Delhi District Court
Svr Engineers vs Delhi Metro Rail Corporation on 31 August, 2021
In the Court of Shri Sanjiv Jain, District Judge,
(Commercial Court-03), New Delhi District
Patiala House Courts, New Delhi
Arbitration No. 1578/18
SVR Engineers
Z-78, 4th Floor, Flat No. 9,
Dayal Sar Road, Uttam Nagar,
New Delhi-110059
... Petitioner/objector
versus
Delhi Metro Rail Corporation,
Metro Bhawan, Fire Brigade Lane,
Barakhamba Road, New Delhi-110001
... Respondent/claimant
Date of institution : 08.05.2018 Date of reserving judgment : 11.08.2021 Date of decision : 31.08.2021 JUDGME NT
1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (as amended upto date) hereinafter called the 'Act' challenges the award dated 06.02.2018 passed by the Ld. Arbitrator Sh. Surya Prakash, whereby, an award of Rs. 90,477/- has been made in respect of the claims filed by the petitioner along with interest @ 10% per annum in case of delay beyond two months from the date of passing of award till the payment of award.
ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 1 of 60 Brief facts:
2. The facts as stated in the petition are that the respondent had invited tender from short listed agencies for maintenance of its office building at IT Park Block 1, Shastri Park, Delhi. As per Para 4.1 of the tender documents, all the works were to be carried out as per the CPWD Specifications / IS codes / Standard Relevant Specifications with upto date correction. The petitioner participated in the tender process and it was awarded the work. It was to be completed within a period of 12 months w.e.f. 21.12.2011. Clause 8.3 and 8.5 of GCC forming part of the tender contemplated that in case the petitioner fails to complete the work within the stipulated period of 12 months, it would be liable for the liquidated damages to be quantified as the parentage of the total contract value.
3. During the execution of work, the petitioner faced a peculiar situation i.e. the methodology provided for erecting the scaffolding as per the tender document, which interalia provided that the scaffolding should be connected with the building to provide the support. The building was having partially glass exterior. As per the methodology provided in the contract, for connecting the scaffolding with the building, the pipes were to run to the nearest ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 2 of 60 support of the wall inside the building, where offices / restaurant were being operated. Since the respondent had leased the space to various entities and the entities were not permitting the petitioner to connect the scaffolding with the wall of the building as it could have disturbed their entire operation, so in these circumstances, the petitioner had two options i.e.
(i) To construct the scaffolding as per the tender document and not to connect it with the building. It, however, had the risk of the lives of the public gathering and the labour working there as without support, there were chances of collapse of the scaffolding.
(ii) To construct independent double scaffolding as per CPWD specifications / IS codes / Standard Relevant Specifications.
4. Since the first option was not at all viable and feasible, the petitioner adopted the second option i.e. to construct independent scaffolding. Since, no external support was available to the independent scaffolding, its base had to be increased to enable the independent scaffolding to stand on. The petitioner vide letter dated 19.05.2012 brought it to the notice of the Engineer-in- Charge about the change in the design of the scaffolding but the Engineer chose not to respond till the completion of the work. The petitioner again vide letter dated 06.03.2013 informed the respondent the reasons for adopting the changed design of scaffolding but the ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 3 of 60 respondent remained silent and did not respond to its letter. After the completion of project, when the petitioner submitted its bill, the respondent for the first time disputed the same vide letter dated 12.07.2013 stating that the payment of scaffolding shall be made as per the BOQ item only.
5. Although, the final bill submitted by the petitioner was based on the work done whereby, the petitioner had demanded the cost of erecting independent scaffolding but the respondent despite having not disputed the existence of the independent scaffolding, did not make the payment for the independent scaffolding. The petitioner wrote letters vide dated i.e. 19.08.2013 & 30.09.2013 but the respondent prepared its own final bill and directed the petitioner to sign the same. Since, the final bill was not reflecting the true state of affairs, the petitioner refused to sign the same. Although, the petitioner requested the respondent number of times to release its payment expeditiously in accordance with the contract and also of the extra item of independent scaffolding but nothing fruitful happened. The petitioner then vide letter dated 30.01.2021 invoked clause 17.4 of GCC and requested the respondent to appoint a Conciliator for settlement of disputes enclosing the extracts from (a) Indian Oil Safety ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 4 of 60 Management System and (b) Occupational Health and Safety Act, Canada, as per which, the width of the base should not be less than 1/3rd of the height of the scaffolding. The respondent did not appoint any Conciliator to settle the dispute. Thereafter, the petitioner vide its letter dated 27.03.2015 issued notice of arbitration invoking the arbitration clause and requested the respondent to provide the names of three persons to be appointed as an Arbitrator. The Arbitrator was appointed. The petitioner filed its statement of claims making three claims interalia as under:
Claim No. 1: Work done but not paid and interest upto
31.08.2015 for Rs. 45,56,093/-.
Claim No. 2: Release of security and interest thereon from 16.08.2012 (date of payment of 1st running account bill) to 31.08.2015 for Rs. 1,27,170.67.
Claim No. 3: Loss of business opportunities for Rs. 5,00,000/-.
6. Alongwith the claims, the petitioner filed the measurements, sketch of the scaffolding system, extracts from the manual of (a) Indian Oil Safety Management System, (b) Occupation Health & Safety Act, Canada - Scaffolding Regulations and (c) Technical Manual of Saflock System Scaffold, Canada / CPWD specifications and code of practice for Steel Tubular Scaffolding issued by Bureau of Indian Standards. It pleaded that it had used 1.0m length pipes to connect the two multiple single frame ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 5 of 60 scaffolding.
7. The respondent filed the reply to the statement of claims admitting the receipt of letter dated 19.05.2012 along with the photographs of the scaffolding provided at site. It, however denied that the petitioner could not have connected the scaffolding with the building as stipulated in the BOQ item. It stated that there was a provision for connecting the scaffolding with the building at 4th, 5th, 6th and 7th floor but the petitioner chose not to follow the instructions / suggestions of the Site Engineer qua connecting the scaffolding with the building. It also stated that the letter dated 19.05.2012 was not complying with the requirements of clause 12.2.1 of GCC and therefore, the petitioner is not entitled to payment of any variation. The respondent, however, did not dispute about the petitioner using 1.0m pipes to connect two multiple single frame scaffoldings. It stated that the pipes, which connect the multiple single frame scaffolding should have been of 1.5m length as per BOQ item no. 14.72, which interalia reads as "providing and fixing double scaffolding system (cup lock type) on the exterior side upto seven story height made with 40mm dia MS tube 1.5 mm centre to centre horizontal and vertical tubes with cup and lock system with MS tubes, MS tube challies, MS clamps and MS ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 6 of 60 staircase system in the scaffolding for working platform etc. and mainting it in a serviceable condition for the required duration as approved and removing it there after. The scaffolding system shall be stiffened with bracing runners connection with the building etc, wherever required for inspection of work at required location with essential safety feature for the workman etc. complete as per directions and approval of engineer in charge. The lavational area of the scaffolding shall be measured for payment purpose. The payment will be made once irrespective of duration of scaffolding". The respondent did not dispute about the petitioner using the pipes at the spacing of 1.5m horizontally and vertically to construct the individual single frame scaffolding and connecting several individual single frame scaffolding to provide support and safety.
8. According to the petitioner, while connecting the individual single frame scaffolding to one another, it had used 1.0 m pipe of 40mm dia. Since, BOQ was silent about the length of the connecting pipe and the diagram provided in CPWD specifications for double frame scaffolding visually represented the connecting pipe to be of a shorter length than the length of the horizontal and vertical pipes of the individual scaffolding, so it had used the pipes of ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 7 of 60 shorter length of 1.0m for connecting individual single frame scaffolding. It was stated that as per clause 4.1 and 4.3.1 of the technical specifications, all works were to be carried out as per CPWD Specifications / IS codes / IRS and IRC Code / Indian Standard Code of Practices / British German American Standards.
9. It was stated that there was a rationale to provide shorter length of pipe to connect the individual single frame scaffolding as the strength of the shorter length pipe would be more than the strength of the longer length pipe of same diameter. It was stated that since, clause 56 & 57 of conditions of contract on safety, health and environment provided for penalty on the contractor and right on DMRC to stop the work at its sole discretion in case of failure to observe the safety norms, the petitioner had no other option but to follow the stringent safety norms and specifications of CPWD manual in its letter and spirit. It was not open to the petitioner to keep the connecting pipes of individual single frame scaffolding of 1.5m length, when CPWD diagrams provided for a shorter length pipe and there existed a rationale behind such shorter length.
10. The Arbitrator referred the relevant contract clauses and observed that as per the bills of quantities (BOQ), the ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 8 of 60 item NS-14.72 was for providing and fixing double scaffolding system (cup lock type) on the exterior side upto 7 storey height made with 40 mm dia MS Tube 1.5m centre to centre horizontal and vertical tube with cup lock system. The scaffolding was to be stiffened with bracing runner connection with the building etc wherever required for the inspection of work at required location with essential safety feature for the workman etc complete as per the directions and approval of Engineer-in-Charge. The lavitational area of the scaffolding was to be measured for payment purpose. He held that as elaborated by the petitioner, as per BOQ item, the scaffolding system was to be stiffened with bracing runners and connections with the building, however, since the building has structural glazing elevation on all sides, it was not possible to connect the scaffolding with the building as stipulated in the BOQ and it was thus imperative that BOQ item be varied and the scaffolding be designed as the free standing scaffolding system. He observed that as per the petitioner, CPWD specifications do not have any specifications for free standing scaffolding system. Therefore, as per clause 4.3.3 of the Technical Specifications of Contract, Standard Code of Practice was followed in this case, which as per clause 7.2 of IS 4014 (Part II) Code of Practice for steel tubular scaffolding, part II Safety Regulations for scaffolding ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 9 of 60 provided that "every scaffold shall be securely supported and suspended and shall where necessary be sufficiently and properly strutted of braced to ensure stability and unless it is properly designed and construed as an independent scaffold shall be rigidly connected with the building". He held that it was also impressed by the petitioner that it had designed the scaffolding considering the best engineering practices in India and abroad, and in the case of free scaffolding system, the width of the base should not be less than 1/3rd of the height of the scaffolding and thus it was imperative to provide several vertical tiers of scaffold duly connected and braced together for ensuring stability. Although, BOQ item stipulated only two vertical tiers of tubes, each tier comprising of 40mm dia MS tubes at 1.5m center to center vertically and horizontally connected by cup lock arrangements but since it had to provide several such tiers for increasing the width of scaffolding system base to 1/3rd of the height, the same were not paid by the respondent. It was impressed upon that the claim was due to variation in the design of scaffolding.
The Arbitrator referred sub-clause 4.9 and sub clause 4.13 and held that in this case, the petitioner could not produce the supportive document that it had submitted its proposal for change of design of scaffolding for approval ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 10 of 60 of the Engineer, however, it had forwarded the photograph of the scaffolding system adopted by it vide its letter dated 19.05.2012 indicating that it had to adopt the special design of scaffolding because there was no space inside the building and due to height and the companies working there were not willing to support. In the communication, it had assured the respondent for the safety and asked the respondent for making any modification, if any, in the arrangement for safety but there was no request for cost aspect or the approval of the changed design. He also referred sub-clause 5.3 and observed that submittal of drawings and documents should have been made sufficiently before the work was to be carried out but in this case, the petitioner adopted the scaffolding system informing vide letter dated 19.05.2012 but the consent of the Engineer on this remained silent. The Arbitrator in Para 9.5, 9.6, 9.7, 9.8 and 9.9 discussed the site conditions and the mode of calculation / variation and held as under:
9.9 The claimant have indicated one bay of 1 m wide double scaffolding at one location with height of 6m but at other locations they have indicated 2 bay of 1 m wide scaffolding with height 6m and 7.5m. At one location height is 8m after that height is much like 17m and 21m. It indicate that up to 8m 2 bay of 1m was workable but from 17m onward 2 bay of 1 m was not sufficient as in case of chhajja 4.5m base width was acceptable to both the parties but claimant indicated a base width of 5m with height 38m. Moreover the claimant has to use more than on ebay of 1.5m. On the basis of limitation of bracing of scaffolding at regular interval to ensure safety and stability. The base width of 2m is equivalent of 1.11 no. of double scaffolding ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 11 of 60 with 1.5m MS Tube. The assessed scaffolding area with 2.33 no. double scaffolding for height above 8m and up to 26m, 2.45 no. double scaffolding above 26m, 1.11 No of double scaffolding for height below 8m and at one location 1 no. of double scaffolding with 1.5m MS Tubes work out is 16066 sqm. The respondent have already billed for 15296 sqm, therefore, amount for balance 770 sqm i.e. 770X95.52= Rs. 73550/- is to be paid to the claimant.
The claimant raised the issue in revision in scaffolding methodology vide their letter dated 06.03.2013 which is after completion of the work i.e. 30.11.2012. The respondent requested claimant in response vide letter dated 12.07.2013 to submit the bill as per BOQ. The claimant indicated pending amount of Rs. 20 lakh vide letter dated 23.12.2013. The claimant submitted final bill vide letter dated 15.07.2013 and the respondent asked to resubmit the bill along with additional documents by 15.01.2014. The sole Arbitrator entered into Terms of Reference on 16.05.2015. Therefore, deemed holding on payment is from 16.01.2014 to 16.05.2015 which is one year four months. The interest amount on due of Rs. 73,550/- is Rs. 6848/- at rate 7% of simple interest.
11. Lavational Area - BOQ item 18/Schedule item 14.72; double scaffolding etc. Locat Length Height Base No. of double scaffolding ion (in m) (in m) (in m) In Claim Corrected Corrected Assessed as 1m as 1.5 m Tube Tube
1. 19.50 38.00 5 2X5 2X3.67 2X2.45 2X2.45
2. 18.50 21.00 8 2X8 2x5.67 2x3.78 2x2.33
3. 18.50 17.00 4 2x4 2x3 2x2 2x2.33
4. 13.50 21.00 8 1x8 1x5.7 1x3.78 1x2.33
5. 13.50 17.00 5 1x5 1x3.67 1x2.45 1x2.33
6. 19.00 21.00 6 1x6 1x4.33 1x2.89 1x2.33
7. 19.00 17.00 5 1x5 1x3.67 1x2.45 1x2.33
8. 18.00 21.00 8 1x8 1x5.67 1x3.78 1x2.33 ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 12 of 60
9. 18.00 17.00 5 1x5 1x3.67 1x2.45 1x2.33
10. 32.70 21.00 6 1x6 1x4.33 1x2.89 1x2.33
11. 32.70 17.00 4 1x4 1x3.00 1x2.00 1x2.33
12. 21.00 8.00 8 1x8 1x5.67 1x3.78 1x1.11
13. 10.00 26.00 5 1x5 1x3.67 1x2.45 1x2.33
14. 23.10 7.50 2 1x2 1x1.67 1x1.11 1x1.11
15. 19.90 7.50 2 1x2 1x1.67 1x1.11 1x1.11
16. 34.00 6.00 2 1x2 1x1.67 1x1.11 1x1.11
17. 6.00 6.00 1 1x1 1x1 1x0.67 1x1
18. 34.00 6.00 2 1x2 1x1.67 1x1.11 1x1.11
19. 23.50 6.00 2 1x2 1x1.67 1x1.11 1x1.11 Lavational Area 39273 28672 19102 16066 (in sqm)
12. In respect of claim no. 2, he held that the agreement was executed on 02.05.2012, however, the petitioner had submitted the performance guarantee for Rs. 309002/- vide letter dated 26.03.2012. He held that the tender security should be returned after executing the contract. He held that the interest period for delay in releasing the tender security would be from 16.08.2012 to 16.05.2015, the day, he entered into the reference. He referred para 3.8.5 of instructions to tenderer and held that the petitioner is entitled to interest of Rs. 10080/- i.e. @ 7% on the amount of 72000/-, which was the amount of the tender security.
13. In respect of claim no. 3 i.e. loss of business and loss of financial and social standing, he referred clause 14.6 of GCC r/w Section 28 (3) of the Act and awarded 'NIL' ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 13 of 60 amount.
14. The Arbitrator in total awarded Rs. 90477/- towards the claims payable within two months. He held that if it is not paid within the said period, it would attract interest @ 10% per annum for delay beyond two months from the date of award. He also directed the parties to share the cost of the proceedings equally.
15. The petitioner challenged the award on the following grounds:
A. That the Arbitrator, instead adjudicating various items forming part of claim no. 1 i.e. work done but not paid / paid short, only dealt with the claim of double scaffolding. He failed to give even a single reason and method of computation for arrival of quantum of money awarded against claim no. 1. He failed to disclose any reason why the method of calculation adopted by the petitioner was not to be followed. He did not give a single reason while computing the length of the pipe connecting the two independent single frame scaffolding as 1.5m. It is stated that since CPWD diagram is the engineering diagram, it cannot be presumed that shorter length of connecting pipe of two individual frame scaffolding is of no consequence. Since, the stringent safety norms and specifications of CPWD manual were to be followed by the petitioner in its letter & spirit, it was not open to it to keep the connecting pipe of individual single frame scaffolding of 1.5 meter length, when CPWD diagram categorically provided for a shorter length and there existed an engineering rationale behind such shorter length. The issue relating to 1.5m connecting pipe viz a viz 1m connecting pipe was raised before the Arbitrator but he chose not to deal with this issue. He thus violated the principles of natural justice and mandate of Section 18 of the Act.
ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 14 of 60 B. That while adjudicating claim no. 2, although, the Arbitrator awarded an interest on the unrefunded security deposit but he did not order for the refund of the security deposit. It is stated that awarding interest without ordering return of security deposit is opposed to the public policy of India shaking the conscience of the Court. It is stated that although, no set off was claimed by the respondent but the Arbitrator allowed the set off and misconducted himself and exceeded his authority. He also dealt with the date on which the security deposit was to be paid, though, there was no pleading to that effect.
C. That the Arbitrator failed to note that the work was supervised by the respondent's Engineer on day today basis and no objection was raised by the respondent before the completion of work that there was no need for multiple scaffolding and there existed space for connecting double frame scaffolding to the building. Further, the petitioner had informed the respondent vide its letter dated 19.05.2012 about the change in design of the scaffolding and sought permission of the Engineer-in-Charge and also put to the notice of the respondent that the change in design of the scaffolding would increase the cost substantially, which the respondent was liable to pay but when after the completion of work, the petitioner sought payments, the respondent made frivolous excuses. It is stated that as per clause 5.3, there was a deemed acceptance by the Engineer-in-Charge, since, he had not disputed about the change in the design of scaffolding and the letter dated 19.05.2012 within the stipulated period of 21 days.
D. That the Arbitrator was the Executive Director of the respondent and he could have been easily approached and influenced by the respondent.
E. That the award is in violation of Section 54, 55 & 70 of Indian Contract Act. The respondent never disputed the fact that the petitioner had erected multiple scaffolding to complete the work, which fact the Arbitrator also agreed that there was a necessity of multiple scaffolding to complete the work but he failed to take into account the amount of extra work done by it and computed ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 15 of 60 the same on surmises and conjectures without any factual / legal reasoning.
F. That the impugned award was passed on 06.02.2018, after a delay of more than two years since the commencement of the Arbitral proceedings (30.09.2015), though, as per the Act, Arbitrator was required to make award within 12 months of his appointment and in any case, not later than 18 months.
G. That the Arbitrator failed to take notice of increase in contract price due to imposition of GST by the Central Government. although, sub clause 11.1.4 of SCC indicates that the increase or decrease in cost resulting from imposition of new taxes or change in existing tax structure by the Government shall be borne by the employer.
16. On getting notice of the petition, the respondent filed its reply alleging that the objections raised by the petitioner are not maintainable since, the Arbitrator while passing the well reasoned and speaking award has taken into consideration the pleadings, evidences and the submissions of the parties. The petitioner failed to make out a case within the four corners of Section 34 (2) of the Act, which restricts the grounds for challenge. The petitioner failed to establish how the impugned award is patently illegal and / or contrary to the public policy of India or against the principles of natural justice. It is stated that while hearing the objections under Section 34 of the Act, the Court cannot and / or not expected to sit as a Court of appeal and / or appreciate / reappreciate the evidence led by the parties before the Arbitrator and / or substitute its own ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 16 of 60 view, even if there exists an alternate plausible view as against a view of the Arbitrator.
17. On merits, it is stated that the petitioner never challenged the appointment of the Arbitrator at any stage of the proceedings and the same cannot be taken as a ground for setting aside the award. It is stated that the petitioner having gone through the entire tender documents apart from having physically inspected the site cannot at this stage take the plea that there arose a peculiar situation, wherein, the methodology under the tender document was not practical and / or that there arose issues with the occupants of the building. It is however admitted that the building where the works were to be executed has the partially glass exterior and it was leased out to various entities. It denied that there arose any problem in the methodology under the tender document. It is stated that in terms of clause 12.2.1, the contractor was entitled to submit to the employer in writing at its own cost any engineering proposal as contractor's variation for modifying the employer's requirements. In this case, the petitioner had opted for an alternate methodology for the execution of work by submitting a proposal, which was duly adopted and as such, it under the contract was not entitled to any additional amount / costs for the alternate ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 17 of 60 methodology proposed and adopted by it. As Such, the issue of independent double scaffolding cannot be claimed to be a variation in the tender document. It denied that as per the methodology as envisaged in the tender document, there was risk to the public at large. It also denied that the alleged adoption by the petitioner was the only option for the execution of work awarded to it. It is stated that even if, the petitioner was required to increase the base to enable the independent scaffolding to stand on at the spot, the same could not have been at the cost of the respondent contractually. Had the methodology as envisaged under the contract been not practically feasible, the petitioner ought to have raised the same by way of clarification prior to the submission of bid but the petitioner having satisfied itself regarding the nature and scope of work under the tender documents apart from having physically visited / inspected the site, can not raise the issue that the original methodology envisaged under the contract was not proper. It also denied that the Engineer-in-Charge had chosen not to respond to the alleged change in the design of scaffolding and stated that the petitioner was rather advised to work as per the contract documents for the execution of work. It is stated that the works executed by the petitioner are governed by the terms & conditions as laid down under the contract, which interalia included ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 18 of 60 defect liability period. It is stated that receipts of the letters dated 19.08.2013 & 30.09.2013 and / or alleged failure on the part of the respondent to respond to the same would not entitle the petitioner to contend that by implication, the contents of the letters stood admitted by the respondent. It is stated that the final bill prepared by the respondent was based on the quantum of work executed by the petitioner in consonance with the rates quoted and the BOQ. The alleged bill submitted by the petitioner was not in accordance with the rates of BOQ r/w the measurement sheets. The respondent also denied that any alleged additional item i.e. independent scaffolding was envisaged under the contract document entitling the petitioner to the additional payments as claimed. It is stated that the claim of the petitioner towards the additional scaffolding is not tenable neither contractually nor lawfully.
18. It is stated that the Arbitrator, who has passed the award is a qualified Engineer. He has taken due note of the pleadings raised by the parties and considered the documents on record and then passed the award, which does not call for interference.
Arguments and contentions:-
19. I have heard Ld. Counsel Sh. Praveen Agarwal for ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 19 of 60 the petitioner & Sh. S. S. Sastry, Ld. Counsel for the respondent. Parties also filed their written synopsis.
20. Ld. Counsel for the petitioner reiterated what has been stated in the petition. He referred the statement of claims filed before the Arbitrator and the tender conditions including the correspondences made by the petitioner and contended that the Arbitrator did not adjudicate all the claims. Comparing the bill prepared by the petitioner with the bill prepared by the respondent, items 14.13, 14.27 and 14.72 were the disputed items because the figures were different from those proposed by the respondent. Items 14.42.1, 14.43, 14.53.1, 14.54.1 & 14.65.1 were accepted in principle and were liable to be paid but the Arbitrator did not pass any order on the accepted items and only chose to deal with the item 14.72 relating to double scaffolding.
21. Ld. Counsel further contended that as per clause 4.3 of the Standard Code of Practice, CPWD specifications and Indian specifications should be followed but if such specifications are not available, reliance should be placed on the British / German / American Specifications in the same order. Ld. Counsel stated that there is an Indian Standard i.e. IOC Safety Standard and clause 8.5 of the same discusses about the independent scaffolding. Ld. ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 20 of 60 Counsel referred the letter dated 19.05.2012, NIT stipulating the period of completion of work, penalty in case the contractor fails to achieve the target, clause 57 and 4.1.3 and submitted that the Engineer on receipt of a program shall inform the contractor in writing within 21 days and if no action is taken within 30 days, the Engineer shall deem to have given the consent to the program submitted. Ld. Counsel stated that the petitioner had submitted the photographs of scaffolding system adopted by it vide letter dated 19.05.2012 indicating that it had to adopt special design of scaffolding since there was no space inside the building and due to height and that the companies i.e. Genpact & L & T working there were not willing to cooperate. It had also asked the respondent to respond if it wanted any modification for safety but the respondent did not give any reply. Only choice, which left with the petitioner was to adopt the scaffolding system as per the photographs submitted with the letter dated 19.05.2012, lest, it could have stopped the work and faced a penalty for not achieving the target or failing to maintain the standards as applicable under clause 57.
22. Ld. Counsel contended that the Arbitrator did not give any basis why he adopted 1.5 meter interval between two props (tiers) while making assessment in fractional ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 21 of 60 numbers. Ld. Counsel stated that Delhi falls in the seismic zone 4 and as per Clause 3.4 of GCC, the work was to be carried out in accordance with the Safety Health & Environment (SHE). Ld. Counsel stated that the word 'employer's variation' is defined in clause 1.1.6. The answer to the questions "whether the employer gave any extra work or asked to leave a portion out", or "whether there was any variation in the employer's requirement" is "No". Ld. Counsel stated that the variation was in the manner of execution of the work because the tenants, who were occupying the building were not cooperating. So, the reliance placed by the Arbitrator on clause 12.2 is not admissible in this scenario. Ld. Counsel stated that the petitioner had given the specific reasons for adoption of special design of scaffolding in its letter but the respondent did not respond to the same. Ld. Counsel stated that the Engineer was constantly supervising the work and there is no letter on record, which says that the double scaffolding could be connected to the building and there was no need to erect independent scaffolding. Further, the respondent never disputed the existence of independent scaffolding at site, which the Arbitrator failed to address.
23. Ld. Counsel contended that the Arbitral award should state reasons upon which it is based as it guarantees ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 22 of 60 fair and legitimate consideration to the dispute. If the Arbitrator chooses to ignore certain facts, which are placed before him, it would amount to misconduct. He stated that the award could be set aside when the Arbitrator misconducts himself of the proceedings. Ld. Counsel stated that if the measurements are ignored, the arbitral award is liable to be set aside. In support of his contentions, Ld. Counsel placed reliance on the cases Somdutt Builders Ltd Vs. State of Kerala, CA No. 3089/2006, decided on 17.09.2009, International Data Processing Company Pvt Ltd Vs. Municipal Corporation of Delhi, 96 (2002) DLT 13, R. S. Avtar Singh & Co. Vs. National Projects Construction Corporation Ltd, 47 (1992) DLT 599 and Associates Builders Vs. DDA, (2015) SCC 49.
24. Ld. Counsel for the respondent per contra reiterated what has been stated in reply to the petition. He contended that the petitioner during pre bid process never raised any issue of scaffolding. It raised this issue subsequently and therefore, he cannot be allowed to take benefit of the same. Ld. Counsel referred clause 1.1.6.11 of GCC, BOQ item 14.72, clause 12.2.1 of GCC, clause 12.5
(iv) & (vi) of GCC, clause 7.9 and clause 7.10 and submitted that the final bill was approved and paid for an ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 23 of 60 amount of Rs. 5,58,670/- on 16.07.2018 after deduction of TDS, service tax and insurance. Ld. Counsel stated that the Arbitrator is a technical person. He was the Executive Director of DMRC. He has followed the procedure while passing the impugned award. The petitioner was given choice to choose one of the Arbitrators out of the three nominated Arbitrators, so the petitioner cannot be allowed to challenge the appointment of the Arbitrator at this stage. Ld. Counsel stated that as per clause 17.10 of GCC, interest pendente lite was not payable and the cost was to be shared equally by the parties. Ld. Counsel stated that there is no illegality / infirmity in the impugned award and the petition deserves to be dismissed. In support of his contentions, Ld. Counsel referred the case of Megha Enterprises & Ors Vs. Haldiram Snacks Pvt Ltd, OMP (Comm) 79/2021, decided on 05.04.2021.
25. Ld. Counsel for the petitioner in rejoinder referred clause 1.1.1.21 and submitted that in this case, within 30 days, the respondent did not give any answer to the design submitted by the petitioner, so it would amount to approval. Ld. Counsel stated that there was no pre bid meeting. The Engineer of the respondent was available at the site 24X7. Ld. Counsel referred the letter dated 19.05.2012 and stated that if the Engineer opted to remain ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 24 of 60 silent, it would amount to implied consent / approval. Ld. Counsel stated that the award is liable to be set aside and fresh adjudication is required. As to the appointment of Arbitrator, Ld. Counsel contended that if a person does not have authority and even then he exercises the authority, the award passed by him is nonest in the eyes of laws.
Adjudication/findings:
26. I have considered the submissions as above and gone through the impugned award, case laws supra and the relevant documents.
27. Section 34 the Arbitration and Conciliation Act as under:
"34.Application for setting aside arbitral award- (1)Re- course to a court against an arbitral award may be made only by an application for setting aside such award in ac- cordance with sub-section (2) and sub- section (3). (2)An arbitral award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indica- tion 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 contem-
plated by or not falling within the terms of the submission ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 25 of 60 to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration; Provided that, if the decisions on matters submitted to ar- bitration can be separated from those not so submitted, only that part of the arbitral award which contains deci- sions 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 pro- vision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds that-
(i) the subject-matter of the dispute is not capable of settle- ment by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation- I For the avoidance of any doubt, it is clari- fied that an award is in conflict with the public policy of India only if the making of the award was induced or af- fected by fraud or corruption or was in violation of Section 75 or Section 81."
ii) It is in contravention with the fundamental policy of In- dian law;
iii) It is in conflict with the most basic notions of morality or justice.
Explanation-II- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental pol- icy of Indian law shall not entail a review on the merits of the dispute.
[2 (A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the court, if the court finds that the award is viti- ated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 26 of 60
28. Normally, general principles are that the decision of the Arbitrator unless there is an error apparent on the face of the award which makes it unsustainable, is not to be set aside even if the court as a court of law would come to a different conclusion on the same facts. The court cannot reappraise the evidence and it is not open to the court to sit in appeal over the conclusion of the arbitrator. It is not open to the court to set aside a finding of fact arrived at by the arbitrator and only grounds on which the award can be cancelled are those mentioned in the Arbitration Act. Where the arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, the award would not call for interference by the court in exer- cise of the power vested in it.
29. In the case of Hiedelberg Cement India Ltd Vs. The Indure Pvt Ltd, OMP (Comm) No. 413/2019 decided on 29.01.2020, it was held that law of judicial review and in- terference in proceedings under Section 34 of the Act is no more res integra. Reference of the case Associate Builders v/s Delhi Development Authority, (2015) 3 SCC 49 was made, where the Supreme Court has held as under:-
"19. When it came to construing the expression the public policy of India contained in Section 34(2)(b)(ii) of the Ar- bitration Act, 1996, this Court in ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705 : held: (SCC pp. 727-28 & 744-45, paras 31 & 74) ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 27 of 60
31. Therefore, in our view, the phrase public policy of In- dia used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public 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 O.M.P. (COMM) 413/2019 Page 30 of 37 from time to time. However, the award which is, on the face of it, 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 to the term public policy in Renusagar case [Renusagar Power Co. Ltd. v. 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 ille- gal.
The result would be award could be set aside if it is con- trary to: (a) fundamental policy of Indian law; or (b) the in- terest of India; or (c) justice or morality, or (d) in addition, if it is patently illegal.
Illegality must go to the root of the matter and if the ille- gality 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.
74. In the result, it is held that: (A)(1) The court can set aside the arbitral award under Section 34(2) of the Act if 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 indica-
tion 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 ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 28 of 60
(iv) the arbitral award deals with a dispute not contem- plated by or not falling within the terms of the O.M.P. (COMM) 413/2019 Page 31 of 37 submission to arbitra- tion, or it contains decisions on matters beyond the scope of the submission to arbitration.
(2) The court may set aside the award:
(i)(a) if the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties, (b) failing such agreement, the composition of the Arbitral Tribunal was not in accordance with Part I of the Act,
(ii) if the arbitral procedure was not in accordance with: (a) the agreement of the parties, or (b) failing such agreement, the arbitral procedure was not in accordance with Part I of the Act. However, exception for setting aside the award on the ground of composition of Arbitral Tribunal or illegality of arbitral procedure is that the agreement should not be in conflict with the provisions of Part I of the Act from which parties cannot derogate. (c) If the award passed by the Ar-
bitral Tribunal is in contravention of the provisions of the Act or any other substantive law governing the parties or is against the terms of the contract.
(3) The award could be set aside if it is against the public policy of India, that is to say, if it is contrary to: (a) funda- mental policy of Indian law; or (b) the interest of India; or
(c) justice or morality; or (d) if it is patently illegal. (4) It could be challenged: (a) as provided under Section 13(5); and (b) Section 16(6) of the Act.......
44. It was held that in the recent judgments, the Supreme Court has once again reiterated the law re- lated to the examination by a Court of an Award under Section 34 of the Act. In Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 29 of 60 of India Ltd. 2019 SCC OnLine SC 677, the Supreme Court has held as under:-
35. What is clear, therefore, is that the expression public policy of India, whether contained in Section 34 or in Sec-
tion 48, would now mean the fundamental policy of Indian law as explained in paragraphs 18 and 27 of Associate Builders (supra), i.e., the fundamental policy of Indian law would be relegated to the Renusagar understanding of this expression. This would necessarily mean that the Western Geco (supra) expansion has been done away with. In short, Western Geco (supra), as explained in paragraphs 28 and 29 of Associate Builders (supra), would no longer ob- tain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial ap- proach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are con- cerned, as contained in Sections 18 and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in paragraph 30 of Associate Builders (supra).
36. It is important to notice that the ground for interfer- ence insofar as it concerns interest of India has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the most basic notions of morality or jus- tice. This again would be in line with O.M.P. (COMM) 413/2019 Page 34 of 37 paragraphs 36 to 39 of Associate Builders (supra), as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
37. Thus, it is clear that public policy of India is now con- stricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paragraphs 18 and 27 of Associate Builders (supra), or secondly, that such award is against basic notions of jus- tice or morality as understood in paragraphs 36 to 39 of Associate Builders (supra). Explanation 2 to Section 34(2)
(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 30 of 60 by the Amendment Act only so that Western Geco (supra), as understood in Associate Builders (supra), and para- graphs 28 and 29 in particular, is now done away with.
38. Insofar as domestic awards made in India are con- cerned, an additional ground is now available under sub- section (2A), added by the Amendment Act, 2015, to Sec- tion 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within the fundamental policy of Indian law, namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the back- door when it comes to setting aside an award on the ground of patent illegality.
39. Secondly, it is also made clear that re-appreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegal- ity appearing on the face of the award.
40. To elucidate, paragraph 42.1 of Associate Builders (supra), namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Paragraph 42.2 of Associate Builders (supra), however, would remain, for if an arbitra- tor gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would O.M.P. (COMM) 413/2019 Page 35 of 37 certainly amount to a patent ille- gality on the face of the award.
41. The change made in Section 28(3) by the Amendment Act really follows what is stated in paragraphs 42.3 to 45 in Associate Builders (supra), namely, that the construc- tion of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2A).
ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 31 of 60
42. What is important to note is that a decision which is perverse, as understood in paragraphs 31 and 32 of Asso- ciate Builders (supra), while no longer being a ground for challenge under public policy of India, would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its deci- sion would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evi- dence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse.
45. It was also observed that recently, in Hindustan Construction Company Limited & Anr. Vs. Union of India & Ors., 2019 SCC OnLine SC 1520, the Apex Court has held as under:-
55. Further, this Court has repeatedly held that an applica-
tion under Section 34 of the Arbitration Act, 1996 is a sum- mary proceeding not in the nature of a regular suit - see Canara Nidhi Ltd. v. M. Shashikala 2019 SCC O.M.P. (COMM) 413/2019 Page 36 of 37 OnLine SC 1244 at para- graph 20. As a result, a court reviewing an arbitral award under Section 34 does not sit in appeal over the award, and if the view taken by the arbitrator is possible, no interfer- ence is called for - see Associated Construction v. Pawan- hans Helicopters Limited. (2008) 16 SCC 128 at paragraph
17.
56. Also, as has been held in the recent decision Ssangyong Engineering & Construction Co. Ltd. v. NHAI 2019 SCC OnLine SC 677, after the 2015 Amendment Act, this Court cannot interfere with an arbitral award on merits. "
ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 32 of 60
30. In the backdrop of the above, let me now examine the objections against the impugned award agitated by Ld. counsel for petitioner, vis-a-vis the contentions of Ld. counsel for respondent in support of the award.
31. The arbitration proceedings and attendance sheet show that the parties had regularly appeared before the Arbitrator and were given due opportunities to defend and / or plead their respective case. Admittedly, the legislative mandate specifically bars reappreciation of evidence for the purpose of an objection petition under Section 34 of the Act and the parties cannot be allowed to expand the scope of defences raised before the Arbitrator to get fresh adjudication from the Court, however, in order to see whether the Arbitrator has passed the award against the basic notions of justice or it is patently illegal, as alleged by the petitioner, I deem it appropriate to consider the real controversy between the parties, which gave rise to the cause of action for filing the claims and the manner in which it were appreciated by the Arbitrator in reference to the relevant terms of the contract / agreement, which are reproduced as under:
Site information - Section 2 (work site) 2.1.3 Contractor shall plan his works keeping in view restriction of approach and availability of space and time.
Instruction to tenderers - Section 3 3.1.3 (e) Period of commencement of work (Form A) start ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 33 of 60 from the date of issue of "letter of Acceptance".
(f) Overall period of completion is of 12 months from the date of issue of "letter of acceptance".
3.2.1 Site visit 3.2.2 (i) Any site information given in this tender document is for reference only. The tenderer is advised to visit and examine the site of work and its surroundings at his / their cost and obtain for himself on his own responsibility, all information that may be necessary for preparing the tender and entering into a contract.
(ii) The agency shall be deemed to have inspected the site and its surroundings beforehand and taken into account all relevant factors pertaining to the site in preparation and submission of the tender.
Technical Specification - Section 4 4.3 Reference to the standard Codes of Practice 4.3.1 The Contractor shall make available at site all relevant Indian Standard Codes of Practice, CPWD Specifications and IRS & IRC codes as applicable and other relevant British / German / American Standard.
4.3.2 Wherever Indian Standards do not cover some particular aspects of design / construction, relevant British / German / American Standards will be referred to.
4.3.3 In case of discrepancy among Standard Codes of practice, CPWD Specifications, special specifications and provision in sub-clauses in the NIT, the order of precedence will be as below:
i. Provision in N.I.T. ii. Special Specifications mentioned in the tender. iii. CPWD Specifications iv. Standard Codes of practice.
In case of discrepancy among Standard Codes of Practice viz. IRS, CPWD, IRC, IS, BS, DIN, MOST, the decision of Engineer will be final and binding.
Special Condition of Contract - Section 5
5. Sub Clause 4.9 - Site Data The Geotechnical and other related data provided by the ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 34 of 60 Employer are based on the investigation conducted by DMRC and are for reference purposes only. The Tenderer should satisfy himself with the data furnished and make his own investigations if required for submitting his offer. Any change in design or construction methodology later during execution of account of charge will be borne by the contractor.
The contractor shall not be relieved from any risk or obligation imposed on or undertaken by him under the contract or any such ground or on the ground that he did not or could not foresee any matter which may affect or have affected the execution of the works, or compliance will his other obligations under the contract.
Sub Clauses 4.13 - Programmes Manufacture, installation and Construction Methods. The Contractor shall submit complete documents and information pertaining to the methods of manufacture, installation and construction which the contractor proposes to adopt or use, (and if applicable such calculations of stresses, strains and defections and the like that will or may arise in the works or to the other works comprising the project or any parts thereof during installation from the use of such methods). The Engineer will then check to see whether, if such methods are adhered to, the works can be executed in accordance with the Contract and without detriment to the Works (when completed) and to other works comprising the project and in a manner which minimizes disruption to road and pedestrian traffic. The Engineer shall inform the Contractor in writing within 21 days after receipt of the above information;
(a) that the Contractor's proposed methods of manufacture, installation and construction have the consent of the Engineer; or ......In the event that the Engineer does not give his consent, the Contractor shall take such steps or make such changes in the said methods or supply such further documents or information as may be necessary to meet the Engineer's requirements and to obtain his consent.......
Sub Clause 5.3 - Submission of documents (other then ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 35 of 60 Design Data) The Contractor shall submit drawings and documents, as required by the Contract, to the Engineer in accordance with any submittal schedule agreed with the Engineer. The submittal shall be made sufficiently before the works are to be carried out to give th Engineer and the employer reasonable time to examine the drawings or other documents, to prepare comments and for any changes to be accommodated by the Contractor.
Where the consent of the Engineer is required, the Engineer shall notify the contractor in writing of his decision either within such period as may expressly be stipulated in the contract or otherwise within a reasonable time.
If the Engineer has reasonable cause for being dissatisfied with the proposals set out in the Contractor's drawings or documents, the Engineer shall, within a period of 28 days from the date of submittal, require the contractor in writing to make such amendments thereto as the Engineer may consider necessary. The Contractor shall make and be bound by such amendments at no additional expense to the Employer and shall resubmit the amended drawings or documents for Engineer's consent.
Within 14 days of notification of the Engineer's consent the contractor shall provide the Engineer with the type and number of sets of the relevant drawings or documents as stipulated in the Employer's requirement.
Sub Clause 12.3 - "Employer's Variation" means a change in the Employer's requirements which makes necessary alteration or modification of the Design, quality or scope of works as described by or referred to in the Employer's requirements. Changes to any sequence, method or timing or construction, manufacture or installation and changes to any part of the site or the works areas or access thereto will not constitute employer's variation.
An Employer's variation shall be requested and implemented in accordance with and subject to the following provisions;
ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 36 of 60
(a) within 14 days (or such other period as the Engineer may allow) of the Engineer informing the Contractor in writing of the intention to request and Employer's variation, the contractor shall notify the Engineer in writing whether in his opinion the Employer's variation would, if ordered;
(i) give rise to any entitlement to an extension of time;
or
(ii) affect the achievement of any Milestone, of; or
(iii) give rise to any entitlement to additional payment......
(b) The Engineer shall determine the amount which should be added to or deducted from the fixed lump sum price as a result of the variation and get it approved by the employer......
General Conditions of Contract (June 2011) General Obligations
4. The Contractor 4.1 The works as completed by the Contractor shall be wholly in accordance with the Contract and fit for the purposes for which they are intended, as defined in the Contract. The works shall include any work which is necessary to satisfy the Employer's requirements, the contractor's proposal and schedules, or is implied by the Contract, or arises from any obligation of the Contractor and all works not mentioned in the contract but which may be inferred to be necessary for stability, or completion, or the safe, reliable and efficient operation of the works.
12. Variations 12.1 Right to Vary All Variations shall be recorded in a written instruction from the Engineer either as a Contractor's variation or as an employer's variation, and shall not be implemented by the Contractor without such an instruction in writing from the Engineer. No variation shall in any way vitiate or invalidate the contracts. The contractor shall not make any alteration and / or modification of the works, unless and until the Engineer instructs or gives consent to a Variation. If the Construction and / or manufacture documents or works are not in accordance with the contract, the ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 37 of 60 rectification shall not constitute a variation.
12.2 Contractor's variation 12.2.1 Variation proposals The Contractor may submit to the Employer, in writing at its own cost, any engineering proposal as contractor's variation for modifying the employer's requirements, provision of additional land, access or feasibility over and above that is provided in the Contract for the purpose of saving in time, construction or manufacture costs. Such variation proposal shall not impair the essential character, functions or characteristics of the work, including service life, economy of operation, ease of maintenance, desired appearance, or design and safety standards.
The Contractor shall provide his variation proposal in a time limit prescribed by the Engineer. The Engineer's decision in this regard shall be communicated to the Contractor within a reasonable period of time. If by any reason the time limit specified by the Engineer is exceeded, the proposal may not be considered. The decision of the Engineer in this regard shall be final and binding.
12.2.4 Amendments - Employer Issuance If the variation proposal is acceptable to the Employer / Engineer in whole or in parts, it will accept by execution of an amendment. Such amendment shall identify all the changes in the specifications, Contract period etc. and shall specify net savings on construction costs which shall be adjusted in the contract value by the employer.
12.2.5 Contractor's Acceptance and payment The Contractor shall either accept or reject any proposed amendment executed by the Engineer pursuant to this section within 5 working days of its receipt date from the Employer. If the Contractor does not reject the same in the period stipulated above, the amendments shall be deemed to be accepted by the Contractor and shall be unconditional and the contract value / price shall be adjusted by the amount of saving due to the variation to the contract. The contractor's acceptance shall be unconditional and contrat value / price shall be adjusted by the amount of saving due to the variation.
ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 38 of 60 12.3 Employer's Variations If the Engineer requests a proposal, prior to instructing a Variation which may be for additional work or alteration in the work or deletion / reduction in the scope of work, the contractor shall submit at his own cost within 14 days or such period as the Engineer may allow of the receipt of such request of the Engineer.....
12.4 Variation Procedure .......After receipt of proposal, it will be the prerogative of the Employer, whether to instruct and proceed ahead with the variation or drop the proposal in part or full. In that case, no cost of preparing and submitting the proposal will be payable to Contractor. In case, the design part of variation has been completed on submission of same to the Engineer, the Employer decides to abandon the variation, only cost for design to the extent of work done will be paid to the Contractor.
12.5 Variation in the Bill of Quantities
(f) In case the variation in individual items or the group of items as stipulated above, is more than 25% on plus side, the rate for the varied quantity beyond 25% shall be negotiated between the Engineer and the Contractor and mutually agreed rates arrived at before actual execution of the extra quantity.
17. Claims, Disputes, Conciliation And Arbitration 17.5 Two stages for dispute resolution Disputes shall be settled through two stages:
a. Conciliation procedures as established by "The Arbitration & Conciliation Act-1996" (as amended from time to time) and in accordance with this Clause. In the event this procedure fails to resolve the Dispute then; b. Arbitration procedures undertaken as provided by "The Arbitration & Conciliation Act-1996" (as amended from time to time) and in accordance with this Clause.
17.10 Interest on Arbitration Award Where the arbitral award is for the payment of money, no interest shall be payable or whole or any part of the money for any period, till the date on which the award is made.
ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 39 of 60 17.11 Cost of Arbitration The cost of arbitration shall be borne by the respective parties. The cost shall, interalia, include the fees of the Arbitrator (s) as per rates fixed by the Employer from time to time.
Conditions of Contract on Safety, Health & Environment 5.5 Employer's approval 5.5.1 Every structure like scaffold, false work, launching girder, earth retaining structures etc shall have its design calculations included int eh method statements in addition to health and safety risks. Employer's designer or his approved proof check consultants as applicable as per the contract conditions shall approved all these designs.
32. The instant work relates to maintenance of an office building of the respondent at IT Park, Shastri Park, Delhi. As per the tender documents, all the works were to be carried out as per the CPWD specifications / IS Codes and Standard Relevant Specifications with upto date corrections. The work was to be completed within a period of 12 months. The item 14.72 of the BOQ related to "providing and fixing double scaffolding system (cup lock type) on the exterior side upto seven story height made with 40mm dia MS tube 1.5 mm centre to centre horizontal and vertical tubes with cup and lock system with MS tubes, MS tube challies, MS clamps and MS staircase system in the scaffolding for working platform etc. and maintaining it in a serviceable condition for the required duration as approved and removing it thereafter. The scaffolding system shall be stiffened with bracing runners connection ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 40 of 60 with the building etc, wherever required for inspection of work at required location with essential safety feature for the workman etc. complete as per directions and approval of engineer in charge. The lavational area of the scaffolding shall be measured for payment purpose. The payment will be made once irrespective of duration of scaffolding". During the execution of work, the petitioner faced a peculiar situation. It could not adopt the methodology provided for erecting the scaffolding in the tender documents, which interalia provided that the scaffolding should be connected with the building to provide support, since the occupants of the building were not permitting for the same. The building was having partially glass exterior. For connecting the scaffolding with the building, the pipes had to run to the nearest support of the wall inside the building to get connected with the wall. Since, the office / restaurant were being operated in the building by various entities, which had been leased by the respondent, the occupants of the said office / restaurant did not permit the petitioner to connect the scaffolding with the wall of the building as it could disturb their entire operation. Since, it was not possible for the petitioner to erect the scaffolding as per the tender documents and connect it with the building and that it had the risk of the lives of the public and the labour working there and that ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 41 of 60 there would have been the chances of collapse of the scaffolding, the option available with the petitioner was to erect independent scaffolding as per CPWD Specifications or IS Codes or Standard Relevant Specifications.
33. Admittedly, the contract contained clause 3.2.1 of Instructions to Tenderers, whereby the petitioner was advised to visit and examine the site of works and its surroundings at its cost and obtain for itself on its own responsibility all information that may be necessary for preparing the tender and entering into a contract and sub clause 4.9 of Special Conditions of Contract provided that the petitioner should satisfy itself with the data furnished and make its own investigations if required for submitting its offer and any change in design and construction methodology later during the execution on account of change would be borne by the petitioner but in the instant case, the petitioner even after the visit or examination of site of works and its surroundings could not know that the occupants of the office / restaurant would not permit the petitioner to connect the scaffolding with the wall of the building as provided in item no. 14.72 of BOQ.
34. In the instant case, the respondent in its reply has disputed that the petitioner could not connect the ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 42 of 60 scaffolding with the building as stipulated in the BOQ item stating that there was a provision of connecting the scaffolding with the building at 4th, 5th, 6th & 7th floor but the petitioner chose not to follow the instructions / suggestions of the Site Engineer qua connecting the scaffolding with the building and the terms & conditions in the contract / agreement clearly provided that the contractor / petitioner was bound to follow the instructions / directions of the Engineer in carrying out the activities as per the contract.
Now the question arises, when connecting the scaffolding with the building as stipulated in the BOQ item was feasible / possible, what made the Engineer or the respondent allow the petitioner to construct independent scaffolding. There is nothing on record to indicate that the Engineer at any time had instructed / suggested the petitioner how the scaffolding was to be connected with the building as alleged. It is not the case that the Engineer of the respondent was not available at site. The reasonable inference, which can be drawn from the facts & circumstances is that since the erection of scaffolding as per the tender document or connecting it with the building was not possible, the Engineer had permitted the petitioner to erect independent scaffolding for carrying out the activities.
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35. In the instant case, the petitioner vide letter dated 19.05.2012 had assured the respondent that it has taken all safety precautions, It is relevant to reproduce the said letter:
"........We had to adopt a special design for scaffoldings (actual photos of site is attached), because there was no space inside the building as well as due to height (approximately 40 m). Companies working there are not willing to support. We tried and talked with Genpact through L & T, but all went in vain. Although, CPWD recommends for folding connected to the building, we could not execute DSR item as per CPWD specifications because of the above mentioned reasons.
We had earlier not just informed the Engineer In Charge about the change in design of scaffoldings, but sought his permission also. Change in design increased the cost considerably and DMRC should take it into notice. We adopted it because of safety as in the given situation, it was not possible to connect the folding with building.
We have rechecked all the arrangements and increased the cross bracing as well. We hope that DMRC will be satisfied with the arrangement made by us. We assure you that for safety, no stone will be left unturned in future also. If DMRC wants any modification in arrangements for safety, we will welcome that".
36. The respondent never disputed the receipt of the said letter dated 19.05.2012. Surprisingly, it chose not to reply or react on that letter nor it suggested as alleged in the reply that BOQ item 14.72 was feasible / possible to execute. The letter of the petitioner shows that prior to writing of this letter, it had informed the Engineer-in- Charge about the change in the design of scaffolding and ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 44 of 60 sought his permission on which, he remained silent. In the said letter, the petitioner had also mentioned that due to change in design, the cost increased considerably and DMRC should take it into notice. The Arbitrator in para 9.3 of the impugned award had noticed that the petitioner in the letter dated 19.05.2012 had assured the respondent for safety and asked it for making any modification, if any in the arrangement for safety but he failed to notice the cost aspect and observed that there was no request for cost aspect or the approval of changed design. The said observations of the Arbitrator are contrary to the submissions made by the petitioner in its letter dated 19.05.2012, whereby, it had categorically stated that change in design increased the cost considerably and DMRC should take it into notice.
Question arises, why the respondent did not respond to the letter denying its liability to pay any amount due to change in design referring clause 12.2.1 terming as the contractor's variation for modifying the respondent's requirements as pleaded in reply to the petition. It is relevant to refer sub clause 4.13 of Special Conditions of Contract, which interalia provides that the contractor shall submit the complete document / information pertaining to the methods of manufacture / installation / construction, which he proposes to adopt / use, the Engineer will then ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 45 of 60 check to see whether, if such method are adhered to, the works can be executed in accordance with contract and without detriment to the works and to other works comprising the project and shall inform the contractor in writing within 21 days after receipt of above information and in case, the Engineer does not give his consent, the contractor shall take such steps and make such changes in the said methods. In the instant case, the Engineer of the respondent despite having received the written information from the petitioner did not inform the petitioner in writing about his consent in the methodology of scaffolding, so it would amount to deemed consent on the part of the respondent. Sub clause 12.3 of Special Condition of Contract provides that an employer's variation shall be requested and implemented within 14 days of the Engineer informing the contractor in writing of the intention to request an Employer's Variation, the contractor shall notify the Engineer in writing whether in his opinion the employer's variation would give rise to any entitlement to additional payment. The Engineer shall determine the amount, which shall be added to or deducted from the fixed lump sum price, as the result of the variation......
37. In the instant case, the said variation can in no way be said to be the contractor's variation as the contractor / ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 46 of 60 petitioner had no option but to use this methodology of independent scaffolding for the execution of the works within the time stipulated ensuring the safety of the building / labour working there, lest, it would have been liable for the penalty / liquidated damages, as stipulated in the contract. It is not the case that the petitioner had suggested this methodology for its own benefit rather, it adopted this methodology under compulsion. This adoption of methodology would definitely amount to the Employer's Variation. The contention of the respondent that since, it was a contractor's variation, the clause 12.2.1 would be applicable and the petitioner would not be entitled to any additional amount / cost for this alternate methodology proposed and adopted by it, is devoid of any merit.
38. It is also relevant to refer another letter of the petitioner dated 06.03.2013, which it had written in continuation of its letter dated 19.05.2012, whereby, it had explained the factors, which compelled it to adopt the special design of scaffolding. In that letter, it was mentioned that the time when the scaffoldings were being placed, it had discussed this matter with all concerned officials of DMRC and no one had objected. It had also mentioned that the change in design was specially for the ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 47 of 60 safety purpose and was going to boost the cost for the same. Even then, there was no communication from DMRC, though, the officials of DMRC had visited the site and they never interfered in the methodology adopted by it. The logical inference, which can be drawn from the facts and circumstances that there was no objection rather there was consent of the Engineer-in-Charge at site for using this methodology of scaffolding for the execution of works. Surprisingly, when the work was completed (completed in December 2012), the respondent after four months of the letter dated 06.03.2013, on 12.07.2013 replied that staging / double scaffolding should have been fixed as per the BOQ item. It also asked the petitioner to prepare the bill as per the BOQ item and submit for necessary action. In the said letter, it was not stated how staging / double scaffolding was possible as per the BOQ item. Question again arises, when staging / double scaffolding was possible as per the BOQ item as claimed, what made the respondent permit the petitioner use the independent scaffolding for the execution of the works contrary to the BOQ item 14.72. It appears that an evasive reply was made by the respondent to deny the legitimate dues of the petitioner.
39. It is an admitted case of the parties that the CPWD ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 48 of 60 Specifications, which are applicable to this contract do not have specifications for the free standing scaffolding system. So, in terms of clause 4.3.3 of the Technical Specifications of Contract, the Standard Code of Practice was followed. Clause 7.2 of Code of practice for steel tubular scaffolding, part II safety regulations for scaffolding {IS 4014 (Part II)} provides that every scaffold shall be securely supported and suspended and shall wherever necessary be sufficiently and properly strutted or braced to ensure stability and unless, it is properly designed and constructed, an independent scaffold shall be rigidly connected with the building.
40. According to the petitioner, it had designed the scaffolding considering the best engineering practices in India and abroad. For a free standing scaffolding system, the base width should not be less than 1/3rd of the height of the scaffolding. It was thus imperative to provide several vertical tiers of scaffolding duly connected and braced together for ensuring stability. In the instant case, BOQ item 14.72 stipulated only two vertical tiers of tube, each tier / layer comprising of 40mm dia MS tube at 1.5m centre to centre vertically and horizontally connected by cup lock arrangement. The petitioner, therefore, had to provide several such tiers / layers for increasing the width ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 49 of 60 of the scaffolding system base to 1/3rd of the height. The petitioner had forwarded the photographs of the scaffolding system adopted by it vide its letter dated 19.05.2012 but the respondent did not respond on the methodology adopted by the petitioner and remained silent. The petitioner had calculated the quantity for BOQ item 14.72 taking length of MS tube as 1.0m taking the base width in meter as number of double scaffolding indicating the base width of scaffolding as 1m, 2m, 4m, 5m, 6m & 8m equivalent to the double scaffolding using 1.0 m MS tube 1 no., 1.67 no., 3 no., 3.67 no. 4.33 no. and 5.67 no. The Arbitrator, however, assessed the double scaffolding system using 1.5m length MS tube, which came to 0.67 no., 1.11 no., 2 no., 2.45 no. 2.89 no. and 3.78 no. respectively and calculated the quantity as 19102.0 sqm as against the claimed quantity of 39273.0 sqm. Ld. Arbitrator based his calculations as detailed in sub-para 2 & 3 of para 9.7, 9.8 & 9.9 giving the chart in sub-para 3 of para 9.9. It is important to refer / reproduce para 4.3 of Technical Specification:
4.3.1 The Contractor shall make available at site all relevant Indian Standard Codes of Practice, CPWD Specifications and IRS & IRC codes as applicable and other relevant British / German / American Standard. 4.3.2 Wherever Indian Standards do not cover some particular aspects of design / construction, relevant British / German / American Standards will be referred to. 4.3.3 In case of discrepancy among Standard Codes of practice, CPWD Specifications, special specifications and ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 50 of 60 provision in sub-clauses in this NIT, the order of precedence will be as below:
i. Provision in N.I.T. ii. Special Specifications mentioned in the tender. iii. CPWD Specifications iv. Standard Codes of practice.
In case of discrepancy among Standard Codes of Practice viz. IRS, CPWD, IRC, IS, BS, DIN, MOST. The decision of Engineer will be final and binding.
41. It is not in dispute, the petitioner had used MS tubes at a spacing of 1.5m centre to centre horizontally and vertically to erect individual single frame scaffolding but it had connected the several individual single frame scaffolding with 1.0m length pipe. BOQ item 14.72 is silent about the length of the connecting pipe between the two single frame scaffolding. It is true that the diagram of double scaffolding system provided in the CPWD Specifications visually represents that the connecting pipe is of a shorter length than the length of the horizontal and vertical pipes of individual single frame scaffolding but in the Specifications, it is nowhere provided that the connecting pipe should be of 1.0m length. The petitioner has also annexed the diagram of double scaffolding as per CPWD Specifications as Annexure A20. Though, the petitioner has claimed that there was a rationale to provide shorter length of pipe to connect the individual single frame scaffolding to give more strength but it did not submit any design calculations to substantiate this rationale. It is true that the petitioner was bound to take all ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 51 of 60 safety measures as contemplated under clause 56 & 57 of the Conditions of Contract, failure of which could entail penalty, which could even lead to blacklisting of the petitioner but since it was an engineering arrangement, so before erecting any scaffolding particularity in these circumstances, it should have got designed the scaffolding from a competent structural engineer, which in this case was neither got done by the petitioner nor by the respondent. According to the petitioner, 1.0m length of pipe connecting the individual single frame scaffolding would give more strength to the scaffolding but according to the respondent, the connecting pipe of 1.5m length would have been sufficient enough to connect the individual single frame scaffolding. In the absence of any structural design / calculation, no opinion can be expressed whether the connecting pipe of length 1.0m or 1.5m would have been sufficient to connect the individual single frame scaffolding. It is however true that in the diagrams of the double scaffolding i.e. Annexure A20, the length of the connecting pipe between the two single frame scaffolding is shorter than the length of the horizontal & vertical tubes of the single frame scaffolding.
42. In the instant case while passing the impugned award, the Arbitrator prepared a table as shown in para 9.9 ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 52 of 60 and assessed the measurements of the independent / double scaffolding taking the length of connecting pipe as 1.5m.
He however, failed to explain the rationale behind this assessment. This assumes importance because none of the parties placed the design of scaffolding before the Arbitrator nor there is any document / specification / code to indicate that length of the pipe connecting the two scaffold should be 1.5m and not 1.0m, as assessed by the Arbitrator. There is no denial of the fact that the petitioner in the execution of works had used 1.0m length pipe to connect the two vertical scaffolds and kept the horizontal & vertical tubes at the spacing of 1.5m centre to centre in each scaffold.
43. In claim no. 1, the petitioner had claimed the amount of work done, which was not paid by the respondent. It besides item no. 14.72, had claimed amounts in respect of the other items i.e. item 14.42.1, 14.43, 14.53.1, 14.54.1 & 14.65.1 as detailed in Annexure C13 of the statement of claims but the Arbitrator confined his award only in respect of item no. 14.72 and did not give any findings qua the claims in respect of other items. In para 9.6 of the award, he discussed about the negative variation and positive variation in BOQ items but did not give any finding whether the amount claimed by the ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 53 of 60 petitioner against those items was payable to the petitioner or not.
Since, the Arbitrator failed to adjudicate the claims in respect of the other items raised by the petitioner under claim no. 1 nor assigned any reason why he did not adjudicate the claim in respect of the other items, it can be said that incomplete award was passed by the Arbitrator, which is liable to be set aside.
44. In claim no. 2, the petitioner had prayed for releasing of tender security and payment of interest from 16.08.2012 to 31.08.2015. The Arbitrator held that the tender security of the successful tenderer shall be returned upon the tenderer executing the contract agreement vide para 3.8.4 in the contract document. He noted that the agreement was executed on 02.05.2012 i.e. after 132 days of issue of letter of award dated 21.12.2011, although, the agreement was to be signed within two weeks after receipt of the performance security, which was to be submitted within two weeks from the date of issue of letter of award vide clause 3.6.1 and 3.6.2 of Instruction to Tenderers. The petitioner submitted the performance guarantee of Rs. 3,09,002/- vide letter dated 26.03.2012 i.e. after 95 days and the agreement was executed on 02.05.2012 i.e. after 30 days of the submission of the performance guarantee.
ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 54 of 60 Thus, there was abnormal delay of 80 days. He held that since he entered into reference vide letter dated 16.05.2019, the petitioner should not seek interest beyond the date, he entered into reference. He calculated the interest period for delay in releasing of the tender security as two years and nine months (16.08.2012 to 16.05.2015). He held that in terms of para 3.8.5, no interest will be payable by the employer on tender security amount, which is Rs. 72,000/-, whereas, the amount of performance security is Rs. 3,09,002/-. He observed that the amount of Rs. 2,37,002/-, which is 3.29 times of tender security was not available with the respondent during the abnormal delay of 80 days in submission of performance guarantee, which is equivalent to about 9 months holding of the tender security. He calculated the deemed interest period of delay of release of tender security as two years and awarded 7% simple interest on the tender security i.e. Rs. 10,080/- against the said claim.
45. Perusal of record shows that the petitioner had submitted the performance guarantee for a sum of Rs. 3,09,002/- vide letter dated 26.03.2012. Although, the Arbitrator had considered the claim towards interest on the security deposit but he remained silent qua release of the tender security, though, in the claim, the petitioner had ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 55 of 60 claimed for releasing of tender security besides interest. Clause 17.10 of GCC 2011 clearly provides that where the arbitral award is for the payment of money, no interest shall be payable on whole or any part of the money for any period till the date on which the award is made.
46. Section 31 (7) (a) of the Act also provides that interest is payable to the other party at such rate as it deems reasonable on whole or any part of the money. If there is prohibitory clause in the agreement barring awarding of interest, the interest cannot be awarded on the amount claimed. In the case of Chitranjan Maity Vs. UOI, 2017 (6) RAJ 1 (SC), it was held that if the agreement prohibits award of interest, the Arbitrator cannot award interest for the said period. Similar view was expressed in the case of Sayeed Ahmed & Co. Vs. State of UP (2009) 12 SCC 26.
47. Since, in the instant case, there is a clause 17.10 of GCC 2011, which clearly prohibits grant of interest, in view of the specific bar as provided under the said clause forming part of the contract and the case laws supra, the petitioner would not be entitled to interest. However, in case, the FDRs are returned as stated above towards the earnest money and performance bank guarantee, which ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 56 of 60 bear interest, the same are liable to be released without deducting the interest.
48. In the absence of any finding qua releasing of the security deposit as claimed by the petitioner, the award is bad in the eyes of law. It is well settled law that awarding interest without ordering for return of security deposit is opposed to the public policy of India shaking the conscience of the Court. Although, in the instant case, no set off was claimed by the respondent but the Arbitrator allowed the set off and misconducted himself and exceeded his authority. He also dealt with the date on which the security deposit was made, though, there was no pleading to that effect.
49. As regards claim no. 3 i.e. claim on account of loss of business and loss of financial and social standing for Rs. 5,00,000/-, the Arbitrator rightly referred clause 14.6 of GCC 2011, which interalia provides that neither party shall be liable to the other party for loss of use of any works, loss of profit, loss of any contract or any other indirect or consequential loss or damage which may be suffered by the other party in connection with the contract and awarded the 'NIL' amount against this claim.
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50. As regards objection that the Arbitrator was the Executive Director of the respondent and he could have been easily approached and influenced by the respondent, perusal of record reveals that the respondent had suggested the names of 3-4 Arbitrators before appointing Sh. Surya Prakash as the Sole Arbitrator. When the petitioner agreed on his appointment, he conducted the proceedings. There is no material to indicate that he was approached or influenced by the respondent. The proceedings conducted by him rather shows that he acted fairly and impartially and gave due opportunities to the parties to present their case. It is also relevant to mention that the Sole Arbitrator was appointed before the amendment came into effect and therefore, the Arbitrator was not bound to disclose in writing any circumstances likely to give rise to justifiable doubt as to his independence and impartially as provided in the amended Act, which came into effect on 23.10.2015.
51. As regards applicability of Section 29A of the Act, which interalia provides that the award should be made within a period of 12 months from the date, the arbitral tribunal enters upon the reference and the parties can extend the time for making the award for a further period not exceeding six months and if the award is not made within the time specified or the extended period, the ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 58 of 60 mandate of the Arbitrator shall terminate unless the Court has either prior to or after the expiry of the period so specified, extended the period, admittedly, in this case, the reference was made on 16.05.2015 and the award was passed on 06.02.2018 i.e. beyond the period of 18 months but since the reference was made prior to the section 29A, which came into effect w.e.f. 23.10.2015 by act 3 of 2016, so by clause 26 of the act of 2016, this new amendment would not be applicable to the pending arbitral proceedings. That being the position, I do not find any force in the contention of Ld. Counsel for the petitioner that the award passed by the Arbitrator was nonest in the eyes of law after the expiry of period of 18 months from the date the Arbitrator entered into reference.
52. As regards the contention that Arbitrator failed to take notice of increase in the contract price due to imposition of GST, since, this was not pleaded in the claims, the petitioner cannot be allowed to agitate this issue in this petition under Section 34 of the Act.
53. For the aforesaid discussions, I am of the view that the incomplete award has been passed by the Arbitrator as he did not give any findings in respect of the claims except the claim towards scaffolding (claim no. 1), releasing of ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 59 of 60 tender security (claim no. 2) nor he assigned any rationale or reason in considering the length of the connecting pipe between the two single frame scaffolding as 1.5m instead 1.0m, which was used and claimed by the petitioner and arbitrarily calculated the quantity considering the length of the connecting pipe as 1.5m. In the absence of any reasoning / rationale, the view taken by the Arbitrator cannot be said to be a possible view to take. Thus, the impugned award is against the basic notions of justice and is patently illegal on the face of it, which is liable to be set aside.
54. For the aforesaid reasons, the impugned award is set aside.
55. No order as to costs.
56. File be consigned to record room.
Announced in open court today i.e. 31.08.2021 (Sanjiv Jain) District Judge (Commercial) - 03 Patiala House Courts, New Delhi ARBT No. 1578/18 SVR Engineering Vs. DMRC Page No. 60 of 60