DYNAMIC ESTATES AND BUILDERS PVT. LTD v. NORTH ENGINEERING COOP. GROUP HOUSING SOCIETY
2007-07-30
SANJAY KISHAN KAUL
body2007
DigiLaw.ai
SANJAY KISHAN KAUL, J. ( 1 ) IA No. 7616/1994 (u/s. 30 and 33 of the Indian Arbitration , 1940) an agreement was executed on 31. 10. 1984 in terms whereof the respondent M/s. North End Co-operative Group Housing Society Limited engaged the services of the petitioner for construction of 74 apartments at the Group housing Complex of the respondent situated at Rohtak Road, Delhi for a total value of Rs. 77,34,526/ -. " The stipulated date of commencement of the work was 14. 10. 1984 and the stipulated date of completion was 13. 04. 1986. " Disputes arose between the parties during the execution of the work resulting in termination of the contract on 23. 04. 1986. ( 2 ) THE petitioner filed a petition before this Court under Section 20 of the Indian Arbitration Act, 1940 for reference of disputes to arbitration being Suit No. 495"a/1986 and in terms of the Order dated 13. 09. 1988, Late justice T. P. S. Chawla (Retd.) was appointed as the Sole Arbitrator. " The arbitrator has made and published the Award dated 17. 06. 1993. " The petitioner has filed objections to the said Award. " ( 3 ) A perusal of the Award and record shows that detailed hearings were held, considerable evidence was led by the parties, but the Award is a non- speaking Award. " It is not disputed that in such a non-speaking Award, it would not be possible to go behind the Award to see how the mind of the Arbitrator worked as there are no reasons stated. ( 4 ) LEARNED counsel for the petitioner, however, contends that there are three aspects, which are to be examined in the present objections despite Award being a non-speaking Award, which are as under :- (i)the findings arrived at by the Arbitrator are inconsistent with each other; (ii)the Award is beyond the terms of contract; and (iii)there is total absence of evidence for awarding the counter claim.
( 5 ) IN order to appreciate the scope of interference by the Court in such a matter, learned counsel referred to the judgment of the Division Bench of this Court in Hira Singh v. Union of India, 1975 Rajdhani Law Reporter (Note) 144 to advance the proposition that the right to forfeit a security deposit and recovery of compensation for breach was by way of penalty within the meaning of section 74 of the Indian Contract Act, 1872. " The Government was, thus, held entitled to recover only reasonable compensation and though the right was absolute to forfeit the security deposit, it cannot be done so in addition to recovery of loss suffered by it. " Thus, the amount of security deposit forfeited was liable to be deducted from the amount of actual cost. ( 6 ) LEARNED counsel also referred to the judgment of learned Single judge of this Court in M/s. Mehta Teja Singh and Co. v. Union of India and Anr. , air 1977 Delhi 231 holding that refusal to summon production of important evidence is misconduct and duty was laid upon every Arbitrator to decide the dispute impartially. " A reference was made also to another judgment of learned single Judge of this Court in M/s. Bhai Sardar Singh and Sons, New Delhi v. New delhi Municipal Committee and Anr. , AIR 1981 Delhi 374 to advance the proposition that even in case of a non-speaking Award passed by the Arbitrator where there was no document or any evidence incorporated in the Award, the Award cannot be vitiated by an error of law apparent on its face. " However, failure to consider the material documents amounted to judicial misconduct. ( 7 ) LEARNED counsel referred to the judgment of learned Single Judge of the Orissa High Court (as he then was) in The Fertilizer Corporation of India ltd. v. M/s. Bharat Painters, AIR 1986 Orissa 82 to contend that an Award passed without any material on record amounts to misconduct. " If an Arbitrator reaches a conclusion which no person acting judicially and properly instructed in law could reach, then he is guilty of misconduct. " Similarly, in M/s. Bombay Ammonia pvt. Ltd. v. Union of India, Air 1987 Delhi 148, it was held that an Award based on no evidence is liable to be set aside. " In Mohan Construction Co.
" Similarly, in M/s. Bombay Ammonia pvt. Ltd. v. Union of India, Air 1987 Delhi 148, it was held that an Award based on no evidence is liable to be set aside. " In Mohan Construction Co. v. Natraj vihar Co-op. Group Housing Society Ltd. , 1996 (Suppl.) Arb. LR 515, it was held that total absence of evidence or Arbitrator"s failure to take into consideration a very material document on record or admission of parties in arriving at the findings are, however, good grounds for challenging the proceedings for legal misconduct of the Arbitrator. ( 8 ) LEARNED counsel contended that in view of the observations of the supreme Court in State of Jandk and Anr. v. Dev Dutt Pandit, AIR 1999 SC 3196 though interference by Court has its limitations in case of a non-speaking award, but there is no complete bar in examining if the award is in terms of reference or the terms of the contract. " A similar view was also expressed in v. G. George v. Indian Rare Earths and Anr. , AIR 1999 SC 1409 . ( 9 ) INSOFAR as the propositions of law advanced in the aforesaid judgments are concerned, there is really no dispute. " The question, however, remains as to whether in the given facts and circumstances of the case, the judgments cited would be of assistance to the petitioner. ( 10 ) THE contention of learned counsel for the petitioner that the findings are inconsistent with each other are based on the fact that while the petitioner has been held entitled to be paid for the balance work done in terms of claim 1a and 1b, in the counter claim, damages have been awarded to the respondent on account of increase of cost of construction. " I find no inconsistency in this behalf as the two parts of claim No. 1 deal with the work done by the petitioner and not paid for as also extra items of work done. " The damages awarded against the petitioner are based on the findings arrived at on issue No. 5 that the respondent had validly and justifiably terminated the contract. " A similar position would arise in respect of the value agreed to for the material left by the petitioner at site.
" The damages awarded against the petitioner are based on the findings arrived at on issue No. 5 that the respondent had validly and justifiably terminated the contract. " A similar position would arise in respect of the value agreed to for the material left by the petitioner at site. ( 11 ) LEARNED counsel for the petitioner contended that on account of it being held by the Arbitrator that the contract was validly terminated, the petitioner was not held entitled to refund of security and yet damages have been awarded against the petitioner without adjusting the security contrary to the observations of the Division Bench of this Court in Hira Singh"s case (supra ). ( 12 ) IN my considered view, the premise on which learned counsel for the petitioner based this submission is that while calculating the damages, the security deposit has not been adjusted. " Such a conclusion cannot be derived from the Award for the simple reason that it is not a reasoned Award. " It cannot be said that the award of damages has not been assessed apart from the forfeiture of the security deposit. ( 13 ) THE second plea of learned counsel for the petitioner on account of the Award being beyond the contract really has no merit. " The contract provided for execution of work by the petitioner. " The petitioner has been found at fault for delay of the contract. " The consequence of delay including increase in cost has been burdened on the petitioner. " This was the real dispute to be decided by the Arbitrator. ( 14 ) THE last aspect urged by learned counsel for the petitioner is that there is no evidence on record. " It is, in fact, in support of this plea that most of the judgments referred to aforesaid were cited. " It is trite to say that this Court does not examine and weigh the evidence again before the Arbitrator. " this Court cannot sit in appeal over the Award to re-appraise the evidence nor can it interfere with the Award on the ground that this Court would have come to a different conclusion than that arrived at by the Arbitrator. " The Arbitrator is a Judge chosen by the parties.
" this Court cannot sit in appeal over the Award to re-appraise the evidence nor can it interfere with the Award on the ground that this Court would have come to a different conclusion than that arrived at by the Arbitrator. " The Arbitrator is a Judge chosen by the parties. " Simultaneously, it cannot be lost sight of in view of the aforesaid judgments that where there is total absence of evidence even in case of a non-speaking Award, this Court is not precluded from setting aside the Award. " ( 15 ) IN the present case, voluminous evidence has been produced. " A number of witnesses were produced and cross-examined. " The arbitral record itself runs into a couple of volumes. " In such a case, it can hardly be accepted that there was no evidence available on record. ( 16 ) I am also unable to accept the plea of learned counsel for the petitioner that there must be documentary evidence on record. " The parties have produced their witnesses, who were cross-examined. " It was open for the arbitrator to weigh the testimony of the witnesses and arrive at a conclusion. " ( 17 ) IN view of the aforesaid, I find no merit in the application, which is dismissed. ( 18 ) THE Award dated 17. 06. 1993 of the Sole Arbitrator, Late Justice T. P. S. Chawla (Retd.) is made Rule of Court. " The respondent shall also be entitled to simple interest @ 12% p. a. from the date of the Award,. e. , 17. 06. 1993 till the date of realization. ( 19 ) PARTIES are left to bear their own costs. ( 20 ) DECREE-SHEET be drawn up accordingly.