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2008 DIGILAW 875 (DEL)

Uppal Engineering Corporation v. C. W. C.

2008-09-11

HIMA KOHLI

body2008
JUDGMENT Hima Kohli, J. 1. The present application filed under Sections 30 and 33 of the Arbitration Act, 1940 (for short ‘the Act’) is directed against an award dated 05.9.1989 passed by the learned Arbitrator in respect of the disputes between the objector/contractor and the respondent/CWC. In a nutshell, the facts of the case are that the objector/contractor was awarded the work of construction of 50,000 MT capacity godown along with the ancillary buildings at Muzaffarnagar (UP), vide award letter dated 31.5.1979. The said work was to be completed within a period of 15 months i.e. by 09.9. 1980. 2. It is the case of the objector/contractor that though it had geared up its entire resources and mobilized to the site of work, the work could not be proceeded with at the desired pace because of a stay order operating at the site of work and later, because of shortage of diesel, which the respondent/CWC failed to arrange, in spite of various requests made by the petitioner. On the other hand, the case of the respondent/CWC is that the objector/contractor had to complete the work by 31.3.1981 and the total cost of work was Rs. 1,43,32,130.10 paise, but the actual work done by the objector/contractor was of the order of Rs. 1,09,44,000/- till 05.8.1981 and thereafter, the work was abandoned by him. As a result, a notice was issued to the objector/contractor but it refused to hand over the possession of the godowns and the stocks to the respondent/CWC. Hence, the respondent was compelled to issue a notice to show cause to the objector/contractor, as to why its contract may not be cancelled. As the response to the aforesaid notice to show-cause was found to be un-satisfactory by the respondent, the contract was rescinded vide letter dated 09.9.1981. 3. It is undisputed the disputes and differences arose between the parties and the petitioner invoked the arbitration clause, as per Clause 25 of the agreement between the parties, seeking adjudication of the disputes by appointment of an arbitral tribunal, vide letters dated 13/14.8.1981 and 14.10.1981. Thereupon, the Appointing Authority, in the first instance, appointed one Sh. A.U. Rajsinghani as the Sole Arbitrator vide letter dated 22.10.1981. After a point of time, the said Arbitrator expressed his inability to continue with the work and thereafter, the Managing Director of the respondent/CWC appointed Sh. Thereupon, the Appointing Authority, in the first instance, appointed one Sh. A.U. Rajsinghani as the Sole Arbitrator vide letter dated 22.10.1981. After a point of time, the said Arbitrator expressed his inability to continue with the work and thereafter, the Managing Director of the respondent/CWC appointed Sh. B.K. Sharma, as the Arbitrator, vide letter dated 08.9.1988, who continued with the proceedings and has rendered the award dated 05.9.1989, impugned by the objector/contractor herein. .4. The first objection raised by the learned Counsel for the objector/contractor to assail the impugned award is that the original agreement governing the parties is missing from the records and thus, the award having been rendered in the absence of the original agreement before the arbitral tribunal, the same is liable to be set aside. In support of the aforesaid submissions, learned Counsel for the objector/contractor relies on the judement of Bhai Sardar Singh & Sons v. New Delhi Municipal Committee, reported at AIR 1981 Delhi 374 and an unreported judgement dated 09.2.2001 in the case of Uppal Engineering v. UOI Suit No. 412-A/1990. 5. The aforesaid plea raised on behalf of the objector/contractor is disputed by the counsel for the respondent/CWC who submits that a perusal of the ground taken by the objector/contractor in the application shows that there was no mention of such an objection taken by him now. Counsel for the objector/contractor draws the attention of this Court to the last para of pages 25 and 26 of the objections to state that such a ground was taken in the aforesaid paras. A perusal of the aforesaid pages shows that the objector/contractor has levelled an allegation against the Executive Engineer of the respondent/CWC to the effect that the records of the arbitral proceedings were given by the learned Arbitrator to him and upon an inspection of the records, it is revealed that the papers have been replaced from the original records and that the original agreement filed before the learned Arbitrator, which contained the schedule of terms and rates of the subject work are also missing and have been replaced by a blank booklet of the contract conditions. 6. 6. The aforesaid objection taken on behalf of the objector/ contractor cannot be interpreted to mean that any objection was taken to the effect that the original agreement was missing from the arbitral records and hence, it ought to be assumed that the learned Arbitrator rendered an award without perusing the original agreement. On the contrary, the objector/contractor has himself stated that the original agreement was filed before the learned Arbitrator and that the same contains a certain schedule of terms and rates, which were purportedly replaced by a blank booklet of the contract conditions. In fact, what has been termed as a “blank booklet” of the objector/contractor, is a printed format of the contract conditions. Hence, the judgments sought to be relied upon by the counsel for the objector/ contractor, can be of no avail. At this stage, learned Counsel for the objector/contractor submits that what was meant by the aforesaid averment was that the booklet was unsigned. However, no such objection has been raised in the grounds taken to assail the award and such an objection taken at this stage in the course of arguments cannot be permitted, being barred by limitation. For the aforesaid reason, the first objection taken to the impugned award is rejected. 7. The second objection taken on behalf of the objector/contractor is that no arguments were heard by the learned Arbitrator on claims No. 1 to 9 at any point of time. He relies upon the observations of the learned Arbitrator, in the last para of page 2 of the award, in support of his submissions. In the last para of page 2 of the award, the Arbitrator observed that the previous Arbitrator had not framed any specific issues, and instead, he had considered each of the 20 separate claims filed individually. He further noted that he had examined 10 claims, and that the 10th claim was only partly examined. Therefore, the learned Arbitrator started further examination from the stage from where the earlier Arbitrator left. .8. The aforesaid observations of the learned Arbitrator have to be examined in the light of the proceedings held by the previous Arbitrator. He further noted that he had examined 10 claims, and that the 10th claim was only partly examined. Therefore, the learned Arbitrator started further examination from the stage from where the earlier Arbitrator left. .8. The aforesaid observations of the learned Arbitrator have to be examined in the light of the proceedings held by the previous Arbitrator. A perusal of the arbitral record shows that, in the order-sheet dated 26.5.1989, the sole Arbitrator observed as below: .In the first instance, the progress in the case made by the previous Arbitrator Shri A.U. Rajshinghani was reviewed and the minutes pertaining to the 24th, 25th and 26th meetings held on 03.12.1984, 05.1.1985 and 19.1.1985 respectively were gone through. It was noted that Claim No. 10 and beyond upto No. 15th, as lodged by the claimants were to be examined. 9. Further, the records reveal that the meetings held on 03.12.1984 and 19.1.1985 by the previous Arbitrator, which have been stated to be reviewed by the subsequent Arbitrator, give the details of the discussions and the decisions taken by the earlier Arbitrator. Viewed in the aforesaid light, the observations of the learned Arbitrator at page 2 of the award fall into place. Taking it further from there, the claims of the objector/contractor in respect of claims No. 1 to 9 have been dealt with at pages 4 & 5 of the impugned award, and it shows that the learned Arbitrator duly considered the material placed on the record, including the measurements of various items taken in the Measurement Book, the terms and conditions of the contract agreement and the nature of the work carried out by the objector/contractor. Out of claims No. 1 to 9, claims No. 4, 6, 7 & 8 of the objector/contractor were duly accepted. Hence, the objection raised by the objector/contractor to the effect that no arguments were heard on claims No. 1 to 9 is not acceptable. 10. In this context, it is also relevant to note that the question of hearing arguments by the learned Arbitrator, in respect of claims No. 1 to 9 would have arisen, had objector/contractor appeared before the learned Arbitrator. A perusal of page 3 of the award shows that the objector/contractor repeatedly sought long adjournments from the learned Arbitrator. The learned Arbitrator was compelled to issue show-cause notices to him on account of his non-appearance. A perusal of page 3 of the award shows that the objector/contractor repeatedly sought long adjournments from the learned Arbitrator. The learned Arbitrator was compelled to issue show-cause notices to him on account of his non-appearance. He observed that the proceedings were to be finalized and an award made by 05.9.1989 and as the objector/contractor failed to appear before him, a show-cause notice was issued on 31.8.1989 regarding ex-parte consideration of the claims. The same was sent to the objector/contractor by registered post, special messenger and also telegraphically. The objector/contractor refused to accept the notice sent by special messenger. The registered AD notice was not returned back and the telegraph was deemed to have been received in normal course. Still, the objector/contractor did not appear on 04.9.1989 nor did he send any communication for explaining his absence, thus, compelling the learned Arbitrator to proceed to render the award on the basis of the documents on the record. It, therefore, does not lie in the mouth of the objector/contractor to state that no arguments were heard by the learned Arbitrator, in respect of claims No. 1 to 9 at any time. The said objection is rejected. 11. As far as the third objection raised on behalf of the objector/contractor to the effect that there was no application of mind by the sole Arbitrator, in view of the fact that claim No. 3, relating to anti-termite treatment for a sum of Rs. 9,05,331.18/- was rejected is concerned, counsel for the objector/contractor states that, despite the fact that vouchers in respect of the work of anti-termite treatment were filed before the learned Arbitrator and are a part of the arbitral record, the said claim was rejected on the plea that the petitioner never produced the desired vouchers or any evidence, in support of the said claim. Counsel for the respondent states that the aforesaid claim was opposed by the respondent/CWC as the same was not part of the work awarded to the contractor. He further states that the objector/contractor failed to place on record any documents along with claims/submissions to establish the said claim, and furthermore, even if notice is taken of the document indicated at page No. 28 of the arbitral proceedings, which was a reminder dated 7.5.1980 by a contractor to the objector for payment of a sum of Rs. He further states that the objector/contractor failed to place on record any documents along with claims/submissions to establish the said claim, and furthermore, even if notice is taken of the document indicated at page No. 28 of the arbitral proceedings, which was a reminder dated 7.5.1980 by a contractor to the objector for payment of a sum of Rs. 3,48,540/- towards anti-termite treatment, the aforesaid document could not have substantiated the claim raised of over Rs. 9,00,000/- raised by the objector/contractor in claim No. 3. 12. It is further pertinent to note that the aforesaid document came to be filed by the objector/contractor only on 26.5.1989. In the order-sheet of the proceedings dated 03.12.1984, the objector/contractor was specifically directed that it should submit the vouchers in respect of purchase of Aldrex by the next date i.e. 20.12.1984. It was also recorded that, in case any party fails to bring the relevant documents desired by the Arbitrator on the said date, the Arbitrator would proceed and finalize the discussions even without reference to such documents. The aforesaid document came to see the light of the day only on 26.5.1989, that is, after a period of over four years from the date of the aforesaid order. Furthermore, as per the records, the objector/contractor chose to stay away from the arbitral proceedings on the date when it was fixed for arguments, as is apparent from the perusal of the impugned award. In these circumstances, the learned Arbitrator cannot be blamed for dis-allowing the said claim on the ground that the claimant never actually produced the desired vouchers, in respect of the said claim. .13. The last objection taken by the learned Counsel for the objector/contractor is in respect of claim No. 14, which relates to an amount of Rs. 11,75,000/-, claimed on the ground of an all around increase in the prices of building materials etc. Counsel for the objector/contractor submits that the increase claimed by his client was @ 18%, as detailed in ‘Ext. C-97’ and there was no question of absorbing 10% escalation and thus, there is an error on the face of the award. In reply thereto, counsel for the respondent/CWC states that the claim for escalation has to be seen in the light of the provisions of the contract. C-97’ and there was no question of absorbing 10% escalation and thus, there is an error on the face of the award. In reply thereto, counsel for the respondent/CWC states that the claim for escalation has to be seen in the light of the provisions of the contract. The escalation was governed by Clause 10(C) of the Contract Agreement, under which the claimant/contractor was required to absorb the first 10% of the increase in prices/wages. Taking that into consideration, the learned Arbitrator held that at best, he could be compensated for increase upto 8%. However, looking at the time span for which the execution of the work remained held up for reasons beyond the contractor’s control, the learned Arbitrator decided to give to the respondent/contractor 2% increase as against 8%. Thus, a sum of Rs. 1,30,000/- was awarded to the objector/contractor. 14. There appears no error on the record, as far as observations of the Arbitrator in respect of Claim No. 14 is concerned. It is settled law that this Court, while deciding the objections under Sections 30 & 33 of the Act, is not required to go into the reasonableness of the reasons given by the learned Arbitrator Refer : State of Rajasthan v. Puri Construction Co. Ltd. and Anr. : (1994) 6 SCC 485 . Furthermore, merely because this Court could arrive at a different conclusion on the same set of facts and evidence on the record, as compared to the award given by the Sole Arbitrator, cannot be a ground for the Court to interfere with the award and hold it to be perverse or arbitrary. Refer: DDA v. Bhagat Construction Co. Pvt. Ltd. 2004 (3) Arb. LR 481. The observations made by the learned Arbitrator are based on sound reasoning as indicated in the impugned award and does not deserve interference. Hence, the said objection is also rejected. No other ground is urged on behalf of the objector/contractor. 15. In view of the aforesaid discussion, it is held that there is no merit in the objections filed by the objector/contractor. The application is, therefore, rejected. The award dated 05.9.1989 rendered by Sh. B.K. Sharma, Sole Arbitrator is made rule of the Court. The respondent shall be entitled to receive future interest on the awarded amount payable @ 9% p.a. from the date of the decree, till the date of realization. Decree sheet be drawn up accordingly. The application is, therefore, rejected. The award dated 05.9.1989 rendered by Sh. B.K. Sharma, Sole Arbitrator is made rule of the Court. The respondent shall be entitled to receive future interest on the awarded amount payable @ 9% p.a. from the date of the decree, till the date of realization. Decree sheet be drawn up accordingly. Application dismissed.