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2006 DIGILAW 1450 (DEL)

UNION OF INDIA v. DAULAT RAI AND SONS

2006-08-25

PRADEEP NANDRAJOG

body2006
PRADEEP NANDRAJOG, J. ( 1 ) OBJECTIONS under Section 34 of the Arbitration and Conciliation Act have been filed to the award dated 2nd July, 1999 published by Shri G. S. Mehta, csw, Office of the Standing Panel of Arbitrators. The first objection raised is to the sum award under claim No. 2. ( 2 ) CONTRACT shows that contractor was to execute certain works in respect whereof material had to be supplied by the objector, meaning thereby, contractor had to provide labour. These works were withdrawn as contract proceeded. Contractor claimed Rs. 52,500/- stating that 30% cost of work could safely be assumed to be loss of profit inasmuch as the work was withdrawn. ( 3 ) LEARNED Arbitrator has awarded Rs. 10,000/ -. The objections cannot be sustained for the reason it is settled law that where a contractor is prevented from doing a work awarded under the contract, he would be entitled to loss of profit as recompense. Second objection raised is in respect of payment to the contractor at enhanced rate for work executed beyond deviation limit. ( 4 ) PERUSAL of the award shows that sum of Rs. 42,500/- has been awarded by the learned Arbitrator after evaluating evidence and determining quantum of work done beyond deviation limit. It is settled law that in respect of a work contract, prices quoted have to remain firm not only during contract stipulated period but also in relation to the contract stipulated work. On proof of price rise, for extra work, compensation can be awarded to the contractor. ( 5 ) PERUSAL of the award shows that learned Arbitrator has determined amount payable in relation to market rate of the ingredients which went into execution of the work beyond deviation limit. The objection is non-sustainable. Third objection raised is to the damages awarded by the learned arbitrator to the contractor on account of the fact that the contract could prolonged by 16 months and 22 days. ( 6 ) REALLY speaking, learned Arbitrator has recompensed the contractor on account of price rise in the cost of raw material consumed during contract prolonged period. ( 7 ) AS noted above, contract quoted prices have to remain firm during contract stipulation period. If contract is prolonged and delay is not attributable to the contractor, contractor would be entitled to increase in price. ( 7 ) AS noted above, contract quoted prices have to remain firm during contract stipulation period. If contract is prolonged and delay is not attributable to the contractor, contractor would be entitled to increase in price. Of course, where the contract provides for an in built formula, for example, clause 10 (cc), generally found in contracts, Arbitrator would have to determine escalation in relation to the structured formula. ( 8 ) IF contract does not provide for a formula to determine price rise beyond contract stipulated date, recompense would have to be in relation to price rise established in relation to market rates. ( 9 ) ON the issue of what led to contract period being not adhere to, in relation to evidence, learned Arbitrator has held that the contractor was not responsible. ( 10 ) FINDING is of fact. It is based on appreciation of evidence. I cannot re-open the said finding, more so, for the reason it is not the case of the objector that a material document has been ignored or that, on the given evidence, no reasonable person could come to the conclusion arrived at. ( 11 ) NOTING that the learned Arbitrator has recompensed the contractor in relation to evidence showing price rise, no infirmity can be found in the award pertaining to the third objection. The next objection is to the award whereunder sum of Rs. 15,000/- has been awarded to the contractor on account of tubewell consisting of motor and pipes left behind at site by the contractor. ( 12 ) OBJECTION is that the contractor was to make arrangements for water to execute the work and for which contractor dug a borewell and installed a pump to lift water from the womb of the earth. Learned counsel for the contractor points out that notwithstanding that it was the obligation of the contractor to provide water for executing the work, but at completion of the work, at the asking of the Garrison Engineer, contractor left behind the pipes and the pump to operate the borewell. ( 13 ) PERUSAL of the award shows that the learned Arbitrator has referred to various letters written by the contractor on the issue which includes Ex. ( 13 ) PERUSAL of the award shows that the learned Arbitrator has referred to various letters written by the contractor on the issue which includes Ex. C-27 being a letter dated 17th August, 1993 written by the contractor to the Garrison engineer in which contractor has referred to the instruction of the Garrison engineer to leave behind the tubewell, undisturbed. ( 14 ) SINCE it has not been pointed out to me that the objector refuted the said letter, I find no infirmity in the award for the reason learned arbitrator has looked into the documentary evidence and based thereon has given a finding that the contractor left behind the equipment pertaining to the tubewell at the asking of the Garrison Engineer. ( 15 ) BE that as it may, amount involved is only Rs. 15,000/ -. It is settled law that in the absence of a prohibition in the contract, prohibiting interest to be awarded, it is within the discretion of the arbitrator to award interest. ( 16 ) I note that the interest awarded is 15% per annum, though, claimed at 24% per annum. Learned Arbitrator has referred to Ex. C-22 being contractor's letter dated 5th May, 1993 in which claim for interest is made. Looking at from any angle, the award is just and proper. The objections are dismissed.