Delhi High Court
D.C. Kapoor, Proprietor And M/S. Dipson ... vs Delhi Development Authority on 1 January, 1800
JUDGMENT Lokeshwar Prasad, J.
1. The present petition has been filed by Shri D. C. Kapoor, sole proprietor of M/s. Dipson and Company with the prayer to direct respondent No. 2 Shri O. P. Mittal, the Arbitrator to file the award alongwith the proceedings and thereafter to make the award rule of the court.
2. The work of construction of "104 MIG. Type 'C' Dwelling Units at Malviya Nagar, New Delhi" was awarded to the petitioner by the Executive Engineer of the Delhi Development Authority (hereinafter referred to as 'the DDA') vide agreement No. 8/HD-I/76-77. As regards the above said work certain disputes/differences had arisen between the parties and as per the agreement between the parties respondent No. 2 Shri O. P. Mittal was appointed as the sole Arbitrator by the Engineer Member, DDA vide letter dated 17.12.1984. The said Arbitrator entered upon the reference and gave his award on 23.9.1989.
3. After the Arbitrator had filed the award alongwith the proceedings, notice of the filing of the award was accepted by the learned Counsel for the petitioner in the court on 20.2.1990. No objections have been filed on behalf of the petitioner. Notice of the filing of the award was also issued to respondent No. 1 DDA directing the said respondent to file objections, if any, within the statutory time limit. In pursuance of the notice, served on respondent DDA. the said respondent filed objections (IA 3215/90) under Sections 30 and 33 of the Arbitration Act, 1940 hereinafter referred to a 'the Act'), raising various objections. It is mainly contended on behalf of the respondent DDA that the Arbitrator has misconducted himself, has ignored the material on record, has misinterpreted the various provisions of the contract between the parties, has overlooked the material on record, has accepted unilateral facts and figures submitted by the petitioner, has erred in disallowing the recoveries for non-submission of fortnightly labour reports and excess material used and has ordered for the refund of recoveries which are not sustainable. It is also contended that the Arbitrator has not given the reasons on the basis of which he has come to the conclusions arrived at by him while giving his award. It is also stated in the objections that it was not within the jurisdiction of the Arbitrator to award future interest as has been awarded in the impugned award. It has been prayed that the objections filed on behalf of the respondent DDA be accepted and the award dated 23.9.1989, made by the Arbitrator Shri O. P. Mittal be set aside.
4. The objections filed by the respondent DDA are resisted by the petitioner by filing reply to the same. In the reply filed on behalf of the petitioner it is stated that the objections are not maintainable. The same be rejected with costs and the award dated 23.9.1989, given by respondent No. 2 the Arbitrator, be made rule of the Court with costs and interest till realisation.
5. On the pleadings of the parties the following issues were framed vide order dated 31.7.1990.
(1) Whether the award is liable to be set aside on the objections raised in the objection petitioner ? (OPR) (2) Relief.Issue No. 1
(A) Before going into the merits of the matter I would like to discuss the scope and limit of correction by the court of an award made by the Arbitrator. The Supreme Court in case Food Corporation of India v. Joginder Pal Mohinder Pal and another , have observed that arbitration as a mode for settlement of disputes between the parties has a tradition in India. It has a social purpose to fulfill today. It has a great urgency today when there has been an explosion of litigations in the courts of Law established by the sovereign power. It is, therefore the function of courts of law to oversee that the Arbitrators act within the norms of justice. Once they do so and the award is clear, just and fair, the courts should, as far as possible, give effect to the award of the parties and make the parties compel to adhere to and obey the decisions of their chosen adjudicator. The Supreme Court in the above said case further observed that is it in this perspective that one should view the scope and limit of correction by the court of an award made by the Arbitrator. In case Raipur Development Authority and others v. Chokhamal Contractors and others , the Supreme Court observed that the two well recognised principles of natural justice are, (i) that a Judge or an Arbitrator who is entrusted with the duty to decide a dispute should be disinterested and unbiased (nemo judex in cause sua) : and (ii) that the parties to dispute should be given adequate notice and opportunity to be heard by the authority (audit alteram partem). Giving reasons in support of a decision was not considered to be a rule of natural justice either under the law of arbitration or under administrative law. What applies generally to the settlement of disputes by the authorities governed by public law need not be extended to all cases arising under private law such as those arising under the law of arbitration which is intended for settlement of private disputes.
The Supreme Court in another case Municipal Corporation of Delhi v. M/s. Jagannath Ashok Kumar and another , have held in clear cut terms that appraisement of evidence by the Arbitrator is ordinarily never a matter which the court questions and considers. Section 1 of the Evidence Act, 1872 in its rigour is not intended to apply to proceedings, before an Arbitrator. The parties have selected their own Forum and the deciding Forum must be conceded the power of appraisement of the evidence. The Arbitrator, therefore, is Sole Judge of the quality as well as quantity of evidence and it is not for the court to take upon itself the task of being a Judge of the evidence before the Arbitrator. It may be possible that on the same evidence the court might have arrived at a different conclusion than the one arrived at by the Arbitrator but that by itself is no ground for setting for aside the award of an Arbitrator. The Supreme Court in the above said decision further observed :
"that it would be unreasonable to expect an exact definition of the word "reasonable". Reason varies in its conclusions according to the idiosyncrasy of the individual, and the times and circumstances in which he thinks. The reasoning which built up the old scholastic logic sounds now like the jingling of a child's toy. But mankind must be satisfied with the reasonableness within reach; and in cases not covered by authority, the verdict of a jury or the decision of a Judge sitting as a Jury usually determines what is "reasonable" in each particular case. The word "reasonable" has in law the prima facie meaning of reasonable in regard to those circumstances of which the actor, called on to act reasonably, knows or ought to know.
6. Thus an Arbitrator, acting as a Judge, has to exercise a discretion informed by tradition, methodized by analogy, disciplined by system, and subordinated to "the primordial necessity of order in the social life." Therefore, where reasons germane and relevant for the Arbitrator to hold in the manner he did, have been indicated it cannot be stated that the reasons were 'unreasonable'.
The respondent DDA in the objections filed to the award has assailed the following findings of the Arbitrator :
(i) Findings in respect of Items No. 19 and 20 under List No. I of the award.
(ii) Findings in respect of Item No. 4 under List No. II of the award.
(iii) Findings in respect of Item No. 13 under List No. II of the award.
(iv) Findings in respect of Item No. 15 under List No. II of the award.
(v) Findings in respect of Item No. 22 under List No. II of the award.
(vi) Findings in respect of Item No. 28 under List No. II of the award.
(vii) Findings in respect of Item No. 29 under List No. II of the award.
(viii) Claim No. 1-C-1 under List No. III of the award.
(ix) Claim No. 2 under Sub-head (c)(17) under List No. III of the award (this item pertains to List No. III Claim No. 1 Item No. 17 regarding - "Extra for allotment of houses".
(x) Claim No. 2 under List No. III of the award.
(xi) Claim No. 3 under List No. III of the award.
(xii) Claims No. 4 & 5 under List No. III of the award.
(xiii) Claim No. 11 under List No. III of the award.
(xiv) Claim No. 12 under List No. III of the award.
(xv) Claim No. 13 under List No. III of the award.
(xvi) Refund of recoveries made for non-submission of fortnightly labour reports and for excess material.
(xvii) Grant of interest in favour of the petitioner/claimant. Regarding - (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi), (xii), (xiii), (xiv), (xv) and (xvi) above.
7. In so far as the findings of the learned Arbitrator with regard to above mentioned claims in the award are concerned the same have been assailed by the learned Counsel for the respondent DDA (Objector) mainly on the ground that either the Arbitrator while allowing the amounts against the above claims has given no reasons or the reasons given by him are insufficient or the Arbitrator has allowed the amount without taking into consideration the material on record and thus has misconducted himself. After perusing the award in question and the other material on record I am unable to accept the above contention of the learned Counsel for the respondent DDA that the findings of the learned Arbitrator relating to the above claims are without any reason or are against the material on record. No doubt in respect of some of the above mentioned disputed claims the reasons given by the Arbitrator are not detailed reasons but merely because of the absence of the detailed reasons it cannot be stated that there are no reasons. It is settled laws that insufficiency of the reasons could not be a ground for setting aside the award. No error of law has been pointed out in the conclusion to which the learned Arbitrator had arrived while allowing the above mentioned claims. Similarly, there is also no error of fact. If the findings of the learned Arbitrator relating to the above claim are read as a whole it would be quite clear that he has made his thinking known on the basis of which he has acted and that in law is sufficient to meet the requirement of a reasoned award. In the case of Sudersan Trading Co. v. Government of Kerala , the following principles have been laid down by the Apex Court :
"Only in a speaking award the Court can look into the reasoning of the award. It is not open to the court to prove the mental process of the Arbitrator and speculate, where no reasons are given by the Arbitrator, as to what impelled the Arbitrator to arrive at his conclusion. See the observations of this Court in Hindustan Steel Works Construction Ltd. v. C. Rajashekhar Rao. In the instant case the Arbitrator has merely set out the claims and given the history of the claims and then awarded certain amount. He has not spoken his mind indicating why he has done what he has done; he has narrated only how he came to make the award. In absence of any reasons for making the award, it is not open to the court to interfere with the award. Furthermore, in any event, reasonableness of the reasons given by the Arbitrator, cannot be challenged. Appraisement of evidence by the Arbitrator is never a matter which the court questions and considers. If the parties have selected their own Forum, the deciding Forum must be conceded the power of appraisement of evidence. The Arbitrator is the Sole Judge of the quality as well as the quantity of evidence and it will not be for the court to take upon itself the task of being a Judge on the evidence before the Arbitrator."
8. In a recent decision in the case of State of Rajasthan v. Puri Construction Co. Ltd. , the Apex court has taken the same view.
In view of the above discussion, in may opinion the above objections, taken by the respondent DDA, are thus devoid of substance.
Regarding (x) above :
9. Under this claim the petitioner/claimant had claimed a sum of Rs. 18,2,781/- towards escalation under Clause 10(c) of the agreement between the parties. The learned Arbitrator has held that the petitioner/claimant be paid a further amount of Rs. 27,291/- for labour escalation under Clause 10(c). The learned Counsel for the respondent DDA has assaulted the above finding of the learned Arbitrator on the ground that the above finding of the learned Arbitrator is not reasoned one and the award in so far as the above aspect is concerned is not a speaking award. From a perusal of the award in question it is apparent that the above said finding of the Arbitrator is based on the proceedings recorded in the 26th hearing wherein the respondent DDA itself had submitted that the impact of labour increase was 2.083% of the estimated cost. The learned Arbitrator accepted the above fact as justified and on the basis of the above escalation calculated the labour escalation and held that a further amount of Rs. 27,291/- is payable by the respondent DDA to the petitioner/claimant on the above count. In my opinion, no fault whatsoever can be found with the above findings of the learned Arbitrator.
Regarding (xviii) above :
10. The respondent DDA in its objections had also objected to the award of interest by the Arbitrator after making the award on the ground that granting of future interest was not within the jurisdiction of the learned Arbitrator. The Arbitrator in the award dated 23.9.1989 has directed that the awarded amount be paid by 22.11.1989 failing which the respondents will pay simple interest @ 10% per annum from 22.11.1989 till payment is made or till the award is made rule of the court whichever is earlier. The only question requiring consideration is whether the Arbitrator was justified in granting future interest. The above question of grant of interest can be easily disposed of as the same is covered by a recent decision of the Supreme Court in case Hindustan Steel Works Construction Ltd. v. State of Jammu & Kashmire , wherein while referring to an earlier decision of Five Judges Bench of the Supreme Court in case Secretary, Irrigation Department of Orissa v. G. C. Roy , their Lordships of the Supreme Court have held that the Arbitrator is competent to award interest for the period commencing with the date of award to the date of decree or date of realisation whichever is earlier. In view of the above decision of the Apex Court the above objection taken by the respondent virtually becomes redundant and has to be rejected. Accordingly, the same is rejected being devoid of merits.
11. In view of the above discussion the objections (IA 3215/90 preferred by the DDA are hereby rejected and the award dated 23.9.1989 given by Shri O. P. Mittal is made a rule of the court and a decree in terms thereof is passed. The respondent DDA shall make payment of the decretal amount to the petitioner firm within eight weeks from the date of the communication of the order otherwise the decretal amount shall carry interest @ 10% per annum from the date of the decree till payment. No interest will however, be payable in case the decretal amount is paid by the respondent DDA within the above said period of eight weeks. Upto the date of the decree the respondent DDA shall pay the interest as awarded by the Arbitrator. In the facts and circumstances of the case no order as to costs. Decree sheet be drawn up accordingly and thereafter the file be consigned to Record Room.
12. Objections dismissed.