Delhi District Court
M/S. Devender Kumar vs Khem Chand Reported In 2003 (2) Raj on 4 July, 2009
IN THE COURT OF Dr. KAMINI LAU: ADDL.
DISTRICT JUDGE13: CENTRAL DISTRICT: DELHI
Suit No. 124/07
Municipal Corporation of Delhi
Through Commissioner
Town Hall, Chandni Chowk,
Delhi110006
.....Objector
Versus
1. M/s. Devender Kumar
Through its Proprietor,
Devender Kumar
S/o Sh. Ganga Ram
R/o H. No. RZ72/A, Indra Park,
Uttam Nagar, New Delhi
2. Mr. D.S. Pawaria,
Sole Arbitrator,
Chamber No. 49,
Tehsil Building, Tis Hazari Courts,
New Delhi 110054
.....Respondents
Date of Institution: 2.11.2007 Arguments heard on: 19.5.2009
Last date for filing additional written synopsis: 1.7.2009
Date of Decision: 4.7.2009
: J U D G M E N T :
These objections under Section 34 and Section 28 (3) and Section 16(6) of the Arbitration and Conciliation 1 Act has been filed by the petitioner/ objector MCD against the arbitral award dated 13.7.2007 passed by the Sole Arbitrator i.e. respondent no. 2. Briefly the facts relevant to the disposal of the same are as under:
PETITIONER'S/ OBJECTOR'S CASE:
The case of the objector/ petitioner is that they had called the tenders for desilting and removing of silt pertaining to area of DEMS, West Zone, Delhi in the year 2000 which job was entrusted to the respondent no.1 vide work orders Nos. 169, 170, 171, 172 dated 9.6.2000 and work order no. 79 dated 22.5.2000 by the objector/MCD. The time of completion for work was one month and in another work order the time for completion of work was two months respectively but the respondent no.1 failed to complete the necessary formalities of the contract and did not supply the dumping receipts/ photographs/ videography of the work executed to the objector. It is stated that the furnishing of the above mentioned documents was mandatory as per the agreement/ work order and since the 2 the respondent no.1 failed to complete the formalities hence no payment could be released by the objector. It is further stated that the respondent no.1 failed to honour his contractual liability and did not complete the work as per the provision and conditions of the agreement/ work order executed between the parties.
It is pleaded that due to the audit objection and vigilance inquiry to the effect whether the work was completed or not, the Commissioner MCD after reviewing the matter has ordered vide letter dated 09.10.2002 through Addl. Director of Vigilance MCD that no further payment for the year 200001 & 20012002 relating to desilting of drains by CSE divisions of all zones of MCD should be made till such time the investigation in this matter is completed by the vigilance department. However, in cases where dumping of silt has been done at SLF sites or at a local sites against proper acknowledgment from the concerned department under whose jurisdiction said local site was located, payments could be recommended made after enclosing receipt of the silts of the SLF sites or receipts 3 issued by concerned department. It is stated that the respondent no. 1 failed to place on record the relevant documents to prove his case i.e. the copy of submitted bill, copy of the completion certificate and other relevant formalities such as SLF receipts, photography, videography and other formalities in compliance with the provisions of Clause - VII, VIII, VIIIA and IX. According to the objector/ petitioner the respondent no.1 had filed a petition bearing no.2/2005 for appointment of independent arbitrator under Section 11(6) of the Arbitration and Conciliation Act before the District and Sessions Judge and the same was marked to Ms. Sunita Gupta, Ld. ADJ, Delhi and vide order dated 14.7.2005 the Ld. ADJ appoint the respondent no. 2 as a sole arbitrator.
Now the petitioner has challenged the said award of the arbitrator on the ground that the all the claims were liable to be rejected in view of the preliminary objections taken by the MCD before the Ld. Arbitrator whereas the Ld. Arbitrator allowed all the claims on doing so ignoring the material provisions of agreement and relied on unsound 4 proposition of law, which render his award a nullity. It is also stated that the arbitrator derives his jurisdiction only from the arbitration agreement entered into between the parties. In the present case, the arbitrator derives his authority from clause 25 and the court appointed the Ld. Arbitrator only under this clause. It is pleaded that the arbitrator, being a creature of the agreement, has to remain within the four corners of the agreement and has to take into consideration various terms and conditions of the agreement and cannot ignore them merely because the same may result in hardship to one of the parties. If the parties consciously agreed to a term/condition, they are bound by the same in the present matter there was a condition of SLF dumping receipt, photography/ videography of the work. It is further stated that the arbitrator cannot set the same at large and the arbitrator is bound to decide in accordance with the terms of the contract.
It is also stated that the Ld. Arbitrator failed to appreciate that the liability, if any of the petitioner MCD towards respondent contractor was discharged on expiry of 5 90 days, in terms of provision set out in the arbitration agreement contained in clause 25 and the invocation of arbitration as well as the claims filed by the claimant were barred by time as per the provision of clause 25 of the agreement. It is also stated that it is a term and condition of the arbitration clause 25 that the claimant has to make demand for appointment of arbitrator i.e. he has to invoke arbitration in writing within 90 days.
The completion of the work is disputed by the MCD although the work has been entered in the measurement Book and the vigilance department has been investigating the present matter as how the work has been entered in the M.B. without SLF receipts, videography and photography and the Commissioner MCD vide letter dated 09.10.2002 through Addl. Director Vigilance ordered that no further payment in the year 20002001 & 20012002 relating to desilting of drains by CSE division should be made till such time of the investigation in this matter by the vigilance department. It is further pleaded that even as per the respondent no.1 the work order was completed in respect of 6 all six work orders in between JuneJuly 2000, then the respondent no.1 could invoked the arbitration within 90 days whereas in the present case the respondent no.1 invoked arbitration in 2005 which is much beyond the special period agreed by the parties consciously and even as per the law of limitation. According to the petitioner/ objector, the arbitration has not been invoked and claims have not been filed within 90 days from the preparation of last bill by the department and having not demanded arbitration within 90 days, as per clause 25 of the agreement his claims are deemed to be waived and absolutely barred and MCD is discharged of all liabilities under this contract.
It is further alleged that the Ld. Arbitrator failed to appreciate that the claims preferred by the respondent herein were time barred. According to the petitioner, it is settled law that the claim is liable to be dismissed as time barred (if it is found to be time barred) even if limitation is not pleaded as a defence. The clause 25 was mutually agreed by the parties without any pressure or coercion and such a condition cannot be given a total go bye. It is also stated that 7 the respondent no.1 himself admitted that he served a legal notice upon the objector on dated 4.3.2004 and hence the claims become time barred upon the above mentioned admission itself, since the work order in question was awarded to the objector in the year 2000 and the time alloted to complete the work was only one and two months. It is also pleaded that the Ld. Arbitrator, has failed to appreciate the fact that he has to decide all the issues pertaining to the disputes in question including the limitation, jurisdiction, etc. while deciding the case the Ld. Arbitrator did not touch the limitation ground, because in his opinion the Hon' ble High Court already had been taken care of the limitation issue and has no importance at this stage. Moreover any discussion or raking up of any of these issues at this stage will attract the provisions of Contempt of Court. Further it is stated that the Ld. Arbitrator has failed to understand the basic provisions of the Arbitration and Conciliation Act. It is further stated that the Ld. Arbitrator had no jurisdiction to decide the disputes in view of the dispute resolution mechanism provided in clause 25 of the agreement since as 8 per this clause, the contractor has to first approach the Superintending Engineer (SE) promptly within 15 days from the dispute. The SE thereafter is obliged to give his decision within one month from receipt of contractor' s request. If the contractor is still aggrieved he can appeal to the Chief Engineer (CE) within 15 days. The Chief Engineer is obliged to give his decision within 30 days from receipt of contractor' s appeal. If the contractor is still aggrieved, the remedy available to him is to give notice to the MCD Commissioner within 30 days from receipt of CE's decision for appointment of arbitrator. The respondent no.1/ claimant was bound to follow the above procedure specified in the agreement as condition precedent for referring the dispute to the arbitrator, which admittedly was not followed by him and accordingly the claims filed by the claimant were not arbitrable and therefore the Ld. Arbitrator did not have the jurisdiction to adjudicate these claims. It is also alleged that the Ld. Arbitrator committed manifest illegality in awarding the claims of the respondent no.1 without considering the reply and documents filed by the objector and the award is 9 also barred as the same was against the terms and condition of the agreement. It is also stated that the above mentioned disputes was never referred to the Ld. Arbitrator for adjudication and the claims are time barred as the claimant/respondent no.1 for the first time raised the claims on 4.6.2004 and hence the claim is barred by limitation. According to the petitioner since the respondent no.1 failed to prove the completion of the work so much so no SLF receipts, photograph & Videography etc. were filed before the Ld. Arbitrator therefore the award for this claim is bad in law. It is stated that the Ld. Arbitrator failed to appreciate that there is a specific prohibition in the agreement for award of interest in a situation which applied in the present case. It is further pleaded that the arbitral tribunal cannot ignore the substantial law on interest contained in the interest Act and the Ld. Arbitrator even otherwise failed to appreciate that in the present case, the interest was not recoverable by law as the Interest Act 1976 prohibits grant of interest in the absence of a notice demanding the same in the present, there was not even a debt. It is also stated that the Ld. Arbitrator 10 ignored the fact that no notice under Interest Act was ever given by the respondent to the petitioner and hence no interest could be awarded to him and there was no provision in the agreement enabling the respondent to claim interest from the petitioner in case of delay in making payments to him. According to the objector MCD the rate of interest awarded by the Ld. Arbitrator is too excessive and is on the higher side, especially considering the very low rates of interest prevalent nowadays and the inability of the corporation at relevant time. It is stated that the party complaining breach of contract can recover only reasonable compensation for the injury sustained by him. It is also stated that the Ld. Arbitrator failed to exercise the jurisdiction fairly and reasonably and failed to properly apply his mind to the facts of the case and has ignored the conditions/provisions of the contract and delivered the award thereby allowing the claims, which is contrary to the law laid down by the courts in India. According to the petitioner/ objector there is no definite finding given by the Ld. Arbitrator with regard to the delay or breach on the part of 11 the objector in the absence of which the awarding of claims of the claimant is not justified and is not sustainable. It is alleged that the award is dated 13.07.2007 and the same was never published (which was received in the office of EE/ DEMS/ West zone on 25.07.2007) and is being challenged within the statutory limitation period prescribed in section 34 of the Act and is therefore, liable to be set aside. RESPONDENT'S/ CLAIMANT'S CASE:
In their reply to the said objections the respondent no. 1 has raised a preliminary objection that the present objections are not filed within the prescribed period of limitation as admittedly they have received the copy of the award passed by the Learned Arbitrator on 25.07.2007 and the present objections have been preferred after expiry of 90 days from the date of receipt of the award, therefore, the present objections are liable to be dismissed. It is also stated that the objections are not maintainable as this Hon' ble Court is not the Appellate Court and as per the provisions of Section 12 of the Arbitration and Conciliation 12 Act, the award can be challenged on those grounds and in the whole of the objections the Objector has challenged the award on its merits, therefore, the objections are liable to be dismissed.
On merits it is denied that the respondent no.1 failed to complete the necessary formalities to the contract and that they have not supplied the necessary receipts which are mandatory as per the agreement/work order or since the respondent no.1 failed to complete the formalities hence no payment could be released by the objector. It is also denied that the respondent no.1 failed to honor his contractual liability and had not completed the work as per the provision and conditions of the agreement/work order executed between the parties. It is stated that the respondent no.1 duly completed all formalities as per the agreement/work order, therefore, his work was duly entered in the measurement book and bills were prepared despite that payment were not released by the respondent no.1 as such as per the provision the respondent no.1 rightly approached to the arbitrator and learned arbitrator after going through all the facts rightly 13 passed award in favour of the respondent no.1. It is further stated that the respondent no.1 has nothing to do with the vigilance inquiry as stated in the para and since the respondent no.1 has duly completed its work as per the agreement/work order. It is also denied that the award given by the learned Arbitrator is based on unsound proposition of law, or is contrary to agreement of the parties, perverse contrary to judgments on the subject, contrary to law and public policy. It is pleaded that Sections 12 & 34 (2) of Arbitration & Conciliation Act, 1996 provides for the grounds on which award passed can be challenged and a perusal of the grounds would show that in none of the grounds i.e. subparas A to T the ingredients of said Sections are touched. According to the respondent no. 1 it is a well settled by the various judgments of the Apex Court as well as our own Hon' ble High Court that while examining the objections U/s 34 of Arbitration & Conciliation Act does not sit as a court of appeal and, therefore, cannot appreciate the evidence and in the present case all grounds are mere towards the appreciating of evidence and record before the 14 learned Arbitrator.
The respondent no. 1 has denied all the grounds raised by the petitioner/ objector for setting aside the award in question. It is stated that the claim of the claimant was within prescribed period of limitation and in this regard it is submitted that again the objector is appreciating the evidence and the findings of the learned Arbitrator which cannot be permitted as the learned Arbitrator has already elaborately dealt with the same. It is further contended that the learned Arbitrator was appointed by the Hon' ble Court on the petition filed by he claimant u/s 11(6) of Arbitration and Conciliation Act and the contents raised under present ground were not raised by the Objector in the said petition hence the same cannot be taken now. According to the respondent they have filed their claim before the learned Arbitrator and produced all necessary documents and learned Arbitrator after going through all documents placed by the parties gave the award without any infirmity. 15 ISSUES FRAMED:
It is evident from the arbitration award that the Ld. Arbitrator has framed the following issues:
1. Whether the claim is time barred or not?
2. Whether the appointment of Arbitrator is not in accordance with Cl. 25 of Agreement?
3. Whether claimant issued notice as alleged and anot replied by respondent?
4. Whether claimant is entitled for claim made?
5. Relief.
ARGUMENTS AND FINDINGS:
I have gone through the authorities placed on record by both the parties. Before proceeding to dispose off the objections raised by the objector briefly the law relating to Section 34 of the Arbitration and Conciliation Act is discussed as under: The provisions of Section 34 (1) of the Act provide that the arbitral award may be set aside by the court on an application for setting aside the same being made on 16 any grounds specified in the subsection (2) and within the time prescribed. The provisions of Section 34 (2) (a) are reproduced as under:
'' 2(a) the party making the application furnishes proof that i. a party was under some incapacity; or ii. the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force;
or iii. the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or iv. the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, 17 or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or v. the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or failing such agreement, was not in accordance with this Part.'' Sub section 2 (a) also provides that party making such an application shall furnish proof to the court in support of such application. The court is entitled to set aside the award only if the grounds mentioned in subsection (2) of 18 Section 34 read with grounds stated in Section 13 and Section 16 of the Act are proved to its satisfaction by the party making such application for setting aside the award and too if satisfy the court that the allegations are true. The onus of proving that the grounds as per subsection (2) of Section 34 of the Act exists and that the award is liable to be set aside lies on the party making such an application.
The Delhi High Court has in the case of Govt. of N.C.T. Delhi Vs. Khem Chand reported in 2003 (2) RAJ 437, by relying upon the ruling of the Hon' ble Apex Court in AIR 1963 SC 677, observed that:
" ..........a Court should approach an award to support it if it is reasonable, possible rather than to dispute it, by calling it illegal. The law in this regard as it existed prior to enactment of Arbitration and Conciliation Act, 1996 still holds the field....."
19 It was further observed that:
" .........the jurisdiction of the Court when called upon to decide the objections raised by a party against an arbitral award is limited, as expressly indicated in the Arbitration and Conciliation Act, 1996. The court has no jurisdiction to sit in appeal and examine the correctness of the award on merits with reference to the material produced before the arbitrator, it can not sit in appeal over the view of the arbitral ......."
The Hon'bl e Supreme Court has in the case of Oil and Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd. reported in AIR 2003, Supreme Court, 2629, has while discussing the phrase Public Policy observed as under: '' Therefore, in our view, the phrase public policy of India' '' ' used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public 20 policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is on the face of it, is patently in violation of statutory provisions cannot be said to be in public interest. Such award/ judgment/ decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given public policy'' to the term '' in Renu Sagar Power Co. Ltd. Vs. General Electric Co., 1994 Supp (1) SCC 644 it is required to be held that the award could be set aside if it is patently illegal. The result would be award could be set aside if it is contrary to;
(a) Fundamental policy of Indian Law, or
(b) the interest of Indian: or 21
(c) justice or morality; or
(d) in addition, it is patently illegal Illegally must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy.
Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court.
Such award is opposed to public policy and is required to be adjudged void.' ' In the case of Bhagwati Oxygen Ltd. Vs. Hindustan Copper Ltd. reported in AIR 2005 SC 2071, it has been observed by the Hon'bl e Apex Court that: " .........In Rajasthan State Mines & Minerals Ltd. Vs. Eastern Engineering Enterprises & Another, (Supra), this court after considering several decisions on the point held that if an Arbitrator has acted arbitrarily ,irrationally, capriciously or beyond the terms of 22 the agreement, as award passed by him can be set aside. In such cases the Arbitrator can be said to have acted beyond the jurisdiction conferred on him....."
It was further observed that:
" ........In U.P. State Electricity Board Vs. Searsole Chemicals Ltd. (Supra), that: where the Arbitrator had applied his mind to the pleadings, considered the evidence adduced before him and passed an award the court could not interfere by reappraising the matter as if it were an appeal......"
" .......In Indu Engineering & Textiles Ltd. Vs Delhi Development Authority (Supra) that: '' An Arbitrator is a judge appointed by the parties and as such the award passed by him is not to be lightly interfered with......"
" .......In Bharat Coking Coal Ltd. Vs. M/s Annapurna Construction 23 (Supra) that: there is distinction between error within jurisdiction and error in excess of jurisdiction. The role of the Arbitrator is to arbitrate within the terms of the contract and if he acts in accordance with the terms of the agreement, his decision cannot be set aside. It is only when he travels beyond the contract that he acts in excess of jurisdiction in which case the award passed by him becomes vulnerable and can be questioned in an appropriate court....."
Further in the case of Tribal Cooperative Marketing Development Federation of India Ltd. Vs. Auro Industries Limited, reported in 2002 VII Apex Decisions (Delhi) 194 it was observed as under: " ..........Any finding of the Arbitrator either on factual or on legal matrix if on subsequent examination is found to be wholly unsound the award is liable to be set aside as it amounts to 24 factual or legal misconduct. In ordinary course the Court does not sit in Appeal nor is it required to reappreciate the evidence and the material on record produced before the Arbitrator. Even if there are erroneous findings of the Arbitrator as to the facts the Court should always refrain from interfering with it. What should irk the Court is that perversity of illegality should be writ large on the fact of the award....."
Hence, in view of the various authoritative pronouncements discussed above it is clear that this court is not sitting in appeal against the award passed by the sole arbitrator and the court is not required to reappreciate or re evaluate the evidence led before the arbitrator.
It is settled law as reported in the case of Associated Engineering Company vs. Govt. of Andhra Pradesh, reported in 1992 SC 232 that an arbitrator cannot act arbitrarily, irrationally, capriciously or independently of the 25 contract and has sole function is to arbitrate in terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled outside the bounds of the contract, he has acted without jurisdiction. But if he has remained inside the parameters of the contract and has construed the provisions of the contract his award cannot be interfered"...
An objection has been raised by the objector/MCD is with regard to the limitation. It has been vehemently argued by the Ld. counsel appearing on behalf of the objector/ MCD that the Ld. Arbitrator has failed to appreciate that the liability of the objector MCD qua the respondent contractor was discharged on the expiry of 90 days in terms of the provisions set out in the Arbitration Agreement contained under clause 25. It is argued that the invocation of the arbitration as well as the claims filed by the claimant were barred by time as per the provisions of Clause 25 of the Agreement since as per the terms and conditions of the Arbitration Clause 25 the claimant has to make the demand for appointment of the Arbitrator and he has to 26 invoke the arbitration in writing within 90 days. It is argued that in the present case the completion of work is disputed by the MCD and the Vigilance Department is already investigating the matter as to how entries have been entered into the measurement books without SLF receipts, videography and photography and the Commissioner MCD vide letter dated 9.10.2002 through the Additional Director Vigilance ordered that no further payment in the year 2000 2001 and 20012002 relating to desilting of drains by CSE Division should not be made till such investigations are completed. It is argued that as per the respondent no. 1 the work was completed in June - July 2000 and therefore, the respondent no. 1 should have invoked the Arbitration within 90 days and having invoked the same in the year 2005 which was much beyond the special period agreed by the parties, the arbitration is beyond the period of limitation even as per the law of limitation. The Ld. counsel appearing on behalf of the objector has placed his reliance in the case of Wild Life Institute of India Vs. Vijay Kumar Garg reported in 27 1997 (10) SCC 528 and in the case of National Insurance Co. Vs. Sujir Nayak & Co. reported in AIR 1997 SC 2049.
I have considered the arguments raised and also the arbitration award. It has been alleged by the respondent that they had completed the work on 9.6.2000, the final bills were prepared in the month of June - July 2001. The petition under Section 11 (6) of the Arbitration and Conciliation Act to appoint an Arbitrator was filed before the Ld. District & Sessions Judge in the year 2005 and the arbitrator was appointed by the order of Ld. ADJ dated 14.7.2005. The Delhi High Court has in the case of D.C. Kapur Vs. DDA reported in 130 (2006) DLT 94 has observed that the Arbitrator can be appointed within three years of the preparation of the final bills. Earlier the Delhi High Court had laid down this principle in the case of M/s. Oriental Structural Engineer Pvt. Ltd. Vs. M/s. Rites and Another reported in AIR 1999 Delhi 303 which principle applies to the facts of the present case. I find no illegality in the findings of the Ld. Arbitrator and I hold that the claims 28 filed by the respondent are within the period of limitation.
The primary objection raised by the applicant is with regard to the payment to be made to the contractor/ claimant in the absence of prescribed mandatory procedure. It is argued that the respondent no. 1 has failed to prove the completion of work and no SLF receipts, videography and photography has been filed before the Ld. Arbitrator on account of which the impugned award is bad. It is vehemently argued by the objector that as per the general usage, practice and procedure adopted by the MCD the contractors were required to supply and furnish the photo graphic/ videographic proofs of work executed by them in respect of desilting activities and the terms and conditions of the agreement/ contractor in writing that the contractor were required to produce the dumping receipt/ receipt from the SLF site for the quantity of SLF and other material dumped at SLF site. It is submitted that the respondent at no point of time submitted the requisite SLF receipt or any of the receipt regarding the acknowledgment of the work done of dumping desilting and therefore under these 29 circumstances, the claims so awarded by the arbitration is not in accordance with the terms and conditions of the agreement. Ld. counsel appearing on behalf of the Municipal Corporation has also pointed out that the related vigilance inquiry has been undertaken by the Vigilance Department regarding desilting of nallas of West Zone for the year 20002001 which is still pending. It is pointed out that the charge sheet is issued to most of the delinquent officials. Copy of the related proceedings with regard to the vigilance has already been placed on record by the objector through its Executive Engineer West Zone. Ld. counsel appearing on behalf of the respondent has on the other hand argued that the Arbitrator has already considered the grounds so raised while deciding the claim between the parties and it is not open for this court to reassess the entire evidence lead before the Arbitrator and to interfere with the findings of the arbitrator to that extent. Ld. counsel has argued that the objector can only challenge the award on the grounds as contained under Section 34 (2) of the Arbitration and Conciliation Act and revaluation and reassessment of the 30 entire material is impermissible before the court of law.
I have duly considered the rival contentions made on behalf of both the parties. I have also gone through the findings of the Ld. Arbitrator on the aforesaid aspect. It is evident that Sh. Surender Singh Executive Engineer in his evidence by way of affidavit has specifically stated that the claimant had not followed the mandatory procedure and had failed to file the documents which disentitle him to any claim. He has also testified that the payment had been withheld in view of the orders from the Vigilance Department. According to the claimants the silt was required to be carried at SLF site at Bhalswa for which a lead of 10 - 20 Kms was provided in the estimated as per the jurisdiction. According to the claimants, they had dumped the silt at Vikaspuri, Naraina and Uttam Nagar but he is unable to tell silt of which area was dumped at which place and according to him they used to dump the silt wherever the space was made available as per the instructions of the field staff. In his evidence the claimants did not give any details to MCD officials regarding the lead and has also stated that 31 he did not keep any account of the truck he used to carry out the silt. Further, according to the claimant the silt used to be carried in his tractor trolly. It is admitted by the respondent that the SLF receipts were not submitted. The witness of the objector has admitted that the bills of the claimant for payment had been passed by the Executive Engineer and the Additional Accountant. It is further an admitted case that neither the earnest money was forfeited nor the contract was rescinded.
I have applied my mind to the facts before me. I have also considered the agreement entered into between the parties and the Special condition which require the contractor to attach alongwith the bills the slips regarding deposit of silt either at the SLF site or at the alternative site so provided by the Engineer Incharge or the Executive Engineer. The Ld. Arbitrator has proceeded to decide the aforesaid in view of the fact that the quantity of work has been measured, entered, billed and passed for payment by the officials of the objector (Municipal Corporation) for all the works so executed by the respondent and as per the 32 certificates provided by the objector the work has been recorded to be completed as per the specifications and NIT conditions. He has further observed that the lead for cartage of silt has been measured and billed for actual lead for which material has been carted and it is evident that no notice has been issued to the respondent by the objector with regard to the non dumping of the silt at SLF site.
The desilting work involve two processes first the actual desilting and second to carry of silt to Sanitary Land Fill site where a receipt is issued and the contractor is required to complete both the processes which receipts had not been submitted by the claimant (present respondents) and therefore under these circumstances, the work cannot be stated to have been completed by the respondent where there is the question of making any payment. It is also evident that vigilance inquiry has been initiated against the contractors regarding the desilting work in the year 2000 2001 in as many as 6 zones which also included the West Zone and there are specific directions from the Finance Department not to release the payment till the disposal of the 33 matter by the Vigilance Department. The measurement books and the completion certificates on which the arbitration has placed his reliance are all secondary evidence since these document are based upon the happening of a particular event i.e. on depositing of silt at the designated site which primary event has to be first proved by the respondent/ contractor independently. The terms and conditions of the agreement require that the deposit of silt should be proved by attaching alongwith the bills the slips regarding deposit of silt either at the SLF sites or at the alternative site so directed by the Engineer Incharge or Executive Engineer. Therefore, under these circumstances, how then can the documents i.e. Measurement Books which are based upon the basic transaction of removal and deposit of silt, be relied upon without the event of removal and deposit of silt being proved by the contractor as required under the terms and conditions of the contract (i.e. by attaching the receipts regarding deposit of silt). Technically silt can be measured only after its deposit. The said deposit can only be made at designated site for which receipt is 34 given. This requirement has been made mandatory as a safeguard towards the unscrupulous contractors who make exorbitant claims without actually performing the work.
It is also evident from the record that the Arbitrator was aware of the vigilance inquiry being held by the vigilance department. While dealing with the present objection before this court the objector has informed this court that the vigilance inquiry regarding West Zone for the work in the year 200001 is still pending and vide order dated 15.4.2008 of the concerned authority a charge sheet had been issued against many delinquent officials. A copy of the related proceedings and various details showing that a number of officials of the Municipal Corporation of Delhi of the rank of JE, AE, Accountant, EE etc. being slapped with a major penalty qua the lapses committed by them in respect of the desilting of drains carried out the SCE contractors, have also been placed on record. The record filed before this court also shows that a charge sheet has been issued to many other delinquent officials whose names have been mentioned in the status report.
35
The Ld. Counsel appearing on behalf of the objector / MCD has vehemently argued that the Arbitrator has exceeded his jurisdiction by not taking into account the existing usage of trade applicable to desilting operations which requires a contractor to furnish the photographs/ videography of proof of work executed by them in respect of desilting activity and also makes it necessary for them to produce the dumping receipts/ receipts from the SLF sites.
It is evident from the various documents placed on record that the requirement of the contractor to make the video film and still photographs for desilting of drain before the start of work, during the progress of the work and on the completion of the work on day to day basis, had been inserted only later in the Special Conditions and the same were not a part of the conditions earlier in the year 2000 when the present contract was entered into between the parties. However, the special conditions duly admitted by both the parties, shows that as per special condition no. 2 the contractor was required to produce the receipts from the SLF site for that quantity of silt and other material which he will 36 dump at the SLF sites for making the payment to him. It is evident from the arbitration proceedings that the claimant/ contractor did not produce the said receipts from the SLF site of the quantity of silt and other material dumped at the SLF site for making the payment to him, a fact which is admitted by the claimant/ present respondent. It is only natural that once the silt is removed from a particular place it has to be deposited at some site and it is only then the measurement of the work done can be calculated. In the present case it had been pleaded by the present objector before the Arbitrator that desilting work involve two processes i.e. firstly desilting and second carriage of silt to SLF site and it is evident that the Arbitrator has failed to appreciate that both the works cannot be separated or segregated since removal of silt at one site would involve its deposit at some alternative site only when the work can be measured. The special terms and conditions duly admitted by both the parties before the Arbitrator require firstly that the contractor would produce the receipts from the SLF sites for the quantity of silt and other material which he dumped at the SLF sites for making 37 payment to him and secondly that the department may ask the contractor to deposit the silt at other site other than SLF sites as per the directions of the Engineer Incharge.
There is, however, nothing on record to show that the existing usage and trade practice required photography/ videography of the site existing in the year 2000. It appears that the above requirement was only incorporated in the Special Conditions over last few years and therefore, under these circumstances it will be improper to insist upon photography/ videography of the site for the works awarded/ done in the year 2000. Even otherwise the said objection requiring photography/ videography was never raised by the objector before the arbitrator.
However, in so far as the submissions of the SLF receipts is concerned the same has been provided under Clause 2 of the Special Condition duly admitted by both the parties. The Clause 4 further require that the silt and other material is required to be removed simultaneously by the contractor and the payment would be relised to the contractor only after the site is cleared of all the silt etc. The 38 relevant clauses of the said terms and conditions are being reproduced as under:
2. The contractor will produce receipts from SLF site for that quantity of silt and other materials which he will dump at SLF for making payment to him.
3. The department may ask the contractor to deposit the silt at any other site other than SLF also as per directions of Engineerin Charge.
4. The silt and other materials will be removed simultaneously by the contractor. The payment will be relised to the contractor only after the site is cleared of all the silt etc. 39 It is, therefore, evident that no payment can be released to the contractor till the site is cleared of silt and it is necessary for the contractor to deposit the receipt of SLF site or the authentication slips issued by the competent officer showing the deposit of silt of any other site other then the SLF site on the directions of the Engineer Incharge or the department.
The Ld. Arbitrator while deciding the aforesaid claim has placed his reliance on the fact that the silt was carried to the requisite dumping site as per the directions of the field staff, measurements were entered and the bills were passed for the payment. He has failed to consider that a vigilance inquiry had been set up regarding involvement and connivance of the MCD for desilting of drains which included the West Zone and therefore, under these circumstances, the certificates showing that the work had been executed by the contractor as per the specification and NIT conditions, measurement books and various bills should have been properly scrutinized for the purposes of examining their correctness which has not been done by the 40 Arbitrator. This was all the more necessary as the respondent/ contractor had failed to produce the receipt from the SLF site for the quantity of silt and other material dumped at the site/ alternative site. It may be noted that even if the contractor has been directed by the field staff to dump the silt at the alternative site, the authenticated slips from the competent officers showing that the silt which had been removed from the site had been dumped at the alternative site should have been produced which again has not been done.
Arbitrator is the creation of the agreement and derives his jurisdiction from the terms and conditions of the agreement entered into between the parties. He cannot ignore a material requirement as agreed to between the parties and incorporated in the terms and conditions on the ground of hardship. Unfortunately in the present case the Arbitrator has ignored the material requirements as provided in the agreement and the contractor having failed to comply with the terms and conditions of the contract which imposes a condition precedent to the release of the payment. The 41 Arbitrator has exceeded his jurisdiction by ignoring the fact that the claimant had himself not complied with the provisions of Clause 2 and 3 of the Special Conditions. It is a settled law that this court cannot sit in an appeal and examine the award on merit yet in a case where there is an error apparent on the face of record and the Arbitrator decides the claim in favour of a party who has not complied with the essential requirements as provided under the terms and conditions of the contract, the court has sufficient powers to intervene.
Even otherwise public policy of India requires that the Arbitrator should safe guard himself against any mischief where parties have raised false and exaggerated claims. Having being informed about the scam regarding raising of false exaggerated claims by the CSE contractors involved in work of desilting of drains in connivance with the officials of MCD against whom vigilance inquiry was pending, and many of such officers of the defendant even been having held guilty in the departmental proceedings, it was all the more necessary for the Arbitrator to have been 42 more cautious in his proceedings.
Public interest requires that work so awarded to the contractor should be done as per the norms provided under the agreement and any deviation in this regard should be dealt with sternly. The work awarded to the contractor in the present case was of desilting of drains and in case if the contractor had carried out the desilting operation and removed the silt from the allotted side he would have deposited the same at some alternative site so provided to him. The measurement of the silt has to be done from the site where it is so deposited by the contractor which deposit can only be made after the contractor obtains the receipt issued from the SLF site or in case of alternative site the authenticated slips issued to him which have to be submitted to the department alongwith the bills. The Arbitrator should have appreciated that mere entries in the measurement book would be of no consequence if the receipts showing the deposit at the site are not placed before the department alongwith the bill. This requirement has been made mandatory as a safe guard to check the unscrupulous officers 43 of the department who in connivance with the contractors make entries in the measurement book and raise claims without actually performing the work so awarded. The Arbitrator and also this court cannot be a mute spectator to such illegal acts. No claim can be awarded for the work not done by the Contractor. Filling up a measurement book is not a mere formality and it is required to be done in accordance with the prescribed norms setforth in the agreement and not on whims and fancies of some functionary of the department. Rather, officers who violate the prescribed norms are required to be proceeded against and an adverse inference of such a conduct is required to be drawn. This court cannot ignore that the work so awarded to the respondent/ contractor of desilting of drains if not properly performed, adversely affects public health and convenience.
In view of the aforesaid I hereby hold that the claims so awarded by the arbitrator despite the non compliance of the mandatory requirements of the terms and 44 conditions of the NIT by the respondent, an error is apparent on the face of the award dated 13.7.2007 and I hold that the award dated 13.7.2007 is bad and against the public policy of India and there being an error apparent on the arbitration award dated 13.7.2009, I hereby set it aside. File be consigned to Record Room.
Announced in the open court (Dr. KAMINI LAU) Dated: 4.7.2009 Addl. District Judge: Delhi 45