Delhi District Court
North Delhi Municipal Corporation vs M/S. Engineering Development Corpn on 19 September, 2014
IN THE COURT OF MS. SUJATA KOHLI
ADDITIONAL DISTRICT JUDGE (WEST)
TIS HAZARI : DELHI
Arbt. No.: 21/14
1. North Delhi Municipal Corporation
(formerly known as the Mpl. Corporation of Delhi/MCD)
Through its Commissioner,
Shyama Prasad Mukherjee Bhawan
Civic Center, New Delhi.
2. The Executive Engineer (Project1),
Rohini Zone,
Second Floor, Sub Zonal Office Bldg.,
Sector 17, Rohini, Delhi
.....Petitioners/objectors
VERSUS
1. M/s. Engineering Development Corpn.
Through its partner
38/52, Punjabi Bagh, New Delhi.
Second address: 11/41, UG2,
West Punjabi Bagh,
New Delhi.
Third address: 31, North Avenue Road,
Punjabi Bagh, New Delhi.
2. Sh. S.P. Rai
Pages 1 to 13 NDMC Vs. Engineering Development & Ors.
A2/12, SectorV,
Rohini, Delhi85
....Respondents
Date of filing the petition : 21.03.2014
Date of reserving the Judgment/Order : 01.09.2014
Date of passing the Judgment/Order : 19.09.2014
ORDER
Brief facts leading to the filing of this objection petition U/S 34 Arbitration & Conciliation Act, 1996 as stated by the petitioner that the claimant/respondent had been awarded the project of construction of Community Toilet Complexes under Yamuna Action Plan at Shakur Pur, New Delhi, vide a work Order dated 27.09.2001, vide which, the work was to be commenced on 06.10.2001, and to be completed on 05.04.2002.
2 Vide a corrigendum, one percent bonus was also provided, if the work would be completed one month in advance, and the half per cent bonus would be given, if the work would be completed two week in advance before the stipulated period. 3 The claimant/respondent herein filed six claims, out of which, claim no. 1, 3 and 5 were awarded in his favour, while claim no. 2, 4 and 6 were rejected.
4 The objections vide Objection Petition No.458/07 were filed by the Pages 2 to 13 NDMC Vs. Engineering Development & Ors.
claimant/respondent visavis the rejection of the claim no. 2, 4 and 6, and vide Order, passed by the Hon'ble High Court, respondent no. 2 was appointed as a new Arbitrator to adjudicate the claim nos. 2, 4 and 6, afresh.
5 The stand taken by the MCD/Objector is that, by the Order dated 27.09.2007, the Hon'ble High Court while appointing the respondent no. 2 as a new Arbitrator to decide the claim afresh, the earlier Arbitrator Sh. R.P. Bhardwaj, had to hand over the original records to the new Arbitrator, but since the said record was not produced, in the absence of the record, the second Arbitrator, could not have entered entertained the claim raised by the claimant/respondent. 6 It is further an objection of the MCD that the claims which were filed by the claimant/respondent before the new Arbitrator, had not formed part and parcel of the claims filed before the original/earlier Arbitrator.
7 Further claimant/respondent had not even filed any supporting document to prove the locusstandi of Sh. Inderjeet Chaddha, as being a partner in the firm, as alleged.
8 The objector also raised objection regarding limitation stating that the claims were timebarred, going by the date of contract, as per the provisions of Clause5 of the contract in question.
9 It has further been stated on behalf of the objector/petitioner herein that the Ex. Arbitrator in respect of the claim nos. 2 and 4 had held that claimant had failed to Pages 3 to 13 NDMC Vs. Engineering Development & Ors.
prove the genuineness and the acknowledgment of Ex. P6, P7 and P8 as the original documents had not been produced before the Ex. Arbitrator, the said claims were also held to be not supported by any statement of account of the firm, and other account books showing any acknowledgment of the watch and ward staff, like documents of PF, ESI etc. 10 Further, it has also held by the Ex. Arbitrator visa vis claim no. 6, no notice had been issued by the claimant under the provisions of 1971 of Interest Act, and in fact, the plea was taken first time before the Hon'ble High Court, while seeking appointment of a new Arbitrator. However, the Arbitrator partially allowed the claim alongwith interest from 18.03.2014 till date of payment.
11 According to the petitioner/objector, the claimant had concealed material facts regarding acceptance of payment of the awarded amount vide cheque dated 09.05.2006 for a total sum of Rs. 16,40,427/ as full and final, and as such, he could not have raised any issue about the payment, subsequently.
12 It was further contended that there was no specific proof produced by the claimant regarding completion of the work on 04.03.2002 as was being claimed by them, and as such, they could not have claimed payment of any bonus, as per the contract. The impugned Order passed by the new Arbitrator, is stated to be against the terms and conditions of the contract, and thus, also violative of the Act, particularly Clause 28 (3) of the Arbitration and Conciliation Act, 1996.
Pages 4 to 13 NDMC Vs. Engineering Development & Ors. 13 On the other hand, respondent/claimant in its detailed reply has also
referred to and relied upon the Order of Hon'ble High Court while allowing the earlier objection petition, which had been filed by the claimant/respondent, and whereby the new Arbitrator had been appointed to adjudicate afresh upon the claim nos. 2, 4 and 6. 14 It is one of the preliminary objections of the claimant/respondent that the present objection petition is more in the nature of an appeal, and that the award as passed on the basis of the evidence on record, the objection petition is outside the scope of Section 34 of the Act.
15 During the course of arguments, the main point that was strongly contended on behalf of the petitioner/objector was against the award of watch and ward charges to the claimant/respondent by the impugned Award and also the interest thereon. 16 Reference was also had to the general terms and conditions and also to Section 31 of the Arbitration and Conciliation Act, 1996, besides also the clause 7.1 of the rules of MCD. It was strongly contended that the documents in support had not been proved, by the claimant/respondent and further that in view of the acceptance of the awarded amount by the claimant/respondent already, reagitation about the second claim could not be entertained.
17 Ld. counsel for the claimant/respondent on the other hand relied upon clause 7 of the MCD rules regarding delayed payments and he referred to a letter issued in this regard, by the claimant/respondent, to which the MCD had not sent any reply.
Pages 5 to 13 NDMC Vs. Engineering Development & Ors.
Reliance was placed on the decision of our own Hon'ble High Court in the case titled as Anant Raj Vs. DDA reported in (2005) VolI ALR 590. Reference was also had to the provisions of Section 28 of the Arbitration and Conciliation Act.
Arguments were addressed at length.
CLAIM NO.2:
18 As regards claim no.2, this was for Rs.1,44,669.131p, which was on account of one percent bonus claimed by the claimant/respondent herein for completion of the work one month in advance of the due date as per the contract agreement. 19 The date of start of the work as per agreement was 06.10.2001 and the stipulated date of completion was thereof 05.04.2002.
20 The claimant/respondent had claimed that he had actually completed the work one month in advance i.e. on 04.03.2002 and even written to the MCD to take over the site and for this reason, he was entitled to one percent bonus in view of the corrigendum dated 04.07.2004 issued by the petitioner/objector MCD itself. 21 The petitioner/objector herein had submitted to the contrary that the said claim was not tenable as claimant had not completed the work in accordance with the terms of the contract and due to which, the work could not be handed over to the NGOs within stipulated time.
22 The petitioner/objector MCD did not deny receipt Ex.P6, the letter, but put the claimant to proof of having completed the work one month ahead of the schedule. It Pages 6 to 13 NDMC Vs. Engineering Development & Ors.
was also submitted on behalf of the MCD that keeping in view of the incomplete work, the fourth bill prepared in their office showed the date of completion as "work in progress".
23 The claimant on the other hand relied on Ex.P9 which was a note sheet of the office of the MCD and further submitted that respondent did not challenge the claim earlier except during the proceedings of arbitration. He maintained that the work had been completed before time and in fact three blocks had even been handed over to the NGOs.
24 The ExArbitrator in the impugned Award has considered the fact that the fourth final bill prepared in the office of Executive Engineer (EE), MCD showed the work in progress as in March 2002 and took into account the fact that the claimant had at no occasion, objected to this noting as being incorrect, the work had not been fully commissioned due to noncompletion of agreement items and further that the claimant did not submit the documents of recording final certification of completion as required under the clause 8 of the agreement.
25 The ExArbitrator was therefore, of the view that it could not be established that the work completed in all respects on 04.03.2002 i.e. before the date scheduled and the claim was held to be not justified in that respect.
26 The Hon'ble High Court on this issue in its order has been pleased to observe that the arbitrator (ExArbitrator) had not written any finding as to when the Pages 7 to 13 NDMC Vs. Engineering Development & Ors.
work was completed. This he ought to have done in as much as he was of the view that the work was not completed on 04.03.2002 as claimed by the claimant herein. 27 The Hon'ble High Court while entertaining the petition of the claimant against the first Award, was pleased to consider documents Mark P6, P7, P8, the last of one which was a letter dated 18.06.2002 issued by the claimant to the MCD, wherein it had been stated more than once that the work had been completed to the satisfaction of the MCD, one month ahead of the schedule. The said letter also stated that despite the completion of work, the incentive bonus of one percent was not being paid nor was the final bill cleared. The certain relevant extracts of the said letter were also produced therein.
The said letter dated 18.06.2002 clearly brought out six points as under:
1. Claimant had notified to the MCD that the work had been completed on 04.03.2002.
2. The claimant had claimed incentive of one percent bonus for completing the work, one month ahead of schedule.
3. The claimant had claimed payment of the final bills.
4. The claimant had also claimed compound interest @ 24% in respect of the delayed payments.
5. The claimant was incurring huge amounts towards watch and ward staff and other liabilities.
Pages 8 to 13 NDMC Vs. Engineering Development & Ors.
6. Claimant had requested the MCD to take over the sites, so that the claimant's responsibility for maintaining the watch and ward staff was came to an end.
28 Special reference was had to the reminder letters dated 02.08.2002 and 15.10.2002. All these letters together clearly indicated that the claimant had notified to the MCD that work had been completed on 04.03.2002. Even MCD had admitted the receipts of all these letters. But there was nothing on record to show that there was any response form the respondent denying the fact that the work had been completed on 04.03.2002.
29 All these letters have been ignored by the first ExArbitrator and as such, the findings of ExArbitrator on the claim no.2 were set aside, being held to be against public policy as the findings were against and in complete ignorance of the material on record. In fact, it has also been observed by Ld. Arbitrator (New) in the impugned Award that not only had the ExArbitrator ignored the material documents submitted by the claimant, but also the ExArbitrator had given undue weightage to the evidence of the MCD, for instance, it was stated as under: "The respondent (MCD) did not deny the receipt of Ex.P6, but put the claimant to proof of having completed the work, one month ahead of schedule."
30 It was rightly questioned by Ld. Arbitrator in this impugned Award that as Pages 9 to 13 NDMC Vs. Engineering Development & Ors.
to how on oral basis, the claimant could have proved this and further it has been rightly held by ld. Arbitrator that the correct approach would have been, to immediately inspect the site, to check up veracity, or otherwise of the claim of completion, to have pointed out the deficiency if any, and taken over the site if complete. Since if one month earlier completion bonus was justified, there was no logic in taking over the site after lapse of eight months.
31 It was further observed by Ld. Arbitrator (New) in the impugned Award that excessive reliance had been placed on the noting in the work book to the words "work in progress". The question that was raised by Ld. Arbitrator in the impugned Award is as to whether any work had been done thereafter or was any additional work done before the site was taken over eight months after, were the questions which could have received answers.
32 In view of the repeated letters from the claimant to take over the site and disclosing his intention to remove the watch and ward in case the site is not taken over by the MCD, Ld. Arbitrator in the impugned Award rightly came to the conclusion that there was overwhelming evidence to suggest that the work was complete one month before and that the lack of proper coordination between the MCD and the end user resulted in the delayed takeover. Thus, the claim no.2 of bonus was rightly accepted by the Ld. Arbitrator in this impugned Award.
Pages 10 to 13 NDMC Vs. Engineering Development & Ors. CLAIM No.4: 33 As regards claim no.4, this claim was for the payment of watch and ward at
the sites, beyond the date of completion till the date 30.10.2003 i.e. when the sites were taken over the amount claimed was Rs.11.49 lacs on this account and besides Rs. 7,36,095/ towards interest thereon.
34 The ExArbitrator gave the reasoning that since there was no evidence to show that the MCD had asked the claimant to engage any watch and ward, the claimant had relied upon Ex.P6 to P8, but had nowhere indicated to the MCD that they would claim extra amount on account of watch and ward and the Ex Arbitrator for this reason, came to the conclusion that the claim no.4 for watch and ward charges was also not maintainable. , rejecting the claim no.4.
35 The arguments of ld. counsel for the MCD before ExArbitrator and even before this court were only this much that nobody had asked the contractor to engage watch and ward and further there was no such clause in the entire contract to pay such claims.
36 However, as rightly held by Ld. Arbitrator in this impugned Award, it is an implied contractual application apart from sheer prudence which dictates that the site is taken over after it is complete, and that till then, no contractor can afford to abandon the site. The basic watch and ward required to protect the site was necessary and the claimant had to be compensated for this. Though the claim against the supervisory staff Pages 11 to 13 NDMC Vs. Engineering Development & Ors.
as demanded by the claimant had been rejected, the Ld. Arbitrator in the impugned Award has thus, accepted the requirements of minimum watch and ward and even after calculating the rates etc., held two chokidars necessary, one for day and one for night at the rate of even Rs.5,000/ p.m. for each of the six sites for eight months have been held to be fully justified and rightly so. The total amount would have come to Rs. 4,80,000/ and thus, claim no.4 was allowed.
CLAIM No.6:
37 As regards claim no.6, this claim was on account of presuit interest which had been rejected by the ExArbitrator on the ground that no notice had been issued by the claimant for claiming interest on the due amount and therefore, no pre suit interest was held admissible.
38 The Hon'ble High Court had been pleased to observe that Ex.P6, whereby the claim of interest had been clearly ignored by the ExArbitrator and therefore that part was also set aside. Ld. Arbitrator in the impugned Award has referred to the provisions of Section 31(7) of the Arbitration and Conciliation Act, 1996 which clearly provides for the payment of interest and does not lay down any pre condition of any prior notice. 39 Ld. Arbitrator in the impugned Award has also observed that the fundamental principle governing payment of interest is that a person is entitled to ordinary or normal profit, which the person entitled to the principal money, might have made, if he had the use of the said money, but for the unexpected loss in question; and Pages 12 to 13 NDMC Vs. Engineering Development & Ors.
therefore, normally a person would always be entitled to interest on his payment due and therefore, the principal suit interest was also held fully justified by Ld. Arbitrator. 40 During the course of arguments, ld. Counsel for respondent has relied upon various decisions of the Hon'ble Supreme Court as well as our own Hon'ble High Court on the aspect of the extent/scope of interference u/S 34 of the Act being as under:
1. Mcdermott International Inc. Vs. Burn Standard Co. Ltd. & Ors. (2006) 11 SCC 181.
2. Connaught Plaza Restaurants Pvt. Ltd. Vs. Ms. Niamat Kaur 2014 (1) R.AJ. 15 (Delhi) 41 In both of these judgments, following the already settled legal position as per landmark judgment in the case of ONGC Vs. Saw Pipes 2003 (5) SCC 705 the view reiterated by both these judgments was that the scope of judicial interference in the arbitral award is very limited and that the court while hearing objections against the award is not sitting as a court of appeal. Their lordships have been further pleased to elaborate that the Court hearing an objection petition u/S 34 is not to reassess the material, the evidence and the terms of the contract assessed and interpreted by the arbitrator and the court is not to substitute its opinion which that of the arbitrator. Even otherwise, even where two view may be possible on a question of law, the court would still not be justified in interfering with the award if the view taken by the arbitrator is a possible view. Similarly, reappraisal of the evidence or re reinterpretation of clauses of Pages 13 to 13 NDMC Vs. Engineering Development & Ors.
an agreement by the court is not permissible.
42 The interference and the supervisory role is to be envisaged only in case of a fraud, or bias or violation of natural justice or a patent illegality which goes to the root of the matter and where the public policy violation is so glaring as to shock the conscience of the court. Present case is certainly not one such, and far from that the award in question is absolutely a well reasoned award based on the material on record. No ground to interfere.
In view of the above discussion, objection petition u/S 34 of Arbitration and Conciliation Act, 1996 is dismissed.
No order as to costs.
Objection petition file be consigned to record room.
(SUJATA KOHLI)
Announced in Open Court ADDITIONAL DISTRICT JUDGE
today i.e. 19.09.2014 WEST/DELHI
Pages 14 to 13 NDMC Vs. Engineering Development & Ors.