasons for disallowing the claim despite the fact that respondent No. 1 had admitted the supply of samples. On the arbitrator's Award on claim No. 3, it is contended that the Arbitrator failed to give any reasons for disallowing the claim despite the fact that respondent No. 1 had admitted the supply of samples. Further, it is contended that the petitioner had placed on record the analysis of rates in Annexure 3 which was overlooked by the arbitrator. On the Arbitrator's Award on claimnos. 4,5 and 6, the objection is that the three claims could not have been dealt with together and that it was a mistake on the part of the Arbitrator in holding that it was the petitioner who was in breach. Further, the petitioner claims that Annexures C-5 to C- 11 proved mobilisation of tools and plant. Further objection in this regard is that an engineer had to be engaged for a period of 15 months in anticipation of the work to commence and further clause 36 of the Agreement required employment of an engineer at site. Similarly, employment of a Chowkidar at site was imperative for the security of the godown, tools and plant and, therefore, the Arbitrator misconducted himself by failing to award the amount claimed. Similarly, on the Arbitrator's Award on claim No. 8 it is contended that the Arbitrator misconducted himself by declining to grant interest which is available to the claimant under the Interest Act as well as under various judgments. ( 4 ) IN reply to the objections, the respondent/ndmc has supported the award and has alleged that there has been no misconduct on the part of the Arbitrator and the award cannot be set aside. ( 5 ) AT the time of hearing of arguments, the learned Counsel for the petitioner/ objector has laid great stress on the failure of the Arbitrator to give reasons for the award and on the Arbitrator's failure to take note of certain documents. There is no dispute that the Arbitrator was required to give reasons. As mentioned earlier on claim No. 1 the Arbitrator awarded a sum of Rs. 1,000/- as against claim of rs. 12,700/ -. This claim was on account of infrastructure by way of a site godown and barricading the same besides deploying site engineer, Chowkidar, etc. Although no proof of the cost was placed on the record since the NDMC had admitted that some sort of symbolic godown was set up the sum of Rs. 1,000/- as against claim of rs. 12,700/ -. This claim was on account of infrastructure by way of a site godown and barricading the same besides deploying site engineer, Chowkidar, etc. Although no proof of the cost was placed on the record since the NDMC had admitted that some sort of symbolic godown was set up the sum of Rs. 1,000/- was awarded to the claimant. The Arbitrator has not given any reasons as to why the sum of rs. 1 ,000/- could be arrived at. On claim No. 3 the Arbitrator has awarded a sum of Rs. 4,000/- towards the cost of samples of dholpur and red sand stone. This was also granted on admission of the respondent-NDMC that some samples had been received. How this figure of Rs. 4,000/- is arrived at is not mentioned by the arbitrator. On Claims 4, 5 and 6 the Arbitrator awarded nothing. The reason for declining the three claims was mainly that it was the claimant, namely, the petitioner, who was in breach. There is no discussion anywhere in the entire award as to how the contract was terminated or withdrawn and who was in breach. For the same reason claim No. 7, i. e. , cost of arbitration, has been declined. The claim for interest is declined on the ground that there was no contract for payment of interest. ( 6 ) THE most important aspect of the award is that the Arbitrator is heavily swayed by the opinion that it was the petitioner/claimant/objector who was in breach. The entire claim of the petitioner rested on his allegation of breach on the part of the respondent. Before the Arbitrator the claimant/petitioner submitted that the work was withdrawn on 27. 11. 1990. In paragraph 11 of the claim, the petitioner gave a narration of the negotiations and correspondence between the parties. In narrates that the NDMC has been changing the specifications from time-to-time and that by such changes the contract had virtually become a new contract. The petitioner charges the respondent with indecision on various aspects. The claim nos. 3,4 and 5 rested on the allegation of the petitioner that it was the NDMC who was in breach. The Arbitrator has not given any reasons for his conclusions that the petitioner was in breach. For this opinion of the Arbitrator the major part of the claim of the petitioner was declined. The claim nos. 3,4 and 5 rested on the allegation of the petitioner that it was the NDMC who was in breach. The Arbitrator has not given any reasons for his conclusions that the petitioner was in breach. For this opinion of the Arbitrator the major part of the claim of the petitioner was declined. It is admitted position that the Arbitrator was required to give reasons for his award. The Arbitrator's award is, therefore, liable to be set aside on this ground alone. ( 7 ) IT is further alleged that the Arbitrator misconducted the proceedings by ignoring the documents. Particular reference is made to documents C-5 and C-11. C-5 is a letter complaining to the NDMC of the delays on the part of the NDMC which has been causing loss to the petitioner who has made all the arrangements at the site and had mobilized the resources in respect of staff, tools, plants and finances, etc. It is further pointed out that another document, C-7, a letter from ndmc, admits the delay on the part of the NDMC. The Arbitrator has not taken note of these two letters as well as of certain other letters. In fact, the Arbitrator has absolutely not taken any note of the documents filed by the claimant before him. ( 8 ) THE petitioner has referred to two judgments of the Supreme Court, namely, K. P. Poulose v. State of Kerala and Another, AIR 1975 SC 1259 and sathyanarayana Brothers (P) Ltd. v. Tamil Nadu Water Supply and Drainage board, VII (2003) SLT 335=2004 (1) Arb. L. R. (SC) 1. The Supreme Court held in the case of K. P. Poulose (supra) that the Arbitrator had misconducted the proceedings by ignoring the two very material documents. Similar opinion was expressed in the case of Sathyanarayana Brothers (supra ). ( 9 ) IN view of above findings, namely, that the Arbitrator had ignored material documents and thus had misconducted the proceedings, that the award does not give reasons for the findings, the award is liable to be set aside. It can be added that the Arbitrator's opinion that no interest is payable on the awarded amount is also against the established legal principles in respect of Arbitrator's power to grant interest and the claimant's entitlement for interest. It can be added that the Arbitrator's opinion that no interest is payable on the awarded amount is also against the established legal principles in respect of Arbitrator's power to grant interest and the claimant's entitlement for interest. ( 10 ) HENCE the objection petition (I. A. No. 4777/96) is allowed and the arbitrator's award is set aside and remanded back to the Arbitrator, namely, Shri s. R. Nigam for passing a fresh award in the dispute. The parties shall report to Shri s. R. Nigam on 1/8/2006 and serve a copy of this judgment on him. In case Shri S. R. Nigam is not available for the arbitration, the petitioner shall be at liberty to apply to this Court for appointment of an Arbitrator in place of Shri S. R. Nigam. The respondent shall bear the cost of the proceedings in this suit. Suit decreed and IA allowed.