Delhi High Court
C. Lal Gupta vs Delhi Development Authority & Anr. on 27 October, 1999
Equivalent citations: 2000IAD(DELHI)37, 2000(52)DRJ12
Author: Vikramajit Sen
Bench: Vikramajit Sen
ORDER Vikramajit Sen, J.
1. In order to appreciate the disputes which fall for adjudication in these proceedings, it is necessary to detail the claims that were raised before the Arbitrator, who was a nominee of the DDA. The Arbitrator was not only a qualified Civil Engineer, but was the Superintending Engineer (Arbitration) of the DDA.
2. The Claims were the following:
S. No. Amount Claimed Amount Granted
Claim No. 1 Rs. 2,12,152/- Rs. 48026/-
Claim No. 2 Rs. 46,300/- Nil
Claim No. 3 Rs. 1,85,200/- Rs. 69,736/-
Claim No. 4 Rs. 30,000/- Nil
Claim No. 5 Rs. 33,957/- Nil
Claim No. 6 Rs. 88,400/- Rs. 24,000/-
Claim No. 7 Rs. 3,60,000/- Nil
Addl.
Claim No.1 Pendente lite Nil
interest
Future interest
@ 12% per
annum on
Rs. 72026/-
pre suit Nil
interest
(already covered
under Claim 1)
Addl.
Claim No. 2 1,24,165/- Nil
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Rs. 1,41,762/-
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3. The petition under Section 14(2), 17 and 29 of the Arbitration Act, 1940 was filed in April 1992 praying, inter alia, that a judgment be pronounced in terms of the Award dated 30.3.1992. The immediate reaction was the filing of I.A. 3801/94 by the DDA. which are objections under Sections 30 and 33 of the Arbitration Act, 1940.
4. I now proceed to consider the Objections seriatim.
Claim No. 1:
5. Under this Claim the Award is as follows :
The claim is on a/c of less measurement in the final bill.
The respondents contended that the claimant did not raise any objection on a/c of less measurements/work done not paid at the time of payment of running bills or final bill. The respondents also relied on the undertaking given by the claimant vide Ext. R-9 to the effect that he would not claim anything for unused material.
The claimant explained that he did not raise any objection upto the payment of 3rd R/A bill as there was no dispute about the measurements till then. As regards objection not having been raised at the time of final bill, the objection, he said, was not raised on the fear that large amount due to him will not be released by the respondents in case he protested. The letter Ext. R-9, he said, was given under duress.
I am inclined to agree with the pleading of the claimant that undertaking was given under duress as no prudent man will give such an undertaking in normal circumstances. The claimant has submitted the bills for procurement of material vide Ext. C-43 to C-50. 3rd bill was paid on 28.1.85. The claimant has stated that there was no dispute of measurement upto 3rd R/A bill. It is seen that bills bearing Exhibits, C-50, C-48, C-47 (page-1), C-46 (Pae-1) and C-43 (page 1 & 2) are for the period prior to payment of 3rd R/A bill. Thus, the quantities reflected therein cannot be considered. As regards other bills, the payment for certain quantities brought after payment of 3rd R/A bill have been accounted for and paid in the final bill. Consolidation, pre-mix carpet and seal coat required use of road roller as well as bitumen. The claimant could not produce any evidence to establish the use of road roller as well as consumption of bitumen in regard to consolidation, premix carpet and seal coat. Also, actual consumption of bitumen and the use of road roller fairly tally with the theoretical requirements as compared to the quantities paid in final bill. Thus, considering the evidence adduced and pleadings made by both the parties, I find that the claim is partly justified to an extent of Rs. 48026/- only.
6. The Objections thereto against this adjudication by their nominated Arbitrator, is as follows :
"That the award of Rs. 48,026/- under Claim No. 1 is perverse inasmuch as the learned Arbitrator has wrongly assumed that the claimant had signed the final bill without raising any objection under duress whereas no particulars of the circumstances from which such an inference could be drawn were pleaded by the claimant and nor was any such material before the learned Arbitrator to arrive at such an inference. Accordingly, the arbitrator erred in partly allowing the claim in the manner awarded by the arbitrator without any basis as to how such amount was worked out by the arbitrator."
7. In my view there is no substance or merit whatsoever in the contention raised by learned counsel for the DDA that no reasons have been given for arriving at the figure of Rs. 48026/-. The Arbitrator has sufficiently discussed the reasons which weighed in his mind at the time of adjudicating this Claim. He has specifically observed, inter alia, that "Consolidation, pre-mix carpet and seal coat required use of road roller as well as bitumen and that Claimant had not produced any evidence to establish the use of road roller as well as consumption of bitumen in this regard". He has further stated that actual consumption of bitumen and the use of road roller fairly tally with the theoretical requirements as compared to the quantities paid in final bill. On this basis, using his expertise not only as a Civil Engineer but as a Senior Officer of the DDA, he awarded a sum of only Rs. 48026/- as against the claimed sum of Rs. 2,12,152/-. What further reasoning or computation was required to be given by the Arbitrator? There is a plethora of precedents laying down that the Arbitrator does not have to give a detailed judgment, on the lines which lawyers are accustomed to. In my view, therefore, this Objection is vexatious, and deserves to be dismissed with exemplary costs.
CLAIM NO. 3:
8. Under this claim the Award is as follows :
"As per S.E.'s letter dt. 11.5.88 and also as per noting on extension of time proforma Part-II, the work was treated to have been completed on 29.8.85. According to the provision in the agreement, the bill of the claimant should have been finalised and security released within 6 months thereafter i.e. by 28.2.86. The bill was, however, finalised on 1.9.88 and the payment amounting to Rs. 1,84,502/- was made to the claimant on 1.9.88 and the securing amounting to Rs. 47,951/- was released thereaf ter. Thus, the release of payment to the claimant was abnormally delayed by the respondent and, therefore, claim for interest is found to be quite justified. The claimant has claimed interest @ 24% p. a. which is rather on high side. I consider an interest @ 12% p.a. to be reasonable and, I award a sum of Rs. 69,736/- by way of simple interest @ 12% p.a. on an amount of Rs. 2, 32,453/- for the period w.e.f. 28.2.86 till 31.8.88."
9. The Objection against Claim No. 3 are as follows:
"That the award of interest amounting to Rs. 69,736/- on the plea of the so-called abnormal delay in releasing the security amount of only Rs. 47,951 and on account of the release of withheld amount of Rs. 1,34,502/- was neither the referred claim nor was it the subject matter of the claim. The amount so awarded is beyond the purview of the agreement and no such interest is payable in view of the clauses 29 and 30 of PWD-7 namely the greement between the parties. It is submitted that the award to that extent is beyond the scope of reference and contrary to the provisions of contract. All dues have been paid in time after completion of formalities by the petitioner."
10. In order to comprehensively deal with this Objection, Clauses 29 and 30 are reproduced for easy reference :
"Clause 29 (1) Whenever any claim or claims for payment of a sum of money arise out of or under the contract against the contractor, the Engineer-in-Charge or the DDA shall be entitled to with-hold and also have a lien to retain such sum or sums in whole or in part from the security, if any deposited by the contractor and for the purpose aforesaid, the Engineer-in-Charge or the DDA. shall be entitled to with-hold the security deposit, if any furnished as the case may be; and also have a line over the same pending finalisation for adjustment of any such claim. In the event of the security being insufficient to cover the claimed amount or amounts or if no security has been taken from the contractor, the Engineer-in-charge or the DDA shall be entitled to with-hold and have a lien to retain to the extent of such claimed amount or amounts referred to above, from any sum or sums found payable or which at any time thereafter may become payable to the contractor under the same contract or any other contract with the Engineer- in-charge or the DDA or any contracting person through the Engineer-in-charge pending finalisation or adjudication of any such claim.
It is an agreed term of the contract that the sum/sums of money so withheld or retained under the lien referred to above, by the Engineer-in-charge or DDA will be kept withheld or retained as such by the Engineer-in-charge or DDA till the claim arising out of or under the contract is determined by the Arbitrator (if the contract is governed by the Arbitration clause) or by the Competent court, as the case may be and that the contractor will have no claim for interest or damages whatsoever on any account in respect of such withholding or retention under the lien referred to above and duly notified as such to the contractor. For the purpose of this clause, where the contractor is a partnership firm or a limited company, the Engineer-in-charge or the DDA shall be entitled to withhold and also have a lien to retain towards such claimed amount or amounts in whole or in part from any sum found payable to any Partner/Limited Company as the case may be whether in his individual capacity or otherwise.
(2) Delhi Development Authority shall have right to cause an audit and technical examination of the works and the final bills of the contractor including all supporting vouchers, abstract etc. to be made after payment of the final bill and if as a result of such audit and technical examination any sum is found to have been overpaid in respect of any work done by the contractor under the contract or any work claimed by him to have been done by him under the contract and found not to have been executed, the contractor shall be liable to refund the amount of over payment and it shall be lawful for Delhi Development Authority to recover the same from him in the manner prescribed in sub clause (1) of this clause or in any other manner legally permissible and if it is found that the contractor was paid less than what was due to him under the contract in respect of any work executed by him under it, the amount of such under payment shall be duly paid by Delhi Development Authority to the contractor.
Provided that Delhi Development Authority shall not be entitled to recover any sum overpaid nor the contractor shall be entitled to payment of any sum paid short where such payment has been agreed upon between the Chief Engineer or Executive Engineer on the one hand and the contractor on the other under any term of the contract permitting payment for work after assessment by the Chief Engineer or the Executive Engineer.
Clause 30.
Any sum of money due and payable to the contractor (including the security deposit returnable to him) under the contract may be withheld or retained by way of lien by the Engineer-in-Charge or the DDA or any other contracting person or persons through Engineer-in-charge against any claim of the Engineer -in-charge or DDA or such other person or persons in respect of payment of a sum of money arising out of or under any other contract made by the contract with the Engineer-in-charge or the DDA or with such other person or persons.
It is an agreed term of the contract that the sum of money so withheld or retained under this clause by the Engineer-in-charge or the DDA will be kept withheld or retained as such by Engineer-in-charge of the DDA., till his claim arising out of the same contract or any other contract is either mutually settled or determined by the Arbitrator (if the contract is governed by the Arbitration clause) or by the competent Court, as the case may be; and that the contractor shall have no claim for interest or damages whatsoever on this account or any other ground in respect of any sum of money with-held or retained under this clause and duly notified as such to the contractor."
11. In respect of this Claim No. 3, the objection of the DDA is two fold - (a) claim was not referred nor was it sub-matter of the claim and (b) the amount awarded is beyond the purview of the agreement and no interest is payable. In order to appreciate these contentions, I have referred to the Claim and its Reply and find that there is no justification at all for these Objections.
12. The Claim and Reply is as follows:
"3. Claimant claim on account of with-held amount of final bill ten per cent security due to loss. Rs. 1,85,200/-
The amount of Rs. 2,31,500/- was with-held by the respondents illegally without any reason for three and half years, the interest of the same at the market rate of Rs. 24% per annum comes to Rs. 1,85,200/-. Hence the claimant is entitled to get the same amount from the respondents.:
13. Reply to claim No. 3 is as under :
"The claimant claim on account of withholding amount of final bill & 10% security is wrong & denied. No amount was withheld in final bill or security illegally. The work was rescinded by the department as delayed by the claimant and the balance work was to be executed on his risk and cost. If the amount was with-held a security was not released, it was all according to the provision of agreement. As the Act of the Department was in order, nothing can be paid to the claimant on this ground. The question of interest is also does not arise as the claimant has himself created such circumstance under which the payment was with-held. The claimants claim therefore, requires rejection."
14. It is evident that frivolous and irresponsible grounds have been raised by the DDA since not only was claim No. 3 specifically raised, but also these objections were never recorded or agitated in the Arbitration Proceedings. They are clearly after thoughts, and being so, are an abuse of the process of law, and deserve to be dismissed with exemplary and compensatory costs.
15. In respect of the application of clauses 29 and 30 from the DDA's reply extracted above it is clear that these clauses had not been relied upon in the Arbitration proceedings. The only defense in respect of this claim was that no amount was withheld and that the Petitioner had himself created circumstances under which the payment was withheld. Public bodies, such as the DDA cannot be excused for raising objections against the Award which are not founded on the arbitral proceedings. Objections appear to be filed as a matter of course, possible to delay payments under the Award, which practice I feel compelled to deprecate.
Claim No. 6 :
Under this claim the Awards is as follows :
"As per extension of time proforma Part-I, the claimant has indicated the delay of 236 days not attributable to him. The respondents, however, in extension of time proforma Part-II have admitted justified delay to be of 118 days showing the last date of hindrance as 8.5.88. The work was completed on 29.8.85. From Ext. C-30, it appears that no work could be executed after 9.5.85. The respondents have admitted in their letter dt. 2.9.86 (Ext-C-30) that the reason for slow progress was due to harassment from the local villagers and partly due to delay in releasing the payment.
From the above, I find that the claimant did face hindrances/obstructions in executing the work was causing in fructuous expenditure on establishment. However, the establishment as indicated by the claimant in Ext. C-51, on which the claim has been based, appeals to be on high side considering the nature and quantum of work.
Considering the facts and circumstances, I assess that the claim is justified to an extent of Rs. 24,000/- only, and I award this amount in favour of the claimant.
16. The Objections filed by the DDA against claim No. 6 are as follows :
"That the award of Rs. 24,000/- on account of extra expenditure is self contradictory to the observation of the arbitrator himself that the claimant did not face any hindrance in executing the work which may have resulted in infructuous expenditure. It is submitted that, in the circumstances, the awarded amount was not justified. The arbitrator also ignored that compensation under clause 2 on account of delay was levied on the contractor and in such circumstances there was no justification for enrichment of the contractor for his own defaults.
17. Although it has been asserted in the Objections that the Award is "self contradictory", this point was not agitated at the time of arguments. A perusal of the Award would disclose that the Arbitrator had taken note of the fact, based on Ex. C-30, that the Objectors had admitted that the reason for slow progress was due to harassment from the local villagers and partly due to delay in releasing payments. The Award is lucid. The claim was for Rs. 88, 400/- and after observing that the claim made was on the high side, Rs. 24,000/- has been awarded. The Arbitrator is not bound to disclose in detail the method adopted by him arriving at this quantum - his thought process is evident.
Additional Claim No.1 :
18. Under this Addl. Claim the Award is as follows :
"The claim is for interests, pre-suit, pendente lite and future. As regards, pre-suit interest, nothing beyond what has been awarded against Claim No. 1 is found to be justified. As per Supreme Court Judgment prevailing at the time of proceedings, the Arbitrator was not empowered to award pendants lite interest. I, however, allow future interest @ 12% p.a. on Rs. 72,026/- i.e. the total amount of award except the award given against Claim No. 3, for the period w.e.f. the date of making and publishing this award till the date of payment of decree whichever is earlier."
19. Objections filed by the DDA against Addl. Claim No.1 are as follows :
"That the award of future interest was not justified and beyond the terms and conditions of the agreement within which the arbitrator was supposed to determine the rights and liabilities of the parts on the referred claim. The same is otherwise also not tenable in law."
20. Objections were raised, but learned counsel for the DDA did not press them in view of the pronouncement of the Apex Court on the question of award of interest.
21. In the light of the above discussion, the Objections are dismissed with costs adjudged at Rs. 5000/-.
22. The award is made rule of the Court.