Delhi High Court
Wee Aar Constructive Builders vs Delhi Development Authority And Anr. on 14 March, 2001
Author: Madan B. Lokur
Bench: Madan B. Lokur
JUDGMENT
Madan B. Lokur, J.
1. The Petitioner filed a petition under Section 14 of the Arbitration Act, 1940 (hereinafter referred to as the Act) for a direction to the learned Arbitrator for filing the original Award dated 18th July, 1996 in Case No.ARB/SCK/67.
2. After the Award and arbitral proceedings were filed, the Respondent Delhi Development Authority (for short the DDA) filed its objections in respect of the Award dated 19th July, 1996 in Case No.ARB/SCK/68 which were the papers
-: # :- Suit No.2456-A/1996 filed by the learned Arbitrator. Fortunately, neither of the learned counsel stood on any technicalities and formalities in respect of this discrepancy. Therefore, this decision is being rendered in respect of the Award dated 19th July, 1996 in Case No.ARB/SCK/67 and Agreement No.49/HD-I/84-85. The prayer clause in the petition filed by the Petitioner under Section 14 of the Act is deemed to be suitably amended.
3. Learned counsel for the Respondent pressed her objections filed under Sections 30 and 33 of the Act with regard to Claim No.6(VII), 7, 8 and 10. She, very fairly, stated that even though objections were filed in respect of some other claims, they were not worth agitating.
4. Claim No.6(VII) relates to item No.3.7 of the Agreement. The main item No.3 concerns "Reinforced Cement Concrete Work" (for short RCC work). Item No.3.7 reads as follows:-
"Reinforcement for RCC work including bending, binding and placing in position complete.
a) Mild steel & medium tensile steel bars.
b) Cold twisted bars."
5. According to the Petitioner who made the claim, this does not include the cost of straightening and cutting the steel bars. According to the Respondent, straightening and cutting the steel bars is implicit in item No.3.7.
6. The learned Arbitrator held as follows in respect of Claim No.6(VII):-
"VII. On account of reinforcement of steel :
Rs.2,74,064/-
The claimant(s) have claimed for extra rates of Rs.0.75 per kg. under item no.3.9 of agreement for undertaking work of cutting and straightening of steel bars as the same is not covered in nomenclature of item. The respondent(s) have denied the claim but have not controverter the analysis of rates. I hold that in nomenclature of item the operation of cutting and straightening is not included and claimant(s) claim is justified, hence respondent(s) do pay Rs.2,74,064/- (Rs.Two lacs seventy-four thousand and sixty-four only) to the claimant(s)."
7. Learned counsel for the Respondent relied on a decision of a learned Single Judge of this Court in Suit No.181 of 1992 (S.K.Mangla v. Delhi Development Authority) decided on 22nd May, 1995. The learned Judge referred to Clause 42(ix) of the contract, which is almost identical in this case. This reads as follows:-
"M.S.Bars, flats, tees, angles etc. shall be issued if stipulated in lengths as available in the stores. No claim on this account shall be entertained."
8. The learned Judge then held:-
"In the very nature of the things reinforcement work involves cutting of steel in required size, bending the same and making in suitable shapes so as to be utilised in reinforcement. There is no question of making separate provision for cutting operation. It is true that a wrong interpretation of contract by the Arbitrator may not be a ground for interference by the court but when the contract means only one thing and still by ignoring the same the arbitrator arrives at a different finding then he commits a legal misconduct. In the fate of the phraseology used in clause 42(ix) of the contract, the claim could not have been allowed. The award on claim No.6 is set aside."
9. Learned counsel for the Respondent also drew my attention to Clause 42(iii) of the contract which reads as follows:-
"The provisions of the foregoing sub-clause shall also apply in the case of steel reinforcement or structural steel sections except that the theoretical quantity of steel shall be taken as the quantity required as per design or as authorized by Engineer-in-Charge, including authorized lappages plus 5% wastages due to cutting into pieces. Over this theoretical quantity, plus 5% and minus 4% shall be allowed as variation due to wastage being more or less."
10. The contention of learned counsel for the Respondent was, effectively, three-fold. Firstly, the Petitioner was to do the complete work of reinforcement of RCC work. This was including bending, binding and placing in position. The description was inclusive and, therefore, not exhaustive. Secondly, the very nature of the work involved cutting and straightening of steel. The Petitioner was to be issued steel bars as were available and no claim on this account was to be entertained. Finally, cutting the steel was not something foreign to the contract since wastages due to cutting were postulated by Clause 42(iii) of the contract.
11. Learned counsel for the Petitioner controverter all these submissions. According to him, the nomenclature of item No.3.7 is important; it simply did not include straightening and cutting of the steel bars. According to him, Clause 42(ix) of the contract was inapplicable since his client was concerned with cold twisted bars which do not find a mention in Clause 42(ix) of the contract. Learned counsel placed reliance on the decision rendered in Suit No.1985-A of 1984 (K.C.Chhibar v. Delhi Development Authority) decided on 18th January, 1991 and Suit No.570-A of 1995 and Suit No.656-A of 1995 (Anant Raj Agencies v. Delhi Development Authority) decided on 30th October, 1998 to contend that identical claims had been accepted by two learned Single Judges of this Court. He also relied on Himachal Pradesh State Electricity Board v. R.J.Shah & Company, to contend that if a clause in a contract could be given two possible interpretations, the Court should not interfere with the interpretation given by the learned Arbitrator. Learned counsel also relied upon B.V.Radha Krishna v. Sponge Iron India Ltd., to contend that I am not sitting as an appellate Court overseeing the decision rendered by the learned Arbitrator. He implied, thereby, that my powers are circumscribed and are not as vast as those of an appellate Court.
12. The propositions laid down by the Supreme Court in two decisions mentioned above are, indeed, indisputable.
13. After hearing learned counsel for the parties on 28th February and 2nd March, 2001, there was little I could do but anxiously consider their submissions. Having done so, I am afraid it is not possible for me to agree with learned counsel for the Petitioner on the other contentions urged by him.
14. There is no doubt that when a clause in a contract is capable of two interpretations, the Court should respect the interpretation given by the learned Arbitrator. The Court should not substitute its interpretation for that of the learned Arbitrator.
15. In the present case, however, it seems to me that item No.3.7 read with Clause 42(iii) and Clause 42(ix) of the contract admits of only one interpretation. If the learned Arbitrator chooses to ignore the only possible interpretation and comes up with an interpretation which does not appear to be plausible, the Court is not obliged to accept the latter interpretation. In this regard, I would definitely go along with the view expressed by a learned Single Judge of this Court in S.K.Mangla that this would amount to a legal misconduct.
16. Quite apart from this, item No.3.7 describes the work in an inclusive manner. The work to be done is reinforcement of RCC work and this is said to include bending, binding and placing in position. The work of bending, binding and placing in position is not exhaustive of the reinforcement of RCC work - it is only illustrative. Therefore, the description of the work being inclusive and illustrative will encompass other ancillary works and, definitely, intrinsically connected works such as straightening and cutting the steel bars.
17. The use of the word "complete" in item No.3.7 also lends support to the view that I have taken. The item requires the Petitioner to do the complete job of reinforcement of RCC work. This means just about everything that is necessary, including bending, binding and placing in position. If the work involves straightening and cutting the steel bars for its completion, well, so be it.
18. I am, therefore, of the view that straightening and cutting the steel bars is postulated in item No.3.7 of the Agreement.
19. The two other decisions relied upon by learned counsel for the Petitioner, that is, K.C.Chhibar and Anant Raj Agencies are clearly distinguishable. In both the cases, the Petitioner therein had notified the DDA that the cutting of steel or the straightening of steel bars was being treated as an extra item of work. This was not objected to by the DDA. The claim of the Petitioner in both the cases was upheld. In the present case, this situation did not arise. No letter or intimation was sent by the Petitioner to the Respondent. The claim of straightening and cutting the steel bars was made by the Petitioner for the first time before the learned Arbitrator. The Respondent had no occasion to react (or not to react) to the claim, prior to the arbitral proceedings.
20. In view of these facts, the decision rendered in S.K.Mangla has to be followed. Moreover, this decision also recognizes pragmatic and down-to-earth facts in building contracts.
21. It must also be appreciated that the Petitioner is an experienced contractor and not a novice. He knows (or is at least expected to know) what item No.3.7 entails. It was only after fully knowing and understanding this that he gave an offer to the Respondent. Straightening and cutting of steel bars was not an unforeseen eventuality which had taken him by surprise. Indeed, in the claim filed by him, the Petitioner admits the following:-
"The steel bars were issued by the Respondents which were required to be straightened and cut before they could be bent to the required shape for reinforcement in the RCC members."
Consequently, as per the understanding of the Petitioner, some work had necessarily to be carried out before the process of bending could take place. This process was of straightening and cutting. The conclusion is, therefore, inevitable that straightening and cutting of the steel bars is included in item No.3.7 or is, in any case, intrinsically connected with it.
22. Learned counsel for the Petitioner contended that cold twisted bars are not included in Clause 42(ix) of the contract. May be so. However, in the statement of claim no such distinction has been made, nor does the main part of item No.3.7 make any such distinction. Moreover, cold twisted bars are, in any case, an item for reinforcement covered by the main part of item No.3.7. It cannot be taken out of the scope of item No.3.7 merely because it is not mentioned specifically in Clause 42(ix) of the contract. I think learned counsel is clutching at a straw to try and salvage something for his client.
23. It was finally contended that the Delhi Schedule of Rates (DSR for short) for 1997 now recognizes straightening and cutting of steel bars as a separate item of work and provides for payment for it. This material was admittedly not before the learned Arbitrator and, therefore, I certainly cannot consider it now.
24. Consequently, the objection raised by the Respondent in respect of Claim No.6(VII) has to be sustained. The Award dated 19th July, 1996 has to be set aside to this extent. The result of this will be that Claim No.7 will have to be suitably modified since it is tied up with the findings given in respect of Claim No.6 as a whole. It is so directed.
25. The next objection of learned counsel for the Respondent is that Claim No.7, 8 and 10 are essentially the same but with different words being used. There is, therefore, a duplication of claims and the learned Arbitrator should have awarded only one of these claims (if at all) instead of all three.
26. These claims read as follows:-
"Claim No.7 : Claimants claim Rs.3,50,000/-
towards balance payment under clause-10CC of the agreement.
Claim No.8 : Claimants claim Rs.8,40,000/-
towards damages on account of under utilisation of staff, establishment and T&P during the extended period of contract.
Claim No.10 : Claimants claim Rs.24,30,000/- on account of loss of profit due to prolongation of the contract by the department."
A bare reading of these claims shows that Claim No.7 is towards balance payment to be made to the Petitioner. From the text of the claim, it is quite clear that it is based on a calculation error by the Respondent. Claim Nos. 8 and 10 are in the nature of damages claimed by the Petitioner due to prolongation of the contract as a result of alleged defaults by the Respondent.
27. Consequently, Claim No.7 on the one hand and Claim Nos.8 and 10 on the other operate in different fields and do not overlap as submitted by learned counsel for the Respondent. Claim No.8 and Claim No.10 do not overlap inter se because they deal with different aspects of the damages allegedly suffered by the Petitioner. Claim No.8 is on account of damages suffered due to under-utilization of staff and machinery, while Claim No.10 is with reference to damages suffered on account of loss of profit.
28. Therefore, on a plain reading of the claims, the objection raised by learned counsel for the Respondent has to be rejected.
29. Learned counsel for the Respondent relied on Union of India v. Jain Associates & Anr., .
Paragraph 8 of the Report shows that the High Court had held that the umpire had mechanically awarded different amounts under the claim of damages and loss of profit. Moreover, the umpire failed to consider the counter claim on the specious plea that it was belated. On these facts, the Supreme Court held that the umpire had not applied his mind to the facts of the case. It was for this reason that the award in respect of the claim of damages and loss of profit was set aside by the Supreme Court. This fact situation is not at all applicable to this case and so Jain Associates does not assist learned counsel for the Respondent.
30. Similarly, Delhi Development Authority Vs. U Kashyap, is also clearly distinguishable. In Kashyap the learned Arbitrator made an Award towards increase in the prices of materials and labour under Clause 10 (cc) of the agreement. However, instead of adopting the formula prescribed in Cluase 10(cc) of the agreement, the learned Arbitrator adopted some other standard. This was held to be without jurisdiction. The claim in Kashyap was not outside the scope of Clause 10(cc) of the agreement (like a claim for damages). The claim was very much within the scope of Clause 10(cc) of the agreement. It is for this reason that I find Kashyap to be inapplicable.
31. A Division Bench of this Court in Delhi Development Authority v. M/s S.S.Jetley, 2000 VII AD (Delhi) 743 has accepted, in paragraph 8 of the Report, that a claim under Clause 10-CC of the agreement is quite different from a claim for damages under Section 73 of the Contract Act, 1872. This being the legal position, the objection of "duplication" raised by learned counsel for the Respondent has to be rejected.
32. Consequently, the Award dated 19th July, 1996 is made a Rule of the Court, except with respect to Claim No.6(VII) and the consequential modification with regard to Claim No.7.
33. The petition and interim applications are disposed of in the above terms. No costs.