Delhi District Court
Delhi Development Authority vs M/S Integrated Techno Systems Pvt Ltd on 16 July, 2024
OMP (Comm) No.77/2023: Delhi Development Authority V/s M/s Integrated Techno Systems Pvt.Ltd.
IN THE COURT OF VINOD YADAV:
DISTRICT JUDGE (COMMERCIAL COURT)-02:
NORTH-WEST DISTRICT: ROHINI COURTS: NEW DELHI
CNR No.DLNW01-006677-2023
OMP (Comm.) No.77/2023
In the matter of:
Delhi Development Authority,
Through Director LSB,
Vikas Sadan, INA, Delhi.
.....Applicant/Petitioner
(Through Shri Tarun Sharma, Advocate)
Versus
M/s Integrated Techno Systems Pvt. Limited,
M-84/2, LGF, Malviya Nagar,
New Delhi-110017.
.....Respondent
(Through Shri Vijay Kumar, A.R/Director of respondent)
Date of Institution of petition : 11.07.2023
Date of hearing final arguments : 09.07.2024
Date of judgment : 16.07.2024
APPLICATION U/s 34 (2) OF ARBITRATION AND CONCILIATION ACT, 1996,
AMENDED UPTO DATE ON BEHALF OF DELHI DEVELOPMENT AUTHORITY
CHALLENGING THE ARBITRAL AWARD TO BE SET-ASIDE, PASSED ON
27.02.2023, BY SHRI S.K SARVARIA (SOLE ARBITRATOR)
DOD: 16.07.2024 || Page 1 of 43
OMP (Comm) No.77/2023: Delhi Development Authority V/s M/s Integrated Techno Systems Pvt.Ltd.
16.07.2024
JUDGMENT
1. This is a petition filed under Section 34 (2) of Arbitration & Conciliation Act, 1996 (hereinafter referred to as the "Act") challenging the Arbitral Award dated 27.02.2023, passed by the sole Arbitrator namely Shri S.K Sarvaria, learned District Judge (Retd.). (hereinafter referred to as the "impugned Award").
2. I have heard arguments advanced at Bar by both the sides and perused the arbitral record. The petitioner, Delhi Development Authority (in short "DDA") is a Government Body and is a State within the meaning of Article 12 of the Constitution of India; whereas, respondent is a private limited company, engaged in conducting survey of the land and other related works (hereinafter referred to as "respondent" or "claimant").
3. The petitioner entered into a contract with the respondent for conducting Total Survey Station of vacant land in sectors-26, 31, 32, 33, 38, 39, 40 and 41 at Rohini Zone, being Agreement No.07/EE/RPD-XI/A/2015-16 (hereinafter referred to as the "contract"). The salient features of the execution of "contract" are tabulated as under:
DOD: 16.07.2024 || Page 2 of 43OMP (Comm) No.77/2023: Delhi Development Authority V/s M/s Integrated Techno Systems Pvt.Ltd.
Name of work:
"Protection of Vacant Land in Rohini Zone, DDA. S/H: Total Survey Station of Vacant Land in Sector- 26,31,32,33,38,39,40 & 41 at Rohini Zone."
[Agreement No. 07 / EE / RPD-XI /A /2015-16] Sr. No. Particulars
1. Date of start 01.09.2015
2. Stipulated Time Period / Stipulated date of completion. 15.10.2015 (45 Days - Page-117 of the Agreement)
3. Actual date of completion as per 16.08.2016 completion certificate.
4. Estimated Cost put to tender Rs. 1,02,00,000/-
5. Tendered Amount Rs. 30,51,840/-
6. Percentage Rate Above / Below 70.08% Below The Estimated Cost
7. EMD (Earnest Money Deposit) Rs. 2,04,000/-
8. DSR applicable DSR 2014
9. Performance Guarantee Amount Rs. 1,52,592/-
DOD: 16.07.2024 || Page 3 of 434. The list of important dates and events are tabulated below:
Date Brief Particulars The Respondent/EE Issued Letter of Award to the Claimant after the deposit of Performance Guarantee 22.08.2015 of Rs. 1,52,592/- in the form of FDR (A/c No. 35158432567 dated 17.08.2015).
01.09.2015 Date of start of work Claimant issued letter to the Respondent requisite details for which the Respondent was under obligation to provide i.e. Layout Plans, Shajra / Khasra Maps, 16.09.2015 Details of the Land / Plan under litigation, Details of the Land / Built up area plan under Encroachment and Details of identification of DDA land and private land
- under encroachment / litigation etc. Submission of draft topographical survey drawing of 23.09.2015 Sector-31 and request for early supply of soft copy of all the sectors of the project area.
Request to the Respondent for carrying out Jungle 24.09.2015 Clearance work of the site.
Request for accord extra item (regarding jungle 01.10.2015 clearance) as per DSR 2014 CPWD under clause 12 of the Agreement Submission of draft topographical survey drawing of 01.10.2015 Sector-26 of the project area.
Reminder to our letter dated 16.09.2015 (Exhibit C-6) 03.10.2015 and status report as on 28.09.2015 attached herewith. Submission of draft topographical survey drawing of 07.10.2015 Sector-32 of the project area.
Submission of draft topographical survey drawing of 12.10.2015 Sector-33, 38 & 39 of the project area.
Grant Provisional Extension of Time by the 13.10.2015 Respondent / EE up to 30.11.2015.
Submission of draft topographical survey drawing of 15.10.2015 Sector-40 & 41 of the project area.
The Claimant again issued letter to Respondent for grant of extra item (i.e. jungle clearance) under clause 29.10.2015 12 of the Agreement and provide hard copies and soft copies of the other points as raised above letters.
5On the request of the Respondent to the Claimant again re-submitted soft copies of topographical survey 02.11.2015 drawing of Sector-26, 31, 32, 33, 38, 39, 40 & 41 of the project area.
03.11.2015 Payment against 1st RA bill to the Claimant In partial fulfillment of mandatory reciprocatory obligation, the Respondent supplied soft copy of layout plans (LOP) of Sector- 26 and Sector-38 to Sector-41;
06.11.2015 But soft copies of LOPs of remaining sectors - 31, 32 & 33 were yet to be supplied by the Respondent till that date and the Claimant reminded the Respondent thereof.
Reminder to Respondent / EE by the Claimant for extra item (i.e. jungle clearance) under clause 12 of 06.11.2015 the Agreement and provide hard copies and soft copies of the other points as raised above letters. Submission of Topographical Survey Drawings after incorporating the desired changes Topographical survey drawings with requisite RL's (Sector 26, 31, 32, 33, 38, 39, 40 and 41) Topographical survey drawings superimposed over 27.11.2015 the Proposed Lay Out Drawings (Sector 26, 31, 32, 38, 39, 40 and 41) Topographical survey drawings superimposed over the given Shajra Plan duly marked with Khasra number no. (Sector 38, 39, 40 and 41) The Claimant again made another request to the Respondent for fulfillment of its mandatory reciprocatory obligations by supplying the following:
Hard copy and soft copy of the proposed layout plan of sector-33 as above.
Hard copy and soft copy of the Shajra Plan duly marked with Khasra numbers of sectors- 26,31, 32 & 33 as above.
30.11.2015 Additional details of the DDA land for which possession has been taken over by the DDA, if any Details of the land under litigation, if any.
Details of the land under encroachment / built up, if any.
Details of detailed identification DDA land and private land under encroachment / litigation, if any. Details of identification mark on drawing and/or at 6 site so as to show distinction between government land and private land in the respective sectors, if any. Submission of final lot of drawings (after having delivered all the requisite deliverables as required 08.12.2015 under the said work) and discharged all our obligations under the Agreement.
Respondent's letter to the Respondent / Dy. Director 17.12.2015 (Planning) for checking the TSS plans and layout plans etc. as submitted by the Claimant Grant of Permission under Clause 23 of the Agreement regarding transfer of business by SPACE 20.11.2015 HUB & Co. to M/s. Integrated Techno Systems Pvt. Ltd.
EE / Respondent letter to Dy. Director (L.M.) to mark land under litigation, if any in fulfillment of 22.02.2016 mandatory reciprocatory obligations of the Respondent.
Re-Submission of statement of actual area surveyed 08.01.2016 with area sheet and request for sanction of deviation statement Email by the Claimant regarding submission of draft 12.02.2016 survey drawing of Swaran Jayanti Park to the Respondent 15.02.2016 Re-Submission of final drawings Claimant submitted due deliverables pertaining to Sector-41 and Industrial Area Sector-40. And also submitted survey drawings of the following three 08.03.2016 parks (i) SwaranJayanti Park, Sector-10,Rohini
(ii) Chandragupta District Park, Sector-14, Rohini
(iii) Avantika Park, Sector-1, Rohini Respondent, in partial fulfillment of mandatory reciprocatory obligation, issued a letter to Dy. 10.03.2016 Director (L.M.) regarding to mark land under litigation.
Payment of 2nd RA Bill to the Claimant and the Respondent recorded a certificate that the work has been carried out as per Agreement and direction of the 21.03.2016 Engineer-in-charge (marked as 'A' on page-90 of the MB). Details of area surveyed is also attached with Exhibit C-33 Claimant issued reminder to Respondent / EE for 25.03.2016 accord of sanction to the extra item (i.e. jungle clearance) under clause 12 of the Agreement. 28.03.2016 Request for issue of Extension of time (EOT) 7 Request for recording of completion certificate and 31.03.2016 payment against final bill The Respondent through its email dated 07.04.2016 07.04.2016 (3:49 PM) forwarded email of the SE CC-
9/Respondent The Claimant through its Email dated 11.04.2016 (9:51 PM) submitted revised drawings of all the three 11.04.2016 parks after incorporating observations / suggestions of the Respondent. The Claimant sent the above said drawings in the AutoCAD format.
On receipt of further instructions of the Respondent, the Claimant again re-submitted the said drawings of 12.04.2016 the parks in the PDF and AutoCAD format as well through email dated 12.04.2016 (02:33 PM). Further again the Claimant re-submitted survey drawings of Chitragupt District Park after 18.04.2016 incorporating observations / suggestions of the Respondent vide its email dated 18.04.2016 (06:05 PM).
The Claimant's again email dated 19.04.2016 (04:43 19.04.2016 PM) re-submission of survey drawings of the parks. The Claimant's again email dated 22.04.2016 (09:56 22.04.2016 PM) re-submit revised survey drawings of the parks. Claimant's letter dated 22.04.2016 regarding re- 22.04.2016 submission of topographical survey drawings of three parks under Rohini Zone by the Claimant Claimant's request for grant of extra items for survey work of parks and a copy of the email letter and the 22.04.2016 details of the extra items with rate analysis was also re-submitted to the Respondent.
Claimants again email dated 07.05.2016 (5:07 PM), 07.05.2016 the Claimant re-issued the 4th / 5th revised survey drawings of the parks.
18.05.2016 Respondent Letter to the Claimant Claimant's Re-Submission of Superimposed Shajra 31.05.2016 Plans over Total Station Survey Plans by the Claimant Respondent again issued letter to Dy. Director (L.M.) regarding to mark land under litigation for partial 17.06.2016 performance of reciprocatory obligations on the part of the Respondent.
Re-Submission of Superimposed Shajra Plans over 15.06.2016 Total Station Survey Plans Sector-38 & 40 and also survey plans of three parks by the Claimant 04.07.2016 Claimant's Request for finalization of bill and making 8 final payment by the Claimant 12.08.2016 Respondent Letter to the Claimant 16.08.2016 Copy of Hindrance Register 16.08.2016 Copies of Site Order Book Claimants another request for final payment 01.09.2016 incorporating due and legitimate extra payment Submission of verified Superimposed Shajra Plan over Total Station Survey Plan from L&M Office of all the sectors including Industrial Area pertaining to the said work by the Claimant.
Further, Exhibit C-54/10 pertains to a copy of the 09.09.2016 certificate cum note of having checked and verified the requisite drawings / submissions of the Claimant, as required and submitted to the Respondent, And the statement of updated area details as annexure (Exhibit C-54/11).
SE / Respondent Office accepted the Completion 16.09.2016 Certificate as submitted by the EE / Respondent Submission of 3rd& Final Bill by the Claimant to the 26.09.2016 Respondent / EE Time extension was also granted up to 16.08.2016 without levy of compensation and without prejudice to 08.11.2016 the right of DDA to recover liquidated damages by the Respondent vide its letter dated 08.11.2016. Claimants another request for grant of extra item and 10.11.2016 processing of final bill by the Claimant.
Notice of Interest Payment under Indian Contract Act, 16.11.2016 1978 by the Claimant to the Respondent EE / Respondent intimated about the recording of conditional completion certificate and the Claimant 23.11.2016 responded vide its letter dated 28.11.2016 and intimated regarding fulfillment of the conditions as recorded in the said completion certificate. Claimant's letter regarding fulfillment of conditions as recorded in the completion certificate with annexures
- (i) Claimant letter dated 09.09.2016, (ii) certificate 28.11.2016 of the LM office of DDA /Respondent and (iii) Sector-wise details of surveyed area in compliance to the letter dated 23.11.2016 of the Respondent (Exhibit C-45A).
EE / Respondent wrote to DD (NL-I) / DDA / Respondent for supply of certain information which 29.11.2016 was otherwise necessary to supply to the Claimant for the discharge of its mandatory reciprocatory 9 obligations under the contract.
Letter of the Claimant to the Respondent seeking intervention of the higher officials for extracting 27.12.2016 necessary information from the concerned wing of the DDA in partial fulfillment of mandatory obligations on the part of the Respondent under the Agreement. 28.12.2016 Claimant's letter regarding payment of extra item Respondent / EE Letter to The Dy. Dir. (NL-1) 03.01.2017 regarding marking of legal status of vacant land. Claimant's letter regarding request to conclude the contract and release due and legitimate payment as the 20.04.2017 same has already been delayed abnormally to the Respondent / EE.
Reminder by the Claimant to the Respondent / EE for 10.05.2017 early payment against final bill and Notice of Interest Payment under Indian Interest Act, 1978 Claimant requests to grant sanction of extra item 19.05.2017 (parks) and complete details of description of item (SOQ) and rate analysis Respondent / EE letter to The Dy. Dir. (LM), DDA to supply the necessary details which were required to be 17.07.2017 supplied to the Claimant as partial fulfillment of mandatory reciprocatory obligations.
Claimant's letter regarding Application of GST to the 20.07.2017 Respondent / EE Claimant request for release of Earnest Money 18.09.2017 Deposit Reminder for early payment final bill payment by the 18.01.2018 Claimant to the Respondent / EE Another request for release of Earnest Money Deposit 20.03.2018 and preparation of final bill by the Claimant to the Respondent / EE Reminder for release of final bill payment by the 21.09.2018 Claimant to the Respondent / EE Another request for preparation of final bill and 29.09.2018 release of Earnest Money Deposit by the Claimant to the Respondent / EE Reminder to record the final bill and release due and 16.10.2018 legitimate payment at the earliest by the Claimant to the Respondent / EE Another reminder to record the final bill and release 13.11.2018 due and legitimate payment at the earliest by the Claimant to the Respondent / EE 03.01.2019 Request for release of EMD / Security Deposit by the 10 Claimant to the Respondent / EE Submission of Revised Claims by the Claimant to the 18.03.2019 Respondent / EE Another reminder by the Claimant to the Respondent / 30.03.2019 EE for preparation of final bill and release of Earnest Money Deposit Notice of Interest payment under Indian Interest Act, 21.05.2019 1978 by the Claimant to the Respondent / EE Re-Submission of Claims / Final bill with all relevant details as annexures by the Claimant to the 25.05.2019 Respondent for payment within 15 days failing which disputes shall be formed between the parties and legal course of action shall be taken by the Claimant. Request of the Claimant to SE / Respondent under Clause-25 for issuing written instructions or decision 12.06.2019 for settlement of the disputes with the EE / Respondent.
The Claimant submitted Appeal to CE / Respondent 16.07.2019 under Clause-25 for settlement of the disputes with the EE / Respondent.
Notice for Appointment of Arbitrator of the Claimant to Respondent / EM (Engineer Member) under 20.08.2019 Clause-25 for settlement of the disputes with the EE / Respondent.
Reminder for early Appointment of Arbitrator of the Claimant to Respondent / EM (Engineer Member) 13.09.2019 under Clause-25 for settlement of the disputes with the EE / Respondent.
Reply by the Claimant to the Respondent / EE letter no. F67(04)A/RPD-XI/2015-16/DDA/597 dated 17.09.2019 05.09.2019 and copy also endorsed to EM / CE / SE / Respondent Email by the Claimant regarding Notice for 01.10.2019 Appointment of Arbitrator to the EM / CE / Respondent Order of EM / Respondent regarding Appointment of 28.10.2019 Ld. Arbitrator [NO. EM2(7)/2019/Arbn./Vol.VIII/Pt-
144/DDA/3176 dated 28.10.2019] Ld. Arbitrator Order dated 08.11.2019 08.11.2019 (No. RND / ITSPL/ New Delhi) for first hearing 01.11.2019 Copy of the Resolution of the Company / Claimant 11
5. Let us have a brief analysis of the "scope and execution of work", which has been bifurcated into "Part-A" and "Part-B".
Part-A:
6. It is that part of the work which the respondent was to carry out independently at its own and does not require any information/material to be supplied by the petitioner Department except the handing over of the site and details of areas (Sector wise) and the Layout Plans of various sectors.
Part-B:
7. Part-B of the scope of work includes superimposing Shajra / Khasra details over the TSS (Total Station Survey) plans and to mark the areas and dimensions for the land acquired by DDA besides other details viz.
1. Land under litigation, if any,
2. Land under encroachment / built up,
3. Detailed identification of DDA land and private land under Encroachment and;
4. Areas under litigation (with dimensions and area).
5. Clear demarcations between Government land and Private land was also to be shown on the drawing.
8. Thus, according to respondent, Part-B refers to that part which was fully dependent upon the revenue details/information/material required to be supplied by the petitioner and the respondent could not have been able to discharge its obligation(s) without supply of all the requisite information/material by the petitioner and its active cooperation.
9. It was the case of the claimant/respondent that it had carried out its obligations as required under the contract, but limited to Part-A, as above because Part-B, as above could not be executed by the claimant 12 independently as the claimant was solely dependent upon the supply of requisite revenue details information / plans and support and cooperation by the Respondent. In another words, as regards Part-B, the petitioner was under mandatory obligation to supply the above requisite information to the Claimant so as to enable the Claimant to perform its reciprocal obligations. But the petitioner failed to perform its obligations within the stipulated time period and the work in hand got prolonged for the reasons fully attributable to the Respondent causing great losses and damages to the Claimant and the Respondent owes a responsibility to compensate for the same to the Claimant.
Respondent/Claimant's claim
10. (a) According to Claimant in the Award, during the subsistence of the contract, petitioner issued instructions to the Claimant to carry out topographical physical survey of three parks (i.e. Avantika Park, Swaran Jayanti Park, District Park) using Total Station surveying instruments and GPS on an understanding that the payment against the same shall be paid as an extra item under clause 12 of the Contract as the scope of work for carrying out the said survey work of parks was entirely different than as given in the stipulated item No.1 under the Contract. Thus, the petitioner was under an obligation to pay the additional cost of carrying out survey work of the said area under the parks which the petitioner failed to pay in the last bill payment to the Claimant. But the petitioner has made payment for the parks wrongly under item No.1 of the Agreement in the 2nd RA Bill (Running Account Bill). However, it was assured by the EE/petitioner to initiate the extra item and the due payment would be paid in the final bill after formal accord of sanction to the said extra item. It is pertinent to consider that the Contract under clause 7 provides "payment on intermediate certificate to be regarded as advances."
13(b) But the petitioner breached its contract by not making final bill and thereby the wrong payment against the parks as released in the 2 nd RA bill, could not be rectified. And thereby, the due and legitimate payment against the parks remained unpaid and the Claimant submitted its claim, accordingly, consequently, the disputes and differences arose in this regard.
(c) The Claimant has stressed that the area of interest of which the Claimant was to carry out survey work under the given scope of Contract, was covered with wild jungle, thorny bushes and shrubs, vegetation, grass, rubbish etc. And the area was also infested with dangerous insects, parasites and reptiles which includes snakes, lizards, crocodiles, turtles, and tortoises on which it was not possible for the surveyors / field staff of the Claimant to carry out the topographical survey work.
(d) Thus, the Claimant was made to carry out the jungle clearance at its own so as to get the site cleared from such risk and make the site workable. But, besides several requests of the Claimant to the petitioner, the jungle clearance was not carried out by the petitioner at its own and / or through any other agency. Finally, the jungle clearance was carried out by the Claimant on its own expense and the petitioner was informed by the Claimant accordingly and the consequent obligation of the petitioner to make necessary payment on this account. Accordingly, the Claimant claimed payment on this account from the petitioner and the petitioner turned a deaf ear and did not pay the same to the Claimant and thus the Claimant raised claims before this Tribunal accordingly.
(e) The Claimant admitted that the petitioner had paid 1 st RA (Running Account) bill on 03.11.2015 and later on 2nd RA bill on 21.03.2016. In this regard, a certificate as recorded while paying last bill as on 21.03.2016 in the MB no. 818/020819 as marked 'A' on MB Page No. 90 shows the following:
14"Certified that (1) the work as has been carried out as per Agreement and direction of the Engineer-in- Charge"
(f) Further, according to Claimant, record shows that completion certificate as recorded by EE/petitioner on 16.08.2016 had been accepted by the SE/petitioner vide its letter dated 16.09.2016 and it was communicated to the EE/petitioner. But the Claimant was intimated by the petitioner only vide its letter dated 23.11.2016. The relevant contents of the said letter dated 23.11.2016 issued to the Claimant is reproduced by Claimant in the Statement of Claim as under:
xxxxx "................ The conditional completion of the work was recorded on dated 16.08.2016 by this office and subject to the following conditions:
6. Collection of reports from DD (LM)R, for superimposition of Shajra plans and status of land over TSS plan for above mentioned sectors of Rohini.
7. Submission of updated area details of land required as per Agreement after the completion of point no. 1.
8. You are therefore requested to do the needful for the above mentioned points. Otherwise this office has no option but to withdraw the conditional completion of the work as recorded by this office."
xxxxx
(g) As regards the above given two conditions as mentioned in the completion certificate, according to interpretation suggested by Claimant, the first condition pertains to receipt of reports from DD (LM) i.e. Deputy 15 Director (Land Management), DDA and for the Claimant, the DD (LM) is a third party and the Claimant has no control on the said officer for the Claimant being an agency only of the EE/petitioner. Secondly, the Claimant is obliged to perform its obligations under the designated Engineer-in- Charge i.e. "The Executive Engineer, RPD- 11/DDA" as per condition no. 2
(v) read with Schedule F of the Agreement (page-29 and page-116). So the reference to DD (LM) in the first condition as given in the completion certificate is unreasonable, invalid and not tenable under the Contract. However, the Claimant had also approached the concerned office of the DD (LM) and sought the requisite approval from that office and the same was communicated to the EE/petitioner vide its letter dated 09.09.2016. Copies of the title block(s) of the respective drawings as got checked and approved from the office of the DD (LM) were submitted to the EE/petitioner alongwith other submissions and the same were also placed on record by the Claimant (Page 243-255 of the documents as attached along with the SOC.)
(h) The Claimant has also stated that the statement of the petitioner in its internal correspondence dated 29.11.2016 also shows that the Claimant had submitted Shajra plans superimposed on TSS plans of all the sectors duly authenticated by DD (LM)/petitioner's office. Thus, according to Claimant, it had fulfilled condition no.1 as recorded in the completion certificate and communicated to the Claimant vide letter dated 23.11.2016.
(i) As regards condition No.2 it was pleaded, even though the statement of updated area details was submitted to the petitioner by the Claimant earlier while getting the last bill paid and along with Claimant's letter dated 09.09.2016, yet the Claimant had re-submitted the same to the petitioner vide its letter dated 28.11.2016. Thus, it shows that the two conditions as recorded in the said completion certificate and communicated to the Claimant as on 23.11.2016, were irrelevant, superfluous and had no material value. However, the Claimant through its letter dated 28.11.2016 16 had made abundantly clear about the fulfillment of the said conditions. And thus, it absolved the Claimant from its all obligations under the Agreement and Agreement got discharged and the Respondent was under
obligation to pay final bill but failed and thus breached the contract.
(j) The Claimant has pointed out that the Hindrance Register and Site Order Book, as placed on record do also show that work was closed as on 16.08.2016 which reaffirms that the work was completed as on 16.08.2016. Further, the Order dated 08.11.2016 issued from the office of the SE/petitioner also shows the actual date of completion as 16.08.2016 and it also shows grant of time extension up to 16.08.2016 without levy of compensation. Thus, the actual date of completion as recorded in the completion certificate i.e. 16.08.2016 by the petitioner is taken as firm and operative for all practical purposes including the discharge of the contract.
Further, the petitioner has released its performance guarantee (PG) i.e. a sum of Rs. 1,52,592/- after satisfactory completion of the entire work and the same was credited to bank account of the Claimant as on 20.11.2018.
(k) The Claimant has also stated that it had written several letters including letters dated 20.04.2017, 10.05.2017, 19.05.2017 and many more, but no final bill was made. The petitioner breached Clause 9 of the Contract Agreement and consequently, the Claimant was subjected to recurring losses and damages. The Claimant had submitted its claims vide its letter dated 18.03.2019 and again on 25.05.2019. But the EE/petitioner maintained its mute silence which is, however, construed as acceptance of the claims and statements of the Claimant. That even though, it is a deemed acceptance of the claims of the Claimant by the petitioner, yet the petitioner has not made any payment against the due and legitimate claims of the Claimant. Thus, disputes and differences cropped up between the parties of the Agreement.
17(l) Being aggrieved with the non-payment by the EE/petitioner, the Claimant made an Application vide its letter dated 12.06.2019 to the SE/petitioner under clause 25 of the Agreement for settlement of disputes and differences and the SE/petitioner preferred to sit over the file and maintained its silence and did not respond at all, which, however, shows deemed admission of the claims and statements of the Claimant. And it also shows breach of the contract on the part of the SE/petitioner.
(m) Thereafter, due to non-response of the EE, SE and the CE of the petitioner to the respective Applications and request under Clause 25 of the Contract, the Claimant approached the Engineer Member of the petitioner for appointment of the arbitrator vide its letter dated 20.08.2019 who appointed Mr. R.N. Dandekar as Sole Arbitrator.
(n) The Claimant has reiterated that even though the completion certificate was recorded and time extension was also granted without levy of compensation by the petitioner, but final bill was not recorded by the petitioner and consequently, huge due and legitimate payment under the Contract was blocked and it caused recurring losses and damages to the Claimant, so the petitioner was liable to pay the same.
11. The details of the claim raised in the matter is as under:
_______________________________________________________
1. Claim No. 1:
Claim Of Rs. 3,80,152/- On Account Of Non-Release Of Due Payment Against Item No. 1 Of The Agreement. Details of Claim No.1 Area are recorded and paid vide 2nd R.A. Bill on Page 90 of MB= 8299.61 Acres Less area under Parks = (-) 379.84 Acres 18 Area payable under Item No.1of SOQ = 7919.84 Acres Due amount 7919.84 Acres @ Rs.748/- per Acre (Rate as per Item No. 1 of Agreement -
Page 133 of Agreement) .................. = Rs. 59,24,040.32 Less already paid vide 2nd R.A. Bill = (-) Rs. 55,43,888.00 Balance short payment made under 2nd Running Bill (non -payment since previous against final bill of the work under this than claim) ....................Rs. 3,80,152.32 Say: Rs. 3,80,152.00
2. Claim No. 2:
Claim Of Rs. 18,24,891/- On Account Of Additional Cost For Carrying Out Topographical Survey Work For The Three DDA Parks (i.e. Avantika Park, Swaran Jayanti Park, District Park).
Area for three parks
a. Avantakia Park = 307926 Sqm
b. Swarant Jayanti Park = 1064972 Sqm
c. District Park (Chitragupt Park) = 175896 Sqm
15,48,693 Sqm (A)
15,48,693 Sqm @ Rs. 1.35/- Sqm = Rs. 20,90,730/- (B)
Less already paid as per Item No.1 of the Agreement Quantity (A) = 379.77 Acres @ Rs.700/- = (-) 2,65,839/- (C) as recorded under 2nd R.A. Bill (Rate as paid under 2nd R.A. Bill of 90 of M.B. No.818/020819) ---------------------------
Net amount payable under this Claim = Rs 18,24,891/-
3. : Claim No. 3:
Claim Of Rs.8,50,123/- On Account Of Clearing Jungle Including Uprooting Of Rank Vegetation, Grass, Brush, Wood, Trees And 19 Saplings Of Girth Up To 30 Cm Measured At A Height Of 1m Above GL And Removal Of Rubbish Up To A Distance Of 50m Outside The Periphery Of The Area Cleared.
Details of Claims:
The Claimant has stated that the quantity payable (i.e. 132418 Sqm) and the rate as applicable (as per item no. 2.31 of the DSR 2014) had also been communicated to the Respondent and thus the amount against the said quantity of 132418 Sqm @ 642 per 100 Sqm works out to Rs. 8,50,123/-.
4. Claim No.4:
Claim Of Rs. 2,04,000/- On Account Of Non-Refund Of EMD (Earnest Money Deposit) / Security Deposit.
5. Claim No. 5:
Claim Of Rs. 31,11,000/- Against Loss Of Profits And Overhead Charges During The Period Of Prolongation Of Contract. Details of Claims:
(i) Contract sum = Rs. 30,51,840/- (A)
(ii) Total stipulated time period = 45 days (B)
(iii) Actual time period = 350 days (C)
(iv) Contractor's profit and overhead charges = 15% (D)(as
per Schedule F of the Agreement)
(v) Prolonged Time period to carry out excess
work done (B) - (C) = 305 days (E)
(vi) Pro-rata assessment of losses and damages for prolongation as per HUDSON formula: contract sum x percentage of contractor's profit and overhead charges and period of delay divided by the stipulated contract period.
= (A) x (D) x (E) = Rs. 30,51,840 x 15% x 305 days
(B) 45 days
= Rs. 31,11,000/-
20
6. Claim No.6:
Claim Of Interest Payment:- Pre-Suit, Pendente Lite And Future Interest @ 15% P.A. From The Due Date Of The Unpaid Principal Amount Under Claim No. 1, 2 & 3 Till The Date Of Actual Payment.
Details of Claims:
The Claimant has claimed pre arbitration interest @ 15% p.a. to be calculated for a period from the due date of payment i.e. 25.03.2017 [six months after date of submission of bill i.e. 26.09.2016 [Exhibit C-56 read with Clause 9 of the Agreement] to Date of Appointment of the Ld. Arbitrator i.e. 28.10.2019 (Exhibit C-89) and the time period works out to be 947 days say 2.595 years; compounded on yearly basis, on the principal amount i.e. 30,55,166/- (Claim No.1 to 3) and it works out to be a sum of Rs. 13,35,361/-. In addition, the pendente lite and future interest is also claimed by the Claimant @ 15% p.a. to be compounded yearly.7. Claim No. 7
Claim On Account Of Amount Payable Against GST (Goods And Service Tax) @ 18% On Claim No. 1, 2, 3, 5, 6 & 8 As Payable Under The Clause 38 Of The Agreement.
8. Claim No.8 :
Claim Of Rs. 6,00,000/- On Account Of Cost Of Arbitration And Legal Expenses.
______________________________________________________
12. The learned Arbitrator after considering the entire material on record disposed off the claims as under:21
SUMMARY OF THE CLAIMS OF THE CLAIMANT AND AMOUNT AWARDED THEREON Amount Amount S. Details of Claims Claimed Awarded No. (Rs.) (Rs.)
1. Claim No. 1 : Rs. Rs.
Claim Of Rs. 3,80,152/- On Account Of Non- 3,80,152/- 2,95,081/-
Release Of Due Payment Against Item No. 1Of The Agreement.
2. Claim No. 2 :
Claim Of Rs. 18,24,891/- On Account Of Rs. Rs. Additional Cost For Carrying Out 18,24,891/- 9,12,445/- Topographical Survey Work For The Three Dda Parks (i.e. Avantika Park, Swaran Jayanti Park, District Park).
3. Claim No. 3 :
Claim Of Rs.8,50,123/- On Account Of Clearing Jungle Including Uprooting Of Rank Rs. Rs. 6,50,000/- Vegetation, Grass, Brush, Wood, Trees And 8,50,123/- Saplings Of Girth Up To 30 Cm Measured At A Height Of 1m Above GL And Removal Of Rubbish Up To A Distance Of 50m Outside The Periphery Of The Area Cleared.
4. Claim No. 4 :
Claim Of Rs. 2,04,000/- On Account Of Non- Rs. Rs. Refund Of EMD (Earnest Money Deposit) / 2,04,000/- ---Nil--- Security Deposit.
Claim No. 5 :
5. Claim Of Rs. 31,11,000/- Against Loss Of Rs. Rs.
Profits And Overhead Charges During The 31,11,000/- 24,75,000/- Period Of Prolongation Of Contract.
6. Claim No.6 : Rs. Rs.
Claim Of Interest Payment:- Pre-Suit, 31,00,508/- 9,76,602/- Pendente Lite and Future Interest @ 15% (***) (Pre-Arbitration P.A. Compounded Yearly from The Due Date and Pendente Lite simple of The Unpaid Principal Amount Under interest Claim No. 1, 2 & 3 Till the Date of Actual calculated @ 9% Payment. p.a. upto date of (in SOC it was mentioned to be calculated as award i.e. per actual date of payment). 27.02.2023) ***(Pre-Arbitration and Pendente Lite interest as calculated upto 31.01.2023 -
assumed date of award by the Claimant as submitted in the Synopsis during the course of arbitration proceedings by the Claimant)
7. Claim No. 7 : To be calculated Declaratory 22 Claim On Account of Amount Payable based upon the award based on Against GST (Goods and Service Tax) @ claims on Claim the claims No. 1, 2, 3, 5, 6 awarded under 18% On Claim No. 1, 2, 3, 5, 6 & 8 As and 8 @ of GST claim nos. 1, 2, Payable Under the Clause 38 Of The as applicable at 3, 5, 6 and 8 by Agreement. the time of this Tribunal @ payment of GST as (presently 18%) applicable at the time of payment (presently 18%)
8. Claim No. 8 :
Claim Of Rs. 6,00,000/- On Account of Cost Rs. Rs. 4,00,000/- Of Arbitration And Legal Expenses. 6,00,000/-
TOTAL:- Rs. Rs.
1,00,70,674/- 57,09,128/-
13. The petitioner has challenged the impugned Award on all the claims, except claim No.4.
14. The grounds of challenge are as under:
(i) Claim No.1:
That the learned Arbitrator failed to consider the contentions of the petitioner pertaining to Award work having not been completed and the delay in completing the work was solely attributable to the respondent. It is contended that the final bill was prepared after approval of the Deduction Item Statement No.1 as per Clause No.16 of the Agreement. It has been further stated that respondent failed to mark/identify the land under litigation as intending tenderers were advised to inspect the area in question and the very submission of a tender by the tenderer implies that he has read the same and had made himself aware of the scope and specifications of the work to be done and the conditions and rates at which stores, tools and plants etc., shall be issued to him. It has been further emphasized that details of the litigation area (land under litigation) was to be found out by the respondent and the petitioner was not under any kind of obligation to provide such details and the second RA Bill was accepted by the respondent without any reservation. The deduction 23 item was approved by the Competent Authority as per Clause 16 of the Contract and Clause 14 was not applicable.
(ii) Claim No.2:
The findings on claim No.2 have been disputed on the ground that topographical survey work of three DDA parks (i.e Avantika Park, Swaran Jayanti Park and District Park) was not an additional work and instead the extra work is of the same nature as contained in Agreement Item No.1. It is contended that the learned Arbitrator failed to appreciate the contention of the petitioner that extra rate for survey of three parks was not tenable. It has been reiterated that admission on this account by the respondent after accepting the second running account bill on 10.03.2016 was not tenable.
(iii) Claim No.3:
As regards claim No.3, it has been contended that the learned Arbitrator failed to appreciate that the petitioner had denied the claim of the respondent vide letter dated 19.10.2015 with reference to condition No.17 of the contract. It has been contended that the learned Arbitrator further failed to consider that the respondent had made approaches in respect of the site for surveyor by clearing jungle, including cutting of rank vegetation, grass etc., only at few places/areas on the site which required clearing, rest of the site was accessible for survey with the help of advance instrument being used by the respondent and this type of work in relation to the site was covered in their scope of existing work. It has further been reiterated that the respondent was supposed to inspect and examine the site before tendering.
(iv) Claim No.5:
It has been contended that the learned Arbitrator failed to consider that extension of time (EOT) was granted without levy of compensation upto the provisional completion of work; whereas, the respondent had not completed 24 the work as recorded in the Provisional Completion Certificate and did not perform the obligation required as per the Agreement. The challenge to this claim has also been made on the ground that the learned Arbitrator applied "Hudson Formula" which was applicable in the cases of construction work.
(v) Claim No.6:
It has been contended that the learned Arbitrator failed to consider that the respondent itself was a defaulting party, as it had not completed the scope of work and as such, was wrongly granted interest by the learned Arbitrator.
(vi) The findings of learned Arbitrator on Claim No.4 has not been challenged. Further, no grounds of challenge has been mentioned with regard to Claims No.7 and 8.
15. The learned counsel for the petitioner has referred to and relied upon orally on the grounds of challenge mentioned in this petition.
16. The A.R of respondent has taken me through the contents of impugned Award and has meticulously referred to the provisions of the contract, the internal communications between various Departments of the petitioner, copies whereof were duly marked to the respondent and the analysis thereof by the learned Arbitrator while rendering findings on all the claims.
17. The petitioner has invoked Section 34 of the "Act", which for ready reference is re-produced hereunder:-
xxxxx "34. Application for setting aside arbitral award.--
(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).25
(2) An arbitral award may be set aside by the Court only if--
(a) the party making the application establishes on the basis of the record of the arbitral tribunal 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 indication 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 contemplated by or not falling within the terms of the submission 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 arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions 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 provision 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 settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the 26 public policy of India.
[Explanation 1.--For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,--
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.--For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.] [(2A) 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 vitiated 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 re-appreciation of evidence.] ..."
xxxxx
18. The Hon'ble High Court of Delhi in case reported as, "OMP (Comm.) No.2/2022", titled as, "AIIMS V/s M/s S.S Total Construction India Pvt. Limited" (DOO: 28.03.2023) has deliberated upon the provisions to be followed under the Arbitration Act while dealing with a petition filed U/s 34 of the "Act". For ready reference, the requisite paragraphs in this regard are re- produced hereunder:
xxxxx
17. The contents of the provision clearly show that the intention of legislature while enacting the Arbitration Act, as well as while carrying out amendments to the same, was that there should be limited intervention of the Courts in arbitral proceedings, especially after the proceedings have been concluded and an Award thereto has been made by the concerned 27 Arbitral Tribunal. Any claim brought forth a Court of law under Section 34 of the Arbitration Act has to be in accordance with the principle of the provisions laid down under the Arbitration Act as well as interpreted by the Hon‟ble Supreme Court.
18. On a bare reading of the invoked provision, it becomes evident that the words used therein are that "An arbitral award may be set aside by the Court only if", which signifies the intent of limiting the scope of interference by Courts in an Arbitral Award, passed after thorough procedure, involvement of parties, and appreciation of facts, evidence and law, "only" in the event of the circumstances delineated in the provision being met. The limited grounds which may invite the intervention and action thereupon by the Courts are explicitly laid down under the provision. What is to be seen by a Court exercising jurisdiction under Section 34 of the Arbitration Act is that an Award passed by an Arbitral Tribunal may only be set aside if it is patently illegal, against the public policy of India, based on no evidence and delineates no reason for passing the Award.
19. While elaborating upon the grounds available under the provision, and that have been invoked by the petitioner vis-à-vis the impugned Award being in conflict with the Public Policy, the Hon‟ble Supreme Court in Ssangyong Engineering & Construction Co. Ltd. vs. NHAI, (2019) 15 SCC 131, held as under:-
"23. What is clear, therefore, is that the expression "public policy of India", whether contained in Section 34 or in Section 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 obtain, as under the guise of interfering with an award on the ground that the arbitrator has not 28 adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment...
25. Thus, it is clear that public policy of India is now constricted 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 justice 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 by the Amendment Act only so that Western Geco (supra), as understood in Associate Builders (supra), and paragraphs 28 and 29 in particular, is now done away with.
26. Insofar as domestic awards made in India are concerned, an additional ground is now available under subsection (2A), added by the Amendment Act, 2015, to Section 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 backdoor when it comes to setting aside an award on the ground of patent illegality.
27. 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 illegality appearing on the face of the award.
28. 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), 29 however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
30. What is important to note is that a decision which is perverse, as understood in paragraphs 31 and 32 of Associate 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 decision 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 evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse."
20. A bare perusal of the above-referred pronouncement makes it evident that the phrases are not to be construed in their plain meaning and have to be given due caution and consideration while being invoked to assail any Arbitral Award. To successfully raise a challenge against an Arbitral Award, the petitioner ought to satisfy this Court that the grounds as provided in the Section 34 of the Arbitration Act are met. It is, therefore, clear that the decisive test is that first, the Arbitrator had to adopt a judicial approach; second, the principles of natural justice have to be upheld; and third, the decision must not have been egregious, or rather, perverse.
21. In the instant petition, the petitioner has raised the grounds of contravention of Public Policy and fundamental policy, however, has not been able to show or establish that the findings of the learned arbitrator are so patently illegal so as to shock the conscience of this Court. The petitioner has also raised the grounds of non- appreciation of material on record and submissions of on behalf of the petitioner, however, a perusal of the impugned Award shows that while deciding Claims No. 30 1, 3, 4, 7, 9 and 10, the learned arbitrator has given extensive findings and elaborate reasoning for such findings after considering the entire material before him.
22. The petitioner has also raised challenges that are substantially on the merits of the case. However, it is settled position of law that a Court while exercising jurisdiction and powers under Section 34 of the Arbitration Act shall not sit in appeal by examining and re-examining the case on its merits.
23. The decision of the learned arbitrator, passed after thorough consideration of the material on record and the submissions of the parties, is final and this Court is not required to carry out an exercise of re-adjudicating the disputes. An Arbitral Award may be set aside on the limited grounds and only under the conditions as explained by the Hon'ble Supreme Court in Delhi Airport Metro Express Pvt Ltd vs. Delhi Metro Rail Corporation, (2022) 1 SCC 131, in the terms as re-produced hereunder:-
"28. The limited grounds available to Courts for annulment of arbitral awards are well known to legally trained minds. However, the difficulty arises in applying the well established principles for interference to the facts of each case that come up before the courts. There is a disturbing tendency of Courts of setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award.
29. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression "patent illegality".
Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression "patent illegality". What is prohibited is 31 for Courts to reappreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as Courts do not sit in appeal against the arbitral award. The permissible grounds for interference with a domestic award under Section 34(2-A) on the ground of patent illegality is when the arbitrator takes a view which is not even a possible one, or interprets a clause in the contract in such a manner which no fair-minded or reasonable person would, or if the arbitrator commits an error of jurisdiction by wandering outside the contract and dealing with matters not allotted to them. An arbitral award stating no reasons for its findings would make itself susceptible to challenge on this account. The conclusions of the arbitrator which are based on no evidence or have been arrived at by ignoring vital evidence are perverse and can be set aside on the ground of patent illegality. Also, consideration of documents which are not supplied to the other party is a facet of perversity falling within the expression "patent illegality"."
24. Therefore, this Court shall also not indulge into the arguments on merits that have been raised by the petitioner, keeping in view the spirit, purpose and essence of the Arbitration Act. To enter into merits of arbitral proceedings and an arbitral award and re-appreciate all arguments while also re-adjudicating the disputes between the parties would mean to defeat the purpose of the legislation itself.
xxxxx
19. With aforesaid legal position in mind, I have given thoughtful consideration to the arguments advanced at Bar. I have also gone through the written synopsis filed by both the parties.
Claim No.1:
20. (i) It is noted that the admitted pleadings related to claim No.1 are available under para 63 to 80 of impugned Award and analysis and finding of 32 the learned Arbitrator are available under para 81 to 93 thereof.
(ii) It is stressed on behalf of claimant that deductions item statement amounting to Rs.3,13,310/- passed by the petitioner/DDA is arbitrary, unreasonable and illegal as the final bill had been prepared after 1284 days of completion of the work on 16.08.2016, passed and filed during arbitration proceedings after submission of SOC. It is argued that no notice of said action of deduction was served upon the Claimant by the Respondent thereby violating clause 16 of the Agreement.
(iii) It is stressed that Clause 16 of the Contract stipulates demand in writing within period of 12 months of the completion of the work for ratification of the defects: unsound or of inferior quality to that contracted. In this matter the completion certificate was recorded on 16.08.2016 and the Claimant performed it's all obligations, as required. As regards the marking of land under litigations on the survey drawings, it could not be done as the petitioner failed to discharge its reciprocatory obligations by not supplying the details of the areas under litigations for long and the Claimant submitted its claims under clause 25 of the Contract to the petitioner as on 18.03.2019 & 25.05.2019 to the EE/petitioner on 12.06.2019 to the SE/petitioner and on 16.07.2019 to the CE/petitioner and finally a notice for the appointment of arbitrator for settlement of the disputes was also issued to the petitioner as on 20.08.2019 and there was no mention of initiation of such deduction items statement. The said action of passing of an arbitrary deduction items statement and giving effect to the same, was taken after an elapse of over 3 years and 6 ½ months after the recording of completion certificate.
21. As regards the plea of petitioner regarding deduction of said amount for not marking/showing land under litigation on plans by the claimant, the claimant has relied on the correspondence between the parties and the intra- department/DDA correspondence.
3322. The contentions on behalf of the petitioner are that there was no cause of action for filing Application dated 27.05.2020 by the Claimant for rejection of deduction item statement passed by the petitioner as the logic put forth by the Claimant in its Application are not correct. It is contended on behalf of the petitioner that the Claimant has not completed the works despite repeated verbal and written requests made by office of the Respondent for completion of the remaining works i.e. marking/identification of land under litigation etc. vide office letters dated 09.12.2016 and 05.01.2017.
23. It is argued that in part rate statement of 2 nd RA bill, it was recorded as layout plans, khasra plans, superimposed on TSS plans are pending in Planning and Land Management Brach for checking and marking area as per item. On the basis of which the case was taken with DD (LM) R and Claimant was requested verbally by giving instructions in writing vide office letters dated 09.12.2016 and 05.01.2017 for marking land under litigation as per provision contained in item no.1 on page 133 of schedule of work of the Agreement for this work. Due to failure on behalf of the claimant to execute the direction given by the petitioner, the petitioner was left with no alternative except to initiate the deduction item statement.
24. The learned Arbitrator in para 87 of the impugned Award gave his findings as under:
xxxxx
87. I have also carefully read and understood various provisions under the Agreement amongst the press notice of NIT of this work, letter of award, clause-3, completion certificate recommended by the EE and approved by the SE, final bill Schedule-F-2(v) of the Agreement and various other correspondence exchanged during the subsistence of the contract which show without any iota of doubt that it was the engineer-in-charge / EE / Respondent who was responsible to perform the reciprocal obligations, as required and not the LM and 34 NL of the DDA as these officers are strangers to the Agreement. Further, I have also carefully read the scope of work as given under the Agreement on page 129 - 130 pertaining to schedule of quantity which clearly shows that marking of "land under litigation, if any" and the term "if any" is very conspicuous which indicates that there may or may not be any DDA land under litigation and the parties were clear about this fact at the time of execution of Agreement.
xxxxx
25. As regards the Deduction Item No.1, it is noted that the learned Arbitrator had duly considered the same and gave detailed findings thereupon which finds duly mention in paragraphs No.76, 77, 80, 82 to 89 of the impugned Award and I find no flaw therein.
26. Claim No.2:
(i) As regards the grounds of objection raised by petitioner qua aforesaid claim, the claimant has answered the same in para No.5.2 of the reply filed by it. It has been contended on behalf of claimant that the learned Arbitrator has dealt with the aforesaid claim vide paragraphs No.95 to 121 of the impugned Award, wherein the learned Arbitrator has dealt with the pleadings of the parties in paragraph No.95 to 109 and then rendered his findings thereupon from paragraphs No.110 to 120 thereof.
(ii) In paragraph No.98 of the impugned Award, the learned Arbitrator has duly considered the scope of work under this Claim. Further, paragraph No.100 of the impugned Award reflects the area of the three parks in question.
For ready reference, paragraph No.100 of the impugned Award is re-produced as under:
35__________________________________________________________
1. Details of the claim as submitted earlier to the Respondent vide letters dated 01.09.2016, 19.05.2017 and 25.05.2019 is given as under:
Area for three parks i. Avantakia Park = 307926 Sqm ii. SwarantJayanti Park = 1064972 Sqm iii. District Park = 175896 Sqm 15,48,693 Sqm (A) 15,48,693 Sqm @ Rs. 1.35/- Sqm = Rs. 20,90,730/- (B) Less already paid as per Item No. 1 of the Agreement = Qty. (A) = 379.77 Acres @ Rs. 700/- = (-) 2,65,839/- (C) as recorded under 2nd R.A. Bill --------------------------- Net amount payable as EI (Extra Item) = Rs 18,24,891/- ______________________________________________________________________
27. I do not find any substance in the submissions of learned counsel for the petitioner that the learned Arbitrator has not considered the pleas with respect to letters dated 09.12.2016, 05.07.2017 and 2 nd running Account Bill dated 13.10.2016, as the learned Arbitrator vide paragraphs No.110 to 120 of the impugned Award has duly dealt on the aforesaid aspect.
28. The A.R of the claimant submitted that it is settled law that it is an obligation of the person/petitioner where claimant law fully does anything for another person or delivers anything to the petitioner, not intending to do gratuitously and such person/petitioner enjoys the benefit thereof, then the petitioner is bound to make compensation to the latter/ claimant in this respect. The arguments on this claim were duly considered by the learned Arbitrator and findings in this regard are based upon the complete analysis of the documentary evidence which are detailed out in paragraphs No.111 to 121 of the impugned Award. Further, the quantity/magnitude of the work done has 36 not been disputed by the petitioner. The learned Arbitrator while rendering his findings has categorically observed in paragraphs No.119 and 120 of the impugned Award that rate of extra work which has been derived as rate analysis is based upon the market rate and the petitioner/DDA has failed to give its observation on rate analysis submitted by the respondent herein which were derived on the basis of market rates and self-assessed labour coefficients. I have gone through the findings of learned Arbitrator on this issue and I found no infirmity therein.
29. Claim No.3:
(i) It was categorically denied on behalf of respondent that the learned Arbitrator has failed to consider the letter dated 19.10.2015 and instead it has been argued that the learned Arbitrator has duly deliberated upon the said letter in paragraphs No.123, 125 and 129 of the impugned Award. It is noted that the learned Arbitrator in paragraphs No.123 to 137 of the impugned Award has duly recorded the contentions of the parties and gave his detailed findings thereupon from paragraphs No.138 to 151.
(ii) I find that the findings arrived at by the learned Arbitrator on the above referred arguments are based upon reasonable and correct analysis of the material on record.
30. Claim No.4:
The findings of learned Arbitrator on this claim has not been disputed by the petitioner.
31. Claim No.5:
It is contended on behalf of respondent that there is no term provisional completion (of work) and provisional grant of Extension of Time (EOT) under the Agreement. It is noted that pleadings of both the parties on 37 this issue have been recorded by leraned Arbitrator in paragraphs No.153 to 182 of the impugned Award and findings thereupon are available from paragraphs No.183 to 217 of the impugned Award. The learned Arbitrator in paragraphs No.168 to 170 of the impugned Award has given a detailed overview of the various correspondence exchanged between the parties and also brought on record the admitted reasons of delay and other connected facts.
It is contended on behalf of respondent that claim of loss of profit and overhead charges during the period of prolongation of the contract was payable under Indian Contract Act, 1872 and it is settled law that Mathematical exactitude of the assessment of losses under Section 73 and 55 of the said Act was not required. It is argued that Hudson formula is appropriate for determining such losses and is adopted by Hon'ble Supreme Court and various Hon'ble High Courts in their various judgments. It is relevant to note here that in paragraph No.172 of the impugned Award, the learned Arbitrator has detailed out the quantification of Rs. 31,11,000/- as given in SOC as worked out as per Hudson formula, which for ready reference is re-produced hereunder:
___________________________________________________ QUANTIFICATION OF THE CLAIM AS PER HUDSON
(i) Contract sum = Rs. 30,51,840/- (A)
(ii) Total stipulated time period = 45 days (B)
(iii) Actual time period = 350 days (C)
(iv) Contractor's profit and overhead charges = 15% (D) (as per Schedule F of the Agreement)
(v) Prolonged Time period to carry out excess work done (B) - (C) = 305 days (E)
(vi) Pro-rata assessment of losses and damages for prolongation as per HUDSON formula contract sum x percentage of contractor's profit and overhead charges and period of delay divided by the stipulated contract period.
= (A) x (D) x (E) = Rs. 30,51,840 x 15% x 305 days
(B) 45 days
= Rs. 31,11,000/-
____________________________________________________ 38
32. The learned Arbitrator after duly considering the judgment passed by Hon'ble Supreme Court in case reported as, "2006 (2) Arb. LR 498 (SC)", titled as, "McDermott International Inc. V/s Burn Standard Co. Ltd. & Ors." (DOD: 12.05.2016) as also the judgments rendered by Hon'ble High Court of Delhi in case reported as, "MANU/DE/2078/2022", titled as, "Delhi State Industrial & Infrastructure Development Corporation Ltd. V/s H.R Builders"
(DOD: 03.06.2022) and case reported as, "MANU/DE/3770/2021", titled as, "Union of India V/s C and C Construction Limited" (DOD: 28.10.2021), duly discussed various formulas, i.e (a) Hudson Formula; (b) Emden Formula'; and
(c) Eichleay Formula, the details whereof finds mention in paragraph No.198 of the Award. For ready reference, the method of computation of damages under the aforesaid three formulas, as discussed by Hon'ble Supreme Court in case of McDermott International Inc. (surpa), which finds mentioned in para 198 of the impugned Award is re-produced hereunder:
xxxxx "METHOD FOR COMPUTATION OF DAMAGES"
68. What should, however, be the method of computation of damages is a question which now arises for consideration. Before we advert to the rival contentions of the parties in this behalf, we may notice that in M.N. Gangappa v. Atmakur Nagabhushanam Setty & Co. and Anr. MANU/SC/0019/1972 : AIR1972SC696 , this Court held that the method used for computation of damages will depend upon the facts and circumstances of each case. In the assessment of damages, the court must consider only strict legal obligations, and not the expectations, however reasonable, of one contractor that the other will do something that he has assumed no legal obligation to do.[See Lavarack v. Woods of Colchester Ltd (1967) 1 QB 278 The arbitrator quantified the claim by taking recourse to the Emden formula. The learned arbitrator also referred to other formulae, but, as noticed hereinbefore, opined that the Emden Formula is a widely accepted one.
69. It is not in dispute that MII had examined one Mr. D.J. Parson to prove the said claim. The said witness calculated the increased overhead and loss of profit on the basis of the formula laid down in a manual published by the Mechanical Contractors Association of America entitled 'Change Orders, Overtime, Productivity' commonly known as the Emden Formula. The said formula is said to be widely accepted in construction contracts for computing increased overhead and loss of profit. Mr. D.J. Parson is said to 39 have brought out the additional project management cost at US$1,109,500. We may at this juncture notice the different formulas applicable in this behalf.
(a) Hudson Formula: In Hudson's Building and Engineering Contracts, Hudson formula is stated in the following terms:
Contract head office overhead x contract sum x period of delay profit percentage Contract Period In the Hudson formula, the head office overhead percentage is taken from the contract. Although the Hudson formula has received judicial support in many cases, it has been criticized principally because it adopts the head office overhead percentage from the contract as the factor for calculating the costs, and this may bear little or no relation to the actual head office costs of the contractor.
(b) Emden Formula: In Emden's Building Contracts and Practice, the Emden formula is stated in the following terms:
Head office overhead & profit x contract sum x period of delay 100 contract period Using the Emden formula, the head office overhead percentage is arrived at by dividing the total overhead cost and profit of the contractor's organization as a whole by the total turnover. This formula has the advantage of using the contractors actual head office and profit percentage rather than those contained in the contract. This formula has been widely applied and has received judicial support in a number of cases including Norwest Holst Construction Ltd. v. Cooperative Wholesale Society Ltd., decided on 17 February, 1998, Beechwood Development Company (Scotland) Ltd. v. Mitchell, decided on 21 February, 2001 and Harvey Shoplifters Ltd. v. Adi Ltd., decided on 6 March, 2003.
(c) Eichleay Formula: The Eichleay formula was evolved in America and derives its name from a case heard by Armed Services Board of Contract Appeals, Eichleay Corp. It is applied in the following manner:
Step-1 Contract Billings Total Overhead for Overhead allocable Total Billings for Contract Period x Contract Period = to the contract Step-2 Allocable overhead Total days of contract = Daily Overhead rate Step-3 Daily Contract overhead Number of Days Amount of Unabsorbed Rate x of delay = overhead This formula is used where it is not possible to prove loss of opportunity and the claim is based on actual cost. It can be seen from the formula that the total head office overheads during the contract period is first determined by comparing the value of work carried out in the contract period for the project with the value of work carried out by the contractor as a whole for the 40 contract period. A share of head office overheads for the contractor is allocated in the same ratio and expressed as a lump sum to the particular contract. The amount of head office overhead allocated to the particular contract is then expressed as a weekly amount by dividing it by the contract period. The period of delay is then multiplied by the weekly amount to give the total sum claimed. The Eichleay formula is regarded by the Federal Circuit Courts of America as the exclusive means for compensating a contractor for overhead expenses. Before us several American decisions have been referred to by Mr. Dipankar Gupta in aid of his submission that the Emden formula has since been widely accepted by the American courts being Nicon Inc. v. United States, decided on 10 June, 2003 (USCA Fed. Cir.), Gladwynne Construction Company v. Balmimore, decided on 25 September, 2002 and Charles G. William Construction Inc. v. White 271 F.3d 1055. We do not intend to delve deep into the matter as it is an accepted position that different formulas can be applied in different circumstances and the question as to whether damages should be computed by taking recourse to one or the other formula, having regard to the facts and circumstances of a particular case, would eminently fall within the domain of the Arbitrator. If the learned Arbitrator, therefore, applied the Emden Formula in assessing the amount of damages, he cannot be said to have committed an error warranting interference by this Court."
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33. The learned counsel for the petitioner has very vehemently argued that Hudson formula is not applicable in this case, however, it has not been specified as to which other formula is applicable for quantification of the claim.
Even if the learned Arbitrator could have adopted some other formula applicable in the case, the learned Arbitrator cannot be faulted merely on this account that if two formulas applicable to the facts of the case in hand were available for he having chosen one formula and after duly excluding the applicability of two other formulae.
34. Further, in paragraph No.205 of the impugned Award, the learned Arbitrator has duly considered the judgment relied upon by the petitioner, i.e case reported as, "Appeal No.11/2012 in Arbitration Petition No.313/2007", titled as, "Edifice Developers and Project V/s M/s Essar Projects (India) Limited", decided by the Hon'ble High Court of Bombay vide judgment dated 03.01.2013 and has distinguished the same in light of judgment rendered by 41 Hon'ble High Court of Delhi in case of C and C Construction Limited (supra) and found the Hudson formula to be the best formula.
35. In paragraph No.208 of the impugned Award, the learned Arbitrator has considered the total number of delay in days and came to the conclusion that there was prolongation of contract for a period of 295 days, i.e excluding period of 10 days (305 less 295 days) for the reasons fully assignable to the petitioner herein.
36. It is further noted that the learned Arbitrator in paragraph No.214 to 216 has categorically observed that Clause 36(i) read with Schedule F indicated that the Claimant (petitioner herein) was required to deploy requisite number of technical staff with specified qualification failing which the respondent was entitled to impose the recovery of the amount indicated in the said schedule on page 120 and an inference was taken that there is no default on the part of the Claimant under clause 36(i) read with schedule of the Agreement.
37. Further, the learned Arbitrator in paragraph No.216 of the impugned Award categorically observed that in the SOC, the claimant (respondent herein) claimed Rs. 31,11,000/-, however, since the delay period was calculated as 295 days, it was found that as per the provisions under Clause 36 read with Schedule "F" (Page 118 to 120) of the Agreement and other expenses, the amount of Rs.24,75,000/- was found to be justifiable.
38. In view of the above, I am of the considered view that the findings arrived at by the learned Arbitrator on the above referred claim are based upon reasonable and correct analysis of the material on record and no interference therein is required.
4239. Claim No.6:
It was vehemently denied on behalf of claimant that it was the defaulting party/wrong doer and had not completed the scope of work. Instead, it was contended that the claimant had suffered damages/losses for non- payment of dues and legitimate payments from the petitioner, resulting in blockage of liquidity and as such pre-arbitration, pendente lite and future interest @ 15% per annum was claimed from the petitioner herein. It was further contended on behalf of respondent that petitioner herein had committed breach of Clause 9 of the Agreement read with Section 31(7)(a) of the "Act" read with Clause 25 of the Agreement and as such, pre-arbitration and pendente lite interest was due to the respondent. The respondent further claimed that it was entitled to future interest in terms of Clause 25 of the Agreement read with Section 31(7)(b) of the same. In support of its aforesaid contentions, the respondent relied upon certain judgments, the details whereof finds mention in paragraphs No.226 of the impugned Award.
40. It is noted that in paragraphs No.219 to 226 the learned Arbitrator has recorded the pleadings of the parties qua this claim and rendered his findings thereupon under paragraphs No.237 to 238. It is evident that the learned Arbitrator has awarded simple interest @9% as pre-arbitration and pendentelite interest and @11% as future interest. The findings arrived at by learned Arbitrator on this account are based on cogent reasoning, wherein he has categorically mentioned that interest aforesaid is being awarded to the respondent in terms of Clause(s) 9 and 25 of the Agreement r/w Section(s) 31(7)(a) and (b) of the Act. As such, I do not find any illegality in the findings of learned Arbitrator qua this Claim.
41. Claims No.7 & 8:
It is noted that no grounds of challenge has been made to Claims No.7 & 8 on behalf of petitioner, meaning thereby that the petitioner is satisfied with the findings on learned Arbitrator on the said claims.43
42. In view of the above discussion, I am of the considered opinion that the impugned Award dated 27.02.2023, passed by the learned Arbitrator is logical, the same has been passed after due consideration of the material on record and the petitioner has miserably failed to point out any flaw therein. The petition is, therefore, found to be meritless; same accordingly stands dismissed.
43. File be consigned to Record Room after completion of necessary formalities.
Dictated & Announced in the (Vinod Yadav)
open Court on 16.07.2024 District Judge (Commercial Court)-02
North-West/Rohini Court