Delhi District Court
M/S Nandi Infratech Pvt. Ltd vs M/S R.K. Bararia on 19 December, 2022
IN THE COURT OF SH GURVINDER PAL SINGH,
DISTRICT JUDGE (COMMERCIAL COURT)-02,
PATIALA HOUSE COURT, NEW DELHI
OMP (Comm.) No. 85/2021
M/s Nandi Infratech Pvt. Ltd.
B-1, G/f, East Baldev Park,
Krishna Nagar, Delhi-110051, (Parwana Road)
Through Its Authorized Representative
Shri Umesh Gupta ...Applicant/Petitioner
versus
1. M/s R.K. Bararia
61, Dayanand Vihar, Delhi-110092
Through its Proprietor Shri R.K. Bararia
2. Shri S.M. Aggarwal
Ld. Sole Arbitrator
Former Additional District & Sessions Judge Delhi
R/o 5, BD Estate, Timarpur, Delhi ...Respondents
Date of Institution : 31/08/2021
Arguments concluded on : 29/10/2022
Decided on : 19/12/2022
Appearances : Sh. Ramesh Singh, Ld. Senior Advocate with Sh. Suresh
Chandra Sharma, Ld. Counsel for petitioner.
Sh. Sanjay Bansal, Ld. Counsel for respondent no. 1.
JUDGMENT
1. Petitioner had filed the present petition under Section 34 of The Arbitration and Conciliation Act, 1996 (herein after referred as The Act), seeking setting aside of the impugned arbitral award dated 07/05/2021 passed by Ld. Sole Arbitrator Sh. S.M. Aggarwal, Former Additional District & Sessions Judge, Delhi in Case Reference No. DAC2738/02/2020 titled 'M/s R.K. Bararia vs M/s Nandi Infra Tech Pvt. Ltd.'. Ld. Sole Arbitrator awarded OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 1 of 42 Rs.1,44,02,313/- with future simple interest @ 10% per annum from 08/05/2021 up to its payment with cost of Rs. 2,50,000/- in favour of respondent no. 1/claimant and against the petitioner.
2. I have heard Sh. Ramesh Singh, Ld. Senior Advocate with Sh. Suresh Chandra Sharma, Ld. Counsel for petitioner; Sh. Sanjay Bansal, Ld. Counsel for respondent no. 1 and perused the record of the case; reply filed on behalf of respondent no. 1; the arbitral proceedings record, filed brief written arguments on behalf of parties, relied upon precedents and given my thoughtful consideration to the rival contentions put forth.
3. Following is the brief factual matrix of the case of respondent no. 1/claimant before Ld. Sole Arbitrator. Respondent no. 1/claimant is engaged in the business of civil contractor. Claimant/respondent no. 1 was awarded work order for execution of the work Vacuum Dewatering Flooring of residential project "Amaatra Homes" of petitioner at Plot No. GH-02C, Sector 10, Greater Noida West with stipulated date of start of the work on 28/04/2018 and stipulation period of completion within 60 days i.e., by 27/06/2018 for contract value of Rs.1,84,19,500/-. Respondent no. 1/claimant was already working as civil contractor with the petitioner for the work of construction of proposed structures for 8 towers later on increased to 10 towers of Amaatra Homes vide work award letter dated 01/11/2014. The scope of said work excluded the work of excavation which was the responsibility of petitioner. Petitioner used to first excavate the site of one or two towers, then used to hand over the same to respondent no. 1/claimant for laying of raft and footing for the OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 2 of 42 tower. Petitioner had deliberately, wrongly, illegally and arbitrarily terminated the main contract as well as vacuum dewatering flooring work contract vide termination letter dated 09/12/2018 received by respondent no. 1/claimant on 18/12/2018. Petitioner had, however, allowed the respondent no. 1/claimant to continue the work of Vacuum Dewatering Flooring up to January, 2019 and had also supplied the RMC (Ready Mix Concrete) towards its completion up to of January, 2019 and had raised invoice against the respondent no. 1/claimant even in March, 2019. Not a single penny was paid to respondent no. 1/claimant although various running account bills were submitted by respondent no. 1/claimant. Moreover, after getting the work of Vacuum Dewatering Flooring done up to January, 2019, petitioner had banned the entry of respondent no. 1/claimant and had not got the measurement of work done at site. Respondent no. 1/claimant filed civil suit CS (Comm.) 166/2019 before Delhi High Court. Petitioner filed civil suit CS (Comm.) 160/2019 before Delhi High Court. Above said two civil suits were regarding the main contract of construction of towers of the "Amaatra Homes". It was the rate contract with materials except that petitioner was to supply cement and reinforcement free of cost to respondent no. 1/claimant. Respondent no. 1/claimant was forced by petitioner to take the supply of RMC and Bricks from them and that too at higher rates for the execution of VDF Work after 01/07/2018. Petitioner had supplied materials worth Rs.91,79,479/- for the VDF Work after 01/07/2018 such as 68,000 bricks for the value of Rs.3,47,857/-; RMC of M25 for value of Rs.62,89,167/- (1677 cum) and Structural Steel (Angle) for Rs. 1,16,185/- (2669.70 Kgs). Out of the debit note of Rs.
OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 3 of 4291,79,479/-, debit note for Rs. 67,53,209/- were correct. But the balance debit notes for a sum of Rs. 24,05,357/- were false and fabricated by petitioner as petitioner had no right to raise such illegal debit notes with malafide intentions to grab the money of respondent no. 1/claimant. Respondent no. 1/claimant invoked the arbitration clause and requested petitioner to act through email dated 19/12/2018 in terms of arbitration clause and appoint an Arbitrator. No reply was received by respondent no. 1/ claimant from the petitioner. Respondent no. 1/claimant filed Arbitration Petition No. 70/2019 under Section 11 of the Act in Delhi High Court wherein petitioner took technical objection regarding non payment of stamp duty of work order and Delhi High Court passed order and directed petitioner to submit original work order before Collector of Stamps. Respondent no. 1/claimant again filed Arbitration Petition under Section 11 of the Act in December, 2019 before Delhi High Court and vide order dated 06/02/2020 Delhi High Court appointed Ld. Sole Arbitrator. Arbitral proceedings culminated into impugned arbitral award.
4. Following are the relevant brief material averments of petitioner and grounds for impugning the arbitral award and arguments of Ld. Senior Advocate and Ld. Counsel for petitioner. All the awarded amounts are ex-facie violative of public policy of Indian law and therefore deserve to be set aside. Award amount inter alia is for claims for payment of amount made by respondent no. 1/claimant against its three RA Bills being 1 st RA Bill dated 30/06/2016 for Rs. 13,68,956/-; 2nd RA Bill dated 02/11/2018 for Rs. 58,15,204/- and 3rd RA/Final Bill dated OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 4 of 42 08/01/2019 for a consolidated amount of Rs. 1,45,05,142/- excluding GST. Respondent no. 1/claimant has supported the amount of work done under the said three RA Bills on the basis of three Measurement Sheets purportedly prepared by them unilaterally being dated 03/07/2018, 03/11/2018 and 27/01/2019 respectively. Arbitral Tribunal has made aforesaid award merely on the basis of the aforesaid three RA Bills read with three unilaterally prepared measurements sheets respectively; however, the same were not filed by the respondent no. 1/claimant with the claim petition. Impugned arbitral award has clearly overlooked the contractual mandate as specifically provided in Clause 13 read with Clause 16 of the present contract and hence is ex facie violative of Section 28(3) read with Section 34(2) of the Act. A bare reading of the said Clause 16 read with Clause 13 makes it clear that there will be physical joint measurement of the work done, mandatorily to be done in all cases after the contractor has submitted the RA Bills along with the supported measurement sheet for the purpose of assessing the said RA bill and making payment thereof. Even though it was the obligation of respondent no. 1/claimant to request for the said joint measurement exercise to be undertaken, in order to get their RA bill assessed and verified; yet no such request was made by respondent no. 1/claimant. This was a clear breach on the part of respondent no. 1/claimant of the mandatorily contractual mandate and therefore, they were clearly not entitled for any payment merely on the basis of their RA bills submitted along with unilateral prepared measurement sheets. Respondent no. 1/claimant even did not turn up for the said exercise despite request of the petitioner, whereas petitioner was not required to make such a request. Per contra OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 5 of 42 Arbitral Tribunal gave finding that there was no such request as there was not a single email to support this on record. Said finding is ex facie perverse being made overlooking the express request on the record made by petitioner on 29/08/2018, 04/11/2018. Respondent no. 1/claimant cannot take advantage of his own breach of the contractual mandate, as per law laid by Supreme Court in the cases of (1) Nirmala Anand vs Advent Corporation (P) Ltd. & Ors., (2002) 5 SCC 481; (2) Kusheshwar Prasad Singh vs State of Bihar & Ors., (2007) 11 SCC 447 and as per law laid by Supreme Court in the case of United Bank of India vs Ramdas Mahadeo Prashad & Ors., (2004) 1 SCC 252 the party in breach cannot seek to enforce a contract. In response to aforesaid measurement sheet sent by respondent no. 1/claimant; petitioner after duly verifying the work done by respondent no. 1/claimant had sent their measurement sheet prepared by them on 18/04/2019 and again sent on 19/04/2019; in terms of which the total work done by respondent no. 1/claimant was to the tune of Rs. 64,01,191/-. Respondent no. 1/claimant had not sent any reply to emails of petitioner, disputing the figures in the said measurement sheet. Arbitral Tribunal had not accepted the measurement sheets of petitioner on the premise that Mr. Bansal who had signed the same was not examined. Even the unsigned measurement sheet of petitioner was also not accepted by the Arbitral Tribunal on the ground (i) as Mr. Kunal Chaudhary had not said that the same is prepared by him; (ii) these measurement sheets bear of 15 pages against 13 pages of measurement sheets signed by Mr. Bansal. Said finding of Arbitral Tribunal is perverse as it clearly omits the deposition of Mr. Chaudhary, wherein he has in unequivocal OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 6 of 42 terms stated that the work was verified by him personally. In such case, Mr. Chaudhary was only required to endorse the said measurement sheet and not prepared the same for it to be valid piece of evidence. Arbitral Tribunal has lost sight of the significance of the said statement made by Mr. Chaudhary. Both the measurement sheets, one signed by Mr. Bansal and other unsigned are of 13 pages. It seems that the Arbitral Tribunal, in one case has added the covering emails while counting the pages of measurement sheets. Arbitral Tribunal has also overlooked the fact that both measurement sheets have been sent by him only on two different dates. Reasonings of the Arbitral Tribunal for not accepting the measurement sheets of petitioner are once again violative of public policy of India as being vitiated by clear omission or ignorance of vital evidence to the prejudice of the petitioner. Respondent no. 1/claimant had also sought to prove the extent of work done by them by adopting the indirect means, by claiming the diverse quantity of diverse material used by them in the undertaking for the given work. As per respondent no. 1/claimant, they had used PCC/M-10 grade RMC to the extent 1018.26 Cum; M2-25 grade RMC to the extent of 1781.16 Cum; reinforcement of 66.92 mt; brick work 230 mm of 131.65 @ Rs. 4500/-; rebarring of steel of 868 numbers and cartage of bricks. Respondent no. 1/claimant had placed no evidence in support of any of the said figures of alleged quantity of material used. Accepting the said figures by the Arbitral Tribunal is a clear case of award based on no evidence and is patently illegal. Only 270.50 Cum M-10 grade RMC (1:4:8) was supplied by the petitioner and not 1018.26 Cum. This is supported by the invoice read with corresponding debit notes. In the present case an OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 7 of 42 amount of Rs. 2,13,821/- against the invoice of total amount of Rs. 6,17,075/- had to be debited under the present contract. Even though the Arbitral Tribunal has admitted the invoices as evidence but has declined to admit the debit notes (which gives the breakup of the total material received and used for the VDF work as the material was being supplied for other works) on the ground that the debit notes were not proved by petitioner despite they being denied by respondent no. 1/claimant. Above said finding of the Arbitral Tribunal is perverse as it clearly ignores the para 19 of the affidavit of Mr. Umesh Gupta, wherein Mr. Gupta has in no uncertain terms proved the said debit notes. In any event, deposition of witness of respondent no. 1/claimant in cross examination also does not support the use of 1018.26 Cum of the M-10 grade RMC for PCC, in as much as in the said deposition there was no requirement of said PCC for leveling purposes particularly on the RCC solid base as the said solid basis did not require any leveling. This vital piece of evidence has been ignored by Arbitral Tribunal. That apart the area claimed under PCC work i.e., 13567.80 sq.m. is not practically possible to be executed. The total area available in the basement as per drawing was 16637.19 sq.m. Deductible area (Deductible area means where no PCC is required to be carried out such as Column Area, UG Tank, STP Foundation area, drain, raft, footings etc.) was 10009.22 sq. m. and therefore net area available for PCC was 6627.96 sq. m. which fact was completely ignored by the Arbitral Tribunal. Arbitral Tribunal further ignored the admitted drawing according to which PCC of thickness 75 mm was to be laid as against claimed 100 mm by the respondent no. 1/claimant. As per petitioner, only 977 Cum was used. Said OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 8 of 42 case of petitioner is based upon the invoices read with the corresponding debit notes. Arbitral Tribunal had declined to accept the debit notes as the legal evidence on the very same ground as mentioned above, which is perverse for the reason as stated above. Respondent no. 1/claimant failed to prove the receipt of 1781.16 Cum as per its own showing. Petitioner had made statement/submission to the effect (i) that 1677 Cum out of 1781.16 Cum of the said material used in VDF is part of 2259.89 Cum of material (M-25 grade RMC) supplied by the petitioner out of which remaining 582.89 Cum used in other part of the project; (ii) the remaining part of said used material has been taken from 484 Cum of said material supplied by one Nav Durga between 27/04/2018 to 22/05/2018. The said jurisdiction lies in the face of their own email dated 10/09/2018 wherein it has been indicated by the respondent that basement flooring VDF work (where M-25 grade RMC was required) would be started only with effect from 18/09/2018. In which case, the question of using any material after receiving the same by the said Nave Durga RMC, which clearly happen for dates much prior to 18/09/2018 does not arise. This vital but undisputed evidence and its significance had been completely ignored by the Arbitral Tribunal. Own attempt of the Arbitral Tribunal to support the said figure of material receipt by relying upon 20 invoices of the petitioner, which total to 1939.50 Cum from 12/07/2018 to 23/01/2019 (745.35 Cum being supplied between 12/07/2018 to 05/09/2018) is once again vitiated for the very same reason as above said in as much as the period of said supply of 745.35 Cum was prior to starting of that part of VDF where M-25 grade RMC was required. Respondent no. 1/claimant has not claimed OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 9 of 42 the use of 484 Cum of Material (M-25 grade RMC) allegedly received from 27/04/2018 to 22/05/2018 from one Nav Durga RMC in the 1st RA Bill dated 30/06/2018 sent on 03/07/2018 and claimed 90.00 Cum M-25 grade RMC which clearly implies that the quantity of 484 Cum material (M-25) was fictitious. This can also be seen from the admitted fact of witness of respondent no. 1/claimant that VDF work was to be done immediately after casting of stitching slab (M-25 grade RMC is to be used in casting stitching slab). The stitching slab casting could be started after 18/09/2018 as above said. Arbitral Tribunal completely ignored this vital evidence. When there is total absence of consideration of evidence led before the Arbitral Tribunal then the arbitral award is vitiated and where the arbitral award is based on no evidence and/or the arbitral award fails to consider the effect and significance of evidence or ignorance of vital evidence; then such arbitral award would be perverse, patently illegal and against the fundamental policy of Indian Law as per law laid down by Supreme Court in the cases of (i) PSA SICAL Terminals Pvt. Ltd. vs Board of Trustees of V.O. Chidambranar Port Trust Tuticorin & Ors., 2021 SCC OnLine SC 508; (ii) Associate Builders vs Delhi Development Authority, (2015) 3 SCC 49; (iii) Delhi Development Authority vs R.S. Sharma & Company, New Delhi, (2008) 13 SCC 80; (iv) Oil & Natural Gas Corporation Ltd. vs SAW Pipes Ltd., (2003) 5 SCC 705 as well as law laid by Delhi High Court in the case of Sunil Kukreja vs North West Sales and Marketing Ltd., 2018 SCC OnLine Del 8715. Award of Rs. 25,60,530/- towards GST on Rs. 1,42,25,168/- is in teeth of Section 16 of The CGST/SGST Act as much as the total value of work of Rs. 1,42,25,168/-includes the OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 10 of 42 material worth of Rs.67,74,122/-. Hence, respondent no. 1/ claimant while discharging their GST liability on Rs. 1,42,25,168/- are entitle to input credit of GST which forms part of Rs. 67,74,122/-. Even assuming without admitting that the total value of work done by respondent no. 1/claimant was to the tune of Rs. 1,42,25,168/- then also GST liability would be only for Rs. 74,51,046/- (Rs. 1,42,25,168 - Rs. 67,74,122). Award of Rs. 4,00,000/- as compensation for delay is barred under Clause 14 of the contract dated 18/04/2018. Also the evidence led by respondent no. 1/claimant does not prove such delay. There is also no evidence to prove the delay on the part of petitioner much less four months delay. In fact the evidence on record including the RA bills of respondent no. 1/claimant itself militate the said position. Finding of the Arbitral Tribunal for Rs. 1,00,000/- per month compensation is not based on any evidence. The whole claim is based upon the work being held up for five months in which case there was no need for Sumit Bararia to stay on site for the said period. There is a completely failure of mitigation of loss, if any, as mandatorily required to be undertaken in view of explanation of Section 73 of The Contract Act. The claim for compensation for delay could not have been granted. The claim for loss of profit was barred under Clause 11 of the Contract dated 18/04/2018 which unequivocally proves that no claim shall be entertained on account of omission and thus altering the aggregate value of contract; and the effect of termination is nothing but altering the aggregate value of contract by omission of the work. Even otherwise the basis of 15% rate of loss of profit is ex facie perverse as the Arbitral Tribunal seeks to rely on Clause 12 which deals with extra item and not main work OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 11 of 42 under the contract. Moreover, even under Clause 12, 15% rate covers three components mainly overheads, profit as well the establishment charges, whereas the present claim is only on account of loss of profit. No claim which is barred under the contract can be awarded by the Arbitral Tribunal as per law laid by Supreme Court in the cases of (1) Oil and Natural Gas Corporation vs Wig Brothers Builders and Engineers Private Limited, (2010) 13 SCC 377; (2) Ramnath International Construction (P) Ltd. vs Union of India, (2007) 2 SCC 453. No interest can be levied on GST amount as it is a statutory liability which has to be discharged and no evidence has been led by respondent no. 1/claimant that they have discharged the said liability yet less paid interest on it. No interest could have been awarded on the award for compensation for delay as well as loss of profit w.e.f., 08/02/2019 as in terms of Section 3 (1) (b) of The Interest Act, the starting date for awarding the interest could be the date of notice, whereas in the present case, no such written notice claiming interest on compensation on delay or loss of profit has been relied upon by respondent no. 1/claimant per contra to law laid by Supreme Court in the case of Assam State Electricity Board & Ors. vs Buildworth Private Limited, (2017) 8 SCC 146. Also the award of interest @ 14% is based on no evidence, yet less any reasoning as required under Section 31 (3) of the Act; which even otherwise is excessive. The rate of interest for post award period @ 10%; is also in the teeth of Section 31(7)(b) of the Act as no basis has been given for taking the said rate yet less the basis as contemplated in the said provision. Also award of cost of Rs. 2.5 lacs is excessive yet less reasonable in terms of Section 31 (A) of the Act. Arbitral Tribunal completely OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 12 of 42 ignored the provision under Clause 27 of the Contract while declining the damages as specifically agreed by respondent no. 1/claimant under said clause while disallowing the counter claim of petitioner on account of damages of Rs. 9,13,485/-. Arbitral Tribunal did not consider Clause 13 at all whereas Clause 13 is applicable for all work for which RA Bills have been raised, including for work which have become hidden because of closing of the same. In any construction contract, a joint measurement exercise has to be taken as per trade usage; even in the absence of provision like Clauses 13 and 16 of the contract. Payment based on unilaterally prepared and unchecked RA Bills would create havoc in construction contracts. Witnesses of claimant/ respondent no. 1 had testified that VDF work was undertaken in the basement and stilt. Email of claimant/respondent no. 1 dated 03/11/2018 was in reply to email of petitioner and 2nd RA Bill was for VDF work even though it refers the said work as basement work. Impugned arbitral award is based on no evidence; without considering the effect and significance of evidence and ignoring the vital evidence as to the quantities, area, estimation led by petitioner before Arbitral Tribunal; the value of work done was of Rs. 64,01,190/- without GST. Arbitral Tribunal ignored the vital evidence in the form against debit notes for material supplied, email sent for penalty levied for delay and non compliance of labour laws. Arbitral Tribunal ignored the statement of account of payment of Rs 6,00,000/- merely on the ground that bank personnel was not present to prove the statement of account, when there was no denial by the respondent no. 1/claimant that he has not received the said amount in his account. Arbitral Tribunal therefore ignored the OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 13 of 42 evidence on record while disallowing the counter claim of Rs. 1,26,405/- on account of excess payment made to respondent no. 1/claimant by the petitioner. Ld. Senior Advocate for the petitioner and Ld. Counsel for petitioner argued for setting aside of the impugned arbitral award accordingly.
5. Following are the brief relevant material averments in the filed reply of claimant/respondent no. 1 through Ld. Counsel and arguments of Ld. Counsel for claimant/respondent no. 1. Petitioner had wrongly filed the pleadings in haphazard manner, with the petition in a manner different to what were so placed in the arbitral proceedings record. Ld. Sole arbitrator had considered the evidence adduced before him while passing the impugned arbitral award. Petitioner had produced four witnesses in evidence and Ld. Sole Arbitrator had considered all filed documents and evidence and material in arbitral proceedings record while passing the impugned arbitral award. Petitioner has filed the present petition as a measure to dispute the award as like an appeal. Ld. Sole Arbitrator had considered and appreciated that the work was still in progress as per witness called by petitioner. Ld. Sole arbitrator had appreciated that there was no decision available on record for imposing penalty by the petitioner and no show cause notice was issued by petitioner whereas petitioner had terminated the contract agreement. Ld. Sole Arbitrator had rejected the contentions of petitioner giving cogent reasons. Impugned arbitral award is neither violative of public policy of Indian law nor Ld. Sole Arbitrator had ignored any vital document as wrongly pleaded in petition and argued by Counsel for petitioner. Ld. Sole Arbitrator had appreciated the OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 14 of 42 fact that the petitioner had not refuted or controverted the contents of statement of claims regarding value of work done. Petitioner had alleged that the measurement sheets were not filed by respondent no. 1/claimant with the bill; however, during the cross examination of witness of petitioner said witness of petitioner admitted that the measurement sheets were part of the bills as received through email. Ld. Sole Arbitrator gave finding that petitioner had failed to prove as to when the bill as allegedly filed by petitioner was prepared and by whom it was made. Further petitioner witness had admitted that the alleged bill towards work done was sent to claimant/respondent no. 1 during mediation proceeding. Petitioner witness Mr. Kunal had filed 15 pages from 09-23 for which petitioner in the challenge petition wrongly averred. Ld. Sole Arbitrator had rightly considered the documents on record and held that there was no single email placed on arbitral proceeding record to show that petitioner had ever called respondent to associate in the joint measurements. Emails as alleged to be placed on arbitral proceeding by the petitioner relates to basement work in Non Tower Area and also does not speak of calling the respondent no. 1/claimant to associate the respondent in joint measurement. Ld. Sole Arbitrator had further rightly considered the evidence on record that the petitioner after getting the work executed from claimant/ respondent no. 1 had banned their entry to site and further rightly considered the evidence on record. Impugned arbitral award is on the basis of evidence, giving cogent reasons and is neither perverse nor violative of public policy and hence cannot be challenged in view of law laid by Supreme Court in the case of Delhi Airport Metro Express Pvt. Ltd vs DMRC, CA 5627 of OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 15 of 42 2021 decided on 09/09/2021. Ld. Sole Arbitrator had rightly passed an award towards delay attributed on the petitioner and granted damages in favour of claimant/respondent no. 1 in terms of law laid by Supreme Court in the case of K.N. Sathyapalan (Dead) by LRs. Vs State of Kerala & Anr., 2006(4) Arb, LR 275 (SC) and law laid by Delhi High Court in the case of Sh. Bharat Lal vs Municipal Corporation of Delhi & Ors., O.M.P. No. 327/2003 decided by Delhi High Court on 25/03/2010 and Union of India vs M/s Chenab Construction Joint Venture, 2010 (6) R.A.J. 334 (Del). It was argued that Ld. Sole Arbitrator had rightly passed an award towards loss of profit, in view of law laid by Supreme Court in the case of A T Brij Paul Singh vs State of Gujarat AIR 1984 SC 1703 and law laid by Delhi High Court in the cases of Polo Singh & Company vs Delhi Development Authority, 92 (2001) DLT 326 and UOI vs J Sons Engg. Corporation Ltd & Anr, 219(2015) DLT 495. Ld. Sole Arbitrator rightly awarded interest in favour of claimant/ respondent no. 1. Petitioner had claimed interest at much higher rate, even more than the interest claimed by the claimant/ respondent no. 1. Therefore, the rate of interest is rightly awarded by Ld. Sole Arbitrator and is in terms of law laid by Delhi High Court in case of Door Sanchar Cooperative Group Housing Society Ltd. vs R.K. Bararia, 2006 (3) Arb. LR 491 (Delhi). Ld. Sole Arbitrator is the final judge of the evidence led before it and it is not for this Court to re-appreciate the same as if sitting in a Court of appeal. Ld. Counsel for claimant/respondent no. 1 also argued that the construction of contract is within the jurisdiction of the Arbitrator having regard to the wide nature, scope and ambit of the arbitration agreement and it cannot be said to have OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 16 of 42 misdirected himself in passing the award and all material on arbitral proceeding record was taken into consideration by Ld. Sole Arbitrator. Interpretation of contract is a matter for the Arbitrator to determine, even if it gives rise to determination of question of law. Ld. Counsel for claimant/respondent no. 1 relied upon the law laid by Supreme Court in the cases of (i) Mc Dermott International vs Burn Standard Co. Ltd.; (ii) Pure Helium India (P) Ltd vs ONGC, (2003) 8 SCC 593; (iii) D.D. Sharma vs Union of India, (2004) 5 SCC 325 and argued that once, if it is held that the Arbitrator had the jurisdiction, no further question shall be raised and the Court will not exercise its jurisdiction unless it is found that there exists any bar on the face of the award. Also was argued by Ld. Counsel for claimant/ respondent no. 1 that even if any clause of contract is capable of two interpretations, and the view taken by Arbitrator was clearly a possible, if not a plausible one; then it is not possible to say that the arbitrator had travelled outside his jurisdiction, or that the view taken by him is against the terms of contract and there is no reason to interfere with the award and substitute the view of the Court in place of the interpretation accepted by the Arbitrator as per law laid in the cases of Rashtriya Ispat Nigam Ltd. vs Dewan Chand Ram Saran and Sumitomo Heavy Industries Ltd. vs ONGC and Kwality Mfg. Corpn. vs Central Warehousing Corpn., (2009) 5 SCC 142. Ld. Counsel for claimant/respondent no. 1 also relied upon the cases (i) Associate Builders vs Delhi Development Authority, (2015) 3 SCC 49 and
(ii) Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India (NHAI), 2019 SCC OnLine SC 677 and argued that petition filed by petitioner OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 17 of 42 deserves to be dismissed with costs.
6. Supreme Court in Suo Moto Writ Petition (Civil) no. 3 of 2020, In Re: Cognizance For Extension Of Limitation vide order dated 10/01/2022 has excluded the period from 15/03/2020 till 28/02/2022 for computing the period of limitation for any suit, appeal, application or proceedings and the petition under Section 34 of The Act is also eligible for the same. Accordingly, present petition filed on 31/08/2021 is within the period of limitation.
7. Clauses 11,12,13,14 and 16 of the Contract dated 18/04/2018 inter se parties to arbitration read as under:-
"11. ITEM Rate Contract: The Contractor shall note that unless and otherwise if stated the work order is strictly on item rate basis contract. His attention is drawn to the fact that rates for each and every item should be correct, workable and self supporting. The quantities in the schedule of Quantities approximately indicate the total extent of work but may vary to any extent and may even be omitted thus altering the aggregate value of the contract. No claim shall be entertained on this account.
12. Extra Items:
If the contractor is required to any such item/work in the course of construction for which the schedule of rate has not been quoted by him, he must undertake such work and he should bring to the notice of the Engineer in charge within seven days of the occurrence. The rate for such additional work shall be determined by the Engineer in Charge as per the following:
• The rate to be derived from one of the quoted rates for similar item of work in the tender.
• Rates based on actual observation and/or analysis of labour, materials, testing and commissioning involved in such work. For this purpose the contractor shall submit to Engineer in charge detailed analysis of the rate proposed by the Contractor supported by relevant vouchers along with the estimated quantity of work item involved. While fixing of rates for extra items an all-inclusive allowance of 15% of the cost will be provided for contractor over heads, profit and establishment charges.OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 18 of 42
13. Measurement and specification:
The works shall be measured as per attached schedule of rate, item wise and as per relevant CPWD/IS-1200 code specification. All the hidden items will be physically measure jointly before being covered. Testing and commissioning of equipments and system should be as per relevant CPWD/IS/BS code.
14. Delay in Commencement:
The contractor shall not be entitled to any compensation (monetary only) for any loss suffered by him on account of delays in commencing or executing the work, whatever the case delays may be, including delays arising out of modification to the work entrusted to him or in any sub- contract connected there with or delay in awarding contract for other trades of the project or in commencement of such works or in procuring Government controlled or other building materials or any other reason whatsoever and the client shall not be liable for any claim in respect thereof. (time duration will be extended accordingly). .........................................................................................................
16. Running Account Bills:
The contractor will submit R.A. Bills including final bill along with supported measurement sheet for entire project work. 50% of the assessed RA bill amount shall be paid within 3 days and balance shall be paid within 10 days of the submission of RA bill to the account department. ........................................................................................................"
8. Following issues were framed by Ld. Sole Arbitrator:-
"(I) To what amount the claimant is entitled against claim no. 1 of Rs 83,98,080/- and GST on Rs. 1,43,05,610/- amounting to Rs. 25,75,010/-? OPC (II) Whether the claimant is entitled to damages on account of prolongation of the work against claim no. 2 of Rs.
6,00,000/-? If so, how much? OPC (III) Whether the Claimant is entitled to loss of profit due to alleged breach of contract committed by the Respondent on the balance of work not got executed from the Claimant against Claim no. 3 of Rs. 5,40,758/-? OPC (IV) Whether the Claimant is entitled to interest? If so, at what rate, on what amount and for what period? OPC (V) Whether the Claimant is entitled the cost of arbitration and litigation? If so, how much against Claim no. 6? OPC OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 19 of 42 (VI) Whether the termination of work of contract was valid and legal? OPR (VII) Whether the Respondent had made payment of Rs. 6,00,00/-
to the claimant? OPR (VIII) Whether the Respondent is entitled to sum of Rs.
58,99,539/- against debit notes for supply of materials and on other counts? If so, how much? OPR (IX) Whether the Respondent is entitled to liquidated damages for alleged breach of contract on the part of the Claimant? If so, how much against claim of Rs. 9,13,475/-? OPR (X) Whether the Respondent is entitled to the counter claim of Rs. 1,26,405/- being the alleged excess payment? OPR (XI) Whether the Respondent is entitled to interest? If so, at what rate, on what amount and how much? OPR (XII) To what relief the parties are entitled? Onus on parties"
9. Issue-wise findings of Ld. Sole Arbitrator are recorded in para nos. 17 to 50 from page nos. 8 to 35 of impugned arbitral award.
10. Ld. Sole Arbitrator explained the process of Vacuum Dewatering Flooring (VDF) work in the following manner in para no. 34 of the impugned arbitral award:-
"34. It would now be worthwhile to briefly explain in lay man's language, the process of Basement Vaccuum Dewatering Flooring (VDF) work. First of all, levelling and dressing including filling up to 200 mm depth earth is duly compacted with vibrio rollers.
Thereafter, plain cement concrete (PCC) is laid and compacted. This is a separation layer. It is then followed by casting of stitching slabs and providing and laying reinforced cement concrete (RCC) using M25 grade ready mix concrete (RMC) in the ration of 1:2:4. Finally excess water is sucked and drained from RMC with the help of suction machines."
11. 19 pages Statement of Defence and Counter Claim of petitioner with affidavit filed before Ld. Sole Arbitrator expressly OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 20 of 42 contained no mention of petitioner having ever requested for joint measurement exercise to be undertaken by petitioner and respondent no. 1/claimant for VDF Work ever. Para no. 9 of Statement of Defence embodies the defence of petitioner that claimant/respondent no. 1 had submitted false, fictitious exaggerated bill dated 08/01/2019 for an amount of Rs. 1,45,05,142/- without any supporting documents and evidences whereas petitioner had verified said bill and found that the claimant/respondent no. 1 did the work of Rs. 64,01,191/- only till the date of termination of contract. Also in para-wise reply on merit in para (vii) of aforesaid Statement of Defence is the averment of petitioner before Ld. Sole Arbitrator that petitioner had number of times requested the claimant/respondent no. 1 to visit the site and get the account for VDF work reconciled but instead of visiting the site, claimant/respondent no. 1 invoked the present arbitration claiming false and fictitious claims when no amount is payable to claimant/respondent no. 1 as per the contract and work done. E-mails dated 29/08/2018, 04/09/2018 and 04/11/2018 allegedly sent by petitioner to claimant/ respondent no. 1 officials have text for calling for bill verification/checking but no where is there any mention therein or otherwise any communication of petitioner to claimant/ respondent no. 1 asking them to turn up for exercise of joint measurement with officials of petitioner.
12. Extensive appreciation of evidences and material placed before Ld. Sole Arbitrator is vivid and clear from impugned arbitral award which finds mention of the finding of Ld. Sole Arbitrator on facts that not even a single email was placed in OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 21 of 42 arbitral proceedings record that petitioner had ever called upon claimant/respondent no. 1 to associate in the joint measurement work done by claimant/respondent no. 1 and therefore, the assertion of RW4 Sh. Umesh Gupta on said facet is totally false. It is also the finding of Ld. Sole Arbitrator that RW4 Mr. Umesh Gupta who was the construction and financial advisor of petitioner; had admitted that alleged measurement verification and assessment of VDF Work was done through engineers of the petitioner. Ld. Sole Arbitrator had reached the finding that RW4 Sh. Umesh Gupta had absolutely no role to play for preparation of summary of assessment bill and the assessment sheet in the format of BOQ of the agreement. Ld. Sole Arbitrator had also appreciated in impugned arbitral award that it had been the claim of claimant/respondent no. 1 that its entry to the site was barred after bill was sent through email dated 27/01/2019 and said claim of claimant had gone unchallenged. Also Ld. Sole Arbitrator had reached the finding that deposition of RW4 Umesh Gupta was in the nature of hearsay evidence and he therefore, rejected it to be of any value for proof of the summary of assessment bill and assessment sheet in the format of BOQ of agreement. Ld. Sole arbitrator also gave finding that Ex RW4/9 (Colly) and CDs of videography and corresponding photographs Ex RW4/8 (Colly) were false and fabricated and so rejected them. Ld. Sole Arbitrator also appreciated that petitioner had neither denied the rate claimed nor had disputed the quantities done by the claimant/respondent no. 1 whereas petitioner never disputed the correctness of 1st RA Bill in which said claim was raised along with measurement sheets. Ld. Sole Arbitrator also appreciated the fact that it was the claim of the petitioner that the OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 22 of 42 measurement sheets were never submitted by claimant/ respondent no. 1 with its three bills i.e., first bill dated 30/06/2018 sent through email dated 03/07/2018; second bill dated 02/11/2018 sent through email dated 03/11/2018 and the last bill dated 08/01/2019 Ex RW4/6 for sum of Rs. 1,45,05,142/- sent through email dated 27/01/2019; which claim of petitioner was proved to be false during cross examination of RW3 Kunal Chaudhary who had persistently claimed that measurement sheets were never submitted by claimant/respondent no. 1 but said RW3 Kunal Chaudhary when was confronted with all these three emails displayed on the screen of DIAC, RW3 Kunal Chaudhary reluctantly admitted that measurement sheets were received by petitioner with aforesaid three emails vide which these three respective bills were sent by respondent no. 1/ claimant. Falsity in evidence of RW3 was accordingly taken note of and clearly put forth in impugned arbitral award. It is also the finding of Ld. Sole Arbitrator in the impugned arbitral award that during the admission and denial of documents by parties to arbitration on affidavit; though claimant/respondent no. 1 had admitted all the 20 invoices filed by the petitioner with its statement of defence with regard to supply of RMC but claimant/respondent no. 1 had not admitted the debit notes or issue slips. It was therefore, incumbent upon petitioner to prove so called debit notes and issue slips with regard to supply of M25 grade RMC to the claimant/respondent no. 1 whereas it was not so done and mere putting a mark of exhibit did not prove these documents as the concerned officials who prepared these documents were never examined. Ld. Sole Arbitrator had also placed implicit reliance upon law laid by Supreme Court in the OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 23 of 42 case of Narbada Devi Gupta vs Birendra Kumar Jaiswal & Anr., (2003) 8 SCC 745 wherein it was held that mere production and marking of a document as exhibit by the Court cannot be held to be a due proof of its contents; as its execution is to be proved by admissible i.e., by 'evidence of those persons who can vouch safe for the truth of the facts in issue.' Clear findings on facts on basis of evidence and material placed on record are in the impugned arbitral award. For adjudication of issue no. 1, following is the operative part of the finding of Ld. Sole Arbitrator:-
" The respondent had neither denied the rates claimed nor had disputed the quantities done by the claimant. The respondent had never disputed the correctness of first RA bill in which this claim was raised along with measurement sheets. I therefore allow this claim of re-barring of steel for a sum of Rs.1,47,560/- to the claimant. The third extra item claimed was for a sum of Rs.68,000 as cartage of 68,000 bricks @ Rs.1/- per brick. The averment of the claimant that the respondent had supplied the bricks to the claimant at a distance of 200 metres from the site of the work and the claimant had spent Rs.1/- per brick for carrying on headload of the bricks to the site of the work. This has been also so stated by CW1 Sumit Bararia in para 40 of his affidavit exhibit Cx. I therefore allow this claim also to the claimant. In view of the aforesaid discussion, the value of work done by the claimant with respect to these three extra items is allowed for a sum of Rs.8,07,985/- with the result, the total value of the work executed by the claimant is allowed for a sum of Rs.1,42,25,168/-. The GST is a statutory liability payable by the respondent. Hence, 18% GST is payable by the respondent on the aforesaid amount of Rs. 1,42,25,168/- amounting to Rs.25,60,530/-. The respondent has been correctly given credit of Rs.67,74,122/- on account of value of bricks, RMC and angles with GST supplied by the respondent to the claimant. The claimant is therefore held entitled for a sum of Rs.1,00,11,576/- (one crore eleven thousand five hundred seventy six). The claim of the claimant for the sum of Rs.8,66,592/- being the alleged profit/discount on the value of material supplied by the respondent for a Rs.57,77,280/- without GST by invoking clause 12 of the contract is disallowed for the simple reason that the claimant had agreed to receive supply of these materials from the respondent without in anyway insisting that he would be entitled for a discount of 15% on the value of these materials.
In view of the aforesaid discussion, I decide issue no 1 in favour of OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 24 of 42 the claimant and against the respondent and hold the claimant entitled for a sum of Rs. 1,00,11,576/- (one crore eleven thousand five hundred seventy six) from respondent."
13. In view of above elicited finding on issue no. 1; arguments of Ld. Senior Advocate and Ld. Counsel for petitioner that impugned award is in the teeth of Section 16 of The CGST/SGST Act does not hold water, since Ld. Sole Arbitrator had not lost sight of the fact of entitlement of input credit of GST.
14. Clause 14 of the contract, elicited above, only dis-entitled claimant/respondent no. 1 contractor for compensation for loss suffered on account of delay in commencing or executing the work including delays arising out of modification to the work entrusted to him or in any sub-contract connected there with. Ld. Sole Arbitrator in finding of issue no. 2 held that delay deliberately caused by the petitioner by the acts of omission and commission in withholding the VDF work midway on baseless ground, when there is no delay arising out of modification to the work, is not covered by delay stipulated in clause 14 of the contract. Also Ld. Sole Arbitrator gave finding of fact that the claim of petitioner that VDF work could not be commenced without completing repair of basement was imaginary in as much as repair of basement had nothing to do with VDF work which is done after levelling and compacting the earth surface. Also Ld. Sole Arbitrator held that moreover repair of basement admittedly is not within the scope of VDF work which is subject matter of the arbitration. Ld. Sole Arbitrator reached the finding that work was prolonged at least for four months due to unreasonable demand and lapses on the part of petitioner whereas petitioner itself had taken upon itself the responsibility to supply RMC vide OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 25 of 42 email dated 27/05/2018 and supply of RMC was resumed after email dated 10/09/2018 only from 23/09/2018 vide invoice dated 15/10/2018. Ld. Sole Arbitrator had also reached the finding of fact that CW1 Sumit Bararia was Engineer by profession and had through out remained at the site and according to him not only he was the son of the claimant/respondent no. 1 but he also draws salary as employee. It was the premise for award of compensation/damages for four months @ Rs.1,00,000/- per month in adjudication of issue no. 2 in favour of claimant/ respondent no. 1 and against petitioner.
15. Following is the finding of Ld. Sole Arbitrator on issue no. 3:-
"47. Issue no 3: Whether the Claimant is entitled to loss of profit due to alleged breach of contract committed by the Respondent on the balance of work not got executed from the Claimant against Claim no. 3 of Rs. 5,40,758/-? OPC I have already held while deciding issue no. 6 that termination of the contract was illegal, arbitrary and invalid with malafide intentions on the part of the respondent. It is settled law that in such eventuality when the contractor is prevented from executing the work awarded to him, the contractor is entitled for loss of profit on the value of unexecuted work. I have already held that work allotted to M/s Satindra Singh was not a genuine transaction. The claimant has calculated loss of profit amounting to Rs. 5,40,758/- on unexecuted work not got executed from him for the value of Rs.36,05,000/- @ 15%. The claimant has made calculation mistake in this respect. It has been proved that the value of the work awarded was Rs.1,84,19,500/-. While deciding issue no. 1 I have already held that the work executed by the claimant was of the value of Rs.1,42,25,168/- and therefore value of the work which the claimant was not allowed to execute comes to Rs. 41,94,332/- which is much higher than Rs. 36,05,000/-. In clause 12 both the parties were of the same view that while fixing of rates for extra items an all inclusive allowance of 15% of the cost will be provided for overheads profit and establishment charges. I therefore allow 15% profit amounting to Rs. 5,40,758/- which is on the lower side and decide issue no. 3 in favour of OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 26 of 42 the claimant and against the respondent."
16. Clause 11 of the contract, elicited above, inter alia embodies that the quantities in the schedule of Quantities approximately indicate the total extent of work but may vary to any extent and may even be omitted thus altering the aggregate value of the contract; so no claim is to be entertained on this account. In the fact of the matter, it is not the fact that the parties to arbitration had varied total extent of work or the quantities in the schedule of Quantities approximately varied; but the claimant/respondent no. 1/contractor was prevented from execution of the part of the work awarded to him and later that part of the work was allotted to other contractor M/s Satindra Singh. Ld. Sole Arbitrator gave finding of fact that termination of contract was illegal, arbitrary and invalid with malafide intention on the part of petitioner and in such eventuality claimant/ respondent no. 1/contractor was entitled for loss of profit on the value of unexecuted work. Accordingly, it cannot be said that the claim for loss of profit is an excepted matter. Ld. Sole Arbitrator merely had taken note of the term agreed inter se parties to arbitration in clause 12 to assess the quantum of loss of profit to be awarded to claimant/respondent no. 1; since, the terms agreed between the parties to arbitration are of utmost importance and are to be given due respect to gather intention of the parties to arbitration while adjudicating their disputes. Petitioner cannot find foul with such reasonings of Ld. Sole Arbitrator by merely putting forth that even in clause 12, 15% rate covers three components of overheads, profit as well as establishment charges. This Court cannot sit in an appeal for such finding of fact arrived upon by Ld. Sole Arbitrator on the basis of evidence OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 27 of 42 and material placed before it including the pleadings of parties. All the more so when, it is plausible and one of the possible view and such finding is not perverse at all.
17. Sections 28(3) and 31 (7) of The Act read as follows:
"28. Rules applicable to substance of dispute.-- ........................................................................................................ (3) While deciding and making an award, the arbitral tribunal shall, in all cases, take into account the terms of the contract and trade usages applicable to the transaction.
........................................................................................................
31. Form and contents of arbitral award.--
......................................................................................................... (7) (a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.
(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of two per cent. higher than the current rate of interest prevalent on the date of award, from the date of the award to the date of payment.
Explanation.- The expression "current rate of interest" shall have the same meaning as assigned to it under clause (b) of section 2 of the Interest Act, 1978 (14 of 1978)."
18. In the case of Ashi Limited vs Union of India O.M.P. 200/2015 decided by Delhi High Court on 19/05/2020, Hon'ble Ms. Justice Jyoti Singh had also appreciated law laid by Supreme Court in the case of Sree Kamatchi Amman Constructions vs The Divisional Railway Manager (Works) Palghat & Ors. MANU/SC/0625/2010 and inter alia held as follows:
"54. In so far as the grant of interest by an Arbitrator is concerned, the law is no longer res integra, Section 31(7)(a) of the Act clearly stipulates that unless otherwise agreed by the parties, where the Award is for payment of money, the Tribunal OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 28 of 42 may grant such rate as it deems reasonable, on the whole or any part of the money and for the whole or any part of the period between the date of cause of action and the date of the Award. In the case of Jaiprakash Associates Ltd. (Jal) v. Tehri Hydro Development Corporation India Ltd., MANU/SC/0157/2019, the Supreme Court after noticing the provisions of the 1996 Act and various judgments on the issue of interest, more particularly, the recent judgment in the case of Reliance Cellulose Products Ltd. v. ONGC Ltd., MANU/SC/0777/2018: (2018) 9 SCC 266, summed up the law on interest as under:
"13. Insofar as power of the arbitral tribunal in granting pre- preference and/or pendente lite interest is concerned, the principles which can be deducted from the various judgments are summed up below:
(a) A Constitution Bench judgment of this Court in the case of Secretary, Irrigation Department, Government of Orissa vs G.C. Roy exhaustively dealt with this very issue, namely, power of the arbitral tribunal to grant pre-
reference and pendente lite interest. The Constitution Bench, of course, construed the provision of the 1940 Act which Act was in vogue at that time. At the same time, the Constitution Bench also considered the principle for grant of interest applying the common law principles. It held that under the general law, the arbitrator is empowered to award interest for the pre- reference, pendente lite or post award period. This proposition was culled out with the following reasoning:
"43 The question still remains whether arbitrator has the power to award interest pendente lite, and if so on what principle. We must reiterate that we are dealing with the situation where the agreement does not provide for grant of such interest nor does it prohibit such grant. In other words, we are dealing with a case where the agreement is silent as to award of interest. On a conspectus of aforementioned decisions, the following principles emerge:
(i) A person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. This basic consideration is as valid for the period the dispute is pending before the arbitrator as it is for the period prior to the arbitrator entering upon the reference. This is the principle of Section 34, Civil Procedure Code and there is no reason or principle to hold otherwise in the case of arbitrator.OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 29 of 42
(ii) An arbitrator is an alternative form (sic forum) for resolution of disputes arising between the parties. If so, he must have the power to decide all the disputes or differences arising between the parties. If the arbitrator has no power to award interest pendente lite, the party claiming it would have to approach the court for that purpose, even though he may have obtained satisfaction in respect of other claims from the arbitrator. This would lead to multiplicity of proceedings.
(iii) An arbitrator is the creature of an agreement. It is open to the parties to confer upon him such powers and prescribe such procedure for him to follow, as they think fit, so long as they are not opposed to law. (The proviso to Section 41 and Section 3 of Arbitration Act illustrate this point).
All the same, the agreement must be in conformity with law. The arbitrator must also act and make his award in accordance with the general law of the land and the agreement.
(iv) Over the years, the English and Indian courts have acted on the assumption that where the agreement does not prohibit and a party to the reference makes a claim for interest, the arbitrator must have the power to award interest pendente lite. Thawardas [Seth Thawardas Pherumal v.
Union of India, MANU/SC/0070/1955 : (1955) 2 SCR 48: AIR 1955 SC 468] has not been followed in the later decisions of this Court. It has been explained and distinguished on the basis that in that case there was no claim for interest but only a claim for unliquidated damages. It has been said repeatedly that observations in the said judgment were not intended to lay down any such absolute or universal rule as they appear to, on first impression. Until Jena case [MANU/SC/ 0004/ 1987: (1988) 1 SCC 418: (1988) 1 SCR 253] almost all the courts in the country had upheld the power of the arbitrator to award interest pendente lite. Continuity and certainty is a highly desirable feature of law.
(v) Interest pendente lite is not a matter of substantive law, like interest for the period anterior to reference (pre-reference period). For doing complete justice between the parties, such power has always been inferred."
OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 30 of 42It is clear from the above that the Court decided to fall back on general principle that a person who is deprived of the use of money to which he is legitimately entitled to, has a right to be compensated for the deprivation and, therefore, such compensation may be called interest compensation or damages.
(b) As a sequitur, the arbitrator would be within his jurisdiction to award pre-reference or pendente lite interest even if agreement between the parties was silent as to whether interest is to be awarded or not.
(c) Conversely, if the agreement between the parties specifically prohibits grant of interest, the arbitrator cannot award pendente lite interest in such cases. This proposition is predicated on the principles that an arbitrator is the creature of an agreement and he is supposed to act and make his award in accordance with the general law of the land and the agreement. This position was made amply clear in G.C Roy case in the discussion thereafter:
"44. Having regard to the above consideration, we think that the following is the correct principle which should be followed in this behalf:
Where the agreement between the parties does not prohibit grant of interest and where a party claims interest and that dispute (along with the claim for principal amount or independently) is referred to the arbitrator, he shall have the power to award interest pendente lite. This is for the reason that in such a case it must be presumed that interest was an implied term of the agreement between the parties and therefore when the parties refer all their disputes or refer the dispute as to interest as such to the arbitrator, he shall have the power to award interest. This does not mean that in every case the arbitrator should necessarily award interest pendente lite. It is a matter within his discretion to be exercised in the light of all the facts and circumstances of the case, keeping the ends of justice in view."
(d) Insofar as 1940 Act is concerned, it was silent about the jurisdiction of the arbitrator in awarding pendente lite interest. However, there is a significant departure on this aspect insofar as 1996 Act is concerned. This distinction has been spelt out in Sayeed Ahmed case in the following manner:
OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 31 of 42"Re: Interest from the date of cause of action to date of award
7. The issue regarding interest as noticed above revolves around Clause G1.09 of the Technical Provisions forming part of the contract extracted below:
"G. 1.09. No claim for interest or damages will be entertained by the Government with respect to any money or balance which may be lying with the Government or any become due owing to any dispute, difference or misunderstanding between the Engineer-in- Charge on the one hand and the contractor on the other hand or with respect to any delay on the part of the Engineer-in-Charge in making periodical or final payment or any other respect whatsoever."
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14. The decisions of this Court with reference to the awards under the old Arbitration Act making a distinction between the pre-reference period and pendente lite period and the observation therein that the arbitrator has the discretion to award interest during pendente lite period in spite of any bar against interest contained in the contract between the parties are not applicable to arbitrations governed by the Arbitration and Conciliation Act, 1996."
............................................................................
56. In the case of Union of India v. Bright Power Projects (India) (P) Ltd., MANU/SC/0712/2015 : (2015) 9 SCC 695, Supreme Court held that when agreement between the parties bars interest on the amounts from cause of action to the date of the Award, the Arbitrator is bound by it and cannot award interest as Section 31 (7)(a) clearly begins with the words 'unless otherwise agreed by parties'.
57. In State of Haryana v. S.L Arora & Co., MANU/SC/ 0131/2010 : (2010) 3 SCC 690, Supreme Court has held that it is not open to the courts to interfere in the discretion exercised by an Arbitrator in granting the rate of interest. This is purely the domain, power and prerogative of the Arbitrator. Relevant part of the judgment reads as under:-
"23. The difference between clauses (a) and (b) of Section 31(7) of the Act may conveniently be noted at this stage. They OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 32 of 42 are:
(i) Clause (a) relates to pre-award period and clause
(b) relates to post-award period. The contract binds and prevails in regard to interest during the pre-award period. The contract has no application in regard to interest during the post-award period.
(ii) Clause (a) gives discretion to the Arbitral Tribunal in regard to the rate, the period, the quantum (principal which is to be subjected to interest) when awarding interest. But such discretion is always subject to the contract between the parties. Clause (b) also gives discretion to the Arbitral Tribunal to award interest for the post-award period but that discretion is not subject to any contract; and if that discretion is not exercised by the Arbitral Tribunal, then the statute steps in and mandates payment of interest, at the specified rate of 18% per annum for the post-award period.
(iii) While clause (a) gives the parties an option to contract out of interest, no such option is available in regard to the post-award period.
In a nutshell, in regard to pre-award period, interest has to be awarded as specified in the contract and in the absence of contract, as per discretion of the Arbitral Tribunal. On the other hand, in regard to the post-award period, interest is payable as per the discretion of the Arbitral Tribunal and in the absence of exercise of such discretion, at a mandatory statutory rate of 18% per annum."
19. Ld. Sole Arbitrator had reached the finding of fact that admittedly, the last bill for sum of Rs. 1,45,05,142/- was submitted to respondent vide email dated 27/01/2019 with measurement sheets whereas clause 16 of contract elicited above inter alia clearly stipulates that payment of assessment amount of the bill submitted by the claimant/respondent no. 1 has to be made within 10 days; so payment had to be made on or before 07/02/2019. Since payment had not been made, so Ld. Sole Arbitrator held claimant/respondent no. 1 entitled for the interest @ 14% per annum from 08/02/2019 for Rs.1,09,52,334/- i.e., OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 33 of 42 total sums of claims allowed in favour of claimant/respondent no. 1 and such interest for period from 08/02/2019 up to 07/07/2020 calculated was Rs. 21,72,209/- and the pendente lite interest up to 07/05/2021 was calculated to be Rs. 12,77,770/-. The calculation of total interest from 08/02/2019 up to 07/05/2021 by Ld. Sole Arbitrator was Rs. 34,49,979/-. None of the parties to arbitration invoked Section 33 of the Act seeking to correct any computation error, any clerical or typographical error for awarded sums and interest. Ld. Sole Arbitrator had awarded future simple interest @ 10% on the awarded sums from 08/05/2021 up to its payment.
20. Ld. Counsel for the petitioner did not point out any provision in the agreement inter se parties for no interest payable for any sum payable in terms of the contract or any provision prohibiting Arbitral Tribunal for award of interest in adjudication of disputes in arbitral proceedings. There was no term in the contract prohibiting award of interest for sums payable adjudicated under the contract. Respondent no. 1/claimant/ contractor was deprived of the use of the money to which it was legitimately entitled, having right to be compensated for the deprivation and for the withheld money accordingly was necessarily required to be compensated, also in terms of interest for the payment withheld. By no figment of imagination the findings of the Arbitral Tribunal can be said to be beyond the terms of contract. Petitioner had claimed interest @ 15% p.a. on counter claims raised, so cannot cry hoarse of awarded rate of interest to respondent no. 1/claimant/contractor to be unreasonable, excessive or exorbitant. Also by no figment of OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 34 of 42 imagination awarded rate of interest can be said to be unreasonable, excessive or exorbitant to compensate the respondent no. 1/claimant/contractor for deprivation of the use of the money to which it was legitimately entitled to. Grounds laid for impugning award of interest and/or rate of interest and/or period of interest do not hold water in view of elicited reasonings of the Arbitral Tribunal.
21. Section 31A of the Act embodies regime for costs and it was inserted in the Act with effect from 23/10/2015 by virtue of Section 17 of the Act 3 of 2016. It reads as under:-
"31A. Regime for costs.-- (1) In relation to any arbitration proceeding or a proceeding under any of the provisions of this Act pertaining to the arbitration, the Court or arbitral tribunal, notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908), shall have the discretion to determine--
(a) whether costs are payable by one party to another;
(b) the amount of such costs; and
(c) when such costs are to be paid.
Explanation.-For the purpose of this sub-section, "costs" means reasonable costs relating to--
(i) the fees and expenses of the arbitrators, Courts and witnesses;
(ii) legal fees and expenses;
(iii) any administration fees of the institution supervising the arbitration; and
(iv) any other expenses incurred in connection with the arbitral or Court proceedings and the arbitral award. (2) If the Court or arbitral tribunal decides to make an order as to payment of costs,-
(a) the general rule is that the unsuccessful party shall be ordered to pay the costs of the successful party; or
(b) the Court or arbitral tribunal may make a different order for reasons to be recorded in writing.
(3) In determining the costs, the Court or arbitral tribunal shall have regard to all the circumstances, including--
(a) the conduct of all the parties;
(b) whether a party has succeeded partly in the case;
(c) whether the party had made a frivolous counter-claim leading to delay in the disposal of the arbitral proceedings; and
(d) whether any reasonable offer to settle the dispute is made by a party and refused by the other party.
OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 35 of 42(4) The Court or arbitral tribunal may make any order under this section including the order that a party shall pay--
(a) a proportion of another party's costs;
(b) a stated amount in respect of another party's costs;
(c) costs from or until a certain date only;
(d) costs incurred before proceedings have begun;
(e) costs relating to particular steps taken in the proceedings;
(f) costs relating only to a distinct part of the proceedings;
and
(g) interest on costs from or until a certain date. (5) An agreement which has the effect that a party is to pay the whole or part of the costs of the arbitration in any event shall be only valid if such agreement is made after the dispute in question has arisen."
22. Ld. Sole Arbitrator held that the petitioner had taken false and untenable plea to deny legitimate dues of the claimant whereas claimant/respondent no. 1/contractor had made a deposit of more than Rs. 2,50,000/- with the Delhi International Arbitration Centre on account of administration charges and Arbitral fees. On that reason Ld. Sole Arbitrator awarded sum of Rs. 2,50,000/- as cost in favour of claimant/respondent no. 1/contractor payable by petitioner. Ld. Sole Arbitrator did not award other litigation expenses incurred by claimant/respondent no. 1/contractor for engaging Counsel and other ministerial expenses, incidental charges. The impugned arbitral award for the award of cost is perfectly reasoned in terms of Section 31(3) of the Act and unnecessarily hype has been created by the petitioner terming awarded cost to be excessive yet less reasonable in terms of Section 31-A of the Act.
23. Supreme Court in the case of Kailash Nath Associates vs Delhi Development Authority, (2015) 4 SCC 136 had elicited the law on compensation for breach of contract under Section 74 as follows:-
OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 36 of 42"43. On a conspectus of the above authorities, the law on compensation for breach of contract Under Section 74 can be stated to be as follows:
1. Where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine pre-estimate of damages fixed by both parties and found to be such by the Court. In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. Similarly, in cases where the amount fixed is in the nature of penalty, only reasonable compensation can be awarded not exceeding the penalty so stated. In both cases, the liquidated amount or penalty is the upper limit beyond which the Court cannot grant reasonable compensation.
2. Reasonable compensation will be fixed on well known principles that are applicable to the law of contract, which are to be found inter alia in Section 73 of the Contract Act.
3. Since Section 74 awards reasonable compensation for damage or loss caused by a breach of contract, damage or loss caused is a sine qua non for the applicability of the Section.
4. The Section applies whether a person is a Plaintiff or a Defendant in a suit.
5. The sum spoken of may already be paid or be payable in future.
6. The expression "whether or not actual damage or loss is proved to have been caused thereby" means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, can be awarded.
7. Section 74 will apply to cases of forfeiture of earnest money under a contract. Where, however, forfeiture takes place under the terms and conditions of a public auction before agreement is reached, Section 74 would have no application."
24. It is also the finding of fact by Ld. Sole Arbitrator in para no. 20 of impugned arbitral award that no evidence whatsoever had been placed on arbitral proceedings record to show that any financial loss was suffered by petitioner on the account of any OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 37 of 42 alleged delay on the part of respondent no.1/claimant/contractor; whereas per contra, the termination of the contract on the part of petitioner itself was illegal, unjustified and falsely made to cause financial loss to the claimant/respondent no. 1/contractor. Ld. Sole Arbitrator also gave the finding of fact that it was the petitioner who had committed the breach of contract by not supplying material on time and not releasing any payment to the claimant/respondent no. 1/contractor after claimant/respondent no. 1/contractor had submitted his bills detailed therein in violation of Clauses 15 and 16 of the contract in question. Petitioner cannot cry hoarse accordingly for disallowing of counter claims including that of liquidated damages of Rs 9,13,475/- by Ld. Sole Arbitrator @ 5% of the contract value.
25. The proceedings under Section 34 of the Act are summary in nature and the scope of enquiry in the proceedings under Section 34 of the Act is restricted to specified grounds for setting aside only, as was held in the case of Canara Nidhi Limited vs M. Shashikala & Ors., 2019 SCC Online SC 1244. The Court would not construe the nature of claim by adopting too technical an approach or by indulging into hair-splitting, otherwise the whole purpose behind holding the arbitration proceedings as an alternative to Civil Court's forum would stand defeated, as was held in the case of Sangamner Bhag Sahakari Karkhana Ltd. vs Krupp Industries Ltd., AIR 2002 SC 2221. An award is not open to challenge on the ground that the arbitrator had reached a wrong conclusion or had failed to appreciate some facts, but if there is an error apparent on the face of the award or if there is misconduct on the part of the arbitrator or legal misconduct in OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 38 of 42 conducting the proceedings or in making the award, the court will interfere with the award; as was held by Supreme Court in the case of Oil & Natural Gas Corporation vs M/s Wig Brothers Builders & Engineers Pvt. Ltd., (2010)13 SCC 377. Reappraisal of evidence by the court is not permissible and as a matter of fact, exercise of power to reappraise the evidence is unknown to a proceeding under the Arbitration Act; as was held by Supreme Court in the case of Ispat Engineering & Foundry Works vs Steel Authority of India Ltd., (2001) 6 SCC 347. In order to provide a balance and to avoid excessive intervention, the award is not to be set aside merely on the ground of an erroneous application of the law or by re-appreciating evidence; as was held by Supreme Court in the case of P.R Shah, Shares & Stock Brokers Pvt. Ltd vs B.H.H. Securities Pvt. Ltd. & Ors., (2012) 1 SCC 594. At global level the doctrine of 'Contra Proferentem' is generally applied by the Judges/Arbitrator in the cases where a contract appears ambiguous to them; the Judges/Arbitrator in India have appreciated and adopted similar line of reasoning in the cases involving ambiguous contract wherein it is believed that 'an ambiguity is needed to be resolved' in order to find the correct intention of the contract. If the conclusion of the arbitrator is based on a possible view of the matter, the court is not expected to interfere with the award and if the Arbitrator relies on a plausible interpretation out of the two possible views, then it would not render the award perverse; as was held by Supreme Court in the case of M/s Sumitomo Heavy Industries Ltd. vs Oil & Natural Gas Commission of India, 2010 (11) SCC
296. Award is not open to challenge on the ground that the Arbitral Tribunal had reached a wrong conclusion or had failed to OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 39 of 42 appreciate the facts; the appreciation of evidence by the arbitrator is never a matter which the Court considers in the proceeding under Section 34 of the Act, as the Court is not sitting in appeal over the adjudication of the arbitrator.; as was held by Delhi High Court in the case of NTPC Ltd vs Marathon Electric Motors India Ltd., 2012 SCC OnLine Del 3995. Supreme Court in the case of Associate Builders vs Delhi Development Authority, (2015) 3 SCC 449 has restricted the scope of public policy, so the Court does not act as a Court of appeal and consequently errors of fact cannot be corrected. An error relatable to interpretation of the contract by an arbitrator is an error within his jurisdiction and such error is not amenable to correction by Courts as such error is not an error on the face of the award; as was held by Supreme Court in the case of Steel Authority of India Ltd. vs Gupta Brother Steel Tubes Ltd., (2009) 10 SCC
63.
26. The facts and circumstances embodied in the precedents relied upon by Ld. Counsel for petitioner are entirely different and distinguishable to the facts and circumstances of the case in hand, so they are of no help to respondent for dismissal of the present petition.
27. The impugned award was passed by an experienced Former Additional District & Sessions Judge, Delhi as Learned Sole Arbitrator whereas the findings were given, based on appreciation of facts, evidences and law after giving all reasonable opportunities to the parties to present their case. Not only the reasonings of Learned Sole Arbitrator are logical but all OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 40 of 42 the material and evidences were taken note of by the Learned Sole Arbitrator. The Court cannot substitute own evaluation of conclusion of law or fact to come to the conclusion other than that of the Learned Sole Arbitrator, as per the law laid in the precedents, elicited herein above. Cogent grounds, sufficient reasons have been assigned by the Ld. Sole Arbitrator in reaching the just conclusion and no error of law or misconduct is apparent on the face of the record. This Court cannot re-appraise the evidence and it is not open to this Court to sit in the appeal over the conclusion/findings of facts arrived at by Learned Sole Arbitrator. The impugned award does not suffer from vice of irrationality and perversity. No error is apparent in respect of the impugned award. I do not find any contradiction in the observations and findings given by Learned Sole Arbitrator. The conclusion of the Ld. Sole Arbitrator is based on a possible view of the matter, so the Court is not expected to interfere with the award. Even impugned award passed by Ld. Sole Arbitrator cannot be set aside on the ground that it was erroneous. The award is not against any public policy nor against the terms of contract of the parties. No ground for interference is made out. None of the grounds raised by the petitioner attract Section 34 of the Act; though concerted efforts have been made to give them colour to term the impugned arbitral award to be (i) based on no evidence; (ii) perverse, over looking express terms of the contract; (iii) patently illegal and against the fundamental policy of Indian law.
28. For the foregoing reasons, the petition is hereby dismissed.
OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 41 of 4229. The parties are left to bear their own costs.
30. File be consigned to record room.
Digitally signed by GURVINDER PAL GURVINDER SINGH
PAL SINGH Date: 2022.12.19
12:07:43 +0530
ANNOUNCED IN (GURVINDER PAL SINGH)
OPEN COURT District Judge (Commercial Court)-02
th
On 19 December, 2022. Patiala House Court, New Delhi.
(DK) OMP (Comm.) No. 85/2021 M/s Nandi Infratech Pvt. Ltd. vs M/s R.K. Bararia & Anr. Page 42 of 42