Delhi District Court
M/S A.K Builders vs All India Institute Of Medical Sciences ... on 30 July, 2020
THROUGH VIDEO CONFERENCING VIA CISCO WEBEX
IN THE COURT OF DISTRICT JUDGE (COMMERCIAL COURT•02), SOUTH
DISTRICT, SAKET, NEWDELHI
Arbt. No. 270/2018
M/S A.K BUILDERS
K-20, LAJPAT NAGAR-III,
NEW DELHI ......PETITIONER
VERSUS
ALL INDIA INSTITUTE OF MEDICAL SCIENCES (A.I.I.M.S)
ANSARI NAGAR EAST
NEW DELHI-110029 ....RESPONDENT
Date of institution : 06th December, 2018
Date of arguments : 24thJuly, 2020
Date of Judgment : 30thJuly, 2020
JUDGMENT
1. This is a petition U/s 34 of Arbitration & Conciliation Act, 1996 (hereinafter referred to as "A&C Act") for setting aside arbitral award dated 04.09.2018, filed by the petitioner i.e. M/s A.K. Builders.
2. In brief, facts leading to the filing of the present petition are that the respondent- AIIMS vide a Tender Notice issued in 2011, invited bids for providing and lying Ceramic glazed floor tiles in B type Quarters (New) from 193 to 336 at A.V Nagar at AIIMS with an estimated cost of work to be of Rs.45,13,331/-. The petitioner tendered the bid of Rs.29,78,798/- which was accepted by the respondent on 20.05.2011. Accordingly, A.K. Builder vs AIIMS page no.1 petitioner was awarded the aforesaid work vide award letter dated 28.05.2011 and thereupon Agreement dated 03.06.2011 was entered between the petitioner and the respondent for execution of said work. The work was estimated to start from 17.06.2011 and was estimated to complete on 16.12.2011. The petitioner vide letter dated 07.07.2011 also offered to execute additional work in deviation in flats, which was not originally within the scope of work of the petitioner tender and same was verbally accepted in the said meeting in August 2011. It is further the case of the petitioner that vide letter dated 29.08.2011, petitioner was allowed to claim market rates for the deviated quantities beyond 50% of deviation limit of work as per the clause 12.2 of the Agreement No. 26/B&R/CD-II/2011-12.
3. It is further stated that vide letter dated 01.09.2011, respondent accepted the proposal of the petitioner's letter dated 07.07.2011. Thereafter, respondent granted the provisional extension of time up to 16.08.2012 to the petitioner for completion of work. Thereafter, on 12.03.2012, petitioner had submitted the first R/A Bill under Clause 7 of the agreement for Gross Bill for Rs.56,43,537.17 against which Gross Bill for Rs.30,59,442.00 was paid at the end of March 2012.
4. On 27.04.2012, petitioner requested respondent to process the sanctioning of analysis of market rates submitted by petitioner vide letter dated 29.08.2011. It is stated that respondent assured the petitioner to continue to work and the written approval would be given shortly.After 27.04.2012, petitioner continued writing letters to the respondent and in the meanwhile also sought an extension for completion of work till December, 2013 which was duly extended till 31.10.2013.
5. Thereafter, vide letter dated 09.12.2013, petitioner informed the respondent about A.K. Builder vs AIIMS page no.2 the status of the work and categorically stated that petitioner would not be in a position to execute the work further, as the rates submitted by the petitioner in terms of letter dated 29.08.2011, have increased considerably in two years and requested the respondent to further increase the rates to an extent of 30% on analysis of rates already submitted vide letter dated 29.08.2011 on the balance work left. Respondent refused the said offer of the petitioner and refused to increase the rates and did not allow the petitioner to execute the balance work and preferred to finalise the bill. Therefore, the work and agreement were closed.
6. It is further the case of petitioner that after completion of work, petitioner submitted the second and final bill for Rs.1,99,54,787.00. The respondent reduced the bill amount to Rs.49,93,558/-. The said bill was accepted by the respondent as "Incomplete Bill accepted under Protest". In view of the above dispute and after exchange of communication, in terms of clause 25 of the agreement, petitioner gave notice to the respondent for the appointment of the Arbitrator and consequently, Shri K.S Gangadharan was appointed as Arbitrator on 07.10.2014 by the respondent who resigned on 17.04.2017 and thereafter Shri O.P. Bhatia, Former Additional DG (Works Special), CPWD was appointed as Arbitrator who passed the impugned award dated 04.09.2018. Ld. Arbitrator allowed five claims in favour of the petitioner. In view of above facts, plaintiff has prayed to set aside the impugned award dated 04.09.2019 passed by Ld. Arbitrator to the extent it disallows in claim no. 2, 3,4 and amount claimed in claim no. 5.
7. It may be noted that on 21.05.2019 an application U/s 151 CPC was filed by the petitioner for placing on record the additional documents i.e. response dated 18.03.2019 A.K. Builder vs AIIMS page no.3 pursuant to RTI query dated 19.11.2018. The said application was contested by the respondent by filing reply on 04.10.2019. Arguments were heard on this application on 26.11.2019 by the Ld. Predecessor of this court and thereafter, this case was transferred to this Commercial Court on 05.02.2020. This Court had impressed upon the parties to address arguments on the petition U/s 34 of A&C Act, keeping in view the fact that this petition was filed more than 1½ year ago. In the application U/s 151 CPC filed by the petitioner, it is submitted that it had filed an application to the Public Information Officer (PIO), CPWD under the RTI Act, 2005 on 19.11.2018 and received a response/reply thereof on 18.03.2019. According to petitioner, the said response/reply is necessary for the proper adjudication of this case. Admittedly, the said application and the response had been received after passing of the award by Tribunal on 04.09.2018. Respondent contested the application by filing reply and stated that the Court cannot look into any new material which was not part of the arbitral record and that the alleged information was obtained after the passing of the award and petitioner cannot improve upon his case filing additional document while challenging the award and petitioner is seeking re-appreciation of evidence which is not permissible u/s 34 of A&C Act. It is submitted that the legal position is well settled that the Court while considering challenge to the award has only to consider the material which was before the Ld. Arbitrator. In these circumstances, this court heard the parties on the main petition and it was observed that while considering the grounds of challenge, Court can consider the relevance of the aforesaid response of the CPWD received under by RTI Act, if required.
8. This Court has heard submissions advanced by Sh. Nitin Saluja, learned counsel for petitioner as well as Sh. Tanveer Oberoi, learned counsel for respondent through A.K. Builder vs AIIMS page no.4 video conferencing and carefully perused the material on record. ARGUMENTS OF THE PETITIONER
9. Ld. Counsel, appearing for the petitioner submitted that petitioner had filed present petition U/s 34 of A&C Act, 1996 challenging the Arbitral award dated 04.09.2018, passed by Sh. O.P Bhatia, Ld. Arbitrator who was referred seven claims in total by the petitioner, out of which the Ld. Arbitrator allowed five claims in favour of the petitioner. It is argued that in manifest disregard to the vital evidence on the record, Ld. Arbitrator substantially reduced the amount of the award. It is argued that there is patent illegality in the award and Ld. Arbitrator has ignored the vital evidence in arriving at a decision. It is further argued that Ld. Arbitrator had asked the respondent to check the analysis of rates submitted by the petitioner and respondent accordingly checked the rates. It is submitted that after checking the rates, Ld. Arbitrator could not have gone behind those rate as those rates had a marginal variation from the rates submitted by the petitioner.
10. It is argued that under clause 12.2 of the agreement, Engineer-in-charge is the designated Authority to determine the final rates, on the basis of market rates of material and labour required and since Engineer in charge is actually getting the work executed under his direct supervision, he is in a better position to assess the requirement of material and labour and the actual market rates for such in inputs. However, despite that the Ld. Arbitrator substantially reduced the admitted rate and awarded the petitioner a much less rate than the rates admitted by the respondent. It is further argued that the Ld. Arbitrator reduced the cost of Adhesive from 13.75 per kg to Rs.11.00 per kg on the basis that the petitioner purchased adhesive Confirming to the IS but not ISI marked. It is argued that the Ld. Arbitrator in one breath held that the respondent could not show any A.K. Builder vs AIIMS page no.5 entry in the adhesive register showing adhesive bags is 20 kg was required and rejected his claims and in another breath held that the basic market rates shown in DSR are generally for the best quality of material ISI mark, however, the petitioner purchased the material in non-standard packing of 30 kg, whereas ISI package is available in 20 kg and hence he has erroneously reduced the adhesive amount without any evidence whatsoever. It is submitted that quality was up to the mark. There is a completion certificate and rate confirmed to ISI mark would 13.75 per kg and petitioner was not supposed to give a voucher since it was the duty of Engineer In-charge himself to ascertain market rates. It is argued that the quality of petitioner has been tested at the field and accordingly entered into adhesive register and no objection was ever raisedby the respondent with regard to the quality of petitioner.
11. It is further argued that the amount claimed by the petitioner for extra adhesive was 435.78 and the amount admitted by the respondent was 424.52 and the amount awarded by the Arbitrator was 256.69. It is further argued that the Ld. Arbitrator drew an imaginary inference. It is further argued that the agreement mandated the petitioner to obtain cement adhesive confirming to IS and not ISI mark; RTI reply dated 26.09.2011 vide which Shri S. Bhaskar Executive Engineer of AIIMS Engineer Service Department, disclosed that according to item No. 11.45, fixing of glazed/ceramic floor tiles with cement Confirming to IS 15477 would be Rs.13.75/-. It is argued that the drawing branch vide letter dated 25.08.2011 also approved the basic market rate of polymer-modified quick set tile adhesive water base at Rs. 13.75 per Kg. It is stated that the basic rate of Rs.13.75 per kg of cement adhesive Confirming to IS:15477 given by the petitioner was under DSR, 2007. It is further argued that the RTI reply dated 25.03.2019 from CPWD A.K. Builder vs AIIMS page no.6 established that the tile adhesive mentioned in DAR 11.43 was 'confirming to IS:15477. It is argued that petitioner submitted an analysis of rate on 29.08.2011 in terms of clause 12.2 at the rate of Rs.435.72 on the excess of adhesive used and this letter was neither admitted nor denied by the respondent and thus this rate was deemed to be admitted by the respondent. It is further argued that once the material of goods in accepted quantity, available in the market in the packing of 30 Kg, as per site conditions was duly checked with its weight, quality by the J.E of work/A.E/Executive Engineer C-II and the respondent had admitted the adhesive confirming to IS: 15477 mark and recorded the same in the adhesive register without any objection.
12. It is further argued that in case no bills and vouchers were produced by the petitioner in support of his claim of Rs.13.75/- per Kg of adhesive, it was well within the rights of the respondent under clause 12.2 of agreement. Ld. Counsel for the petitioner argued that the Ld. Arbitrator without any evidence on record or any argument being made apropos cost of labour would include cutting and laying of floor tiles, out of nowhere drew an inference that extra labour would be 50% on the item no 11.43 of DAR 2007 Vol I for application of the excess quantity of adhesive as balance 50% of labour in item No 11.43 of DAR would be for cutting and laying of floor tiles when the respondent himself admitted the cost of extra adhesive will be Rs.424.52. This clearly shows that it is because of laying adhesive and this DAR 2007 has to be seen in the light of clause 11.37 and 11.42 of DAR. After this, petitioner sent RTI to CPWD and it confirmed that clause 11.43 is only for laying adhesive and cost of cutting tiles is not included. This document clearly clarified to the document already on record. It is argued that this imaginative finding of the Ld. Arbitrator is contrary to the evidence on record.
A.K. Builder vs AIIMS page no.7
13. Ld. Counsel for petitioner has argued that on the issue of extra amount for cutting/breakage of tiles, Ld. Arbitrator completely misread the Agreement and overlooked that as per the nomenclature of agreement item no 5, it was not specified in the said item that 300mm X 300mm tiles were to be fixed in smaller size after cutting from the standard size, but it was only mentioned that fixing of size 300MM X 300MM or smaller size. It is argued that petitioner in his letter dated 29.08.2011 specifically wrote cutting of tiles 300 x 150 mm involves extra labour and wastage of material, carriage of tiles site. It is argued that on 05.09.2011, petitioner in terms of his letter dated 29.08.2011 proceeded to work at the site with the approval of the respondent. Ld. Counsel for petitioner argued that petitioner again on 27.04.2012, requested the respondent to process the sanctioning of analysis of market rates submitted by the petitioner vide letter dated 29.08.2011, which the respondent assured the petitioner to continue to work and the written approval would be given shortly. Ld. Counsel for the petitioner has argued that respondent did not reply to the communication of the petitioner and now cannot be allowed to take advantage of his silence/wrong after the work has been completed. Ld. Counsel for the petitioner has prayed that the award to the extent challenged by the petitioner be set aside and petitioner be awarded the amount claimed for.
14. Shri Nitin Saluja, learned counsel for petitioner has urged that it is a settled law that the award could be set aside on the ground of patent illegality U/s 34 (2A) of the Arbitration Amendment Act, 2015). It is submitted that an award which is perverse or so irrational that no reasonable person would arrive at the same conclusion. The perversity would be if the Arbitrator ignores the vital evidence in arriving at a decision or takes into A.K. Builder vs AIIMS page no.8 account something irrelevant to the decision. (Associate Builder vs. DDA (2015) 3 SCC 59 and MMTC vs. Anglo American MettallurgicalFAOOS 532/2015 decided on 02.03.2020. It is submitted that an award would be set aside which can shock the conscience of the Court. A claimant is content with restricting his claim, let us say to Rs. 30 lakhs in a statement of claim before the arbitrator and at no point does he seek to claim anything more. The arbitral award ultimately awards him 45 lakhs without any acceptable reason or justification. This would shock the conscience of the court and the arbitral award would be liable to be set aside on the ground that it is contrary to "justice". It is further stated that if on facts proved before the arbitrators, the arbitrator failed to draw an inference which ought to have been drawn; or if they have drawn an inference which, on the face of it, is untenable the award will be open to challenge. Reliance is placed on the judgment in the matter of ONGC vs. Western Geo International 2014 (9) SCC 263. It is submitted that the impugned award is perverse and illegal to the extent challenged. Reliance is placed on the judgement in the matter of National Highways Authority vs. PNC-BEL FAO (OS) (Comm) 174/2019 decided on 26.07.2019 and Pushkar Raj Wason vs Union of India AIR 2008 Cal 255 in support of his submission that admission is the best evidence, which requires no further proof.
15. It is submitted that the amount claimed by the petitioner for extra adhesive was 435.78. The amount admitted by the respondent was 424.52. The amount awarded by the Arbitrator was 256.69/-. It is submitted that the Ld. Arbitrator completely drew an aforesaid imaginary inference, what is not stated in any of the following documents. The documents reflect that the Agreement mandated the petitioner to obtain cement adhesive Confirming to IS and not ISI mark.
A.K. Builder vs AIIMS page no.9
16. It is submitted that RTI reply dated 26.09.2011 vide which S. Bhaskar Executive Engineer of AIIMS Engineer Service Department disclosed that according to item No. 11. 45, fixing of glazed/ceramic floor tiles with cement Confirming to IS 15477 would be Rs. 13.75/-.The drawing branch vide letter dated 25.08.2011 also approved the basic market rate of polymer-modified quick set tile adhesive water base at Rs. 13.75 per Kg. It is submitted that the basic rate of Rs.13.75 per kg of cement adhesive Confirming to IS:
15477 given by the petitioner was under DSR, 2007. It is submitted that the RTI reply dated 25.03.2019 (post award) from CPWD established that the tile adhesive mentioned in DAR 11.43 was 'confirming to IS:15477.
17. It is further submitted that the petitioner submitted an analysis of rate on 29.08.2011in terms of clause 12.2 at the rate of Rs. 435.72 on the excess of adhesive used. This letter was neither admitted nor denied by the respondent and thus this rate was deemed to be admitted by the respondent. It is submitted once the material of goods in accepted quantity, available in the market in the packing of 30 Kg, as per site conditions was duly checked with its weight, quality by the J.E of work/A.E/Executive Engineer C-II and the respondent had admitted the adhesive Confirming to IS: 15477 mark and recorded the same in the adhesive register without any objection the Ld. Arbitrator now is estopped from turning back to decide that Adhesive had to be ISI marked in 20 kg bag packing. The same is contrary to the principle of estoppel.
18. It is urged that in case no bills and vouchers were produced by the petitioner in support of his claim of Rs.13.75/- per Kg of adhesive, it was well within the rights of the respondent under clause 12.2 of agreement. In Union of India vs. Sab Industries Limited 224 (2015) DLT 196 to independently ascertain the market rates and make an analysis A.K. Builder vs AIIMS page no.10 there from. The Ld. Arbitrator failed to consider the judgment though the Ld. Arbitrator without any evidence on record or any argument being made apropos cost of labour would include cutting and laying of floor tiles, out of nowhere drew an inference that extra labour would be 50% on the item no 11.43 of DAR 2007 Vol I for application of the excess quantity of adhesive as balance 50% of labour in item No 11.43 of DAR would be for cutting and laying of floor tiles when the respondent himself admitted the cost of extra adhesive will be Rs.424.52/-. This imaginative finding of the Ld. Arbitrator is contrary to the evidence on record, which is asunder that the DAR, 2007 which has been consistently been followed by the Engineering Service Department of AIIMS is clear that labour cost is taken in item no 11.43 DAR Vol I, is only for the cost of laying of adhesive 3mm thick or 5 Kg/ Sq Mt area and does not include the cost of cutting and fixing of floor tiles as held by the Arbitrator.
19. It is argued that pursuant to the impugned award, the petitioner on 19.11.2018, moved an RTI Application before the Directorate General, CPWD asking information regarding DAR 2007 item 11.37,11.42 and 11.43 for bifurcation in labour cost in cutting of tiles and labour cost for mixing and laying 3mm (Average thickness) of adhesive as bed base for tiles in it. The petitioner after filing the present arbitration petition on 30.11.2018, received a response of the said RTI on 25.03.2019 that labour cost will not be included for cutting and fixing of floor tile in the DAR cost and the codes are for mixing and laying of 3 mm (Average thickness) of cement-based high polymer modify quick-set tile adhesive (water-based) confirming to IS:!5477 (5 Kg adhesive per sqm of tile area) as bed base of tiles.
A.K. Builder vs AIIMS page no.11
20. It is averred that the petitioner moved an application U/s 151 CPC along with his affidavit on 21.05.2019 to take the said response received in RTI on record. The said document is of utmost necessity to determine the present 34 Petition and be considered while deciding the present petition in view of Emkay Global Financial Service vs. Girdhar Sondhi(2018) 9 SCC 49. It is submitted that the RTI is merely a clarification of the document of analysis of rates prepared of DAR item no. 11.37, 11.42, 11.43 which was already on record and does not require any further evidence to be led and could be considered on its face value. The total loss suffered by the petitioner will be Rs.19,34,896/- if this error on the face of an arbitration award is not cured and justice and equity is delivered.
21. It is contended that on the issue of extra amount for cutting/ breakage of tiles, it is submitted the Ld. Arbitrator completely misread the Agreement and overlooked that as per the nomenclature of agreement item no 5, it was not specified in the said item that 300mm X 300mm tiles were to be fixed in smaller size after cutting from the standard size, but it was only mentioned that fixing of size 300MM X 300MM or smaller size. The petitioner in his letter dated 29.08.2011 specifically wrote cutting of tiles 300 x 150 mm involves extra labour and wastage of material, carriage of tiles site. On 05.09.2011 the petitioner in terms of his letter dated 29.08.2011 proceeded to work at the site with the approval of the respondent.
22. It is submitted that petitioner again on 27.04.2012, requested the respondent to process the sanctioning of analysis of market rates submitted by the petitioner vide letter dated 29.08.2011, which the respondent assured the petitioner to continue to work and the written approval would be given shortly. It is submitted once the petitioner had put the A.K. Builder vs AIIMS page no.12 respondent to notice that cutting of tiles would require extra work, thereafter the petitioner will be entitled to the claim amount. Reliance is placed on the judgment in the matter ofG.D Tewari vs. DDA FAO (OS) No. 183/2005 and Global Contract Service vs. Delhi Development Authority 2010 (115) DRJ 249.
23. It is submitted that the respondent did not reply to the communication of the petitioner and now cannot be allowed to take advantage of his silence/wrong after the work has been completed. Moreover, the petitioner also placed reliance on NIT tenders which were not considered by the Ld. Arbitrator. The issue qua the claim of the petitioner for a sum of Rs. 9,73,828 on account of less payment of 10C Bill is elaborately dealt with at pg. 32-36of the Petition, which may be taken into consideration. Additional reliance is placed on Union of India vs. NN Buildcon MANU/DE/4461/2015 .
STAND OF THE DEFENDANT
24. Per contra, Sh. Tanveer Oberoi, Ld. Counsel appearing for the respondent has argued that the present petition filed under Section 34 of A&C Act 1996 is not maintainable and it deserves to be dismissed. It is argued that case of the respondent herein that the Impugned Award dated 04.09.2018 is a reasoned, speaking award that has recorded in detail and considered all the submissions made by the parties to reach its conclusions and that all the grounds raised by the petitioner have been duly considered by the Ld. Arbitrator. Ld. Counsel for the respondent has argued that it is the petitioner's own case that the contract term was 6 months and the work was to be completed by 16.12.2011, but even by 11.12.2013 the work had not been completed.
25. It is argued that Ld. Arbitrator has awarded a higher rate of Rs. 256.69 for the extra works done, for valid reasons and therefore, there is no perversity in the impugned A.K. Builder vs AIIMS page no.13 award. Ld. Counsel for the respondent has argued that in so far as Extra Item 4/2, Clauses 11.36 and 11.37 of DAR 2007 shows that both wastage/breakage, as well as labour are inclusive therein in the quoted rates. Furthermore, the Ld. Arbitrator has correctly determined that in so far as the nomenclature of Agreement Item 5 is specifically states that "any size as approved by the Engineer-in-Charge" and has rightly rejected the claim. It is submitted that in so far as the petitioner's Claim No. 5 for payment of 10C Bill, the Ld. Arbitrator has correctly determined that there was no provision in the agreement for Extra Items and Deviated Items (under clause 12.2 of the agreement) to be paid at escalated market rates. Ld. Counsel has argued that the Ld. Arbitrator correctly found that as per Clause 10C of the agreement the petitioner has already been paid in excess of the amount admissible under Clause 10C. It is argued that the present application should be dismissed on account of the petitioner's mala fides and the fact that the petitioner has not approached this Court with clean hands.In support of his submissions, Ld. Counsel for respondent has relied upon Union of India vs. Sab Industries Limited 224 (2015) DLT 196.
26. It is submitted that the present petition filed under Section 34 of A&C Act, 1996 is not maintainable, mala fide and deserves to be dismissed outright, as it is contrary to a plethora of judgments and the law as laid down by the Hon'ble Supreme Court which limit the grounds on which a court can interfere with an arbitral award under Section34. It is further submitted that he petitioner has erroneously placed heavily reliance on the decision of Associate Builders v. DDA, (2015) 3 SCC 49, in which the Hon'ble Supreme Court has categorically laid down the limits on power of courts to interfere with arbitral awards. Accordingly, the relevant principles enunciated in the said decision would A.K. Builder vs AIIMS page no.14 preclude this Court from interfering or substituting its own views for that of the Ld. Arbitrator. In fact, the main counsel for the respondent successfully argued the Associate Builders (supra) matter before the Hon'ble Supreme Court. The said principles laid down in Associate Builders (supra)are that learned arbitrator has laboriously gone through all the evidence and answered each claim giving reasons for the same and the same should not be interfered with.
27. It is urged that an arbitration award under Part I can be set aside only on the grounds mentioned under Sections 34(2) and 34(3) and not otherwise. It is submitted that the 1996 Act was enacted, inter alia, to minimise the supervisory roles of the courts in the arbitral process and None of the grounds contained in Section 34(2)(a) deal with the merits of the decision rendered by an arbitral award. It is only when the award is in conflict with the public policy of India that the merits of an arbitral award are to be looked into under certain specified circumstances.
28. It is submitted that the expression "public policy of India" used in Section 34(2)(b)(ii) was first construed in ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705 to mean that an award could be set aside if it was "patently illegal". The law laid down by Saw Pipes (supra) has been consistently followed by the Hon'ble Supreme Court in its subsequent decisions to hold that such illegality must go to the root of the matter, i.e. if the illegality is of trivial nature, it cannot be held that the award is against public policy. The award should be so unfair and so unreasonable that it shocks the conscience of the court.
29. It is settled law that for a decision to be so perverse or irrational that no reasonable person would arrive at the same it must be based on: (i) no evidence; or (ii) A.K. Builder vs AIIMS page no.15 the Arbitral Tribunal taking into account something irrelevant to the decision which it arrives at; or (iii) ignores vital evidence. It is submitted that if there is some evidence on record which is acceptable and which could be relied upon, the conclusions would not be treated as perverse and the findings would not be interfered with. It is further submitted that when applying the "public policy" test to an arbitration award, a court 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. An award based on little evidence or on evidence which does not measure up in quality to a trained legal mined would not be held to be invalid. A court does not sit in appeal by reassessing or re-appreciating the evidence.
30. It is urged that a patent illegality must be on the face of the award. Such patent illegality must be in contravention to: (a) the substantive law of India; or (b) the Arbitration Act, e.g. if the arbitrator gives no reasons for an award; or (c) Section 28(3) of the Act, however if an arbitrator construes a term of the contract in a reasonable manner the award cannot be set aside. It is submitted that if a clause of a contract is capable of more than one interpretation, and the view taken by the arbitrator is a possible or plausible view, the court cannot interfere with the award and substitute its own view.
31. It is contended that after the aforesaid decision in Associate Builders (supra) the statutory contours of Section 34 underwent a change to bring the provision in line with the settled law. Post the Arbitration and Conciliation (Amendment) Act, 2015, Section 34reads:
"34. Application for setting aside arbitral award.--
A.K. Builder vs AIIMS page no.16
(1) xxx
xxx xxx
(2) An arbitral award may be set aside by the Court only if--
(a) xxx xxxxxx
(b) the Court finds that--
(i) xxx xxxxxx
(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.
(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
xxx xxx xxx"
32. It is submitted that it is seen that after the 2015 Amendment, "patent illegality" has been given statutory recognition as a ground of challenge, as laid out in Associate Builders (supra), however the same should be on the face of the award and there is a specific statutory prohibition on re-appreciation of evidence. The present challenge by the petitioner under Section 34 is solely on the ground that the impugned award dated 04.09.2018 is "patently illegal", i.e. under Section 34(2A). In the application filed by the petitioner under Section 34, petitioner has not pleaded any grounds of challenge under Sections 34(2)(a) or 34(2)(b), and this Hon'ble Court ought not to go beyond the A.K. Builder vs AIIMS page no.17 pleadings made in the application. Thus, only the award itself needs to be considered whether there is any patent illegality on the face of it, and a re-appreciation of evidence is prohibited. In Sutlej Construction Limited v. U.T. of Chandigarh, (2018) 1 SCC 718, the Hon'ble Supreme Court held that the Ld. ADJ, Chandigarh while dismissing the application under Section 34, came to the conclusion that the findings of the arbitrator were based on appraisal of evidence and it was not the function of the Court in a challenge to an award under Section 34 of the Act to re-appreciate the evidence, provided it was not a case completely devoid of evidence.
33. It is submitted that Hon'ble Supreme Court was not in agreement with the approach taken by the Ld. Single Judge of the High Court, who had re-appreciated the evidence and come to a different conclusion that the arbitrator misconduct himself by acting contrary to the terms of the contract. The Supreme Court held that the award was a reasoned one and the arbitrator had taken a plausible view. It was held that the Ld. ADJ was correct in not re-appreciating the evidence as the arbitrator is the chosen Judge by the parties. Thus, the Hon'ble Supreme Court reiterated that there should not be a reassessment or re-appreciation of evidence in Section 34 proceedings.
34. It is submitted that in Patel Engineering Ltd. v. NEEPCO, 2020 SCC OnLine SC 466, after considering the position of "patent illegality" as laid down by Associate Builders th (supra), the Hon'ble Supreme Court referred to the 246 Law Commission Report which recommended the insertion of clause (2A) in Section 34. The said report specifically stipulates that "[I]n order to provide a balance and to avoid excessive intervention, it is clarified in the proposed proviso to the proposed section 34(2A) that such "an award shall not be set aside merely on the ground of an erroneous application of the law or be re-
A.K. Builder vs AIIMS page no.18 appreciating evidence." The Court referred to its decision in Sangyong Engineering and Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131, which specifically stated that in a Section 34 application re-appreciation of evidence was not permitted under the ground of "patent illegality".
35. It is submitted that it is the case of the respondent herein that the Impugned Award dated 04.09.2018 is a reasoned, speaking award that has recorded in detail and considered all the submissions made by the Parties to reach its conclusions. All the grounds taken by the petitioned in the present application under section 34 have been appropriately dealt with by the Ld. Arbitrator. In light of Section 34(2A) as no individual, piecemeal re-appreciation of evidence is permitted, it is humbly submitted that all the grounds raised by the petitioner have been duly considered by the Arbitrator. It is argued that it is the petitioner's own case that the contract term was 6 months and the work was to be completed by 16.12.2011, but even by 11.12.2013 the work had not been completed. The crux of the petitioner's challenge is regarding Claim Nos. 4 and5. It is submitted that Claim 4, was for "Extra Items" as approved under Clause 12.2 of the agreement. Clause 12.2 stipulates that upon submission of analysis of rates by the contractor for extra items, the rates shall be determined on the basis of market rates. In thus dealing with the Claim 4, the arbitrator has considered Clause 12.2 and the petitioner's letter dated 29.08.2011, and it is not for the court in proceedings under Section 34 to reassess the view taken by the Ld. Arbitrator.
36. It is submitted that insofar as Extra Item 4/1, after a detailed discussion the Ld. Arbitrator held that insofar as the contract provided for 5 kg per sqm. but the extra 9kg per sqm consumed by the petitioner, would not be at the same rate and gave detailed A.K. Builder vs AIIMS page no.19 reasons for the same. This being a plausible and reasonable view the Hon'ble Court is bound by the aforesaid principles as laid down by the Hon'ble Supreme Court and should not substitute its own view for that of the Ld. Arbitrator's. It is argued that Letter dated 29.08.2011 sent by the petitioner would not novate the agreement dated 03.06.2011 and the effect of Clause 12.2 would still be that the analysis of rates for extra items would only be determined upon submission of analysis of rates by the petitioner within 15 days from occurrence of such Extra works. It is submitted that Clause 11. 43 of DSR-2007 shows the rate being Rs. 224.73 for 5 Kg adhesive per sqm. The Ld. Arbitrator has awarded a higher rate of Rs. 256.69 for the extra works done, for valid reasons and therefore there is no perversity in the impugned award.
37. It is further submitted that Insofar as Extra Item 4/2, Clauses 11.36 and 11.37 of DAR 2007 shows that both wastage/breakage, as well as labour are inclusive therein in the quoted rates. Furthermore, the Ld. Arbitrator has correctly determined that insofar as the nomenclature of Agreement Item 5 is specifically states that "any size as approved by the Engineer-in-Charge" and has rightly rejected the claim. It is argued that insofar as the petitioner's Claim No. 5 for payment of 10C Bill, the Ld. Arbitrator has correctly determined that there was no provision in the agreement for Extra Items and Deviated Items (under clause 12.2 of the agreement) to be paid at escalated market rates. The Ld. Arbitrator correctly found that as per Clause 10Cof the agreement the petitioner has already been paid in excess of the amount admissible under Clause10C.
38. It is contended that the present application should be dismissed on account of the petitioner's mala fides and the fact that the petitioner has not approached this Hon'ble Court with clean hands. In this regard: it is submitted that at para 33(I)(e)(iii) has sought A.K. Builder vs AIIMS page no.20 to substantiate its Claim No. 4 by relying on circular No. DG/CON/272 dated 21.08.2013. However a simple reading of the first two lines of the said circular show that the said circular shall be applicable for NITs (Notice Inviting Tenders) to be issued after issue of this order. It is an admitted position that the NIT in the present case was issued in 2011, and therefore the said circular has been annexed solely to confuse this Hon'ble Court.
39. It is submitted that similarly, at para 33(I)(e)(xi) the petitioner has cleverly stated "For illustration purpose in the NIT tender..." and has proceeded to annexe the "NIT Tender". However upon perusal of the same it is evident that the said NITs annexed by the petitioner pertain to the years 2013-14 and 2014-15 are not germane to the present proceedings. Furthermore, the same were not part of the record before the Ld. Arbitrator and the petitioner has sought to surreptitiously bring them on record in the present proceedings.
40. It is submitted that in paragraph 3 of the application filed by the petitioner under Section 151 CPC is ex facie false and the petitioner is guilty of suppression very suggestion falsi. The petitioner has stated that its RTI query dated 19.11.2018 was filed during the pendency of the Arbitration Proceedings, however this statement is evidently false, as the Impugned Award itself is dated 04.09.2018, and therefore the Arbitration Proceedings could not have been pending on 19.11.2018. It is submitted that the petitioner's mala fides are further evident from the fact that the present petition filed under Section 34 of the Act was filed on 01.12.2018, however the petition is wholly silent and not even a whisper is mentioned regarding the filing of the said RTI query dated 19.11.2018. It is only after receiving a response to the RTI on 18.03.2019 that the petitioner first disclosed to this Hon'ble Court that any RTI application had been filed. The A.K. Builder vs AIIMS page no.21 petitioner is, thus, trying to improve upon his case and is, in effect, seeking a re- appreciation of evidence which is not permissible under Section 34 of the Act.
41. In Sandeep Kumar v. Dr. Ashok Hans and Anr, 2004 SCC OnLine Del 106, the Hon'ble Delhi High Court held that there is no requirement under the provisions of Section 34 of the Act for parties to lead evidence. The Hon'ble Court further held that the record of the Arbitrator was before the Court and what was required was to go through the record and find out whether the objections to the award were maintainable. In Sial Bioenergiev. SBEC Systems, 2004 SCC OnLine Del 863 the Hon'ble Delhi High Court held that the purpose of the Act would be defeated by grantingpermissiontoleadoralevidenceatthestageofobjectionsagainstan arbitral award. The Act requires expeditious disposal of objections and minimal interference by the Court. The objections that a party can take are, themselves, limited in scope due to the provisions of the Act.
42. In Emkay Global Financial Services Limited v. Girdhar Sondhi, (2018) 9 SCC 49, the Hon'ble Supreme Court held that There is no requirement under the provisions of Section 34 for parties to lead evidence. The Court is not bound to grant opportunities to the parties to lead evidence as in a regular civil suit. Justice B.N Srikrishna Committee proposed amendment of Section 34(2)(a), to substitute the words "furnishes proof that"
with the words "establishes on the basis of the Arbitral Tribunal's record that".
43. It is submitted that Notably, this amendment has been carried out to Section 34 A&C (Amendment) Act,2019. In light of the 2019 Amendment, evidence at the stage of a Section 34 application has been dispensed with altogether. The position in as to "furnishing proof" under Section 34(2)(a) as law laid down by the Delhi High Court in A.K. Builder vs AIIMS page no.22 Sandeep Kumar (supra) and SialBioenergie(supra) is correct. An application for setting aside an arbitral award will not ordinarily require anything beyond the record that was before the arbitrator. In Canara Nidhi Limited v. M. Shashikala and Others, (2019) 9 SCC 462, the Hon'ble Supreme Court considered the very same question as is before this Hon'ble Court, i.e. whether the parties can adduce evidence to prove the specific grounds in Section 34(2) of the Act. The Hon'ble Court held that "The proceedings under Section 34 of the Act are summary in nature. The scope of enquiry in the proceedings under Section 34 is restricted to a consideration whether any of the grounds mentioned in Section 34(2). It is imperative for expeditious disposal of cases that the arbitration cases under Section 34 of the Act should be decided only with reference to the pleadings and the evidence placed before the Arbitral Tribunal and the grounds specified under Section 34(2) of the Act."
44. Reference was made to the recommendations of the Justice B.N. Srikrishna Committee, the 2019 Amendment to Section 34, and the decision in Emkay Global (supra). The application filed under Section 151 CPC does not indicate as to what point evidence is sought to be adduced on, and no specific averments as to the necessity and relevance of the additional evidence sought to be adduced. The parties had sufficient opportunity to adduce such evidence in the arbitration proceedings and had not made out an exceptional case to permit filing of evidence. In the present case, the application filed under Section 151 CPC by the petitioner has deliberately made a material misrepresentation of facts as stated above. Furthermore, as opined in Canara Nidhi Limited (supra) the application has made absolutely no averments as to the necessity and relevance of the documents sought to be adduced. Without prejudice to the A.K. Builder vs AIIMS page no.23 aforesaid point, even on the face of the award, the Arbitrator has appropriately and adequately dealt with the issue that the petitioner now seeks to raise, as can be seen in the dealing of Claim No. 4 under the award dated 04.09.2018.
LEGAL POSITION
45. It may be noted that In terms of sub-section (2) of Section 34 of the A & C Act, an arbitral award may be set aside if one of the conditions specified therein is satisfied. The Arbitrator's decision is generally considered binding between the parties and, therefore, the power of the Court to set aside the award would be exercised only in cases where the court finds the arbitral award is on the fact of it erroneous or patently illegal or in contravention of the provisions of the Act. It is a well settled proposition that the court shall not ordinarily substitute its interpretation for that of the arbitrator. Similarly, when the parties have arrived at a concluded contract and acted on the basis of those terms and conditions of the contract then substituting new terms in the contract by the arbitrator or by the court would be erroneous or illegal. It is an equally well settled that the arbitrator appointed by the parties is the final judge of the facts. The finding of facts recorded by him cannot be interfered with on the ground that the terms of the contract were not correctly interpreted by him.
46. In Associate Builders v. DDA, (2015) 3 SCC 49, Hon'ble Supreme Court cautioned that U/s 34 A & C act, the court should not set aside arbitral award merely because it does not agree with the interpretation of the agreement given by the arbitrator, rather it has to be shown that tribunal's findings were based on no evidence or irrelevant evidence or was perverse.
Section 34 (2) (a) states as follows:
"34. Application for setting aside arbitral award.-
A.K. Builder vs AIIMS page no.24 (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......
xxx xxxxxx"
In National Highways Authority of India v. SomDutt Builders-NCC(JV), 2018 SCC OnLine Del 10783, "18. It is not for this court to sit in appeal over the said finding of fact recorded by the learned arbitral tribunal.19. The Supreme Court in Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49 held as follows:
"12 .......The third juristic principle is that a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation. It is settled law that where-
A.K. Builder vs AIIMS page no.25
1. a finding is based on no evidence, or
2. an arbitral tribunal takes into account something
irrelevant to the decision which it arrives at; or
3. ignores vital evidence in arriving at its decision,
such decision would necessarily be perverse. A good
working test of perversity is contained in two
judgments.
In H.B. Gandhi, Excise and Taxation Officer-cum-Assessing Authority v. Gopi Nath & Sons, 1992 Supp (2) SCC 312 at p.317, it was held:
7. .....It is, no doubt, true that if a finding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the finding so outrageously defies logic as to suffer from the vice of irrationality incurring the blame of being perverse, then, the finding is rendered infirm in law.
In Kuldeep Singh v. Commr. of Police, (1999) 2 SCC 10 at para 10, it was held:
10. A broad distinction has, therefore, to be maintained between the decisions which are perverse and those which are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse and the findings would not be interfered with."
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.
A.K. Builder vs AIIMS page no.26 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 arbitrators approach is not arbitrary or capricious, than he is the last word on facts.
In P.R. Shah, Shares &Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd., (2012) 1 SCC 594, this Court held:
"21. A court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or 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 the 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 the 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. ................"
Hence, merely because while passing the award the learned Arbitral Tribunal has not referred to the correspondence placed on record by the petitioner does not vitiate the award. Arbitral Tribunal has instead given greater weightage to the reports prepared by the petitioner's officials when granting extension of time to arrive at the findings of fact. The arbitrator is the master of quality and quantity of evidence. No fault can be found in this approach."
DISCUSSION AND CONCLUSION
47. This court is of the considered view that findings of the Ld. Arbitrator are based on A.K. Builder vs AIIMS page no.27 appraisal of evidence as a whole and it was not the function of the Court in a challenge to an award under Section 34 of the Act to re-appreciate the evidence. It is not a case completely devoid of evidence. Tribunal has arrived at a finding based on the interpretation of the contractual clauses as well as the technical interpretation and it is not open to the Court at the stage of S. 34 petition to substitute the said findings, more particularly, when as per settled law, the Arbitrator is the master of quality and quantity of evidence before it. Manner and methodology of calculation, application of formulas and interpretation of contractual clauses is purely the domain of the Tribunal.
48. Petitioners/the claimant had raised seven claims before the Tribunal. The first was the claim of Rs.22,37,723/.29/- as regards 34% discount deducted from the incomplete second and final bill passed by the respondent. The second was the claim of Rs. 25,134.76/- as deviated quantities more than 50% of agreement quantities at market rates of deviated quantities not paid in the incomplete 2nd& final paid by the respondent. The third was the claim of Rs. 51,70,232.51/-as measurement of flat numbers where work was got executed by Department in Deviation as entered in MB No. 8250 from page no. 72to 86 but not paid. The fourth was the claim of Rs.66,54,005.05/- as less payment of extra items as approved under clause 12.2 of the agreement in terms of extra item statement no. 4item no. 4/1& 4/2. The fifth was the claim of Rs. 9,73,828/- with regard to less payment of 10 C Bill as per approval was given on petitioners letter dated 29.08.2011 at the site as written on site order book on 22.09.2011.
49. The Arbitral Tribunal (AT) had awarded the first claim in the sum of Rs.22,37,723/- after accepting the claimants stand and had observed that the respondent had not produced any evidence to prove withdrawal of the discount condition.
A.K. Builder vs AIIMS page no.28
50. Now ,the second claim was Rs. 25,134.76/- in para 2.5 at page 14, ATs finding an award given wherein it was observed that claimant was entitled to be paid market rates for the quantities of these items deviated beyond the deviation limit of 50% as per agreement. And after working out in detail, an amount of Rs. 16,915/- was awarded under this claim. In this item, claimant had claimed market rate @ Rs. 766.76/- per sq. meter. Ld. Arbitrator noted that A/R submitted by the respondent on 11.05.2018 cannot be relied upon in the absence of any basis for the market rates of material opted therein and allowed the rate of Rs. 755.02/- checked by the respondent with correction for the market rate of adhesive. Market rate of adhesive was allowed @ 11 per kg instead of 13.75. It was observed that this correction cost of 5 kg of adhesive would Rs. 55/- as against Rs. 68.75/- as per the A/R. Water charges @ 1% were added, CP & OH @ 15% and VAT and L.CESS @ 3% , on the difference on cost of adhesive of Rs. 13.75/- , the reduction in rate was found Rs. 16.45 per sq. meter and the corrected rate @ 738.57/- per sq. meter was allowed and amount o f Rs. 16,915/- was awarded.
51. As regards the claim no. 3, Rs.51,70,232.51 as measurement of flat numbers where work was got executed by Department in Deviation as entered in MB No. 8250 from page no. 72to 86 and same was not paid, AT awarded Rs. 50,05044/-. In this regard, Ld. Arbitrator found that the quantities of agreement items upto the deviation limit have to be paid at the agreement rates i.e. estimated rate given in the tender without any discount and the market rate for the item no. 1 and 2 decided @ Rs. 190.03/- and Rs.738.57/- per sq. meter would be applicable for the balance quantities. Ld. Arbitrator noted the analysis rates corrected by the respondent and he did not found any infirmity in A.K. Builder vs AIIMS page no.29 those rates checked by the respondent and the same were allowed. In a tabular form at page 19 of the award and after deduction of Rs.1,65,785/- , the amount worked out to Rs.50,05044/- was awarded.
52. Next, now the claim no. 4 is of Rs.66,54,005.05/- on account of less payment of extra items as approved under clause 12.2 of the agreement in terms of extra item statement no. 4item no. 4/1& 4/2.
53. It is the case of the claimant that the extra item 4/1 was with regard to cost of extra adhesive of 9 kg (average) consumed over 5kg per sq. meter of tile area as per site conditions over agreement item no. 2. The claimant after executing work in some flats noticed that due to old floor being irregular, wavy and sunk with excessive undulations, the actual consumption of cement adhesive was coming out to be 14 kg/sqm. The claimant then sent analysis of rates of extra item 4/1 which was Cost of Extra Adhesive consumed of 9 kg (Average)under Clause 12.2 of the Agreement vide letter dated 29.08.2011 (point no. 3 & 5) which was approved at site (both item & rate) during execution of work and was promised by the respondent to be paid at the time of Finalization of the bill.
54. The claimant had claimed rate @ 435.72 per sqm on agreement item no. 2 being extra cost of material and Labour involved for laying extra cement adhesive of 9 kg/sqm in levelling layer before executing agreement item no. 2. The certified copy of the cement adhesive register maintained by Respondent of day to day consumption of cement adhesive during execution of work as taken by the claimant under the RTI Act 2005 from the respondent is annexed herewith. The respondent during execution of work assured and promised the claimant for payment of excess consumption of cement adhesive as A.K. Builder vs AIIMS page no.30 extra item at submitted rates by the claimant under clause 12.2 of agreement but at the of preparation of Final Bill refused to make the payment of this Extra item no. 4/1 at Rs.435.72/- per sqm over agreement item no. 2 and the claimant was forced to accept the bill under Protest. After completion of the work, the respondent vide his letter dated 01.07.2014 (point no. 3) denied the payment by stating that there is no provision for extra payment of adhesive/cement extra used in the work. The respondent denied to respect clause 12.2 of the agreement at the time of payment of final bill. This E. I. for excess adhesive was submitted by the claimant on the same lines as submitted for extra item no. 2/2 for excess consumption of cement mortar of 18 mm over agreement no 5 for 12 mm cement mortar which has been paid by the respondent.
55. The extra item 4/2 was with regards extra cost of labour, breakage of tiles and cutting charges of all ceramic tiles to size 150mm x 300 mm size from 300 mm x 300mm on agreement no. 5 for fixing of tiles in skirting as per instructions given at site and approved by respondent for fixing the tiles with height of 150mm instead of 300mm. There is no doubt that agreement item no. 5 says for fixing of size 300mm x 300mm of any size in skirting. During execution of work, on orders of respondent at site tiles of size 300 mm x 150mm were cut from 300 mm x300 mm which was involved extra cost of labour in cutting all tiles of smaller size, cost of blades and also wastage/breakage while cutting to smaller size. As per the analysis of rates prepared and passed in estimate of this non schedule item by respondent it can be seen that respondent has not considered this aspect at the time of preparing the estimate but during execution of work, the decision of fixing only size of tiles 300mm x 150mm was taken by the respondent. The claimant had accordingly submitted analysis of rates @ Rs.179.54/- per sqm on A.K. Builder vs AIIMS page no.31 agreement item no. 5 under clause 12.2 vide letter dated 29.08.2011 (point no. 6). It was approved at site (both item & rate) during execution of work and was promised by respondent to be paid at the submitted rates at the time of finalization of bill. This was intimated by the claimant in writing in the site order book on 22.09.2011 (page no. 21) of the said decision/approval given at site by the respondent. The said letter dated 29.8.2011 was never denied by the respondent as was referred in many further letters by the claimant during execution of work. The claimant was assured by the respondent for the payment of the said item on rates submitted to the new Executive Engineer C-II in April 2012 and the same was communicated by the claimant vide letter dated 27.04.2012 of the said decision given by the previous EE C-II. The respondent at the time of preparation of final bill refused to include the payment of this extra item number 4/2 at Rs. 179.54/- per sqm over agreement no. 5 and the claimant was forced to accept the bill under protest.
56. This claim has been raised over agreement item no. 5, nomenclature of which is as under:
P/F 1st quality ceramic glazed floor tiles 300 x 300mm group V confirming to IS:15622 (thickness to be specified by the manufacture) of approved make in all colors shade & print except burgundy bottle green black of any size as approved by Engineer-in-charge in skirting risers of steps dado etc.,over 12mm thick bed of cement mortar 1:3 (1cement:
3c.sand and jointing with grey cement slurry @3.30 kg per sqm i/c pointing in white cement mixed with pigment of matching shade complete". Nomenclature of the item makes it clear that tiles 300 x 300mm size were to be used but skirting was to be provided of the size as approved by the engineer-in-charge. Evidently, all A.K. Builder vs AIIMS page no.32 labour/breakage etc, for providing the skirting of required size is covered in the above agreement item and nothing extra is admissible for the same. The claim is thus found to be untenable and rejected. Thus, after discussion, Ld. Arbitrator awarded Rs.36,01,656/-.
57. This court does not finds any substance in the contention of the petitioner that the Ld. Arbitrator reduced the cost of Adhesive from 13.75 per kg to Rs.11.00 per kg on the basis that "the petitioner purchased adhesive Confirming to the IS but not ISI marked" or that the Ld. Arbitrator in one breath stated held that the respondent could not show any entry in the adhesive register showing adhesive bags is 20 kg was required and rejected his claims and in another breath held that the basic market rates shown in DSR are for the best quality of material ISI mark, however, the petitioner purchased the material in non-standard packing of 30 kg, whereas ISI package is available in 20 kg. It cannot be held that Ld. Arbitrator erroneously reduced the adhesive amount without any evidence whatsoever.
58. As per para 4.2 of the award, as regards less payment of extra items respondent had stated that Extra for 18mm thick cement plaster over item no. 5 for agreement, as per site requirement, the same was approved and the payment for extra thickness of plaster was made to the claimant and as regards claim for cost of extra cement adhesive used, it was mentioned that as per contract special condition vide P/20 (Annex-B-6) of the agreement which says "nothing extra shall be paid to the contractor for excess consumption of material in case of material arranged by him." Since the adhesive/cement is arranged by the contractor, as per above said para of the agreement, no claim for extra cement adhesive consumption stands .As per contract special conditions vide P/20 (Annex-B-7) of agreement vide S. No 20 says "Contractor shall quote their rates inclusive A.K. Builder vs AIIMS page no.33 of all taxes, cartage royalties etc. complete" since the contractor has paid all taxes for purchase of material such as cement, adhesive and tiles etc., and department. Include the taxes while analysing rates for all items and the rates are paid accordingly. Hence, the department has full right to take/see the original bills of purchase of materials.
59. It was further the case of the respondent and noted by the Ld. Arbitrator in the award that as per contract special conditions vide P/20 (Annex-B-8) of agreement vide S. No 31 says, "The contractor shall procure cement from the open market of brand JK,SHREE,BANGAR, BIRAL-UTTAM confirming to IS:1489-11991 with amendment 1-3 as approved by Engineer in charge. The procurement bill/invoice/challan etc of each lot shall be submitted to the department." Since the cement adhesive is used in place of cement for fixing tiles, therefore, the claimant has to produce original bill of cement/adhesive to the department which the claimant is refusing to produce. Furthermore as per GCC Sl. No. 12.4 P/33 (annex-B-9), The contractor shall send to the Engineer-in-charge once every three months and up to date account giving complete detail of all account for additional payment to which the contractor may consider himself entitled and of all additional work ordered by the Engineer-in-charge which he has executed during the preceding quarter failing which the contractor shall be deemed to have waived his right. However, the Superintending Engineer may authorize consideration of such claims on merits." The above para clearly shows there was no additional claim during execution of work. The claimant showed his claim only on is letter dated 17.04.2014 written to the Executive Engineer after 5 months of completion of work. It shows there was no actual justified claim of the claimant. It was further the version of the respondent that as per GCC 12.4 contractor was supposed to furnish complete A.K. Builder vs AIIMS page no.34 details of the account for the additional payment which he considered himself entitled and of additional work order which Engineer Incharge had executed during the precedent quarter failing which contractor (i.e. petitioner herein) shall be deemed to have his right. As per the respondent's version, no such additional claim was raised during the execution of work by the petitioner.
60. Regarding extra cost of adhesive (E. I no. 4/1) Ld Arbitrator's findings are noteworthy. The Rt's reference to the special condition of the agreement that "Nothing extra shall be paid to the contractor for excel consumption of material, in case of material arranged by him, is not relevant to the instant case in view of specific stipulation made in nomenclature of the item for adhesive '5kg/sqm'. As contended by the Claimant in his rejoinder in case of any ambiguity/interpretation of any item, nomenclature of the item takes first preference. Therefore, the Claimant is entitled for the payment on account of excel consumption of the adhesive. He noted that documents like cement register, paints register and adhesive register etc, are required to be held in safe custody of the Respondent's filed engineers.
61. In the instant case, perusal of the adhesive register reveals recording of 30 kg packing of each bag at page 654, 655, 698, 700 & 702. Each and every entry of this register has been signed by the JE and the AE has also conducted his test check on regular basis. If the adhesive bags brought to the site were of other than 30 kg packing, the AE/JE ought to have specifically entered the packing rates in the adhesive register. However, the Rt could not show any entry is the adhesive register showing weight of the adhesive bags of 20 kgs as alleged by him. Therefore, the Rt's arguments in this context are without any basis. The adhesive register maintained at site showing day to day A.K. Builder vs AIIMS page no.35 consumption of the adhesive defies all arguments advanced by Rt. regarding high consumption of adhesive.
62. Award noted that Respondent(Rt.) has contended that the basic market rate of adhesive @ Rs.13.75 claimed by the Claimant(Clt.) is very high. In support of his contention, he has filed copy of an invoice dated 28.01.2016 for purchase of one bag of tile adhesive for Rs.169/- , which is stated to be for 20 kg. Per contra, the Rt. himself has adopted the rate of Rs. 13.75 per kg while preparing A/R for the tiles flooring and also in his A/R submitted to the previous arbitrator. Moreover, basic market rate of the adhesive as per DSR 2007 is Rs. 16.0 per kg. Therefore, the RT's invoice for purchase of just one bag of adhesive in January 2016 cannot be relied upon for determining this claim. The rate of Rs. 13.75 claimed by the Clt., has the authenticity as explained above. It is however, to mention here that basic market rates shown in the DSR are generally for the best quality of materials, ISI marked. In the instant case, Clt himself has stated that he purchased the adhesive conforming to ISI but not ISI marked. The material is stated to have been purchased in a non-standard packing of 30kg. When the ISI marked material was available in standard packing of 20 kg and Clt. has procured the material in non- standard packing of 30 kg without bearing ISI mark, obviously he has gone for the cheaper rate. No bills/vouchers of the adhesive have been produced by him in support of his claimed rate of Rs. 13.75 per kg. Considering all these facts of the case, I feel it appropriate to allow the basic market rate of adhesive @ 80% of Rs.13.75 i.e. Rs. 11.00 per kg.
63. It is also noted that the Clt. had submitted his A/R for this extra item based on DSR 2007 item no. 11.43 which is a complete item for fixing of glazed/ceramic tiles using A.K. Builder vs AIIMS page no.36 adhesive @ 5 kg per sqm. The labour involved in this item included the labour for cutting and fixing of tiles, and for application of the adhesive. The Clt. in his A/R had claimed extra labour for 9 kg adhesive on pro-rata basis of the labour quantum for the complete DSR item, which is incorrect. Due to excel use of adhesive, extra labour would be admissible only for application of excel quantity of the adhesive which he allowed @ 50% of the total labour involved in execution of the aforesaid item of fixing of tiles. According to the arbitrator , same was the position for sundries. Thus, after discussion, Ld. Arbitrator awarded Rs. 36,01656/-.
64. This court finds that all the grounds raised by the petitioner have been considered in detail by the learned Arbitrator. While dealing with the Claim 4, the learned arbitrator has considered Clause 12.2 and the petitioner's letter dated 29.08.2011, and this court U/s 34 A&C Act cannot reassess the evidence and substitute its own view in place of the possible view taken by the Ld. Arbitrator.
65. As regards Extra Item 4/1, after a detailed discussion the Ld. Arbitrator held that insofar as the contract provided for 5 kg per sqm. but the extra 9kg per sqm consumed by the petitioner, would not be at the same rate and gave detailed reasons for the same, which is a reasonable view. Letter dated 29.08.2011 sent by the petitioner cannot have the effect of negating the agreement dated 03.06.2011 and the effect of Clause 12.2 would still be that the analysis of rates for extra items would only be determined upon submission of analysis of rates by the petitioner within 15 days from occurrence of such Extra works. Clause 11.43 of DSR-2007 shows the rate being Rs.224.73 for 5 Kg adhesive per sqm, but the Ld. Arbitrator has awarded a rate of Rs.256.69 for the extra works done, for justifiable reasons. This court finds no perversity in the impugned award.
A.K. Builder vs AIIMS page no.37
66. No fault can be found with the reasoning and the finds of the Ld. Arbitrator who considered all the facts and circumstances in totality and has taken pains to balance the conflicting interest. This court finds no merit in the contention of learned counsel for the petitioner that the ground raised by the petitioner to the effect that the Ld. Arbitrator had asked the respondent to check the analysis of rates submitted by the petitioner and that respondent accordingly checked the rates and had a marginal variation from the rates submitted by the petitioner or Under clause 12.2 of the agreement, the Engineer-in- charge is the designated Authority to determine the final rates, on the basis of market rates of material and labour required since Engineer in charge is actually getting the work executed under his direct supervision, he is in a better position to assess the requirement of material and labour and the actual market rates for such inputs and despite that the Ld. Arbitrator substantially reduced the admitted rate and awarded the petitioner a much less rate than the rates admitted by the respondent. Ld. Arbitrator was an experianced technical expert who had considered the totality of circumstances, Delhi analysis of the rates and the market rates. He considered the quality, the market rate/cost of adhesive in connection with the extra work/material and breakage/cutting of tiles from 300x300 mm to 300x150 mm for skirting used by the petitioner - the contractor and there is nothing in the award having the effect of shocking the conscience of the Court and this court finds no patent illegality in the award.
67. The Claim no. 5 for Rs.9,73,828/- on account of less payment of 10 C bill as per approval given in the petitioners letter dated 29.08.2011 at site was rejected and AT has given detailed reasoning in this regard page no. 31 to 33 while rejecting this claim. By no stretch of imagination , it can be observed that arbitrator ignored or excluded relevant A.K. Builder vs AIIMS page no.38 material or passed the award by taking into consideration irrelevant material.
68. This court is of the considered view that the interpretation of the learned arbitrator on the provisions of is a possible interpretation, and such a possible interpretation cannot be substituted by another interpretation by this Court under section 34 of the Arbitration Act. Arbitrator being the master of facts, on the basis of record and materials placed before him by the parties came to such specific findings in reaching its conclusions which cannot be stigmatized as perverse by this Court . This court finds no patent illegality in the impugned award .Tribunal has given detailed findings on facts based on evidence adduced before it.
69. To sum up, on perusal of material on record and the submissions advanced, this court is satisfied that Ld. Arbitrator had considered all the relevant facts, material and issues raised by both the parties and passed a reasoned award dated 04.09.2018having no defect and as such merits no interference and thus, this petition U/s 34 of A&C Act deserves to be dismissed. Order accordingly. File be consigned to record room.
Digitally signed by
VINAY KUMAR VINAY KUMAR KHANNA
( dictated & announced KHANNA Date: 2020.07.31
17:54:29 +05'30'
On 30th July 2020 )
VINAY KUMAR KHANNA
District Judge (Commercial Court-02)
South Distt., Saket, New Delhi
A.K. Builder vs AIIMS page no.39