Delhi High Court
Shri Naraindas R. Israni vs Delhi Development Authority on 25 October, 2002
Equivalent citations: 101(2002)DLT238, 2003(66)DRJ794
Author: R.C. Chopra
Bench: R.C. Chopra
JUDGMENT R.C. Chopra, J.
1. The objections under Sections 30 and 33 of the Arbitration Act, 1940 (hereinafter referred to as the Act only) are directed against an award dated 5.1.1994 by which the Arbitrator upheld certain claims of petitioner against the respondent-objector.
2. The facts relevant for the disposal of the objection petition, briefly stated, are that the claimant-petitioner had entered into an agreement No. 8EE/V/76-77 with respondent-objector in regard to the construction of a Higher Secondary School at Seema Puri, Delhi. In view of the arbitration Clause, as contained in Clause 25 of the Agreement, the disputes between the parties were referred to the sole Arbitrator who entered upon the reference and after hearing the parties and examining the material placed before him made the impugned award dated 5.1.1994.
3. The claimant-petitioner prays for making the Award Rule of the Court whereas the respondent-objector by its objection petition pleads that under claim No. 3 the petitioner was not entitled to any interest as the payments had been made within the time frame; that in Claims No. 4 and 5 also there was an error apparent on the face of the award as Annexure R-10 had already been placed on record but still the Arbitrator observed that there was no comment from the side of the respondent-objector. It was also pleaded that in respect of Claims No. 6 and 8 the raise of 109 per cent for calculating damages towards escalation of the costs was not justified and this escalation could not be taken from the first month itself. The award of Claim No. 10 was assailed on the ground that the claimant-petitioner had not asked for interest on security but still it was awarded. It was also pleaded that the rate of interest awarded by the arbitrator was too high.
4. The claimant-petitioner filed a reply to the objections controverting the pleas raised therein. It was submitted that there was no error apparent on the face of the record and the arbitrator had passed the award on the basis of the material made available to him. Regarding Claim No. 3, it was submitted that in Claim Annexure C-5, the dates of payment, 30.6.1977 and 28.10.1977, were wrongly typed out and these were the dates on which the payments had become due and were not dates of payment. According to Annexure R-11, Annexure C-II as well as reply filed by the respondent-objector before the arbitrator, it was clear that the payment of 3rd and 4th Bills was made on 31.12.1977 only. Regarding Claims No. 4 and 5 also, it was pointed out that the Arbitrator had discussed the entire background of these claims and void orders dated 17.7.1993 the arbitrator had even asked the respondent to explain C-III but nothing was done. In regard to the damages on account of escalation in the costs it was submitted that Ex. C-51, the cost index, was supplied to the arbitrator and as such his findings in regard to 109 per cent escalation instead of 113 per cent as claimed by the petitioner were fully justified. Ex. C-68 to C-177 fully supported the arbitrator on this issue. Regarding the claim of interest the claimant petitioner pleaded that the arbitrator had ample powers and was justified in awarding the interest on the outstanding amount.
5. On the pleadings of the parties, following issues were framed on 3.4.1998:-
1. Whether the award dated January 5, 1994 is liable to be set aside on the basis of the objections filed by the respondent, Delhi Development Authority?
2. Relief.
I have heard learned counsel for the claimant-petitioner and learned counsel for the respondent-objector. I have gone through the Award and the arbitral proceedings. My findings on the issues are as under:-
ISSUE NO. 16. Before considering the pleas raised by the parties and examining the impugned award, this Court must keep in mind that the law is well settled that while considering objections under Sections 30 and 31 of the Act against an Award the Court does not exercise appellate jurisdiction so as to reappreciate or reassess the evidence and material on record and examine the correctness or otherwise of the findings arrived at by the arbitrator on the basis thereof. The Court can interfere only if it is shown that the arbitrator has misconducted himself or the proceedings or there is some serious error on record which cannot be countenanced. No exhaustive definition of misconduct on the part of the arbitrator can be given but a capricious conduct can be treated as misconduct. In State of Rajasthan v. Puri Construction Pvt. Ltd. and Indu Engineering and Textile Ltd. v. DDA the Apex Court laid down the parameters for the Court's interference with the arbitral awards and expressed its opinion in favor of preserving the awards as for as possible. It was held that a close scrutiny of the findings of the arbitrator and the conclusions drawn by him from facts is not permissible in as much as the powers similar to the powers of the Appellate Courts to reverse the findings of the Arbitrators are not available to Courts. Even where mis-construction or mis-appreciation of the material on record is found the award may not be set aside.
7. In Municipal Corporation of Delhi v. Jagan Nath Ashok Kumar and Anr. , the Apex Court categorically held that the Arbitrator is the sole Judge of the quality as well as quantity of evidence and it would not be for the Supreme Court to take upon itself the task of being a judge of the evidence before the Arbitrator. It was also held that even if it may be possible that on the same evidence the Court might have arrived at a different conclusion that the one arrived at by the arbitrator that by itself would be no ground for setting aside the award passed by an arbitrator. A learned Single Judge of this Court in Kochar Construction Work v. DDA reported in 1998 (3) Raj. 222 (Delhi) held that the Court should not unnecessarily try to find faults with the award and it must lean to a limited extent in favor of upholding the award ensuring that the arbitrator had not exceeded the limits set by the arbitration agreement. It was also held that a reasoned award must disclose some thought process dealing with the points raised before the arbitrator showing nexus between the material and the conclusions arrived at by the arbitrator. It was held that it was not necessary for the arbitrator to give actual calculations. It was also held that there is bound to be a some estimation even based on the experience and qualifications of the arbitrator especially the technically qualified arbitrator.
8. Applying the aforesaid principles to the facts f the present case, let this Court consider the objections raised against the award by the respondent-objector. The first and foremost objection raised by the objector against the award is in regard to claim No. 3 by which the arbitrator had awarded a sum of Rs. 1,14,460/- in favor of the claimant on account of interest on delayed payments. Leaned counsel for the respondent-objector relies upon Annexure C-5, Statement of claims made by the petitioner, in which the dates of payment of 3rd and 4th bills were mentioned as 30.6.1977 and 20.10.1977 and has argued that the arbitrator had gone wrong inholding that these payments were made on 31.12.1977. On the other hand learned counsel for the claimant has pointed out that the dates 30.6.1977 and 29.10.1977 were wrongly mentioned and actually these dates were due dates only. There is enough material on record and documents filed by the respondent-objector even show that these payments were not made on the aforesaid dates but on 31.12.1977 only. Petitioner has drawn the attention of the court to Annexure R/11 in which the respondent-objector also had admitted that on account of shortage of funds the payments had been delayed up to December, 1977. The reply filed by the respondent-objector as well as Annexure C-II clearly show that the payments of these two bills were late. On page 5 of the reply a table was given regarding the due dates and dates of payments which were not controverter even in the rejoinder. Considering the material available on record and the submissions made by learned counsel for the parties, this court is of the considered view that the arbitrator was fully justified in holding that there was delay in the payments and as such award of interest under claim No. 3 was justified. it appears that the respondent-objector is only trying to take advantage of a typographical mistake made by the claimant in Annexure C-5.
9. Learned counsel for the respondent-objector has vehemently argued that the Arbitrator had misconducted himself and the proceedings by holding that the respondent had failed to give comments on Annexure C-III containing details of claim No. 4 and 5. It is submitted that in view of Annexure R-10 no further comment in regard to these claims was required to be made. A perusal of the award made by the arbitrator in regard to the claim No. 4 and 5 shows that the entire background of these claims was discussed by the arbitrator. Vide order dated 17.7.1993 the arbitrator had asked the respondent to explain Annexure C-3 which the respondent had failed to explain and as such the arbitrator was justified in taking the view that the amount of Rs. 70,000/- and Rs. 52057/- was payable. No fault can be found with the view taken by the learned Arbitrator on these claims.
10. Learned counsel for the respondent-objector has assailed the findings given by the arbitrator in regard to the claims No. 6 and 8 regarding damages on account of escalation of costs due to prolongation of the contract not covered by Clause 10-C of the agreement. The CPWD Cost Index which had shown 113 per cent escalation was reduced to 109 per cent on account of supply of the steel and cement at fixed price. The claimant had placed on record Ex. C-68 to C-177 and calculations Annexure C-VI to substantiate its claim in regard to escalation of the costs. The plea of learned counsel for the respondent-objector that 109 per cent increase could not be taken from the first month itself cannot be sustained as the escalation could not be determined on day to day basis and had to be worked out on the basis of some material which was in the form of CPWD Cost Index which is not issued on day to day or month to month basis. The Arbitrator himself being a retired Chief Engineer of CPWD was a technical man and was well conversant and fully competent to calculate and assess the increase in the cost of the material and then make award on the basis thereof after taking into consideration the material placed before him. This Court has no good grounds to interfere with his findings.
11. The findings given by the arbitrator in regard to claim No. 10 awarding interest @ 14 per cent per annum were assailed on the ground that the rate of interest was on the higher side. This Court is of the considered view that during the relevant period the interests were not as low as those are these days and as such the arbitrator had good grounds for awarding interest @ 14 per cent per annum. This Court need not interfere with the findings arrived at by the learned arbitrator on this issue also.
12. In the result the issue stands disposed of by holding that the Award dated 5.1.1994 does not suffer from any legal infirmity and there is no error apparent on the face of record. The arbitrator has neither misconducted himself nor the proceedings. The objections, therefore, deserve to be rejected. The objection petition therefore is dismissed and the Award dated 5.1.1994 is upheld.
ISSUE NO. 213. In view of the foregoing reasons the objections filed under Sections 30 and 33 of the Act are dismissed and the Award dated 5.1.1994 is made Rule of the Court and a decree is passed in terms there of. The claimant-petitioner is awarded interest @ 12 per cent per annum on the awarded amount from the date of this petition till realisation.