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Cites 2 docs
The Arbitration Act, 1940
Indu Engineering & Textiles Ltd vs Delhi Development Authority on 11 July, 2001

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Delhi High Court
R.S. Builders vs Delhi Development Authority And ... on 18 March, 2002
Author: M Sharma
Bench: M Sharma

JUDGMENT

Mukundakam Sharma, J.

1. In relation to a work order for construction of Community Hall in pockets K & L of Sarita Vihar an agreement was entered into between the petitioner and the respondent which also contained an arbitration clause being Clause 25. While executing the aforesaid contract disputes arose between the parties and, therefore, the said disputes were referred for adjudication through the process of arbitration in terms of Clause 25 of the arbitration agreement between the parties. The Sole Arbitrator appointed entered into the reference and after receiving evidence and hearing the parties made and published his award on 26.3.1993.

2. When the aforesaid award was filed in this Court, the respondent authority filed on objection under Section 30 & 33 of the Arbitration Act for setting aside the award whereas the petitioner sought for making the said award a Rule of the Court. On the aforesaid objection and the plea of making the award a Rule of the Court I have heard the learned counsel appearing for the parties. I have also perused the connected records to which my attention was drawn during the course of hearing.

3. In the decision of the Supreme Court in Indu Engineering & Textiles Ltd. v. Delhi Development Authority, the scope for interference by the Court with an award passed by the arbitrator was set out holding that the same is very limited. It was said that some of the well-recognised grounds on which interference is permissible are that (i) violation of the principles of natural justice in passing the award (2) error apparent on the face of the award (3) the Arbitrator has ignored or deliberately violated a clause in the agreement prohibiting dispute of the nature entertained (4) the award on the face of it is based on a proposition of law which is erroneous, etc. The present award which is rendered by the Sole Arbitrator is, therefore, to be examined in the light of the aforesaid principles of law laid down by the Supreme Court while considering the objections filed by the respondent authority herein.

4. I have carefully scrutinised the award passed by the arbitrator and find that the award passed by the said arbitrator as against all the claims are based on appreciation of the evidence on record and thereafter arriving at the conclusions recorded therein. However, the Respondent assails the award on various grounds and, therefore, the same require consideration.

5. Counsel for the respondent authority vehemently urged that there has been misreading of the evidence on record by the arbitrator while passing his award and that in respect of the some of the awards the arbitrator has ignored relevant documents and also passed the award as against the stipulation int he arbitration agreement and, therefore, the award is required to be set aside. In view of the aforesaid submission, I propose to examine each of the claims independently to find out if any of the said award passed by the arbitrator against various claims could be set aside on any of the grounds.

CLAIM NO. 1

The Claim No. 1 pertains to a claim of Rs. 44075/- on account of balance payment for the work done. The arbitrator considered the said claim and on appreciation of the evidence awarded, an amount of Rs. 9,736/- by giving reasons and holding that recision of the contract was not correct. The arbitrator agreed with the stand taken by the claimant/petitioner against the recovery of the cost and cement and steel issued to the claimant by the department and hold that no such recovery could be made. The arbitrator further held that the balance lying at site on the day of recision of the contract should have been taken over by the respondent particularly as cement is kept under dual locks and some balance should be there on the date of rescinding the contract. Considering the evidence on record the arbitrator found that a payment of Rs. 9736/- would be justified. The aforesaid conclusions have been arrived at after discussions and appreciation of the evidence on record. I find no reason to interfere with the aforesaid award passed by the Arbitrator.

CLAIM NO. 2.

So far Claim No. 2 is concerned, the same was a claim made by the petitioner of an amount of Rs. 57079/- on account of refund of security deposit. The arbitrator examined the said claim and held that the respondent forfeited the security deposit of the petitioner after rescinding the contract and as the said recision of the contract was not in order, the aforesaid security deposit is returnable to the petitioner. The reasons given by the arbitrator for the award is inter-related with the counter claim and, therefore, the award against the counter claim is considered at this stage.

While dealing with the counter claim of the respondent it was held by the arbitrator that the action of the Executive Engineer in rescinding the contract was incorrect. He has given his detailed reasons for coming to the aforesaid conclusions. This Court cannot sit over the reasoning and the findings of fact arrived at by the arbitrator in order to arrive at a contrary finding. The jurisdiction of this Court in such cases are very restricted and limited and this Court cannot travel beyond the circumscribed limit which is set by the various decisions of the Court. In that view of the matter, I find no reasons to interfere with the findings and the conclusions arrived by the arbitrator in respect of the award of the arbitrator as against Claim No. 2 as also as against the counter claim of the respondent.

CLAIM NO. 3

Claim No. 3 pertains to a claim of Rs. 3200/- on account of rebates and in that regard the Arbitrator has awarded an amount of Rs. 1303/- to the petitioner on the ground that deduction of rebate for payment of final bill and return of security deposit were not warranted and accordingly, I hold that the said conclusions are conclusions of facts and no error could be shown which is apparent on the face of the record and, therefore, the award is not interfered with as it contains reasons and conclusions.

CLAIM NO. 4

So far Claim No. 4 is concerned, an amount of Rs. 15,000/- was withheld from the bills of the petitioner by the respondent on account of deduction made by it. It is an admitted position that the aforesaid deduction of Rs. 15,000/- was made which was adjusted against the amount due for carrying out the work at the risk and cost of the petitioner. The arbitrator considered the statements in the contract and found that there was no such provision in the contract for either withholding or making an adjustment against the amount due for carrying out the work at the risk and cost of the petitioner and in that context it was held by the arbitrator that the aforesaid amount was returnable to the petitioner as it had also into committed any breach. The aforesaid conclusions of the arbitrator are based on reasons given by the arbitrator and on scrutiny of the various clauses in the contract. No interference is, therefore, called for in respect of the award.

CLAIM NO. 5

Claim No. 5 relates to a claim of Rs. 10,000/- extra for composite part of doors and the arbitrator has awarded the full amount as against the aforesaid claim. For such award also the arbitrator has given his reasons after considering the records and holding that the said claim is justified on the records to which he has made reference in his award itself. I find no reason to interfere with the aforesaid award passed by the Arbitrator.

CLAIM NO. 6

Cliam No. 6 was not allowed by the Arbitrator and, therefore, the same does not require any consideration by this Court.

CLAIM NO. 7

Claim No. 7 was a claim of an amount of Rs. 1,10,490/- on account of the material left at site due to wrongful rescission of the contract and not allowed to be removed by the respondent. The said claim was considered by the arbitrator and found that the said claim was partly justified and he awarded an amount of Rs. 27555/-. The said award was based on the basis of appreciation of the records namely, C-20 which is a letter written by the petitioner on 31-10-1989 by which he intimated that the material worth Rs. 1,10,490/- was lying at site. The arbitrator considered the records and thereafter came to the conclusion that in his assessment the material lying at the site would at least cost Rs. 27,555/- and the said amount was awarded. The conclusions are reached by the Arbitrator on appreciation of records and reasons have been given for arriving at such conclusions. The award is held to be justified.

CLAIM NO. 10

Counsel appearing for the respondent vehemently submitted that when the arbitrator has rejected the claim in respect of Claim No. 8, which was a claim on account of substantial loss due to breach of contract by the respondent, there was no reasonable ground on which the arbitrator could have allowed Claim No.1 0 partly. The compensation was claimed in respect of Claim No. 10 for an amount of Rs. 48,000/- on account of breach of contract by the respondent and the arbitrator has partly allowed the said claim and awarded an amount of Rs. 32,400/-. It was submitted by the counsel appearing for the respondent that the aforesaid award was allowed on the ground of breach of contract whereas a similar claim namely, Claim No. 8 was rejected by the arbitrator.

I have considered the evidence and reasons given by the arbitrator in respect of his award as against both claims No. 8 & 10. On careful consideration of the same, I find that both the aforesaid claims are completely on different footings and on different grounds. The claim raised as Claim No. 8 pertains to loss of profit that the petitioner would have made under normal circumstances but for recision of the contract whereas Claim No. 10 was on the ground that the completion of the contract was prolonged by four months and extension was granted by the contract was wrongfully rescinded. So far Claim No. 8 is concerned, the same was rejected by the Arbitrator on the ground that the aforesaid loss of profit was an indirect loss and, therefore, cannot be granted whereas as against Claim No. 10 it was held that the delay was not attributable to the petitioner and, therefore, he was to be compensated for the establishment engaged for the work executed. Payment of an amount of Rs. 32,400/- was allowed by the Arbitrator as against the Claim of Rs. 48,000/- which was claimed towards salary of the staff like engineer, supervisor, one foreman and three watchman and mechanic. The Arbitrator has given his reasons for awarding the aforesaid amount which cannot be said to be not plausible. The objection has no merit and rejected.

CLAIM NO. 9

Claim of Rs. 4,000/- made against Claim No. 9 was allowed in full by the arbitrator which was on account of rent of scaffolding lying idle for external stonework. The aforesaid amount was awarded in favor of the petitioner as according to the arbitrator it was clear from the record produced that there had been delay by the respondent in coming to the decision on the pattern of jointing of Dholpur stones which has resulted in keeping the scaffolding idle. The said award is also justified in the facts and circumstances of the case and, therefore, I am not interfering with the said award.

CLAIM NO. 11

Cliam No. 11 is in respect of interest. The Arbitrator has held that the respondent would pay the petitioner interest at 10% on the amount of Rs. 1,39,381/- from 19.9.1990 to date of the award and on Rs. 15,000/- which was wrongly withheld from 21.7.1989 to the date of the reference i.e. up to 19.9.1990 and thereafter pendente lite interest up to the date of the Award. The reference was made to the arbitrator by an order dated 19.9.1990 and, therefore, he has awarded interest on the awarded amount from the said date till the date of the award. But only in respect of Rs. 15,000/- which was wrongly withheld by the Respondent he has directed payment of interest at the rate of 18% per annum from 21.7.1989 to date of the award. In any case, on the same amount of Rs. 15,000/- also the arbitrator is empowered to award interest at the rate of 18% per annum from the date of the reference till the date of the award as a pendente lite interest. The question was sought to be raised by the counsel appearing for the respondent that the arbitrator was not justified in awarding interest for the pre-reference period. I, however, do not wish to interfere with the aforesaid part of the award also as the same so effected is very negligible.

6. In the concluding part of the award the arbitrator has held that the respondent shall also be liable to pay interest at 18% per annum from the date of the award till to the date of payment or date of decree, whichever is earlier. Counsel for the Respondent submitted that the aforesaid award for payment of interest at 18% per annum from the date of the award till the date of interest or till the date of decree, whichever is earlier could not have been passed as it would amount to a direction of payment of interest upon interest. I, however, cannot accept the aforesaid position as upon passing of the award the respondent was required to make payment of the entire awarded amount including the interest. If the said amount is not paid on the due date, the petitioner would be entitled to payment of interest on the entire amount due and payable on the due date but not paid. The aforesaid contention is also without any merit and is dismissed. Therefore, there is no merit in the objection filed by the respondent. The award passed by the arbitrator is made a Rule of the Court. A decree shall be drawn up in terms of the award.