Delhi High Court
Union Of India vs Ramesh Lalwani on 14 October, 1997
Equivalent citations: AIR1998DELHI249, 1998(44)DRJ470, AIR 1998 DELHI 249, (1997) 30 ARBILR 64
ORDER C.M. Nayar, J.
1. The present petition arises out of the Award dated April 13, 1994 of Mr. S.S.Juneja which has since been filed in this Court along with the proceedings. Notice of filing of the Award was issued to the parties directing them to file their respective objections, if any, within the statutory period. The claimant-Union of India has filed objections under Section 30 of the Arbitration Act, 1940 and has challenged the Award as illegal and prayed for setting aside of the same.
2. Mr. S.S.Juneja, Arbitrator in the Ministry of Urban Development, New Delhi was appointed by the Chief Engineer(NDZ), C.P.W.D., New Delhi under his letter No.4(10)91-A & C(NDZ), dated 19.5.92 as sole Arbitrator to decide and make Award regarding the disputes falling within the purview of clause 25 of the agreement entered into between the parties for the construction of R.C.C. overhead tank of 75,000 litres capacity at Dr.Zakir Hussain Memorial, College, New Delhi. The claimant raised the following claims/disputes before the Arbitrator:-
"Claim No. 1 : Claim on a/c of additional expenditure incurred/to be incurred on completion of the work and under clause 17(c) of the agreement- Rs.3,94,000/-.
Claim No.2 : Claim for forfeiture of security deposit under clause 17(c) of the agreement - Rs.65,010/-
Claim No.3 : Claim for delaying completion of the work under clause 16 of the agreement - Rs.65,010/-.
Claim No.4 : Claim for cost of cement 6.75 M.T. ( at double rate) - Rs.17, 686."
3. While dealing with the Claim No.1 the Arbitrator examined the pleas raised by both the parties and on appreciation of evidence and consideration of documents held that rescission of contract by the claimant was not in order and the claimant was not entitled to any amount. The main plea was that the design submitted by the respondent was not in terms of the contract and had deficiencies and, therefore, show cause notice was issued. The respondent failed to submit the designs as per terms of agreement and the contract was validly rescinded vide order dated 13th March, 1991. The tenders for the balance work were called after rescission of the work and the rates quoted by the lowest tenderer were highest by Rs.3,94,000/- as compared to rates quoted by the respondent. The pleas of the claimant were rejected and the Arbitrator held as follows:-
"On consideration of documents filed and arguments advanced by the parties, I find that admittedly the designs and drawings were submitted thrice by the Respondent to the claimants for approval. Exh.C-4 filed by the Respondent shows that the design of piles was approved by the claimants. The Respondent had confirmed with his submission dated 7.2.91 (C-9) that the central shaft was made circular as per directions of the claimants. He had also offered to get the designs submitted by him checked by an Expert like Dr.O.P.Jain. The Respondent had pointed out discrepancies in architectural drawings supplied by the claimants vide his letter at Exh.C-10 which was not specifically refuted by the claimants with facts and figures. In his letter dated 21.1.91(C-7) and letter dated 7.2.91(C-11), the Respondent had requested the claimants to issue steel for casting of piles. In reply to show cause notice of the claimants, the Respondent vide his letter dated 23.2.91(C-12) explained the position and stated that the steel had not been issued to him in spite of requests for casting of piles. He also clarified that piling work of other contractors has been changed to draft due to the fact that boulders were met with during excavation. He again offered that the designs be got checked from Dr.O.P.Jain or by any other authority at his cost. He reiterated that he was prepared to continue with the work of bored cast-in-situ piles if steel was issued to him by the claimants: In his letter dated 2.3.91(C-13), the Respondent again explained the position and requested the department to approve the designs. Thus Respondent had shown his intention to carry out the work. He has also made modifications in the design as suggested by the claimants and submitted the same for approval by the claimants 3 times. The claimants, however, were of the opinion that the designs were not as per agreement. In the circumstances, offer of the Respondent to get the same checked by an independent authority should have been accepted and the position could be explained by both the parties to this authority. As an alternative, the claimants could have modified the design as per agreement and claim the cost, if any, from the Respondent. The claimants have not indicated any reason as to why the steel for foundations was not issued to the Respondent for execution of work of piles when the design of piles had been approved by them. The Respondent had requested the claimants to reconsider the matter of rescission of contract even after the work was rescinded by the claimants and had asked them to allow him to continue with the work.
In the circumstances, I am of the opinion that the claimants were not entitled to rescind the contract. The Respondent has further stated that no tenders have been called by the claimants for the balance work. The claimants have, however, stated that the tenders were called but no documents have been placed on record by the claimants to show the terms and conditions adopted for the call of tenders for the balance work and the rates received in these tenders. The work was rescinded on 13.3.91. Enough time has already passed. Admittedly, no work has been awarded for the balance work by the claimants and the claimed amount is only hypothetical. Non execution of balance work by the claimants shows that there is force in the contention of the Respondent that the Department wanted to abandon this work. The claim of the claimants for the risk and cost amount is, therefore, not justified. Nothing is awarded in favour of claimants against this claim."
4. Similarly the other claims of the Union of India has obviously to be rejected in view of the findings as arrived at while disposing of Claim No.1. The respondent submitted his counter claim which may be reproduced as follows:-
"Counter Claim No.1: Claim for refund of Earnest money including interest thereon-Rs.13,002/-.
Counter Claim No.2. Claim for the work done but not paid Rs.1,71,535/- which is sub-divided as follows:-
a) Excavation Rs.7,560/-
b) Badarpur sand Rs.3,600/-
bi) Stone aggregate
20mm nominal size 90M. Rs.12,375/-
c) Shuttering plates 100
Nos Rs.1 per plate for 120 Rs.12,000/-
days. Planks & Ballies 1000 Rs.60,000/-
Nos. 0.50 per day for 120 days.
d) 2 mixer @ 300/- per
day for 120 days. Rs.36,000/-
e) Consultation charges
other expenses of consultants
for redesigning & designing. Rs.40,000/-
Counter Claim No.3: Claim as loss
of advances paid to the
people for pilling
work. Rs.15,000/-
a) C/water tank, labour
hutment, cement, Rs.5,000/-
godown etc.
b) Cartage of cement &
storage charges Rs.4,000/-
c) Loss of advances for
materials & labour Rs.30,000/-
Counter Claim No.4: Claim on a/c of expenses incurred on maintaining establishment i.e. watchman, Munshi etc. Rs.25,000/-.
Counter Claim No.5: Claim on a/c of loss of profit Rs.54,700/-.
Counter Claim No.6: Cost of arbitration proceedings Rs.15,000.
Counter Claim No.7: Claim for interest by way of damages on the aforesaid amounts - 18% p.a."
5. The amounts awarded in respect of the same can be stated as under:-
1. Counter Claim No.1 Rs.13,002/-
2. Counter Claim No.2(a) Rs.693/-
3. Counter Claim Nos.2(b) & (b)(i) NIL
4. Counter Claim No. 2(c) Rs.22,000/-
5. Counter Claim No. 2(d) Rs.8,000/-
6. Counter Claim No. 2(e) Rs.15,000/-
7. Counter Claim No.3 Rs.5,000/-
8. Counter Claim No.3(a) Rs.3,000/-
9. Counter Claim No.3(b) Rs.250/-
10. Counter Claim No.3(c) Rs.8,250/-
11. Counter Claim No.4 Rs.12,000/-
12. Counter Claim No.5 NIL
13. Counter Claim No.6 Rs.4,000/-
6. Similarly the respondent was awarded interest at the rate of 12% per annum on the net awarded amount against the counter claims No.1 and 2 and Claim No.4 from 16.6.92 to the date of publishing of the award as pendente lite interest.
7. Reading of the Award will clearly show that the Arbitrator has considered the evidence as well as the documents on record and on appreciation of the same has come to a finding that recission of the contract was not in order and, therefore, prima facie on that ground the claims of the Union of India were rejected and counter claims of the respondent were allowed to the extent as indicated in the Award. The law is well settled that an Award made by the Arbitrator is conclusive and the Court is only entitled to set aside the same if the Arbitrator has misconducted himself and the scope in this regard is rather limited. The law is reiterated and stated in judgment of this Court as reported in M/s Sanykt Nirmata Vs. Delhi Development Authority & Anr. 1997 III AD (Delhi) 400. Paragraphs 12, 14, 17 and 18 of the said judgment may be reproduced as under:
12. It is well established that an award made by an Arbitrator is conclusive as a judgment between the parties and the Court is entitled to set aside the award only if the Arbitrator has misconducted himself for the proceedings or when the award has been made after the issue of an order by the Court superseding the arbitration or if the Arbitration proceedings have become invalid under section 35 of the Act, or where an award has been improper-
ly procured or he has proceeded beyond jurisdiction or is otherwise invalid under section 30 of the Act. The award may be set aside by the Court on the ground of error on the 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 had committed some mistake in arriving at some conclusion.
(Jivaraj Bhai Ujamshi Sheth & Ors. Vs. Chintamanrao Balaji ). State of Rajasthan Vs. M/s R.S.Sharma & Co. .
14. The scope of interference by the Court is limited. Appraisement of evidence by the Arbitrator is ordinarily never a matter which the Court questions and considers. The parties have selected their own forum and the deciding forum must be conceded the power of appraisement of evidence. The Court has no jurisdiction to sit in appeal and examine the correctness of the award on merits. The Arbitrator is the sole Judge of the quality as well as quantity of the evidence and it is not for the Court to taken upon itself the task of being a Judge of the evidence before the Arbitrator. It may be possible that on the same evidence the Court might arrive at different conclusions than the one arrived at by the Arbitrator but that by itself is no ground of setting aside the award of an Arbitrator where there is no violation of principles of natural justice nor there is any allegations of misconduct nor that the Arbitrator has not considered the material produced before him or has not heard the parties or has not given opportunity to lead evidence. Municipal Corporation of Delhi Vs. M/s Jagan Nath Ashok Kumar AIR 1989 SC 2316. Puri Contractor Pvt. Ltd. Vs. Union of India . As held in New India Civil Contractors Pvt. Ltd Vs. Oil and Natural Gas Corporation JT 1997(2) SC 633 normally the Court would not interfere. The attempt of the Court should always be to support the Award within letter of law."
Following observations made by Lord Goddard, C.J. in Mediterranean & Eastern Export Co. Ltd. Vs. Fortress Fabrics Ltd. (1948)2 All ER 186 at pages 188-189 have been referred to with approval by the Supreme Court in Municipal Corporation of Delhi Vs. M/s Jagan Ashok Kumar & Anr. in respect of an award made by an arbitrator who is a knowledgeable person on the subject matter of the dispute:-
"The day has long gone by when the Courts looked with jealously on the jurisdiction of the Arbitrators.
The modern Tendency is in any opinion more especially in commercial arbitrations, to endeavour to uphold awards of the skilled person that the parties themselves have selected to decide the questions at issue between them. If an arbitrator has acted within the terms of the submission and has not violated any rules of what is so often called natural justice the Courts should be show indeed to set aside his award."
17. When an Arbitrator is required to give reasons for the award, he is not required to write a detailed judgment setting out each logical step of his reasoning but it is sufficient if he indicates the trend of his thought process, so that errors can be eliminated and arbitrariness avoided. What reasons are sufficient in any particular case must depend upon the facts of that case (DDA Vs. M/s Alka Ram DDA Vs. M/s Uppal Engineering Construction Co. Narain Dass R.Istrani Vs. Union of India ). In College of Vocational Studies Vs. S.S.Jaitley AIR 1987 Delhi 134(DB) also no different principles has been laid down.
18. In Municipal Corporation of Delhi Vs. M/s Jagan Nath Ashok Kumar it was held that when the reasons given by the Arbitrator are germane, relevant and have rational nexus with the conclusions arrived at by him, the reasonableness of the reasons cannot be challenged and it cannot be said to be unreasonable. The word "reasonable" has in law the prima facie meaning of reasonable in regard to those circumstances of which the actor called on to act reasonable knows or ought to know. Reasons vary in its conclusions according to the idiosyncrasy of the individual and the times and circumstances in which he thinks."
8. In view of the settled position of law it will not be open for this Court to reappraise evidence and arrive at contrary conclusion which have already been rendered by the Arbitrator on cogent grounds. The Award dated 13th April, 1994 is, accordingly, made rule of the Court. The respondent shall also be entitled to interest @ 12% p.a. from the date of decree till realisation. Let the decree in terms thereof be drawn There will be no order as to costs.