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2008 DIGILAW 800 (DEL)

MUNICIPAL CORPORATION OF DELHI v. GUPTA BROTHERS

2008-08-21

HIMA KOHLI

body2008
JUDGMENT Hima Kohli, J. (Oral)-The petitioner/MCD has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) against the award of the Arbitral Tribunal dated 30.11.2007. As per the aforesaid award, out of seven claims, the learned Arbitrator has granted three claims under Claim Nos. 1, 2 and 3 in favour of the respondent/contractor along with pendente lite and future interest@9%. The counter claim of the petitioner was, however, rejected. 2. The brief facts of the case are that the petitioner /MCD entered into an agreement with the respondent/contractor for work pertaining to improvement and regrading of existing storm water drains in Blocks A, B, C and D of Suraj Mal Vihar, vide Agreement dated 31.3.2004. It is the case of the petitioner/MCD that the tender of the respondent/contractor was accepted for an estimated contractual amount of Rs. 69,28,996/-, @ 5% above the estimated rates of tender amount of Rs. 65,99,044/ -. The stipulated date for completion of the work was 8.12.2004. However, the work was actually completed in the month of March, 2005. After the work was completed, the respondent/contractor made certain claims on the petitioner/MCD which the latter refused to pay. Therefore, disputes arose between the parties. As per the aforesaid Agreement, an arbitration clause governed the parties, but the petitioner/MCD failed to appoint an Arbitrator. The respondent/contractor thus approached this Court by filing a petition for appointment of an Arbitrator. Vide order dated 30.3.2006, an Arbitrator was appointed and the disputes between the parties were referred for arbitration, resulting in passing of the impugned award. 3. The main ground taken by the Counsel for the petitioner/MCD for assailing the impugned award is that the learned Arbitrator failed to appreciate the fact that the respondent/contractor did not discharge its onus by establishing the claims raised before the learned Arbitrator. In this regard, he seeks to refer to the observations of the learned Arbitrator in respect of the Claim No.1 which relates to payment of bills of the respondent/contractor. The said claim was for a sum of Rs. 70.00 lacs. It is a matter of record that the respondent/contractor was paid a sum of Rs. 12,08,865/- by the petitioner/MCD during the course of the arbitration. The said claim was for a sum of Rs. 70.00 lacs. It is a matter of record that the respondent/contractor was paid a sum of Rs. 12,08,865/- by the petitioner/MCD during the course of the arbitration. Counsel for the petitioner/MCD states that the respondent/contractor did not justify the bill raised by it on the petitioner/MCD by placing on record any documentary evidence in support thereof. 4. As far as Claim No.2, which pertains to refund of security amount of Rs. 1.00 lac is concerned, it is stated by the Counsel for the petitioner/MCD that the petitioner/MCD was entitled to forfeit the aforesaid amount as the respondent/contractor did not complete the entire work as per the contract, which fact the learned Arbitrator failed to take into consideration. 5. It is lastly stated that as far as Claim No.3, which pertains to an amount of Rs. 6,16,641/- claimed by the. respondent/contractor by invoking the escalation clause contained in Clause 10CC of the contract is concerned, the respondent/contractor failed to give the basis of the calculations worked out under the said claim. 6. I have heard the Counsel for the parties and perused the impugned award in the context of the submissions made by the Counsel. At the outset, it may be noted that the law on the scope of interference under Section 34 of the Act is well settled. A number of judicial pronouncements have indicated that the Courts while examining the award of an Arbitrator are not required to re-appreciate the evidence placed on the record as if sitting in appeal and that the learned Arbitrator is the master of the facts and law. It is also settled law that the Court should endeavour to uphold the award unless the same is on the face of it, illegal, arbitrary or perverse. 7. In Hindustan Construction Co. Ltd. v. Governor of Orissa & Ors. reported as AIR 1995 SC 2189 , it was held that the Court cannot reappreciate the material on the record. In Hindustan Iron Co. v. K. Shashikant & Co. reported as AIR 1987 SC 81 , the Supreme Court held that the award of the Arbitrator ought not to be set aside for the reason that, in the opinion of the Court, the Arbitrator reached wrong conclusions or failed to appreciate the facts. In Podu Thozillar Sangam v. Balasubramania Foundry & Ors. v. K. Shashikant & Co. reported as AIR 1987 SC 81 , the Supreme Court held that the award of the Arbitrator ought not to be set aside for the reason that, in the opinion of the Court, the Arbitrator reached wrong conclusions or failed to appreciate the facts. In Podu Thozillar Sangam v. Balasubramania Foundry & Ors. reported as AIR 1987 SC 2045 , it has been opined that it is only an error of law and not a mistake of fact committed by the Arbitrator which can be adjudicated in the application/ objection before the Court. 8. The Supreme Court in the case of M/s. Sudarsan Trading Co. v. The Government of Kerala and Anr. reported as AIR 1989 SC 890 held that once there is no dispute as to the contract, what is the interpretation of that contract, is a matter for the Arbitrator to consider and decide, on which the Court cannot substitute its own decision. If on a view taken of a contract, the decision of the Arbitrator on certain aspects, is a possible view, though perhaps not the only correct view, the award cannot be examined and set aside by the Court on the said ground. 9. It is also a settled legal proposition that where two views were possible, it could not be predicated that there was an error apparent on the face of the award [Refer: Hind Builders v. Union of India, AIR 1990 SC 1340 ]. In Bijendra Nath Srivastava v. Mayank Srivastava & Ors. reported as AIR 1994 SC 2562 , the view expressed by the Supreme Court was that the reasonableness of reasons given by the Arbitrator were not open to challenge and that the proper approach would be for the Court to support the award. 10. When the award is examined in the light of the aforesaid judicial pronouncements, this Court finds that the ground taken by the petitioner /MCD to assail the award insofar as Claim No.1 is concerned, entails re-examination of the evidence placed on the record before the learned Arbitrator, which is beyond the scope of interference by a Court while exercising its powers under Section 34 of the Act. Whether the respondent/ contractor discharged the onus laid on it for establishing the basis of the bills raised on the petitioner/MCD, would depend on the evidence placed by the respondent/ contractor before the learned Arbitrator. Whether the respondent/ contractor discharged the onus laid on it for establishing the basis of the bills raised on the petitioner/MCD, would depend on the evidence placed by the respondent/ contractor before the learned Arbitrator. It was for the learned Arbitrator to satisfy herself as to the nature and sufficiency of evidence placed before her to establish the quantity of work done by the respondent/ contractor for preparing a final bill. 11. A perusal of the impugned award shows that the learned Arbitrator has not only referred to a series of documents including correspondence between the parties, but has also referred to the basis of measurements and the evidence led by the parties before awarding Claim No.1 in favour of the respondent/contractor. 12. In view of the fact that the learned Arbitrator has duly taken into consideration all the relevant documents and the evidence adduced by the parties, it is not appropriate for this Court to re-appreciate the same so as to arrive at a conclusion as to whether the stand of the petitioner/MCD, that the reduction of the quantity of the work done by the respondent/contractor was rightly done by the petitioner/MCD or not. This would amount to re-appreciating the finding of facts, which is clearly impermissible and beyond the scope of interference under the provisions of Section 34 of the Act. 13. Similarly, while dealing with Claim No.2 with regard to refund of earnest money, the learned Arbitrator has referred to various documents and observed that the respondent/contractor had completed the work in respect of the three blocks in Blocks A, B and D before 14.1.2005 and in Block C by March, 2005. While observing so, it was also noticed that the petitioner /MCD had not placed on record any letter of the relevant time to prove that the defects were pointed out by the petitioner/MCD or they were directed to remove the same. Instead, specific reference was made by the learned Arbitrator to an independent agency appointed by the petitioner /MCD itself and its report dated 14.1.2005 to observe that the petitioner/MCD did not point out that the dressing was incomplete or the ramps were damaged or slopes were not proper, etc. Discussing at length, the said report given by IIT experts, the learned Arbitrator arrived at a conclusion that the work was complete in all respects. Discussing at length, the said report given by IIT experts, the learned Arbitrator arrived at a conclusion that the work was complete in all respects. All the aforesaid findings, are findings of facts arrived at by the learned Arbitrator after weighing all the documents of the parties and the report of the expert body. After taking into consideration the aforesaid material placed on the record, the learned Arbitrator granted Claim No.2 in favour of the respondent/ contractor. This Court does not find any error in the findings given by the learned Arbitrator which are neither illegal, arbitrary or perverse, thus requiring no interference by this Court. 14. The third ground taken by the petitioner/MCD to assail the award is in respect of Claim No.3 which deals with the escalation clause contained in Clause 10CC of the contract. It is stated by the Counsel for the petitioner/MCD that the respondent/contractor failed to give the basis of the calculations for justifying the same to be awarded in his favour. In this regard, the findings of the learned Arbitrator are material. It has been categorically observed in the award that apart from a bald statement made on behalf of the petitioner/MCD; it has not been able to contradict the calculations made by the respondent/contractor to show that they are wrong. Thus, while holding that Clause 10CC is applicable to the facts of the case, the learned Arbitrator, after looking at the claim of the respondent/ contractor and the calculations done, arrived at a conclusion that the respondent/contractor was entitled to a sum of Rs. 6,16,641/- which was stated to be proved on the basis of the formula provided in the Agreement. 15. A perusal of the impugned award shows that the learned Arbitrator not only examined the documents placed on record by the parties as also their deposition, but also heard the arguments of the parties. So, the third ground taken assailing the award, that the learned Arbitrator miscalculated the claim No.3, is not maintainable. In the case of State of Orissa &Ors. So, the third ground taken assailing the award, that the learned Arbitrator miscalculated the claim No.3, is not maintainable. In the case of State of Orissa &Ors. v. M/s. Lall Brothers (1988) 4 SCC 153 , it has been held that an award may be set aside by the Court on the ground of error on face of the award, but an award is not invalid merely because by a process of inference and argument, it may be demonstrated that the Arbitrator has committed some mistake in arriving at his conclusion. This Court therefore refuses to accede to the request of the petitioner/MCD for recalculating the basis of the Claim No.3. Counsel for the petitioner/MCD has been specifically asked that if the calculations made by the learned Arbitrator were wrong, then what according to the petitioner /MCD were the calculations under Clause 10CC of the Contract and were the same furnished to the learned Arbitrator. In view of the fact that the answer is in the negative, nothing further needs to be stated to reject the ground taken by the petitioner/MCD to challenge the award. Suffice it is to observe that the learned Arbitrator was justified in relying on the documents placed before her by the respondent/contractor for the purpose of dealing with Claim No.3. 16. The last argument urged by the Counsel for the petitioner/MCD is that the learned Arbitrator has made extraneous observations contrary to the facts while dealing with Claim No.4. Interestingly Claim No.4 which relates to loss of profit allegedly suffered by the respondent/contractor was rejected by the learned Arbitrator. It is also pertinent to note that no such ground has been taken in the present petition, as sought to be argued by the Counsel for the petitioner/MCD. Hence, this Court refuses to permit the petitioner/MCD to take such a plea, more so when Claim No. 4 itself was rejected and not granted to the respondent/contractor. No further grounds have been urged on behalf of the petitioner /MCD to assail the impugned award. 17. In view of the aforesaid observations and discussion, this Court declines to interfere in the impugned award by invoking the powers vested in it under Section 34 of the Act. Accordingly, the petition is dismissed being devoid of merits along with the pending applications. Petition & Applications dismissed.