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Jawahar Lal Nehru University vs . M/S. A.K. Builder. on 15 September, 2012

Jawahar Lal Nehru University Vs. M/s. A.K. Builder. 


   IN THE COURT OF SHRI  J.P.S. MALIK :  ADDITIONAL DISTRICT JUDGE­04  : 
          SOUTH DISTRICT  :   SAKET COURT COMPLEX, NEW DELHI

                                                                      ARB. NO. 126/10  

In the matter of :



           Jawahar Lal Nehru University
          New Delhi­67
          Through Executive Engineer
          Sh. P.K. Jain                                                .....Petitioner


                            Versus

         M/s. A. K. Builder
         K­20, Lajpat Nagar­III,
         New Delhi­11024,
         Through:
         Prop: Anil Khanna                                             ....Respondent 

Date of institution of case        : 20.05.2010
Date of Reserving order            : 11.09.2012
Date of Judgment                   : 15.09.2012

                                       Judgment

1. This is an application U/s 34 of the Arbitration and Conciliation Act filed by the petitioner, Jawaharlal Nehru University. The application has been filed through executive engineer Sh. P. K. Jain.

ARB. No. 126/10 Page 1 of 8

Jawahar Lal Nehru University Vs. M/s. A.K. Builder.

2. As per the facts stated, respondent M/s. A. K. Builder vide letter of award dated 27.02.06 bearing reference no. 4 (34)/ Tender/ 2005­2006/ Engg/ 534­546 were awarded the contract for renovation of toilets of the Hansraj Hostel in JNU and a time limit of 75 days was allotted for execution of contract/ reckoned from the 7th day after issue of letter of award. Both petitioner and respondent entered into a formal agreement on 17.03.06 detailing the general conditions of contract for works. Respondent commenced his work and stipulated date for completion was 19.05.06. Respondent failed to complete the work by stipulated date and actual date of completion was 17.06.06. As per the case of the petitioner, the respondent was required to submit running bills as well as final bill and as per the clause 7 of the General Conditions of Contract for works, it was the duty of the contractor / respondent to claim monthly running bills and Engineer in Chief had to give finality to that. First running bill of Rs. 14,38,443/­ was raised by the respondent on 07.07.06 and final bill was submitted on 31.08.06, wherein respondent claimed an amount of Rs. 22,98,110/­. The petitioner after modification reduced the claim of respondent from Rs. 22,98,110/­ to Rs. 21,69,255/­. Completion certificate was issued by the petitioner on 23.11.06 and it was clarified that same was issued subject to the settlement of final bill of Rs. 2258,110/­ which was pending consideration at that time. Vide letter dated 20.04.07, intimation was given to the respondent by the petitioner that final bill was valued as Rs. 21,69,255/­ and after deducting the amount already paid, respondent was asked to collect the sum of Rs. 6,80,637/­ within two ARB. No. 126/10 Page 2 of 8 Jawahar Lal Nehru University Vs. M/s. A.K. Builder.

days.

3. Respondent submitted a representation on 23.04.07 stating that he would sign the bill only after the final bill was signed by the Engineer In­charge. Cheque for a sum of Rs. 6,80,637/­ was received by the respondent on 11.06.07. Further, claim by the respondent was denied by Engineer In­charge. Respondent made the representation submitting claim Rs. 2,83,385/­ of to the Vice Chancellor and the Vice Chancellor being the competent authority to appoint an arbitrator under clause 25 of the General Conditions of Contract for Works, appointed Sh. G.K. Majumdar as Sole Arbitrator. Award was passed by Ld. Arbitrator on 08.02.10 for an amount of Rs. 8,90,810/­ and the petitioner has challenged the said award dated 08.02.10 in the present proceedings.

4. The award has been challenged by the petitioner on several counts. It is stated that no reasons were given by the Ld. Arbitrator while passing the award. It is contended that as per clause 9 of the General Conditions of Contract for works, it was the responsibility and duty of the respondent to submit the final bill and one last final bill was submitted by the respondent on 31.08.06 and this fact was ignored by Ld. Arbitrator. The award is also challenged on the ground that same is against the terms of contract between the parties. It is also stated on behalf of the petitioner that Ld. Arbitrator has allowed the damages by ARB. No. 126/10 Page 3 of 8 Jawahar Lal Nehru University Vs. M/s. A.K. Builder.

way of interest under a claim which is on the ground that the respondent had to deploy a sum of Rs. Thirty Lakhs, because of which he suffered a loss of Rs. Thirty thousand per month for infructuous overhead. It is also the case of the petitioner that Ld. Arbitrator has also allowed the claim of the respondent, which was never claimed by him in the claim filed before the competent authority/ Vice Chancellor of the petitioner and was not a subject to be decided by Ld. Arbitrator, to whom the issue was not referred.

5. Reply to the application was filed on behalf of the respondent. In general, the award passed in the matter has been supported on behalf of the respondent and it is contended that award has been rightly passed in favour of the respondent, as he was entitled for the amount awarded to him.

6. No submissions were made on behalf of the petitioner and it was conveyed that matter be disposed of in the light of the material placed on record by both the parties. Written submissions were filed on behalf of respondent and I hold as under:

7. In the statement of claim filed before Ld. Arbitrator, the respondent has filed claim under 9 heads. Claim at serial no. 3, 4, 5 and 9 were not allowed to the respondent and claim vide serial no. 1, 2, 6, 7 and 8 were ARB. No. 126/10 Page 4 of 8 Jawahar Lal Nehru University Vs. M/s. A.K. Builder.

allowed in the award passed by Ld. Arbitrator.

8. Claim no. 1 is on account of deviated quantities by more than 25% of the agreement quantities at market rates totaling for a sum of Rs. Three Lakhs. Ld. Arbitrator allowed the claim observing that when the claim was made for thirteen items against demand of Rs. 2,83,385/­ by the respondent in the claim made to the competent authority, the respondents wanted to settle the claim at Rs. 1,75,497/­ with a rider that all other claims by the respondent be put to nil. Ld. Arbitrator had also termed the arguments on behalf of the respondent as erroneous that Ld. Arbitrator cannot look into and consider rates in other contracts allowed by the petitioner to other contractors. As per the admitted case of the parties, there was an agreement as per clause 12.2.3 of the General Conditions of Contract for Works that if the contract items exceed the limit laid down for schedule 'F' i.e 25% of the quantity mentioned in the schedule of quantity, the contractor may claim the revision of rates in case of order or occurrence of excess beyond the said 25%. There was no dispute as regard the deviation in the quantity used being excess of more than 25% of the agreement quantities and this is a finding of fact given by Ld. Arbitrator who was competent to decide the issue after having been referred by the competent authority. The contention on behalf of the petitioner that final had been submitted by the respondent on 21.08.06 and this fact ought to have been considered by Ld. Arbitrator, does not have merits since additional claim of Rs. 2,83,385/­ was submitted by the ARB. No. 126/10 Page 5 of 8 Jawahar Lal Nehru University Vs. M/s. A.K. Builder.

respondent to the Vice Chancellor on 28.09.07 and matter referred for arbitration.

9. Claim no. 2 , was also for a sum of Rs. Three Lakhs and was on account of payment of AHR items on market rates less than the agreement rates. Ld. Arbitrator had observed that there was no dispute as regards that respondent was paid less amount of Rs. 2,90,798/­ than what would be payable to him, as per the rates mentioned in the tender (agreement) as is evident from page 55 of SF. As there was no difference on the payable quantities and the reduced rates paid by the petitioner in respect of 19 items, Ld. Arbitrator allowed the claim on the ground that as per the provisions of the contract agreement, petitioner could not have made less payment having agreed to pay the claimant of the sum that became payable on the basis of rates mentioned in the tender. Court while hearing application U/s 34 of the Arbitration Act are not to decide the issues again and there is nothing on the record to suggest that findings given by the Ld. Arbitrator are perverse or contrary to any law of the land.

10. In the plaint filed before the competent authority, under the Head Claim no. 6, the respondent had claimed excess recovery of rebate of total value of work @ .36% amount to Rs. 3000/­ but in the claim before Ld. Arbitrator, under Head Claim no. 6, the respondent claimed a sum of Rs. 4,058,420/­ being 18% of total cost of work /damage U/s 73 of the ARB. No. 126/10 Page 6 of 8 Jawahar Lal Nehru University Vs. M/s. A.K. Builder.

Indian Contract Act on amount of Rs. 27,69,000/­. The claim was allowed by Ld. Arbitrator to the extent of Rs. 1,20,000/­ holding that there were delays in handing over the site and inordinate delay of releasing of the payment on the part of the petitioner and because of the delay caused by the petitioner, the respondent will be entitled for payment of compensation U/s 55 and 73 of Indian Contract Act, as claimed by the claimant. This was not the claim made by the respondent to the competent authority and was never referred to Ld. Arbitrator for resolving that dispute. Amount of Rs. 1,20,000/­ was awarded to the respondent by Ld. Arbitrator. Ld. Arbitrator having no jurisdiction to decide the dispute not referred to him, the award passed by Ld. Arbitrator to that extent is bad in law.

11. Claim no. 7 , was on account of interest @ 18% from 17.01.07 to 11.06.07 on the amount of Rs. 6,80,637/­ of the final bill. Ld. Arbitrator has allowed a sum of Rs. 32,446/­ after computation of interest @ 12% per annum for a period of 145 days holding that delay in execution in payment were caused by the petitioner. Contract was originally for Rs. 14,97,329/­ after taking into consideration .36% rebate on the estimated cost of Rs. 13,86,375/­ of the tender, whereas final bill was submitted by the respondent of 22,98,110/­. As per clause 7, of the general Conditions of Contract for Work, it was permissible for the respondent to raise running bills and is is not the case of the respondent that bills were raised and payment not made by the petitioner. The final claim of the respondent was allowed by the ARB. No. 126/10 Page 7 of 8 Jawahar Lal Nehru University Vs. M/s. A.K. Builder.

petitioner to the extent of Rs. 21,69,255/­ and same was communicated to the respondent vide letter dated 20.04.07 asking the respondent to get the payment within two days. There was no agreement of payment as regard the interest on the money payable under the running bills and so granting of interest on the amount of Rs. 6,80,637/­ was contrary to the terms and conditions of the contract between the parties and so, claim allowed by the arbitrator was beyond the terms and conditions of the contract and bad in law.

12.Claim under Head no. 8 , is on account of interest @ 18% on the amount due and payable after the award. Ld. Arbitrator vide his award as regards the claim no. 8, directed that if the amount is paid within three months, no interest will be payable on the amount of the award and if award is not paid within three months, the post award interest will be payable @ 18% per annum as specified in clause 31 (7) (b) of the Arbitration and Conciliation Act. That part of the award cannot be interfere with by the courts.

13.The result being the award to the extent of claim no. 6 and 7 is set aside. Rest of the award is upheld. Award shall be implemented minus decision as regards claim no . 6 and 7. The application U/s 34 of the Arbitration and Conciliation Act moved by the petitioner is disposed of accordingly.

Announced in the open Court                                         (J.P.S. MALIK)
on 15.09.2012                                          ADJ­04  : SOUTH DISTRICT
All pages signed                                                  NEW DELHI 



ARB. No.  126/10                                                                  Page 8 of 8

Jawahar Lal Nehru University Vs. M/s. A.K. Builder.

Arb. no. 126/10
 
15.09.2012

Present:    None.

Vide separate judgment of the date, the award dated 08.02.10 is set aside partly to the extent of claim no. 6 and 7. Rest of the award is upheld. Record of the Ld. Arbitrator be returned.

File be consigned to record room.

(J.P.S. MALIK) ADJ­04 : SOUTH DISTRICT NEW DELHI : 15.09.2012 ARB. No. 126/10 Page 9 of 8