Delhi High Court
Ishwar Singh & Sons vs Delhi Development Authority on 21 April, 1994
JUDGMENT Vijender Jain, J.
(1) This is an application by which the respondents-DDA have filed the objections to the award dated 29.1.1991. In all, there are 12 claims referred by the claimants. The Arbitrator has awarded a sum of Rs. 2,83,604.00 by virtue of the impugned award. He has awarded claim No. 1 for refund of Rs. 10,000.00 on account of earnest money / security deposit in favor of the claimants.
(2) The claimants have claimed Rs. 1,00,000.00, approximately on account of work done but not paid, under claim No. 2. These included claim for 3 m.m. extra thickness of base plaster in the item of marble chips dado, external plaster above 10 meters height. On the said claim, the claimants withdrew this claim after considering the measurement. Though, there are sub-heads under this claim and the Arbitrator has, after discussing various arguments advanced by both the parties and perusing the record, awarded a sum of Rs. 44,305.00 in favor of the claimants and against the respondents.
(3) Claim No. 3 is a claim for Rs. 60,000.00 on account of amount unjustifiably withheld. The Arbitrator has also awarded a sum of Rs. 47,407.00 against this claim to be paid by the respondents to the claimants. The Arbitrator has given a finding that amount of Rs. 5,000.00 is withheld by the respondents on account of clearance of observations of Quality Control Wing which inspected the work and pointed out certain deficiencies. Therefore, the Arbitrator has granted Rs. 5,000.00. Similarly, the Arbitrator has also awarded the release of withheld amount for non-sanction of El / SI's. That claim of the claimants was for Rs. 42,406.78 paise. That amount which was to be released to the claimant works out to Rs. 43,863.27 paise. The Arbitrator has rightly awarded only Rs. 42,407.00 on this claim.
(4) Claim No. 4 pertains to short payments made by the respondents amounting to Rs. 50,000.00. On this claim, the Arbitrator has awarded a sum of Rs. 15,783/ - by taking into consideration the measurement and calculations.
(5) Claim No. 5 pertains to claim of Rs. 42,000.00 approximately on account of rebate. The Arbitrator has awarded a sum of Rs. 21,663.00. The Arbitrator has given a finding that on perusal of the record, the said amount of rebate became due and payable by the respondents to the claimants.
(6) No objection has been filed in relation to claim No. 6. However, against this claim, the Arbitrator has only awarded a sum of Rs. 1,546.00.
(7) No objection has been filed against claim No. 7. However, the Arbitrator has awarded a sum of Rs. 10,000.00 to be paid by the respondents to the claimants 510 against this award.
(8) No objection has been filed against the award in relation to Claim Nos. 9, 10 and 11. No objection has also been filed against the award in relation to Claim No. 1. The objections were filed by the respondents against the award in relation to Claim Nos. 2,3, 4, 5 and 8.
(9) Ms. Salwan, learned Counsel for respondent-DDA, however, has vehemently objected the award in relation to claim No. 8 for a sum of Rs. 1,32,900.00 in favor of the claimants by the Arbitrator. A sum of Rs. 6 lakhs was claimed by the claimants on account of damages.
(10) Ms. Salwan has argued that the Arbitrator has committed serious irregularity in awarding this amount as specifically under the specific terms of the agreement the claimants did not have any right to claim any amount as damages. In this connection she has invited the attention of this Court to Clause (1) of Specifications and Conditions which reads as under:- "The Contractor must get acquainted with the proposed site for the works and study specification and conditions carefully before tendering. The work shall be executed as per programme approved by the Engineer-in-charge. If part of site is not available for any reason or there is some unavoidable delay in supply of material stipulated by the Department, the programme of construction shall be modified accordingly and the contractor shall have no claim for any extras of compensation on this account."
(11) Ms. Salwan has further argued that in view of specific bar imposed by the specific clause of the agreement the Arbitrator had no jurisdiction to award any sum on account of damages. She has also cited in support of her arguments Government of Kerala and Another v. V.P. Jolly, and M.L. Mahajan v. Delhi Development Authority and Another, in Suit No. 2185 of 1987 decided on 20th July, 1990. She has stated that in view of the decision of the Supreme Court in Continental Construction Co. Ltd v. State of Madhya Pradesh, . the Arbitrator cannot award damages when there is a specific clause prohibiting the contractor to claim such damages.
(12) On the other hand, Shri P.N. Kumar learned Counsel for the petitioners has argued that the judgment in Continental Construction Co. Ltd. 's case (Supra) is not applicable in the present facts and circumstances of the case as the clauses before the Supreme Court in relation to which observations had been made were different than in the present case. Secondly, Mr. Kumar has argued that even if there is a prohibition specifically debarring him from claiming damages the same would be unreasonable and illegal and will be squarely hit by the provisions of Secs. 54 and 55 of the Contract Act. Third leg of his argument is that Clause. 25 of the arbitration agreement, inter alia, mentions all disputes and disputes relating to damages on account of the site inordinately being given to the claimants after much delay would also be the subject-matter of reference under Clause 25 of the arbitration agreement and, therefore, the arbitrator will have the jurisdiction to adjudicate upon the same dispute. Mr. Kumar has cited in his support Food Corporation of India v. Joginder pal Mohinderpal and Anr., Judgment Today 1989 (2) Supreme Court 89. Mr. Kumar has also argued that under various clauses of the 511 agreement like Clauses 5,12A and 36 the petitioner is under obligation not to stop the work and to engage the work force and the agreement does not provide for any damages in case of any breach of the obligation on the part of the respondent-DDA.
(13) There is an obvious fallacy in the arguments of learned Counsel for the petitioner as the dispute which has to be referred for adjudication has to be the dispute arising out of the agreement. Any dispute which relates to the agreement can be referred to arbitration. Specific provision has been made in the arbitration agreement which deals with a situation when in case of non-performance of its obligation like the present one the petitioner has a right for extension of time. Various clauses of the agreement show the intention of the parties that in case of breach of non-handing over of site to the contractor, the remedy is extension of time to complete the work. It further finds mention in Clause 10 of the agreement which reads as under:- "Stores supplied by Delhi Development Authority. If the specifications or schedule of items provided for the use of any special materials to be supplied from Engineer-in-Charge's stores or it is required that the contractor shall use certain stores to be provided by the Engineer-in-Charge as shown in the schedule of materials hereto annexed the contractor shall be bound to procure and shall be supplied such materials and stores as are from time to time required to be used by him or the purposes of the contractor only, and the value of the full quantity of materials and stores so supplied at the rates specified in the said schedule of materials may be set off or deducted from any sums then due, or thereafter to become due to the contractor under the contract, or otherwise or against or from the security deposit or the proceeds of sale thereof if the same is held in Government securities, the same or a sufficient portion thereof being in this case sold for the purpose. All materials so supplied to the contractor shall remain the absolute property of Delhi Development Authority and shall not be removed on any account from site of the work, all shall be at all times open to inspection by the Engineer-in-Charge at a place directed by him, by a notice in writing under his hand, if he shall so require but the contractor shall not be entitled to return any such materials unless with such consent, and shall have no claim for compensation on account of any such materials. Provided that the contractor shall in no case be entitled to any compensation or damages on account of any delay in supply or non-supply thereof all or any such materials and stores. Provided further that the Delhi Development Authority within the scheduled time for completion of the worker 50 per cent thereof (Scheduled time plus 6 months if the time of completion of the work exceeds 12 months) but if a part only of the materials has been supplied within the aforesaid period then the contractor shall be bound to do so much of the work as may be possible with the materials and stores supplied in the aforesaid period. For the completion of the rest of the work the contractor shall be entitled to such extension of time as may be determined by the Engineer-in-Charge whose decision in this regard shall be final."
(14) The agreement specifically prohibits the claim of damages on account of delay. Therefore, there is no force in the argument of Shri P.N. Kumar on this score. 512 Argument of learned Counsel for the petitioner regarding provisions of agreement being hit by Sections 54 nd 55 of the Contract Act cannot find support as the agreement reflects the intention of the parties and what has been knowingly not agreed to by the parties cannot be hit by the provisions of Sections 54 and 55 of the Contract Act except on the ground that the agreement itself is unlawful or void which is not the case before this Court nor it has been argued by Shri P.N. Kumar. The Arbitration Act is a special statute and only specific dispute as could be brought under the arbitration agreement can be referred for arbitration and not the general disputes regarding damages, more so in view of the prohibition in the agreement. Supreme Court in Continental Construction Co. Ltd. (supra) held:- "that the District Judge found and in our opinion rightly that the question regarding extra cost was a general question and not a specific legal question and the decision of the Arbitrator was not final one. The Arbitrator misconducted himself in allowing claim without deciding the objection of the State. In view of the specific clauses, the appellant was not legally entitled to claim for extra cost.
(15) The Court then referred to the case of Seth Thawardas v. Union of India wherein it was held- "if no specific question of law is referred, the decision of the arbitrator on that question is not final however much it may be within his jurisdiction and indeed essential for him to decide the question incidentally. The Arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks is just and reasonable. The Arbitrator is a Tribunal selected by the parties to decide their disputes according to law and so is bound to follow and apply the law, and if he does not he can be set right by the Court provided his error appears on the face of the award. In this case, the contractor having contracted, he cannot go back to the agreement simply because it does not suit him to abide by it. The decision of this Court in M/s Alopi Par-shad v. Union of India, may be examined. There it was observed that a contract is not frustrated merely because the circumstances in which the contract was made, altered. The Contract Act does not enable a party to a contract to ignore the express covenants thereof, and to claim payment of consideration for performance of the contract at rates different from the stipulated rates, on some vague plea of equity. The parties to an executory contract are often faced, in the course of carrying it out, with a turn of event which they did not at all anticipate, a wholly abnormal rise or fall in prices, a sudden depreciation of currency, an unexpected obstacle to execution, or the like. There is no general liberty reserved to the Courts to absolve a party from liability to perform his part of the contract merely because on account of an uncontemplated turn of events, the performance of the contract may become onerous. It was argued on behalf of the appellant that since specific issues were framed and the same had been answered by a non-speaking award, there is no mistake of law apparent on the face of record and the District Judge erred in setting aside the award by looking into the terms of the contract which, it was submitted, neither formed part of the award nor appended to it. We are 513 unable to agree. This being a general question, in our opinion, the District Judge rightly examined the question and found that the appellant was not entitled to claim for extra cost in view of the terms of the contractor and the Arbitrator misdirected himself by not considering this objection of the State before giving the award."
(16) The Supreme Court was dealing with a non-speaking award in the Continental Construction Co. Ltd.'s case. Applying the principle laid down in the said case it is manifestly clear that the Arbitrator cannot give award which is contrary to the terms of the contract. Once the petitioner has agreed to have a specific clause like Clause (1) of General Terms and Conditions, he will not be entitled to claim any damages and the Arbitrator would be misconducting himself, if contrary to the specific provision of the contract any sum is awarded under that head. In view of the aforesaid discussion, award in relation to Claim No. 8 is modified to the extent that no amount is due under this claim to the petitioners from the respondents. The rest of the award is made a rule of the Court and decree is passed in terms thereof. Petitioners shall be entitled to interest at the rate of 12 per cent per annum from the date of decree till realisation. No order as to costs.