Delhi District Court
Delhi Jal Board vs M/S Chaitanya Construction Co on 31 October, 2022
IN THE COURT OF MS. VINEETA GOYAL, DISTRICT
JUDGE (COMMERCIAL) - 02, SOUTH-EAST DISTRICT,
SAKET COURTS, NEW DELHI
OMP (COMM) No. 37/2019
DELHI JAL BOARD
CONSTITUTED UNDER
THE DELHI WATER BOARD ACT, 1998
VARUNALYA, JHANDEWALAN, NEW DELHI
THROUGH ITS CHIEF
EXECUTIVE OFFICER ........... PETITIONER
Versus
M/S CHAITANYA CONSTRUCTION CO.
THROUGH ITS PROPRIETOR
MR. BRIJEDH KUMAR SINGH
PP-32, MAURYA ENCLAVE
PITAM PURA,
NEW DELHI- 110034 ........... RESPONDENT
Date of Institution : 15.03.2019
Date of arguments : 07.10.2022
Date of Judgment : 31.10.2022
JUDGMENT
1. The present petition has been filed u/s 34 of Arbitration and Conciliation Act, 1996 as amended (hereinafter referred to as the Act 1996) for setting aside the arbitral award dated 03.11.2018 subsequently modified vide award dated OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 1 of 30 03.12.2018 passed by Ld. Sole Arbitrator, Dr. Justice (Retd.) Arijit Pasayat.
2. The brief facts, according to petitioner, are that petitioner prays for setting aside the impugned award passed by Ld. Arbitrator whereby the Ld. Sole Arbitrator, arbitrarily and without appreciating the defence taken by the petitioner, awarded an amount of Rs.1,50,80,000/- (Rupees One Crore Fifty Lacs Eighty Thousand only) to the respondent vide award dated 03.11.2018 and the amount remained unchanged by the modified award dated 03.12.2018 along with interest @ 15% per annum from the date of stop payment order dated 05.09.2014 till the date of payment and in case, the amount is not paid by the petitioner herein within 2 months, then respondent herein shall be entitled to interest @18% per annum from 05.09.2014 in respect of Work Order No. 75.
2.1. According to petitioner, an online tenders were invited by the office for petitioner i.e. S/I/T/C of Fine Bar Screen at Nilothi STP on 28.06.2012 with the condition that the bidder shall be only manufacturers/ or authorized dealers of manufacturer. An agreement was also executed between the petitioner and the respondent on 12.02.2013. The respondent had submitted the documents issued by the manufacturer i.e. ATE OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 2 of 30 Enterprises Pvt. Ltd. specifying that the respondent is its authorized dealer to supply and install HUBER make screen. The equipment installed by the respondent at site had gone out of order within the guarantee period and the same was conveyed by the petitioner to the respondent at the earliest but the respondent had not repaired the same and no response was received from respondent till date with regard to the same and therefore the petitioner had not released the EMD which was intimated by various letter(s) dated 03.11.2014, 23.02.2015 and vide e-mail dated 23.02.2015 respectively. As per terms and conditions of the work order, the respondent was required to apply for C-form with regard to the amount of work order i.e. Rs. 1,48,12,703/- as per the terms and conditions of the work order, which was not applied by the respondent till date. The respondent had not written to the petitioner for the inspection of Bar Screen as the same has been put on hold by it till 30.11.2013. Later on the respondent informed the petitioner that the team will be ready for inspection. Accordingly, approval for inspection was granted by the competent authority on 05.12.2013 and visa was applied for 26.12.2013.
2.2. According to petitioner, the time of commissioning was 180 days as mentioned in work order which includes the time of overall procedure from supply to commissioning.
OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 3 of 30However, the respondent did not get the inspection done immediately and only on 29.10.2013 has informed that equipment will be ready for inspection on 30.11.2013 i.e. after about 9 and 1/2 months from the date of award of the work. The said delay of 285 days in work is attributed to the respondent. The petitioner has given clearance for installation of equipment immediately to the respondent. The respondent purchased the conveyor system of the Bar Screen from the local market on 17.05.2014, and therefore, the said delay has been caused. Due to the delay caused by the respondent, the permissible penalty of 10% was imposed on the respondent by the competent authority of the petitioner as per clause 2 of the Contract Agreement. Since the equipment installed on 22.05.2014 by the respondent went out of order after its installation, many letters were written to it to rectify but the efforts of the petitioner which did not yield any result because of no response from the respondent. Even item no.4 of work order has not been executed by the respondent and make of item no.2 is not as per the work order. The respondent raised a bill and requested for EOT on 06.04.2014. The process of EOT approval started on 18.06.2014 and was finally approved by the competent authority on 10.12.2014 with a penalty of 10% as per clause 2 of the Contract Agreement executed between the parties. Meanwhile, letters were received by the petitioner from the Vigilance Wing on 05.09.2014 and 09.09.2014 to stop "all OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 4 of 30 due payments of the firm" regarding the vigilance inquiry for other cases (for act of forgery for respondent) and accordingly, the payment was not processed. Thereafter the petitioner informed the respondent that its name was included under the vigilance inquiry and therefore the payments have been stopped as per the instructions of the higher authorities. It is pertinent to mention her that till date, no instruction has been received by the higher authorities of the department to release payment and now the respondent has been black listed by the department permanently vide circular dated 01.01.2016.
2.3. The respondent invoked the arbitration clause and filed a petition before the Hon'ble Delhi High Court for appointment of arbitrator and vide order dated 13.10.2015 Mr. Justice (Retd.) B.A. Khan was appointed as the Ld. Sole Arbitrator. Subsequent thereto, in the year of 2017, the respondent filed SLP (C) Nos. 21165 & 23076 of 2017 before the Hon'ble Apex Court wherein by vide order dated 02.02.2018 Dr. Justice (Retd.) Arijit Pasayat was appointed as Ld. Sole Arbitrator in place of Mr. Justice B.A. Khan. Arbitral proceedings culminated in to impuged award.
2.4. Petitioner has impugned the arbitral award mainly on the grounds that the award is erroneous, arbitrary and OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 5 of 30 unlawful and is legally unsustainable and against the Principle of natural justice. The Ld. Sole Arbitrator has not considered the fact that the respondent has installed conveyor systems which is provided as item no.2 of the work order and submitted its purchase voucher of a local make, which violates the terms and conditions of the work order. The Ld. Sole Arbitrator has also erred in law by not considering the fact that the equipment installed by the respondent at site had gone out of order within the guarantee period and the same has been conveyed by the petitioner to the respondent at the earliest but the respondent has never taken any steps to repair the equipment nor any response has been received by the respondent till date with regard to the same and therefore the petitioner has not released the EMD and also that the respondent was required to apply for the C-form with regard to the amount of work order i.e. Rs. 1,48,12,703/- as per the terms and conditions of the work order, which has never been applied by the respondent till date. It is further submitted that the Ld. Sole Arbitrator has not considered the fact that the time of commissioning was 180 days as per the work order which includes the time of overall procedure from supply to commissioning, however, the respondent did not get the inspection done immediate after work and had finally requested for inspection on 29.10.2013 stating that the equipment will be ready for inspection on 30.11.2013 which is approximate 9 ½ OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 6 of 30 months after award of the work, the said delay in work has been caused by the respondent, which is in total of 285 days after the stipulated time as per the work order and therefore the respondent is not entitled to the amount awarded in the impugned award dated 03.11.2018. Ld. Arbitration has failed to appreciate that the letters were received by the petitioner from the Vigilance wing on 05.09.2014 and 09.09.2014 to stop "all due payments of the firm" regarding the vigilance inquiry for other cases (for act of forgery for respondent) and accordingly, the payment was not processed and that till date, no instruction has been received by the higher authorities of the department to release payment and now the respondent has been black listed by the department permanently vide circular dated 01.01.2016. Ld. Counsel for the petitioner argued that in the terms of above-mentioned grounds, prayed for setting aside the award accordingly.
3. Respondent filed reply and as it is argued by the Ld. Counsel for respondent that impugned award is reasoned award and also there exists no ground for setting aside the award. The respondent invoked the Arbitration clause of the agreement and filed a petition before the Hon'ble High Court of Delhi for appointment of Arbitrator. The Hon'ble High Court of Delhi appointed Mr. Justice B.A. Khan, Former Chief Justice of J & K High Court as Ld. Sole arbitrator. Later on, his appointment as OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 7 of 30 full time Chairman of J & K State Accountability Commission (SAC), an SLP was filed before Hon'ble Supreme Court of India to appoint another Sole arbitrator. The Hon'ble Supreme court after issuing due notice to Delhi Jal Board (petitioner herein) and with their full knowledge and consent appointed Dr. Justice Arijit Pasayat, Former Judge of Hon'ble Supreme Court of India as Ld. Sole Arbitrator.
3.1 It is submitted that, the Ld. Sole arbitrator followed the due procedure for conducting the arbitral proceedings as mentioned by him on Page 17 of the award which reads as follows: -
"the matter was taken up and the parties were directed to file complete set of documents incorporating Statement of Claim, Statement of Defence, Rejoinders, Affidavit of Witness and documents relating to admission and denial of documents the said exercise was carried out.
Thereafter, the examination of the witness of the parties was completed and the matters were taken up for arguments. It is thus, abundantly clear that the petitioner (D.J.B.) was given full opportunity to present its case and it was only thereafter, following the due process of the law, the Ld. Sole Arbitrator passed a detailed, reasoned and speaking order OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 8 of 30 deciding the arbitral award in favour of the respondent. As such, no ground is available under Section 34 of the Act 1996 to seek setting aside of impugned award.
3.2. Ld. Counsel for respondent further submitted that, Ld. Sole Arbitrator has passed the award in favour of respondent after considering and appreciating facts and evidence presented by both the sides. While considering the objection against the award, the court is not under obligation to re-examine and re- appreciate the evidence considered by the Ld. Arbitrator as if sitting in appeal over the award. The court is not empowered to substitute its own view or finding in place of the view or the findings recorded by Ld. Sole Arbitrator. Ld. Counsel for respondent relied upon judgment of Hon'ble Apex Court in the case of Maharashtra State Electricity Distribution Co. Ltd. vs. Datar Switchgear Ltd. (2018) 3 SCC 133 argued that it is settled law that the Arbitral Tribunal is the master of Evidence and the findings of facts which are arrived at by the arbitrators on the basis of evidence on record are not to be scrutinized as if the court was sitting in appeal and it is observed and held as under:
"Categorical findings are arrived at by the Arbitral Tribunal to the effect that insofar as Respondent 2 is concerned, it was always ready and willing to perform its contractual obligations, but was prevented by the appellant OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 9 of 30 from such performance. Another specific finding which is returned by the Arbitral Tribunal is that the appellant had not given the list of locations and, therefore, its submission that Respondent 2 had adequate lists of locations available but still failed to install the contract objects was not acceptable. In fact, on this count, the Arbitral Tribunal has commented upon the working of the appellant itself and expressed5 s dismay about lack of control by the head office of the appellant ver the field offices which lead to the fallure of the contract. These are findings of facts which are arrived at by the Arbitral tribunal after appreciating the evidence and documents of record. From these findings it stands established that there is a fundamental breach on the part of the appellant in carrying out its obligations, with no fault of Respondent 2 which had invested whopping amount of Rs. 163 crores in the project. A perusal of the award reveals that the Tribunal investigated the conduct of the entire transaction between the parties pertaining to the work order, including withholding of DTC locations, allegations and counter-allegations by the parties concerning installed objects. The arbitrators did not focus on a particular breach qua particular number of objects/class of objects. Respondent 2 is right in its submission that the fundamental breach, by its very nature, pervades the entire contract and once committed, the contract as whole stands abrogated. It is on the aforesaid basis that the Arbitral Tribunal has come to the conclusion that the termination of contract by the Respondent 2 was in order and valid. The proposition of law that the Arbitral Tribunal is OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 10 of 30 the master of evidence and the findings of facts which are arrived at by the arbitrators on the basis of evidence on record are not to be scrutinized as if the Court was sitting in appeal now stand settled by a catena of judgments pronounced by this Court without any exception thereto".
3.3. Ld. counsel for the respondent further relied upon para Para 33 of judgment dated 25.11.2014 in the case of Associate Builders V/S DELHI DEVELOPMENT AUTHORITY (2015) 2 SCC (Civ) 204 wherein it has been held as under:
"33. It must clearly be understood that when a court is applying the "Public Policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus, an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once it is found that the arbitrator's approach is not arbitrary or capricious, then he is the last word on facts. In P.R. Shah, shares & Stock Brokers (P) Ltd. V/s B.H.H. Securities (P) Ltd, this court held: (SCC pp.601-02, para 21) "21. A court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 11 of 30 re-appreciating the evidence. An award can be challenged only under the grounds mentioned in section 34 (2) of the Act. The Arbitral Tribunal has examined the facts and held that both the second respondent and appellant are liable. The case as put forward by the first respondent has been accepted. Even the minority view was that the second respondent was liable as claimed by the first respondent, but the appellant was not liable only on the ground that the arbitrators appointed by the stock exchange under Bye-law 248, in a claim against a non-member had no jurisdiction to decide a claim against another member. The finding of the majority is that the appellant did the transaction in the name of second respondent and is therefore, liable along with the second respondent. Therefore, in the absence of any ground under section 34(2) of the Act, it is not possible to re-examine the facts to find out whether a different decision can be arrived at."
3.4. Ld. Counsel for the respondent also argued that in another recent Judgment dated 18.10.2019 the Hon'ble Supreme Court in the case of STATE of JHARKHAND & OTHERS V/S M/s HSS INTEGRATED SDN & ANOTHER (2019) 9 SCC 798 has re-iterated the same view and has held as under:
"7.1 In the present case, the categorical findings arrived at by the Arbitral Tribunal are to the effect that the termination of the contract was illegal and without following due procedure of the provision of the contract. The OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 12 of 30 findings are on appreciation of evidence considering the relevant provision and material on record as well as on interpretation of the relevant provisions of the contract, which are neither perverse nor contrary to the evidence in record. Therefore, as such, the first appellate court and the High Court have rightly not interfered with such findings of facts recorded by the learned Arbitral Tribunal".
3.5. Ld. Counsel for the respondent submitted that petitioner was contractually and legally bound and is liable to make payment to the respondent and the Ld. Sole Arbitrator has analyzed and appreciated the facts and evidence available on record and thereafter, has passed a reasoned and speaking award and therefore, do not require any interference by this court.
4. I have heard arguments advanced by Ld. Counsel for the parties and considered case laws cited by Ld. Counsel for the parties and gone through the arbitral record.
5. Before adverting to rival contentions of the parties, it need to delve into ambit and scope of court's jurisdiction u/s 34 of the Act. Sub-sections (1) and (2) of Section 34, as amended by the Arbitration and Conciliation (Amendment) Act, 2019, reads thus:
OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 13 of 30"34. Application for setting aside arbitral award-
(1) Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub- section (3). (2) An arbitral award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds that-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 14 of 30
(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1 - For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute."
6. Normally, the general principles are that Arbitrator is a Judge of the choice of the parties and his decision, unless there is an error apparent on the face of the award which makes it unsustainable, is not to be set aside even by the Court as a Court of law could come to a different conclusion on the same facts. The Court cannot reappraise the evidence and it is not open to the Court to sit in appeal over the conclusion of the Arbitrator. It is not open to the Court to set aside a finding of fact arrived at by the Arbitrator and only grounds on which the award can be set aside are those mentioned in the Act, 1996. Where the Arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, the award will not call for interference by the Court in exercise of the power vested in it.
OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 15 of 307. Hon'ble Supreme Court in case of 'Associate Builders vs. Delhi Development Authority', (2015) 3 SCC 49 has held that the interference with an arbitral award is permissible only when the findings of the arbitrator are arbitrary, capricious or perverse or when conscience of the Court is shocked or when illegality is not trivial but goes to the root of the matter. It is held that once it is found that the arbitrator's approach is neither arbitrary nor capricious, no interference is called for on facts. The arbitrator is ultimately a master of the quantity and quality of evidence while drawing the arbitral award.
8. Hon'ble Supreme Court in the case of Parsa Kente Collieries Limited Vs. Rajasthan Rajya Vidyut Utpadan Nigam Limited, (2019) 7 SCC 236 has held that an Arbitral Tribunal must decide in accordance with the terms of the contract. If an arbitrator construes a term of the contract in a reasonable manner then the award not to be set aside on this ground.
9. In the case of M/s Arosan Enterprises Ltd vs Union of India & Anr., MANU/SC/0595/1999, it was inter alia held that reappraisal of evidence by the Court is not permissible in the proceeding under the Arbitration Act. In the event of there being OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 16 of 30 no reason in the award, question of interference of the court would not arise at all. In the event, however there are reasons, the interference would still be not available within the jurisdiction of the Court unless of course, there exist a total perversity in the award or the judgment is based on wrong proposition of law. In the event, however, two views are possible on a question of law as well, the Court would not be justified in interfering with the award. It was also held that the Court as matter of fact, cannot substitute its evaluation and come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. If the view of arbitrator is a possible view the award or the reasoning contained therein cannot be examined.
10. It is a settled position that a Court can set aside the award only on the grounds as provided in the Act as interpreted by the Hon'ble High Court of Delhi in Dyna Technologies Pvt. Ltd. v. Crompton Greaves Ltd. [2019 SCC Online SC 1656] laid down the scope of such interference and observed as follows :
" 26. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various Courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 17 of 30 perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award. and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the Courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated."
10.1. It is also settled law that where two views are possible, the Court cannot interfere in the plausible view taken by the arbitrator supported by reasoning. In Dyna Technologies (supra) Hon'ble Supreme Court further observed as under :
"27. Moreover, umpteen number of judgments of this Court have categorically held that the Courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The Courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays.OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 18 of 30
11. In the instant case, before considering the rival submissions advanced by Ld. Counsel for the parties, it would be appropriate to scan through the award. It transpires that respondent executed a number of work orders (no. 24, 28, 35, 51 and 75) in the year 2013 for petitioner which have remained unpaid. It was claimed by the petitioner that the work executed was not in accordance with the agreed terms and conditions but on the other hand, the respondent has contended that withholding of payment was unjustified. The dispute resulted into invocation of 'Arbitration Clause' of the contract and after following due process culminated in the Arbitration Award dated 03.11.2018 and modified award dated 03.12.2018. Aggrieved by this, the petitioner has filed the present petition assailing the aforesaid Arbitral Award.
12. A careful reading of 57 pages of the impugned award shows that at page 16 to 18 the factual matrix has been given and thereafter discussion on individual work order and the decisions have been given. Ld. Sole Arbitrator has given major part of the impugned award to Work order no. 75 with a view to discuss some of the facts which run common even for other work orders.
OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 19 of 3013. The gamut of the impugned Arbitration Award is tabulated below for better understanding of the dispute between the parties:-
Word Page no. OMP
Order
75 33-44 1,50,80,000/- S/I/TC supply, installation testing and
commissioning of the Fine Bar Screen at
Nilothi STP. HUBER certified in the case of the claimant.
51 45-47 19,07,900/- Improvement and maintenance of functioning of aeration surface aerators at 40 MGD STP Keshopur 24 47-51 5,06,660/- Renovation and overhauling of Gear box of STP Vasant Kunj 35 47-51 5,01,950/- Renovation of 25 HP Gear Box ESENPRO make of STP Vasant Kunj.
28 55 10,18,500/- Procurement of Gearbox at STP Vasant Kunj.
1,90,15,010/-
14. It would be appropriate to consider the grounds of petitioner in the background above.
15. The main thrust of the arguments of the petitioner are that the Ld. Sole Arbitrator has erred in not considering the fact that, the supply was not made by the respondent in the terms of work order ; that the equipment install at the site has gone out of order within guarantee period and the same has been conveyed OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 20 of 30 to the respondent by the petitioner but respondent did not repair the equipment nor gave any response; that the respondent was required to apply for C Form with regard to amount of work order which was never applied by the respondent till date; that there is a delay caused by the respondent; that the permissible penalty of 10% was imposed on the respondent by the competent authority as per Clause 2 of the Contract Agreement; and that because of inquiry being conducted, competent authority has decided to withhold the payment and till date no instructions has been received by the competent authorities to release payment and the name of the respondent is included in the list of the concerns included within the scope of vigilance. On the other hand, the respondent submitted that, all the facts have been duly considered by the Ld. Arbitrator and well-reasoned award has been passed.
16. A careful perusal of impugned award reflects that, the Ld. Sole Arbitrator has duly considered the submissions made by both the sides and referred to the orders dated 13.05.2017, 22.07.2017, 26.08.2017,and 11.11.2017 by his predecessor and observed that at some stage, the respondent (petitioner herein) were willing to make the payment but later on there was complete U Turn. The relevant orders passed by his predecessor read as follows:
OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 21 of 301. Order By order dated 25.02.2017 claimant was required to produce some original documents, list whereof was provided to him.
He was also given an option to provide such documents to the competent authority of the respondent. He has done so today as a result no cross-examination of CW could take place.
However, one more opportunity is granted to the claimant to produce original documents, to competent authority of the respondent. The competent authority / officials of the respondent / DJB are directed to examine the documents produced by the claimant in association with. the claimant and record their acceptance/rejection / objections and file their report before the Tribunal. Claimant is directed to hold meeting with the competent authority / officials of the respondent / DJB on any working day next week".
2. Order Vide order dated 13.05.2017, parties were directed, to hold meeting in which Claimant's documents were to be examined by Jal Board Authority (Mr V.K. Grover, EE), (Mr P.K. Sharma, AE).
Pursuant to this order Claimant addressed a letter to Jal Board Authority seeking the meeting which went unattended. As a result no meeting has been held by the parties till date, which has delayed the resolution of dispute.
OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 22 of 30Today both engineers of Jal Board (Mr. Grover and Mr. Sharma) are present and they undertake to resolve the issue within 15 days from today. Mr. Grover submitted that the date of the meeting will be fixed on 02.08.2017 in which Claimant is required to produce all documents before the Delhi Jal Board Designated Committee for examination and acceptance.
In case this Committee and the aforesaid Engineers find that document so produced is in order, they shall pass appropriate' order for release of the amount.
3. "ORDER (26.08.2017) On 22.07.2017, Delhi Jal Board Authority represented by Mr V.K. Grover (EE) and Mr P.K. Sharma (AE) were directed to examine the documents to be submitted by the Claimant and to verify his claim se his payment or being satisfied with the proof. So much so, Mr Grover assured that he would resolve the issue within 15 days but still no headway has been made.
Parties are giving their own conflicting versions for their inability to finalize the matter. Today a report has been filed by Delhi Jal Board stating the position work order wise. In case of five work.
orders (Work Order Nos. 24, 28,35, 59 and
60), it is pointed out that claimant did not submit the original vouchers or copy OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 23 of 30 thereof and as such no decision could be taken.
To cut short the matter, Claimant was today directed to show the vouchers related to these work orders to Delhi Jal Board Authorities present. He shall now furnish the photocopy of these original vouchers for the aforesaid five work orders mentioning the title of the work and attesting by his signature. These copies shall be supplied within three days and after receipt thereof, Delhi Jal Board Authority / Committee shall examine and seek appropriate verification of these orders within 15 days and in case of default it shall be presumed that the vouchers submitted by the Claimant for these five work orders were found in order.It is submitted that no such procedure is required to be done in ther work order Nos.
24, 35 and 51 which pertains to repair and renovation works. These work orders shall be dealt with separately".
4. "ORDER 11.11.2017 In terms of last order dated 23.09.2017, authorities / officers of the Respondent -DJB were directed to conduct the verification of original vouchers, submitted by the Claimant and on recording their satisfaction, release the payment of such vouchers to the Claimant.
This was done after reconciliation proceedings were conducted to end the dispute between the parties by an amicable OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 24 of 30 settlement. Authorities / Officers of Delhi Jal Board have reported. today that they have verified the original vouchers submitted by the Claimant on some work orders and finding the relevant vouchers in order, have decided to make the payment for these vouchers to the Claimant.
The Claimant present, however, is not comfortable now with the course adopted and wants things to be left open to carry on further litigation.
The Claimant has an option to choose his course of action and to come out on the settlement proceedings conducted so far. He shall consider the matter afresh and report his decision on the course of action by the next date".
17. It is transpires from the impugned award that, Ld. Arbitrator has duly considered that the petitioner herein resiled from its earlier commitment and stated that because of pendency of vigilance proceedings, it was not in a position to make any payment. Ld. Sole Arbitrator emphasized that withholding of payments continued even after verification of the necessary vouchers merely based on the pretext that the respondent herein has been Blacklisted and there was continuance of some criminal proceedings. Ld. Sole Arbitrator has given very clear findings that the petitioner herein was withholding amounts without any basis and there was continuous shift in the reasons for withholding as has been elaborated in page 39 onwards. The OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 25 of 30 findings also include that the respondent was entitled to grant of Principles of Natural justice which were not observed by the petitioner herein. Ld. Sole Arbitrator at page 40 also noted uncontroverted facts that the inspection report of the Respondent's Officials is not on record and the Respondent's official certified that Fine Bar Screen was in order. The relevant extract is reproduced as under :
The stand relating to non-
applicability of the principles of natural justice as canvassed by the Respondent is indefensible. The Claimant has stated that before the so called black listing and / or the direction for non payment, no opportunity was granted to it to project and present its version and stands. This position is not disputed by the Respondent, who, as indicated above, is of the view that it is not necessary to do so. One more uncontroverted assertion of the Claimant needs to be noted. They are (a) the Inspection Report of the Respondent's Officials is not on record, and (b) the Respondent's Officials certified that the Fine Bar Screen was in order.
The two decisions relied upon by the Respondent have no application to the facts of the present case. It would depend upon facts of each case as to whether the principles are applicable. The Hon'ble Supreme Court in Mahipal Singh Tomar v State of Uttar Pradesh, (2013) 12 SCALE 304 held that even in administrative law, the rule of natural justice have traditionally been regarded as OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 26 of 30 comprising "audi alteram partem" and "nemo judex in causa sua". Where non-grant of opportunity results in civil / financial consequences or deprivation of property or entitlement, it becomes: necessary to grant the affected person opportunity to project its stand. Undisputedly, the order of black listing / stoppage of payment have resulted civil/financial consequences. In fact in cases relating to black listing, decision of the Hon'ble Supreme Court in Erusian Equipment & Chemicals Ltd v State of West Bengal, (1975) 1 SCC 70 applies. The said decision is applicable to the facts of the present case. In any event, undisputably by its order, learned Civil Judge-06 (Central) Tis Hazari Courts has stayed the operation of black listing by order dated 13.04.2017 which continues to be operative.
18. Coming to the aspect of non-supply of specific item as alleged by the petitioner herein, it transpires from the impugned award that the Ld. Sole Arbitrator with his reasonings observed that this is no ground on which payment has been denied to the respondent herein. The Ld. Arbitrator duly considered that letter dated 31.10.2013 superseded the previous letter of petitioner dated 27.06.2013 by which further business with the respondent herein and payment to it was stopped. Ld. Sole Arbitrator with his detailed reasoning upheld levy of 10% attributed to the delay caused on account therefore awarded on Rs. 1,47,85,783 (being 90% of the claimed amount along with OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 27 of 30 EMD refund of Rs. 2,94,500/-making a total of awarded claim at Rs. 1,50,80,000/-. The relevant extract is reproduced as under :
A letter dated 31.10.2013 superseded the Respondent's previous order dated 27.06.2013 by which further business with the Claimant and .payment to it was stopped. Therefore, after 31.10.2013, there was no operative order directing stoppage of payment. Even thereafter, no payment was made till September 2014. For the first time thereafter on 05.09.2014, the position as stood on 27.06.2013 was reiterated. Finally, on 01.01.2016 it was directed to blacklist the Claimant. A faint attempt was made by the learned counsel for the Respondent to contend that there is no challenge to these orders passed by Competent Authorities specifically and, therefore, payment cannot be made. This is clearly unsustainable. All the actions of the Respondent which acts through its officials affecting the Claimant have been questioned. Therefore, there was no need to do so referring to any particular officer or authority. As noted above, in the absence of grant of opportunity to present its stand, the stoppage of payment (without reference to any prescription in the agreement / work der), is unsustainable on the touchstone of sustainability. Therefore, the Claimant to entitled to the 90% of the amount involved which the Respondent in law and contractually liable to pay. Coming to the question as to the levy of penalty for EOT, it is clear that some part of the delay is attributable to the Claimant. There was actually no communication by the Respondent to the Claimant for stoppage of work and the process of inspection. It was the OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 28 of 30 Claimant who had requested the process to be kept in abeyance. In the absence of adequate material being placed on record by the Claimant as regards the delay, the levy of 10% penalty .is maintainable and accordingly maintained.
The stand regarding amount being withheld as taken by Respondent is clearly indefensible because there is no provision in the Contract empowering the Respondent to withhold any amount, much less on the grounds which have been pressed into service for withholding the amount. The same is impermissible under the Contract. The expression "withhold" has been judicially interpreted.
"Withholding" - The dictionary meaning of the word "withholding" is to be hold back; to keep back; to restrain ore decline to grant. The holding back or keeping backing is not an isolated act but is a continuous process. Lalit Jalan and another v. Bombay Goa Co. Ltd others, (2003) 6 SCC 107.
The aforesaid Basic Conditions are applicable to all the Claims dealt with individually hereinafter.
One significant factor which needs to be noted is that in the orders of Vigilance Department about blacklisting and withholding of payment, the authorities have directed stoppage of payment of "due payment" to the Claimant. It is therefore clear that the authorities accepted that the payments were due i.e. payable. Otherwise, the question of stoppage of payment would not have arisen.
OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 29 of 3019. It is settled law and not necessary to repeat that the court is not expected to sit in appeal over the findings of learned Sole Arbitrator or to re-appreciate evidence as an appellate court. In the present case, there is no error in the interpretation of the contract clauses by the learned Arbitrator. The endeavour of the petitioner in the present case seems to convert the challenge to the Arbitral Tribunal into an appellate proceedings involving a total rehearing of matter and re-appreciation of evidence, which is impermissible in law.
20. In view of above-stated reasons, the findings of learned Sole Arbitrator are on the basis of facts and interpretation of various clauses of the contract. The impugned award does not suffer from vice of irrationality and perversity. The conclusion of the Ld. Sole Arbitrator is based on a possible view of the matter, so this court is not expected to interfere with the award. This is not against any public policy nor against the terms of contract of the parties. The objection petition of the petitioner is thus, without any merit and is hereby dismissed. No order as to costs.
File be consigned to record room.
Pronounced in open Court (Vineeta Goyal) On 31st October, 2022 District Judge (Commercial)-02 South-East, Saket Courts, ND 31.10.2022 OMP (Comm)- 37/19 Delhi Jal Board vs. Chaitanya Constructions Co. Page 30 of 30