Delhi District Court
All India Institute Of Medical Sciences vs M/S P.S. & Sons on 2 September, 2008
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IN THE COURT OF RAJIV MEHRA
ADDL. DISTRICT JUDGE: DELHI
Suit No.96/05
All India Institute of Medical Sciences
Ansari Nagar,
New Delhi - 110029
Through its Director ......Petitioner
VERSUS
M/s P.S. & Sons,
1819/4, Sher Singh Bazar,
Kotla Mubarakpur,
New Delhi ......Respondent
Date of Arguments : 23.08.2008.
Date of Order : 2.09.2008.
ORDER
This objection petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 against the award dated 8.1.2005 passed by the arbitrator allowing the claim of the claimant who is the respondent herein to the extent of Rs.5,77,204/- together with interest @ 9%.
2. The facts of the case are that one contract was 2 awarded to the respondent M/s P.S. and Sons by the petitioner AIIMS for providing an installation of central air conditioning plaint in CN Center at AIIMS vide letter Engineer/Electric EW- 16/Acctts/559-63 dated 15.5.99. The time to start the work was stipulated as 25.5.99 and completion date was put up as 26.4.99. Vide letter dated 24.6.99 the time to complete the contract was extended upto 14.7.99. Time was again extended for a period uptill 24.7.99 vide letter dated 13.7.99. The respondent was paid one running account bill for Rs.21,98,396/- on 8.7.1999. As there was some defect that the current was not flowing from the sub station to the air conditioning plant and the plant was repeatedly tripping when it was switched on, the petitioner vide telegram dated 17.8.99 asked the respondent to relay the cable within seven days latest by 26.8.99. The cables were not relaid though agreed by the respondent. As a result vide letter dated 27.8.99 contract was rescined and the further work was assigned by the petitioner to one Cable Corporation of India and balance amount and security deposit of the respondent herein were withheld.
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3. The contract between the parties was having an arbitration clause. The claim petition was filed before the arbitrator under eight different heads. Claim no.1 was for a sum of Rs.10,35,000/- for the balance payment Claim no.2 was for Rs.3,10,000/- being the payment for extra and substituted items. Claim no.3 was for a sum of Rs.3,00,159/- for the return of the amount of security deposit. Claim no.4 was for a sum of rs.20,000/- allegedly being the losses and damages due to prolongation of contract. Claim no.5 was for a sum of Rs.50,000/- being the losses of turnover due to prolongation of the contract. Claim no.6 was for a sum of Rs.5000/- being illegal recovery made from bills. Claim no.7 was for interest present, pendentelite and future @ 24% and claim no.8 was for a sum of Rs.25,000/- for cost of arbitration.
4. The petitioner herein had contested the claim before the Arbitrator by filing the reply and documents.
5. The Arbitrator passed the impugned award allowing the claim no.1 for a sum of Rs.2,39,080/-. Claim no.2 for a sum 4 of Rs.1,18,284/- and claim no.3 for a sum of Rs.2,19,840/-. He rejected the claim no.4 and 5. Claim no.6 was not pressed and was withdrawn. Interest was awarded against claim no.7 @ 9% and an amount of Rs.5000/- was awarded as arbitration cost. Thus making it a total claim amount of Rs. 5,77,204.04 paisa.
6. This award has been challenged amongst others on the grounds that time was the essence of the contract. Despite extension of time the work could not be completed and defect was found in laying of the cables for which reason vide telegram dated 17.8.99 and reminder dated 19.8.99 respondent was asked to relay the cables as per CPWD specifications and complete the work latest by 26.8.99. The respondent herein despite having agreed to lay the cables as per CPWD specification has not done so and the Arbitrator was not justified in passing the award. The award is bad also for the reason that the work was to be carried out as per CPWD specifications. As per clause 11 of the agreement between the parties the work under contract was agreed to be executed as per CPWD specifications and vide letter dated 10.5.99 issued by the respondent herein, it was 5 agreed that cables were to be laid as per CPWD specifications. According to him as per Clause 19 of the agreement the completion plan in triplicate should have been submitted after completion of the work. As per the requirement of Clause 20 after completion of the work the installation was to be tested in the presence of Engineer Incharge or his representative as per relevant rules. According to the counsel the Arbitrator was not justified in allowing the claim no.1 of the respondent because after completion of the work it was found that the plant was not working and was repeatedly tripping on switching on the same. According to him it was found that the cables laid were defective and were not so laid as per the requirement of CPWD specifications. It has been submitted by the counsel that as per the requirement of Clause 2.6.7.5 of CPWD specifications for electric work three single core cables forming 13 phase circuit shall normally be laid in close trefoil formation and shall be bound together at intervals of approximately 1 m. According to the counsel the cables were however laid in violation of this clause. According to him the Arbitrator was not justified in passing the award against claim no.1. According to him it was 6 the duty of the respondent to get the plant commissioned and only thereafter the work could have been said to be completed.
7. According to the counsel the arbitrator was also not justified in passing the award with respect to the claim no.2. According to him as per Clause 30 of the specifications and contents of the agreement the respondent himself was to get the site clear after completion of each day work without any additional cost.
8. Similarly objection has been raised for allowing the claim no.3 regarding return of the amount of security deposit. According to the counsel this amount of security deposit was adjusted towards the payment of Rs.4,00,000/- made to the Cable Corporation of India for completing the work left incomplete by the respondent herein.
9. Counsel for the respondent on the other hand submitted that objection as filed is barred by time. On merits it has been submitted that the work has been performed as per the 7 schedule of work awarded to the respondent. The work was done under the constant supervision of the officer of the petitioner. The officer has already released running account payment of Rs. 21,18,396 vide bill dated 8.7.99 and at no stage raised any objection that there was any defect in laying of the cables. According to the counsel while dealing with the claim no.2 the arbitrator has already taken note of the documents exchanged between the parties and allowing of the claim under this lead thus is not open to challenge. He further submitted that the finding of the arbitrator on the claim of adjustment of the security amount is also not open to challenge through the present objection petition.
10. For the purpose of limitation under Section 34 (3) of the Arbitration and Conciliation Act, an application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award. Proviso to the sub section says that however, if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said 8 period of three months, it may entertain the application within a further period of thirty days, but not thereafter.
11. The present objection petition has been filed on 7.5.2005. Award is dated 8.1.2005. In Para 3, 4 and 5 of the application seeking extension of time for filing objection it has been stated that award dated 8.1.2005 was delivered in the office of the applicant on or around 17.1.2005 where after it was put by the dealing clerk with detailed note on 1.2.2005. Thereafter the matter was sent for the legal opinion from where the file was received back on 7.2.2005. File was put up to the competent authority for approval of the matter which was granted on 8.2.2005. It has been stated that thereafter the file could not be sent to the counsel for drafting the objection for about one month as it got tagged by mistake with another file relating to the arbitration award. The dealing official lost track of the file due to oversight and mistake. This file was located in the last week of April and immediately thereafter it was handed over to the counsel who filed application without delay.
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12. In support the affidavit of Sh. B.S. Anand Electrical Engineer AIIMS has also been filed.
13. In reply the stand of the petitioner has been opposed.
14. Having given thoughtful consideration, it may be noted that even if the objection could not have been filed within 90 days still it is not beyond 120 days which is the total time limit given in proviso of sub section (3) of Section 34 of the Arbitration and Conciliation Act. The delay in the present case is not abnormal. Petitioner is not going to gain anything from this delay. There is no mala fide seems to be with the petitioner in not preferring the objection petition in time. Then at the same time AIIMS is a big Government Undertaking. For initiating any action it needs confirmation and approval at different official levels. The occasion of delay thus has to be viewed in this background. The reason given in the present case to explain delay by the petitioner to be accepted as disclosing the sufficient cause which had prevented the petitioner from moving the application within the period of three months after the award was 10 received by the petitioner. Accordingly this delay is condoned and matter to be taken up and decided on merits.
15. Having heard the counsels for the parties and after going through the documents on record it may be noted that the arbitrator was a retired Addl. Director General (Electric) CPWD. He was a person with technical qualification. It has also been stated that he was in the panel of arbitrator of CPWD.
16. The scope of the challenge to an award passed by an Arbitrator has been discussed in the judgment of Brick Steel Enterprises V. The Superintending Engineer 2006 (5) CTC 519 . It was held in this case that the court can exercise limited jurisdiction over the award passed by the arbitrator. The court cannot go to the merits or re-apprise or re-examine the evidence or look into the insufficiency of the evidence. The court cannot sit as a court of appeal over the actual finding of the arbitrator. The court can interfere only when the conditions enumerated in Section 34 (2) of the Act are not satisfied. Similarly in Ennorpart Ltd. V. Hindustan Construction Company 2005-4 11 LW 319 it was held that it is a settled law that the court are not expected to re-apprise the matter as if it is an appeal in the matter of interference on the award passed by the arbitrator.
17. In this legal background it is now to be seen whether the award passed in the present case meet the yardstick of law or is it required to be recalled and set aside?
18. So far as argument that time was the essence to complete the work is concerned, it may be noted from the record that the Petitioner Authorities themselves were extending the time for completing the project without objection and thus it is not open for the petitioner to raise this objection in the petition filed against the award. This would only show that the time was set at large by the own conduct of the petitioner.
19. It may also be noted that respondent were admittedly released the amount of Rs. 21,98,396/- by the Petitioner Authorities vide R.A bill dated 8.7.99 which according to the Arbitrator was practically 95% of the work envisaged in the 12 contract. It has also been noted by the Arbitrator that during the entire period of laying of cables not one letter was written by the respondent ( petitioner herein) that the claimant (respondent herein) were not laying the cables as per specifications or methods being adopted by them for laying of the cables was defective. The arbitrator has also observed that respondent (petitioner herein) could not provide any shred of evidence about what instructions they had given for laying of cables and what instructions claimant (respondent herein) had flouted resulting in alleged defective work.
20. It has been taken note of by the Arbitrator in the award which is also relevant for the purpose of the objection sought to have been raised on the point of flouting of the CPWD specifications that respondent during the arbitration proceeding explained that the laying of cable was defective in as much as current was not flowing from the sub station to the air conditioning plant as the plant was repeatedly tripping when the plant was switched on. The Arbitrator found that no pin pointing of the actual defect in laying of the cable was made. According 13 to the Arbitrator it was a bald and unsubstantiated statement. The arbitrator has observed that instead of diagnosing the correct reason for this tripping the respondent (petitioner herein) put the blame on the claimant (respondent herein) for defective laying of cables is absolutely without any basis.
21. The aforesaid observation of the Arbitrator is of material significance. He has recorded findings and assigned reasons on the core questions involved in controversy. In view of the same it would not be open for the petitioner to make the submission that the CPWD specifications were not followed in laying of cables. Assuming this contention even if it is correct will not be of any help to the petitioner. Arbitrator has taken note of the basic question in controversy. The reasons assigned for finding are not absurd and even otherwise this court is not to indulge in exercise of judging reasonability of those reasons. This would otherwise also be beyond jurisdiction of this court.
22. In the light of the aforesaid observations of Arbitrator it cannot be said that contentions of the petitioner on the point of 14 violation of CPWD specifications has not been taken note of. Even if the arbitration award is silent about the particular reference to the CPWD specifications which allegedly has been violated but in substance it deals with the same contentions of tripping down of the plant for which violation of the CPWD specification was pressed in support submitting that the same was on account of defective laying of cables.
23. From the reading of the award, therefore, it cannot be said that the reason of the trouble to the petitioner in operating the plant have been ignored by the Arbitrator while passing the award. The Arbitrator rather being a technical person is supposed to have an expertise and has contributed his experience and knowledge about the subject and his observation cannot be lightly brushed aside.
24. Moreover again it has to be reminded that this court is not sitting as a court of appeal over the award passed by the Arbitrator. Scope of present petition is limited and in view of the reasons submitted to support the award which is based on the 15 pleadings and evidence produced by the arbitrator it is not open to challenge on the ground that the work was executed in violation of CPWD specification. The objection in this regard sought to have been raised through the present petition is held as without merit. The observations and findings given by Arbitrator has to be accepted as discussed in right perspective dealing with the scope of the technical aspect of the matter.
25. Than at the same time once having released the 95% of the amount of the contract and work was being performed under the constant supervision of the officers of the AIIMS authorities who at no point raised any objection on or before 17.8.99 first time through telegram, it is only to be assumed that the Authorities were not having complaint with the work of laying of the cables and raising objection in this regard was only an afterthought. The award cannot be called back and allowed to be interfered for this reason that laying of cable was in violation of CPWD specifications. The petitioner authorities are equally to be blamed for its failing to pin point the defect in time and inaction on their part or the late recording of the objections 16 would only amount to giving up any objection in this regard.
26. As far as allowing of the claim regarding extra work and also on the point of security deposit is concerned the award shows that the arbitrator has taken note of the exhibits produced on record. He has also observed that inspite of repeated letters from the claimants (respondent herein) to pay for disposal of surplus earth the respondent (petitioner) have not replied to the letters. He has also observed that neither the item nor CPWD specifications prohibited payment for disposal of surplus earth beyond 50 meters. The objection of the petitioner was that disposal of earth upto 50 meters was the responsibility of the claimant which it was to perform without payment. As per the Arbitrator there was no place within 50 meters lead, where such use surplus earth could be disposed of and he also found that respondent (objector herein) never questioned the claimant (respondent herein) of having disposed of surplus earth beyond 50 meters.
27. Similarly on the point of claim of refund of security 17 deposit it was observed by the arbitrator that respondent (petitioner) had awarded the work of relaying the cables at the risk and cost of claimant (respondent) without calling for any competitive quotations/tender. The Arbitrator observed that the work was awarded through a work order to a firm without even specifying how the cables are to be laid. It was observed by the Arbitrator that just by saying 'as per standard engineering practice' does not absolve respondent (petitioner herein) of their responsibility to give clear cut instructions how the cables are to be relaid specifically in this case where the work was supposed to be done at the risk and cost of the claimant (respondent herein). The Arbitrator found this conduct of the respondent (Petitioner) highly irregular, unlawful, arbitrary and without any convincing reason for necessity for relaying. The Arbitrator accordingly held that no recovery on this account of relaying from claimant (respondent herein) is permissible and similarly awarded the refund of security deposit to the respondent herein.
28. Taking into account the overall facts of the case there does not appear to be any defect or infirmity in the award on 18 either of the ground on which it is open to challenge under the Act. The award is a reasoned award. The objection sought to have been raised is without basis. The objection petition is dismissed.
Dictated and announced in the open Court on 2.9.2008.
( RAJIV MEHRA ) ADDL. DISTRICT JUDGE: DELHI