Delhi District Court
Union Of India vs . M/S. Gupta Construction Co. & Anr. on 14 November, 2019
Union of India Vs. M/s. Gupta Construction Co. & Anr.
IN THE COURT OF SH. ARUN SUKHIJA,
ADDITIONAL DISTRICT JUDGE - 07, (CENTRAL DISTRICT)
TIS HAZARI COURTS, DELHI.
ARBN. NO. : 24/2018
UNIQUE CASE ID NO. : 449/2018
IN THE MATTER OF :
Union of India
Through its Chief Engineer (NDZ1)
Ministry of Urban Development,
Government of India, CPWD,
Nirman Bhawan, New Delhi. ....Petitioner/
Objector
VERSUS
1. M/s. Gupta Construction Co.
A registered partnership Firm,
WZ235, C1, Inderpuri,
New Delhi110012.
2. Divakar Garg,
Arbitrator,
Government of India,
Ministry of Urban Development,
Room No.C316, Indraprastha Bhawan,
I.P. Estate, New Delhi. ....Respondents
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Union of India Vs. M/s. Gupta Construction Co. & Anr.
APPLICATION FOR SETTING ASIDE ARBITRAL AWARD ON
BEHALF OF THE PETITIONER UNDER SECTION 34 OF THE
ARBITRATION & CONCILIATION ACT, 1996, AGAINST THE
AWARD DATED 06TH OF MAY, 2011, PASSED BY SHRI
DIVAKAR GARG, LD. ARBITRATOR IN ARBITRATION CASE
NO. ARB/DG/478.
Date of institution of the Petition : 27/07/2012
Date on which Judgment was reserved : 19/09/2019
Date of Judgment : 14/11/2019
:: J U D G M E N T ::
By way of present judgment, this court shall
conscientiously adjudicate upon the application/objections/petition
filed on behalf of Union of India through its Civil Engineer (NDZ1)
Ministry of Urban Development, Govt. of India, CPWD under
Section 34 of the Arbitration and Conciliation Act, 1996 for setting
aside the arbitral award dated 06.05.2011.
CASE OF THE OBJECTOR AS PER PETITION
Succinctly, the objector/ petitioner has averred the
following facts in the objections:
a) The petitioner invited the tender for the work of Aesthetic
improvement of bungalows under 'I' Division, New Delhi
during 20062007 (SH: FRC Road with precast kerb stone)
with an estimated cost of Rs.7559928/ which tender was
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Union of India Vs. M/s. Gupta Construction Co. & Anr.
opened on 6th of January, 2007 vide NIT No.06/SE/DCC
II/200607/New Delhi. Seven Agencies had participated for
the work and offered their bid. M/s. Gupta Construction Co.
registered as Class II Contractor in CPWD (B&R) was one of
the bidder.
b) M/s. Gupta Construction Co. was declared to be the lowest
bidder and after the negotiations with Chief Engineer (NDZI),
CPWD, the respondent awarded the contract for amount of
Rs.1,08,92,127/ vide agreement No.47/EE/ID/A2/200607.
c) The stipulated date of start and completion of the work was
declared as 28.02.2007 and 27.06.2007 respectively, however,
the work was actually completed on 28.08.2007. The gross
amount of work done by the respondent under the agreement
amount to Rs.1,87,76,340/. The said amount was paid in
seven installments as and when running bills along with
measurements received in the Division Office for payment.
The 7th and final bill was paid to the respondent on
06.11.2008. The respondent had accepted the final bill and
measurements at page 88/MB 820.
d) The extension of time was also granted to the respondent
without levy of any compensation. In EOT PartI submitted
by the claimant, he has given an undertaking that "I have not
suffered any liquidated damages/losses due to delay in
completion of work and I will not claim anything extra on this
account".
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Union of India Vs. M/s. Gupta Construction Co. & Anr.
e) The respondent thereafter invoked clause 25 of the Agreement
and requested CE (NDZI) vide letter no.nil, dated 02.02.2009
for appointment of the Arbitrator for adjudication of the
disputes. Accordingly, Sh. Vijay Motwani, CE (NDZI), vide his
letter no.4.8.2008A&C/NDZI, dated 18.08.2009, appointed
Sh. Divakar Garg, Ministry of Urban Development as Sole
Arbitrator in the above case.
f) Sh. Divakar Garg, Ld. Arbitrator in case No.ARB/DG/418
directed the respondent/claimant to file the Statement of
Facts in respect of his claims within 15 days from the date of
receipt of Notice dated 01.09.2009 and also directed the petitioner to file their Counter Statement of facts within 30 days of the receipt of Statement of Facts from the respondent/ claimant and the date of hearing was fixed as 09.10.2009.
g) The respondent/claimant neither filed the Statement of Facts nor appeared before the Ld. Arbitrator on 09.10.2009. Accordingly, the Ld. Arbitrator passed an Order dated 09.10.2009 giving an opportunity to the respondent/claimant with the directions to file Statement of Facts by 15.11.2009 and fixed the next date of hearing as 18.11.2009 but the respondent/ claimant neither filed the Statement of Facts nor appeared before the Ld. Arbitrator on 18.11.2009, consequently, the Ld. Arbitrator vide its Order dated 20.11.2009 was pleased to terminate the case under Section 25(a) of the Arbitration & Conciliation Act, 1996.
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h) The respondent/claimant thereafter approached the Hon'ble Delhi High Court with the prayer for appointment of an Arbitrator or alternatively for appointment of a fresh Arbitrator for adjudication of disputes and Hon'ble Delhi High Court vide its Order dated 20.05.2010 set aside the order dated 20.11.2009 and simultaneously, directed the Arbitrator to issue fresh notice of hearing to both the parties and thereafter, proceed to decide the matter on merits in accordance with law. In compliance of Order dated 20.05.2010, Ld. Arbitrator issued fresh notice vide case no. ARB/DG/47B, dated 25.06.2010 directing the respondent/claimant to submit the Statement of Facts and Claims within 20 days from the date of issue of notice and also directed the petitioner herein to file the Counter Statement of Facts within 30 days of the receipt of Statement of Facts from the respondent/ claimant.
i) The respondent/claimant filed the Statement of Facts vide letter no. Nil, dated 10.01.2011 before the Ld. Arbitrator and after filing the same, the respondent filed another application before the Ld. Arbitrator vide letter no. Nil, dated 31.01.2011 stating that by inadvertence or otherwise or by means of typographic error, in claim no.3, the respondent/claimant claimed a sum of Rs.6,25,000/ on account of wrongful sanction of rates of various extra items, whereas, the correct amount which should have been claimed is Rs.36,35,000/ Arbt. No.24/2018 Page 5 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
and prayed the Ld. Arbitrator to consider the request for amendment in the amount under Claim No.3.
j) The petitioner/respondent submitted the counter Statement of Facts before the Ld. Arbitrator on 09.03.2011 and the first hearing of the case was held before the Ld. Arbitrator on 29.03.2011. The respondent requested for order on his application dated 31.01.2011 under Section 23(3) of the Arbitration & Conciliation Act, 1996 for modifying the amount of claim no.3 and accordingly, Ld. Arbitrator informed the claimant "I hold that the claimant may obtain the decision of C.E. and file the same before me for further action in this regard" and also allowed the claimant to file the rejoinder by 15.04.2011 and next date of hearing was fixed as 18.04.2011. The petitioner/ respondent submitted that the application dated 31.01.2007 filed by the respondent/ claimant should not be considered unless and until the amount of claim is modified by the competent authority under the Clause 25 of the Agreement. The respondent/ claimant relied upon Section 11 of the Arbitration & Conciliation Act, 1996 and submitted that this Section restricts the power of competent authority only for appointment of Arbitrator and no further reference of individual claim is required to be made by the said competent authority, as was required under Arbitration Act, 1940. The petitioner replied on Clause 25 of the Agreement which contains "It is also term of contract that arbitrator shall Arbt. No.24/2018 Page 6 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
adjudicate only such disputes as are referred to him by the appointing authority". The respondent/ claimant submitted written arguments vide letter no. Nil, dated 21.04.2011 before the Ld. Arbitrator. The final hearing held on 26.04.2011 in the Chamber of Ld. Arbitrator and all the claims were discussed and oral hearing concluded with the consent of both the parties. The claimant submitted the calculation sheet of Clause 10CA and submitted the calculation for Rs.2,24,423.24p and the petitioner was asked to submit calculation sheet of Clause 10CA within two days with copy to claimant. The claimant was further asked to file nonjudicial stamp papers of appropriate value for publishing the Award within 2 days.
k) The petitioner submitted Written Statement regarding Claim No.2 along with calculation sheet of Clause 10CA amounting to Rs.1,61,005/ and also submitted analysis of rates of extra items against claim no.3 vide letter no.
54(827)/Arb/EE/ID/2011/947, dated 28.04.2011 with copy to the respondent. The Sole Arbitrator signed the Award on the nonjudicial stamp paper against case no. ARB/DG/478 on 6th May, 2011 and awarded Rs.18,26,490/ to the respondents M/s. Gupta Construction Company against all their claims and simple interest, as awarded under para 7.1 of claim no.5, which was received by the petitioner on 9 th May, 2011. The Award was examined and it was observed that the Arbt. No.24/2018 Page 7 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
Ld. Arbitrator has committed a grave error of law on the face of the Award and the same is manifest disregard of the contract and is liable to be set aside, inter alia, on the following grounds and the same is more or less the arguments of the Petitioner/Applicant:
1. The Ld. Arbitrator, while passing the Award, failed to appreciate that in para 1.1 of the award, the Ld. Arbitrator has decided wrongly ignoring the relevant provisions of clause 25 of the Agreement as well as Section 23(3) of the Arbitration & Conciliation Act, 1996 on the application dated 31.01.2011 of the respondent firm on the modification of the amount of Rs.36,25,000/ in place of Rs.6,25,000/.
2. The appointing authority i.e. Chief Engineer vide his letter dated 18.08.2009 has referred the claim (6) in which against claim no.3, the amount of claim is Rs.6,25,000/ and not the amount of Rs.36,25,000/ which was not modified by the competent authority prior to publishing the award but the arbitrator has awarded the amount of Rs.11,12,340/ against claim no.3, which is beyond the reference to him. Hence, on this ground, the Arbitrator has exceeded his jurisdiction under the agreement as well as in law. Clause 25 of the Agreement is agreed terms of both the parties when the contract was entered into between the parties. Other part of Arbt. No.24/2018 Page 8 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
Section 23(3) is not applicable to the respondent firm since the clause 25 of the agreement has been made with the consent of both the parties in which it is abundantly clear that only claims be referred to the Arbitrator, if the same is referred by the appointing authority and in claim no.3, the amount of Rs.36,25,000/ was neither modified nor referred by the competent authority, as provided in clause 25.
3. The petitioner herein by way of present petition is challenging claim no.1, (1A & 1C), claim no.3, claims no. 4, 5 and 6. The ground for challenge of the Award on behalf of the petitioner in respect of claim no. 1A is that in Bungalow no.12, Rajaji Marg, total quantities executed were 902.07 sq. meter, as recorded in MB No.884. However, during inspection at site by CE and SE, some defects were noticed in already laid and paid FRC concrete. The respondent was asked at site to remove the defective FRC concrete. The respondent has dismantled and removed the FRC concrete of that area at his cost. After moving the defective concrete, it was decide to provide precast paver blocks in this area. The respondent executed the work of laying precast paver block, as per the instructions of the field staff as extra item and paid accordingly in the area of 371.33 sqm. Under the situation, the quantity was remeasured and Arbt. No.24/2018 Page 9 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
paid according to work executed at site. The finding of Arbitrator that claimants (now respondent) cannot be punished for no fault of there is an error on the face of the Award. No payment for the defective work can be made to the respondent. The respondent has never pointedout the above reduction in measurement of agreement item o.11 during the currency of the agreement. Therefore, the Award given by the Ld. Arbitrator for Rs.2,68,035.65 against this part of claim is not justified.
4. In respect of Claim No.1C, the petitioner submits that the work of FRC road has done in different bungalows under LBZ areas. Wherever this item has been executed, there already exists bituminous road. The item of FRC was executed after removing the existing layer of bituminous surface as per requirement to maintain the correct level and alignment. Physically, there was no necessity of operation of the item of preparation of sub grade by excavating earth to an average of 22.5 cm depth, which is normally executed in road embankment/ cutting for new road construction. This was not the case in the sites covered under the agreement. Practically, only compaction of surface after dismantling was required to be done with roller at certain locations. Since the final bill and measurement Arbt. No.24/2018 Page 10 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
was duly accepted by the claimant (now respondent) at page 88 of MB 820 and paid accordingly, therefore, the award given by Ld. Arbitrator for Rs.2,48,109.42 worked out on the basis of assumption is not justified and is liable to be set aside and the award under claim 1C being after thought is liable to be rejected.
5. As far as the claim no.3 is concerned, the same is to be challenged on account of wrong sanctioning of rates of various extra items, Rs.6,25,000/ modified amount Rs.36,25,000/ and the Award given by the Ld. Arbitrator Rs.11,12,340/. It is also a fact that after termination of the proceedings under Section 25A of Arbitration & Conciliation Act, 1996 by the Ld. Arbitrator vide letter no. ARB/DG/418, dated 20.11.2009, the claimant filed a petition in the Hon'ble High Court of Delhi vide OMP No. 103/2010 for appointment of fresh/ another arbitrator. In his petition, the claimant has submitted the list of claims required to be adjudicated at page 7 in which claim no.3, Rs.6,25,000/ on account of wrong sanction of various extra items has been prayed. The total amount of claims no. 1 to 6 has been shown Rs.28,00,000/ besides interest and cost. The Hon'ble High Court vide its orders dated 20.05.2010 has set aside the termination order directing the Arbitrator to issue fresh Arbt. No.24/2018 Page 11 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
notice to both the parties and thereafter, proceeded to decide the matter on merits in accordance with law. Neither the claimant/ respondent referred this fact at the time of reference to the Chief Engineer under Clause 25 nor the same was ever agitated before the Hon'ble Delhi High Court referred the same to Ld. Arbitrator.
6. The decision of Arbitrator to consider the rate of providing the laying polythene sheet @ Rs.52/ per sqm. and rate of cutting grooves @ Rs.458.23 as proposed in 6th R.A. bill (extra item not yet sanctioned) is not to be acceptable because SE, DCCII i.e. competent authority has sanctioned the extra item under his competency and approved the rate Rs.25/ per sqm. and Rs.334.32 per meter respectively based on the prevailing rates. The 7th and final bill has been paid as per the rate sanctioned by the SE, DCCII and the claimant has accepted the final bill and measurement in page 88 of MB 820. The Arbitrator while giving award has considered only the part/ provisional rates of extra items (which were not sanctioned at the time of 5 th & 6th R.A. bill) paid in the 5 th and 6th R.A. bill and ignored the final rates arrived and sanctioned by the competent authority which were applicable as per clause 12 of the agreement and paid by EE in the final bill. As per clause7 of the agreement, all interim/running Arbt. No.24/2018 Page 12 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
payments shall be regarded as payment by way of advances against final payment on final settlement and adjustment. The rates intimated by the claimant (contractor) for extra item were not supported with analysis of rates based on market rate quotations of men and material. As such, the rates payable for extra item were determined on the basis of market rate of men & material prevalent at the time in accordance with clause 12 of the agreement and paid accordingly.
7. Against the claim no.4, the Ld. Arbitrator has allowed a sum of Rs.32,000/ as damages due to breach of contract, however, there is no breach of contract on the part of petitioner herein and the Ld. Arbitrator has exceeded its jurisdiction while allowing the same.
8. The claim no.5 is the awarding of interest on the delayed payment, which itself is arbitrary and illegal decision passed by the Ld. Arbitrator and is being challenged by virtue of the present objection petition. Since the petitioner has already challenged the claims no.1, 3, 4, 5 and 6, therefore, the respondent is not entitled to interest over and above claims.
9. The claim no. 6 pertains to the cost of the proceedings, which is again arbitrary because the respondent/ claimant by filing the present claim and other litigations, has rendered the petitioner huge losses.
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10. The award is bad in the eyes of law as the Ld. Arbitrator has not given reason in support of his findings while passing the award and thus, the same is in violation of the provision of Section 31 of Arbitration & Conciliation Act, 1996.
CASE OF THE RESPONDENT NO.1 AS PER REPLY Notice of the petition was issued to the respondent and the respondent no.1 has filed reply to the objections. Succinctly, the respondent no.1 has made the following averments and the same is more or less the arguments of the Respondent No.1 (who is contesting party): A. The present petition has been filed beyond the time limit provided under Section 34(3) of the Arbitration & Conciliation Act, 1996.
B. In the parawise reply, the contents of the petition have been denied and it has been submitted that the Award of Rs.18,26,490/ alongwith simple interest @ 10% p.a. falls within the four corners of law and has been passed by Ld. Arbitrator after considering all the relevant documents placed on record and there is no error apparent on the face of the Award.
C. The Ld. Arbitrator has adjudicated only upon the disputes/ claims, as are referred to him, by the appointing authority and has not entertained any fresh claim of the respondent/claimant. The Ld. Arbitrator has only allowed Arbt. No.24/2018 Page 14 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
rectification of a clerical/typographical error in the claim amount of claim no.3 for which he is empowered under Section 23(3) of Arbitration & Conciliation Act, 1996. The Ld. Arbitrator duly considered the applicable provisions of law as well as the terms of contract and then, gave a reasoned decision. The application for rectification of typographical error in claim no.3 was made within period of 3 years, as provided in the Limitation Act and also within 21 days of filing of Statement of Facts and before filing of the Counter Statement of Facts and further, the claim of the respondent was well supported by the relevant documents. Hence, the Ld. Arbitrator allowed the amendment/ rectification, for which he is empowered under Section 23(3) of the Arbitration & Conciliation Act, 1996.
D. The Ld. Arbitrator has nowhere enlarged the scope of reference or entertained a "fresh claim" of the respondent/ claimant but has merely allowed rectification of a typographical error in a preexisting claim, which is well within his jurisdiction. The Ld. Arbitrator has not travelled beyond the reference of the competent authority. The decision of the Ld. Arbitrator is neither against the provisions of the Agreement nor against the provisions of Section 31 of the Act. E. The Ld. Arbitrator has awarded a sum of Rs.32,000/ as against the claim on account of damages due to breach of the contract for delayed payment. The Ld. Arbitrator has awarded Arbt. No.24/2018 Page 15 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
simple interest @ 10% p.a. on the award amount against the claims no. 1 to 3 from the date of invocation of the Arbitration Clause till the date of payment and at the same rate on award amount against claim no.4 from the date of award, till payment. As the respondent/ claimant incurred huge losses due to the breach of contract on the part of the petitioner herein, the respondent/ claimant is entitled to interest on the award amount. Hence, the decision of Ld. Arbitrator to award simple interest @ 10% p.a. is neither arbitrary, nor illegal. It has been prayed to dismiss the petition with heavy costs and the impugned award dated 06.05.2011 may kindly be upheld.
The Petitioner/Objector/Applicant has filed the rejoinder controverting the allegations/ contentions in the reply of respondent no.1 and contents of the petition/ objection have been reiterated and reaffirmed.
PRINCIPLES OF SETTINGASIDE OF AWARD UNDER SECTION 34 OF THE ARBITRATION AND CONCILIATION ACT On a panoramic appreciation of the earlier existing judi cial thought on the issue, as manifested by decisions ranging from Renu Sagar Power Company Ltd. v. General Electric Company 1994 Supp. (1) SCC 644 to Associated Builders v. DDA (2015) 3 SCC 49, the Hon'ble High Court in its decision in NHAI v. Hindustan Construction Company Ltd. MANU/DE/2699/2017 delineated the following propositions: Arbt. No.24/2018 Page 16 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
(i) The four reasons motivating the legislation of the Act, in 1996, were
(a) to provide for a fair and efficient arbitral procedure,
(b) to provide for the passing of reasoned awards,
(c) to ensure that the arbitrator does not transgress his jurisdiction, and
(d) to minimize supervision, by courts, in the arbitral process.
(ii) The merits of the award are required to be examined only in certain specified circumstances, for examining whether the award is in conflict with the public policy of India.
(iii) An award would be regarded as conflicting with the public policy of India if
(a) it is contrary to the fundamental policy of Indian law, or
(b) it is contrary to the interests of India,
(c) it is contrary to justice or morality,
(d) it is patently illegal, or
(e) it is so perverse, irrational, unfair or unreasonable that it shocks the conscience of the court.
(iv) An award would be liable to be regarded as contrary to the fundamental policy of Indian law, for example, if Arbt. No.24/2018 Page 17 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
(a) it disregards orders passed by superior courts, or the binding effect thereof, or
(b) it is patently violative of statutory provisions, or
(c) it is not in public interest, or
(d) the arbitrator has not adopted a "judicial approach", i.e. has not acted a fair, reasonable and objective approach, or has acted arbitrarily, capriciously or whimsically, or
(e) the arbitrator has failed to draw an inference which, on the face of the facts, ought to have been drawn, or
(f) the arbitrator has drawn an inference, from the facts, which, on the face of it, is unreasonable, or
(g) the principles of natural justice have been violated.
(v) The "patent illegality" had to go to the root of the matter. Trivial illegalities were inconsequential.
(vi) Additionally, an award could be set aside if
(a) either party was under some incapacity, or
(b) the arbitration agreement is invalid under the law, Or
(c) the applicant was not given proper notice of appointment of the arbitrator, or of the arbitral proceedings, or was otherwise unable to present his case, or Arbt. No.24/2018 Page 18 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
(d) the award deals with a dispute not submitted to arbitration, or decides issues outside the scope of the dispute submitted to arbitration, or
(e) the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties, or in accordance with Part I of the Act, or
(f) the arbitral procedure was not in accordance with the agreement of the parties, or in accordance with Part I of the Act, or
(g) the award contravenes the Act, or
(h) the award is contrary to the contract between the parties.
(vii) "Perversity", as a ground for setting aside an arbitral award, has to be examined on the touchstone of the Wednesbury principle of reasonableness. (A reasoning or decision is Wednesbury unreasonable (or irrational) if it is so unreasonable that no reasonable person acting reasonably could have made it (Associated Provincial Picture Houses Ltd v Wednesbury Corporation (1948) 1 KB 223).
It would include a case in which
(a) the findings, in the award, are based on no evidence, or
(b) the Arbitral Tribunal takes into account something irrelevant to the decision arrived at, or
(c) the Arbitral Tribunal ignores vital evidence in arriving at its decision.
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(viii) At the same time,
(a) a decision which is founded on some evidence, which could be relied upon, howsoever compendious, cannot be treated as "perverse",
(b) if the view adopted by the arbitrator is a plausible view, it has to pass muster,
(c) neither quantity, nor quality, of evidence is open to reassessment in judicial review over the award.
(ix) "Morality" would imply enforceability, of the agreement, given the prevailing mores of the day.
"Immorality", however, can constitute a ground for interfering with an arbitral award only if it shocks the judicial conscience.
(x) For examining the above aspects, the pleadings of the parties and materials brought on record would be relevant.
(xi) The court cannot sit in appeal over an arbitration award. Errors of fact cannot be corrected under Section
34. The arbitrator is the last word on facts."
ARGUMENTS OF THE PETITIONER/ OBJECTOR/APPLICANT (1) The ground of challenge of the award on behalf of the petitioner in respect of claim no. 1A is that in bungalow no. 12, Rajaji Marg, total quantities executed was 902.07 Sq meter as recorded in MB no. 884, however during the inspection at site by chief Engineer and superintending Engineer some defect were noticed and claimant was also Arbt. No.24/2018 Page 20 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
admitted the fault and it is therefore no payment for the defective work can be made to the respondent. However Ld. Arbitrator failed to appreciate the facts and objection of opposite party/ petitioner herein and without going through the Measurement book award of Rs. 2,68,035.65/ passed in favour of claimant against the claim no. 1A. (2) In respect of the claim no. 1C, the petitioner submits that the work of Fiber Reinforce Concrete (FRC) road has done in different bungalows under LBZ areas. Wherever this item has been executed, there was already bituminous road exist. The item of FRC was executed after removing the existing layer of bituminous surface as per requirement to maintain the correct level and alignment. The item of dismantling has been paid in this agreement wherever these item are required to be executed. Physically there was no necessity of operation of the item of preparation of subgrade by excavating earth to 22.5 cm depth which is normally executed in road embankment/ cutting for new road construction. This was not the case in the sites covered under the agreement, and Ld. Arbitrator awarded only based upon assumption and therefore the award of Rs. 2, 48,109.42/ is not justified and same is liable to be rejected.
(3) That as far as claim no. 3 is concerned, the same is to be challenged on account of wrong sanction of rates of various extra items, Rs. 6,25,000/ modified to amount 36,25,000/ Arbt. No.24/2018 Page 21 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
and the award given by the Ld. Arbitrator Rs. 11,12,340/. It is submitted that it is also a fact that after termination of the proceedings under section 25A of arbitration and conciliation act 1996 by the Ld. Arbitrator on 20.11.2009 the claimant filed the petition in the Hon'ble Delhi High court for fresh appointment of Arbitrator. And in his petition the claimant has submitted the list of claims required to be adjudicate at page no. 7 in which claim no. 3, Rs. 6, 25,000/ on account of wrong sanction of various extra items has been prayed. It is submitted that neither the claimant refer this fact at the time of reference to the chief Engineer nor the same were agitated before Hon'ble High court, it is only before the Ld. Arbitrator. It is clearly shows the concealment of fact and therefore the award of claim no. 3 is not maintainable in the eye of law and same is to be rejected with heavy cost. However, the decision of arbitrator to consider the rate of providing and laying Polythene Sheet @Rs. 52/ per sqm. and rate of cutting grooves @Rs. 458.23 as proposed in 6 th R.A bill (extra item not yet sanctioned) is not to be acceptable because SE, DCCII i.e. competent authority has sanctioned the extra item under his competency and approved the rate Rs. 25/ per Sqm. and Rs. 334.32 per meter respectively based on the prevailing rates. That claimant has accepted the bill and measurement at page 88 of the MB no.820.
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(4) The arbitrator while passing award has considered only the part/ provisional rates of extra items (which were not sanctioned at the time of 5th and 6th R.A bill) paid in the 5th and 6th R.A bill and ignored the final rates arrived and sanction by the competent authority which were applicable as per clause 12 of the agreements and paid by EE in the final bill. As per clause 7 of the agreement all interim / running payments shall be regarded as payment by way of advances against final payment on final settlement and adjustment. ARGUMENTS OF THE RESPONDENT/CLAIMANT (1) It is submitted that the Ld. Arbitrator after appreciating the evidence and documents on record awarded only an amount of Rs. 5,16,145/ under subheads 1(A) & 1(C) against the claimed amount of Rs. 11,50,000/. It is submitted that the petitioner is challenging the award on merits thereby wanting this Hon'ble Court to again appreciate the evidence and documents which is not permissible in a petition under Section 34 of the Arbitration and Conciliation Act, 1996. It is submitted that the Ld. Arbitrator has given a finding of fact that the respondent firm in fact has done the work in question qua which the claims were made and payment qua the same was also made by the petitioner in the R/A bills but later on illegally deducted the same. It is further submitted that the Ld. Arbitrator is former Director General, CPWD and on his expertise awarded Claim No. 1 only in part in favor of the Arbt. No.24/2018 Page 23 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
respondent Firm. Thus the same cannot be interfered with and the objections are liable to be dismissed. Detailed submissions will be made during arguments with reference to Judgments.
(2) It is submitted that the respondent firm filed their statement of facts vide their letter dated 10.1.2011 and qua Claim No. 3 given/furnished details of disputed amount of Rs. 30,01,559.04/ and also claimed Rs. 30,01,559/ but inadvertently in the title of the said Claim amount shown is Rs. 6,25,000/. It is submitted that since there was typographical mistake qua Claim No. 3 therefore the respondent firm filed an application under Section 23(3) of the Arbitration and Conciliation Act, 1996 for modification of the amount of Claim No. 3 and the same was allowed by the Ld. Arbitrator.
(3) It is submitted that the main objection of the petitioner is qua the allowing of amendment of Claim No. 3 by the Ld. Arbitrator. According to the petitioner the amendment could not have been allowed by the Ld. Arbitrator in vide of Clause 25 being the Arbitration Clause. It is submitted that Section 23(3) of the Arbitration & Conciliation Act, 1996 itself provides for amendment of Claim & Defence and thus the Contention of the Petitioner that the amendment could not have been allowed is not tenable in law.
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(4) It is further submitted that the contention of the petitioner that the amendment could not have been allowed in view of Clause 25 i.e. Arbitration Clause is hit by Sections 23 & 28 of the Indian Contract Act, 1872. It is submitted that agreement between the parties cannot override the Statue which is made by act of parliament and if it does then the same is not legally tenable. It is submitted that the Arbitration Act itself provides for amendment of Claims and Defense and thus the Ld. Arbitrator rightly allowed the amendment application. It is further submitted that the respondent firm did not sought amendment of any dispute but what was sought to be amended is the amount under the said dispute. From the pleadings it can be seen that the respondent firm is still claiming the amount under the same dispute/head and not under any other dispute/head. This being the position again Clause 25 was not a bar to the amendment application filed by the respondent firm and the objections of the petitioner are liable to be dismissed.
(5) It is submitted that after allowing the amendment application, the Ld. Arbitrator after appreciating the documents and evidence on record allowed only an amount of Rs. 11,12,340/ against the amended claimed amount of Rs. 36,25,000/. Thus it can be seen that the Ld. Arbitrator has not awarded the entire amount what was claimed but after adjudicating the dispute awarded the same.
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(6) Principally this is the only objection qua award of Claim No. 3 in favor of the respondent firm by the petitioner. Rests of the objections qua this Claim No. 3 are on merits which are based on finding of facts by the Ld. Arbitrator and thus cannot be interfered with in a petition filed under section 34 of the Arbitration and Conciliation Act, 1996 as this Hon'ble Court is not sitting as an appellate court. Detailed submissions will be made during oral arguments.
(7) The respondent has relied upon the following Judgments/Citations: (A) MANU/DE/0602/2004 titled as D.D.A. Vs. Bhagat Construction Co. Pvt. Ltd., decided by Hon'ble High Court of Delhi on 04.08.2004.
(B) MANU/DE/4099/2015 titled as Union of India Vs. N.K. Garg & Co., decided by Hon'ble High Court of Delhi on 02.11.2015.
(C) MANU/DE/1714/2012 titled as D.D.A. Vs. Pandit Construction Co., decided by Hon'ble High Court of Delhi on 19.04.2012.
FINDINGS AND CONCLUSIONS The Ld. Counsel for Respondent No.1 has argued that the Hon'ble Arbitrator had made and published award after considering entire record and submissions before him and had given detailed reasons for his award in respect of the claims challenged by the petitioner, though, the Arbitrator is not supposed Arbt. No.24/2018 Page 26 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
to give detailed reasons and write judgment like that of the Court had held by Hon'ble Supreme Court persistently and consistently.
The reasons and finding of the Hon'ble Arbitrator in respect of the claims challenged by the petitioner are as per record available before the Arbitrator and the view of the documents, contract and evidence/record available before him taken by the Arbitrator is a plausible view if not the only possible view and the findings of the Arbitrator based on record and interpretation of contract/ documents is a findings of fact and cannot be disturbed even if the Court by a process of reasoning come to a different view, because the Court is not sitting in appeal over the award of the arbitrator.
The legal position in this regard is well settled, as settled in the case of Santa Sila Devi Vs. Devender Nath Sen three judge Bench judgment reported in AIR 1963 SC 1677 paras 10 and 13 holding that where, therefore, after taking into consideration the arbitration agreement, statements filed by the parties and documents produced, the arbitrator proceeds to give his award in writing as to all disputes referred to him, the Court will assume that the Arbitrator has considered and disposed of every claim made or defence raised.
In M/s. Sudershan Trading C. Vs. Govt. of Kerala AIR 1989 SC 890 para 29, it has been held that reasonableness of reasons cannot be challenged and appreciation of evidence by the Arbt. No.24/2018 Page 27 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
Arbitrator is never a matter which the Court questions and considers and in para 32, it is held that what is interpretation of the Contract is a matter for the Arbitrator and on which the Court cannot substitute its own decision and it is observed that if on a view taken of a Contract, the decision of the Arbitrator on certain amount awarded is a possible view, though, not the only correct view, the award cannot be examined by the Court.
The Hon'ble three judge Bench in the case of The Hindustan Construction Co. Ltd. Vs. State of Jammu & Kashmir reported in JT 1992 (5) S.C. 325 in para 10 has held that the Court had no jurisdiction to do substitution of its own evaluation of the conclusion of law or fact to come to the conclusion that Arbitrator had acted contrary to the bargain between the parties. Whether a particular amount was to be paid or damages liable to be sustained, was a decision within competency of the Arbitrator.
In State of Rajasthan Vs. Puri Construction reported in (1994) 6 SCC page 485, it has been held that Arbitrator not required to indicate in award computations made for various heads and it is open to the Arbitrator to give lump sum award. It, therefore, does not stand to reason that Arbitrator's award will be per se invalid and inoperative for the simple reason that the Arbitrator has failed to appreciate the facts and has committed error in appreciating correct legal principle in basing the award.
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Even if it is assumed that on the materials on record, a different view could have been taken and the Arbitrators have failed to consider the documents and materials on record in their proper perspective, the award is not liable to be set aside.
The three judge bench Judgment in the case of K.R. Ravendranathan Vs. State of Kerala reported in (1998) 9 SCC 410 holding that the view taken by the Hon'ble Supreme Court in the cases of Sudarshan Trading (supra) and Hindustan Construction Company (supra) is the correct view and Court cannot substitute its own view for the view of the contract/ document taken by the Arbitrator.
In the Judgment passed by the Hon'ble Supreme Court in Mcdermott International Inc. Vs. Burn Standard Co. reported in 2006 (2) Arb.L.R. 498 (SC) para 55, the Hon'ble Supreme Court has held that under Arbitration & Conciliation Act, 1996, intervention of the Court is envisaged in few circumstances only, like in case of fraud or bias by the arbitrators, violation of natural justice etc. The Court cannot correct errors of the Arbitrator and the construction of the contract agreement, is within the jurisdiction of the Arbitrator having regard to the wide nature, scope and ambit of arbitration agreement and the arbitrator cannot be said to have misdirected in passing the award by taking into consideration the conduct of the parties. Interpretation of contract is a matter for the Arbitrator to determine, even if it gives rise to Arbt. No.24/2018 Page 29 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
determination of a question of law. Further as per provisions of Section 19(4) of the Arbitration & Conciliation Act, 1996 the appreciation of evidence and documents is within the sole jurisdiction and power of the Arbitrator.
Para No.13 of the Judgment of the Hon'ble Supreme Court passed in Assam State Electricity Board and others Versus Buildworth Private Limited (2017) 8 SCC 146 is reproduced herein for apt understanding: "13. The arbitrator has taken the view that the provisions for price escalation would not bind the claimant beyond the scheduled date of completion. This view of the arbitrator is based on the construction of the provisions of the contract, correspondence between the parties and the conduct of the Board in allowing the completion of the contract even beyond the formal extended date of 6.9.1983 to 31.1.1986. Matters relating to the construction of a contract lie within the province of the Arbitral Tribunal. Moreover, in the present case, the view which has been adopted by the arbitrator is based on evidentiary material which was relevant to the decision......"
In view of the aforesaid settled position by way of catena of Judgments, the conclusions and findings as passed by the Hon'ble Arbitrator qua the amendment of claim, claim No.1A, 1C and 3 are reproduced as under: "1.1 Decision of Arbitrator on the application dated 31.1.2011 under section 23(3) of Arbitration & Conciliation Act,1996 for modification of amount of Claim No.3 from Rs.625000/ to Rs.3625000/.
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The claimants submitted that due to typographical error amount of Claim No.3 sent for reference to Chief Engineer was mentioned as Rs.625000/ in place of correct amount of Rs.3625000/ which may be amended as per their request by virtue of section 23(3) of the Arbitration & Conciliation Act, 1996.
The respondents submitted that this correction should not be considered unless and until the amount of claim is modified by competent authority under clause 25 of agreement they also relied on case laws AIR 2005 (SC) 4430 between State of Rajasthan Vs. M/s. Nav Bharat Construction Co.
The claimants relied on section 11 of Arbitration & Conciliation Act, 1996 and submitted that this section restrict the power of competent authority only for appointment of arbitration for resolving the dispute between the parties, once arbitration is appointed no further reference of individual claim is required to be made by said competent authority as was required under Arbitration Act, 1940 on which the case law signed by respondents as above is based. They also produced the part rate statement of 4th & 5th R/A bill along with the rate paid in final bill to support their contention with respect to correct amount of claim as preexisting dispute between the parties.
The respondents relied on clause 25 of agreement which contain, "It is also term of contract that the arbitrator shall adjudicated as only such disputes as are referred to him by the appointing authority and give separate award against each dispute and claim referred to him" to support their contention.
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Section 23(3) of Arbitration & Conciliation Act, 1996 reads as under: "Unless otherwise agreed by the parties, either party may amend or supplement his claim or defense during the course of the arbitral proceedings unless the arbitral tribunal considers it an appropriate to allow the amendment or supplement having regard to the delay in making it."
The clause 25 of agreement relied by the respondents mention that only such disputes as are referred to him by appointing authority shall be adjudicated by arbitrator. This restricts the power of arbitrator to adjudicate only those disputes referred by competent authority but does not restrict the amount of dispute referred by the competent authority, for which (for amending such amount) the arbitral tribunal has been given power under above referred section 23(3).
The preexistence of dispute for its amended amount has been established by claimants through full rate indicated by respondents in R/A bills in part rate statements and ultimately paid rate is final bill.
Further the claimants in their Statement of facts (filed on 10.1.2011) had already furnished the details of disputed amount of Rs.3001559.04 and claimed Rs.3001559/ under Claim No.3. Further the bill was finalized and paid on 6.11.08. Arbitration was invoked on 2.2.2009 and amendment to the claimed amount under section 23(3) of the Arbitration & Conciliation Act, 1996 was made on 31.1.2011 i.e. within the period of limitation of 3 years as per Limitation Act and within 21 days of filing of S.F., as such I hold that request of amendment in the amount cannot be rejected on the ground of delay also.
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In view of above findings, I allow the amendment of the amount of Claim No.3 to Rs.3625000/ as per the request of claimants under the above application."
".........(A) Agmt. Item No.11(Fibre reinforced concrete):
The claimants submitted that quantities of 2277.82 sqm. measured, test checked by respondents and paid by them in 1st R/A bill but in 4th R/A bill the quantities were reduced to 1899.24 sqm. without any reason and without serving notice to them as such the reduction in measurement is illegal.
The respondents submitted that in Bungalow No.12, Rajaji Marg total quantities executed were 902.07 sqm. as recorded in MB No.884. However during inspection at site by C.E. and S.E., some defects were noticed in F.R.C. concrete. The claimants have dismantled and removed the FRC concrete of that area and in that area it was decided to provide precast pavers block; as such the same was laid by claimants and paid accordingly in the area of 371.33 sqm. and the remaining area was re measured for FRC concrete.
The claimants submitted that no defects were pointed out by respondents to them, who had duly recorded the work done by them test checked and also paid by them in running account bills. It was on the demand of residents of Bungalow No. 12 that precast pavers blocks were provided as per direction of respondents. And to avoid rise in level of payment the F.R.C. concrete already laid and paid was got dismantled by respondents. As they were already paid for F.R.C. concrete laid by them in that area; they dismantled the same on the direction of Arbt. No.24/2018 Page 33 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
respondents, there was no other reason for dismantling the same.
It was observed from various internal correspondences of departmental officers that senior officers have observed during inspection that road surface is slightly uneven at places. This was the general observation for whole work without specifying any location of bungalow number. The respondents had already measured test checked and paid the quantities under dispute without any reservation. No notice was issued for dismantling the bad work, if any. The respondents had admittedly in the area of dispute the same work was not got redone but other work was got executed with altogether change in specification. Under such circumstances, I hold that claimants cannot be punished for no fault of their. I hold that the claimants are entitled for this part of claim for admitted quantities of 371.33 sqm i.e. for Rs.268035.65 (371.33 x 721.86 = 268035.65) against this part of claim.
"(C) Extra item of preparation of subgrade -
Rs.443613.44:
The claimants submitted that at the time of execution of item of preparation of subgrade was required to be executed by respondents; as such they had demanded the extra item under clause 12 of the agreement vide letter dated 17.3.2007 (C2) and thereafter submitted the A/r demanding the rate of Rs.32 per sqm. vide letter dated 18.5.2007. The respondents also agreed with their contention and prepared the item of subgrade, measured the quantities in M.B. and continue to pay them with this item upto fifth R/A bill (paid on 30.7.2007) at part rate of Rs.23,83 per sqm. against proposed full rate of Rs.37.50 per sqm. However all of a sudden without any notice to Arbt. No.24/2018 Page 34 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
them and without any reasoning the respondents deleted this item in 6th R/A bill arbitrarily and illegally.
The respondents submitted that this item of subgrade was measured wherever existing bituminous road was dismantled for providing the item of FRC pavement. The item of dismantling of bituminous road has already been paid under Agreement Item 6.1. Physically there was no necessity of operation of the item of preparation of sub grade consisting of excavation of earth to an average of 22.5 cm. depth. Practically, only compaction of surface after dismantling was required to be done with roller at certain location. Thus the mistake being committed by them upto 5th bill was corrected in 6th bill and ultimately item of consolidation of subgrade with power road roller was paid in 7th & final bill for Rs.13837.67 sqm. @ Rs.0.82 per sqm.
It is observed that the respondents themselves agreed and measured and paid the claimants item of preparation of subgrade upto 5th R/A bill. But ultimately paid only item of consolidation of subgrade and worked out the rate of rolling by power road roller, while paying this item the respondents themselves agreed as apparent from the language of item sanctioned that it was the subgrade only which was compacted. Such subgrade was not existing earlier and only bituminous road was existing. Dismantling of bituminous road only does not create uncompated subgrade in itself, as contended by respondents who upto 5th bill agreed that subgrade was prepared by the claimants. In my opinion dismantling of bituminous road only reduces the effort required in excavation but do not totally eliminate the same. The element of subgrade not only consist excavation for average 22.5 cum. but also levelling, dressing and consolidation.
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As the item was demanded by claimants, agreed by respondents and paid in R/A bill upto 5th bill; as such unilateral deletion of item after laying lean base coarse concrete and F.R.C. concrete surface course, without detailed reasoning or notice to respondents is neither legally or contractually admissible nor justified. However, I agree with respondents that the efforts in excavation are reduced due to item of dismantling of bituminous road to that extent. Keeping in view overall circumstances, I hold that end of justice would meet if at least 50% of full assessed rate of preparation of sub grade by respondents is allowed to the claimants against this item. Thus I hold that claimants are entitled for Rs.248109.42 [13837.67 x (37.50 - 0.82) = 248109.42] against this part of claim.
"CLAIM NO.3: On a/c of wrong sanction of rates of various extra item - Rs.6,25,000/. (Modified Amount - Rs.36,25,000/) .
"4.1 Finding of Arbitrator and Award:
"The claimants submitted that vide their letters dated 27.3.2007 (C2), dated 30.3.2007 (C3), dated 18.5.2007 (C5) and dated 3.8.2007 (C8) they had intimated the respondents regarding execution of various extra items and also submitted the A/R vide letter dated 18.5.2007. The respondents also modified the market rate after verifying from the market and start paying them in R/A bill. However, at the time of payment of final bill the claimants came to know that the proposed rates have been drastically slashed by the higher authority of respondents without intimation to them and without taking their consent. While as per clause 12 the Arbt. No.24/2018 Page 36 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
respondents were to determine the rate within one month of their submission of rate. As such the reduction in rate in the final bill is arbitrary and illegal.
The respondents submitted that as per clause 12.2 of the agreement the claimants were supposed to submit their rates supported with proper analysis of rate within 15 days of occurrence of item; but the claimants never submitted their rates for extra items supported with proper A/R. However all the extra items have been approved by competent authority as per term of agreement and the bill and measurements were duly accepted by the claimants at the time of payment of final bill. Further claimants claim regarding quantity and the rates are totally vague and not based on fact; as such are liable to be rejected.
It is observed that claimants vide his letter dated 18.5.2007 (C5) had claimed the specific rates for various extra items as per analysis of rates. The respondents did not produce if any reply to this letter was given by them. And if A/R were not found attached with letter; then the respondents should have demanded the same from the claimants. As per clause 12 all the extra substituted items were to be paid at market rate determined by the respondents, which were to be determined by him within one month of demanding the specific rate by claimants based on A/R. The respondents E.E.incharge of work did not determine the rate within specified time and intimate the claimants. However it is observed that the respondents E.E. had starting paying these items at part rate while indicating full proposed rate pending sanction. Some of these items were ultimately sanction ed by E.E. incharge himself and also paid at finally sanctioned rate in 6th R/A bill but some of the rates although modified and paid at part rate indicating modified full rate in 6 th Arbt. No.24/2018 Page 37 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
R/A bill by Engineerincharge but ultimately paid at lesser than proposed full rate in final bill paid on 6.11.2008 i.e. much after completion of work on 28.8.2007 on the pretext that the said rate was sanctioned by the competent authority who was S.E. in the present case.
In my opinion no undue benefit can be given to claimants for the said fault of not determination of rate within a specified time of one month. However, E.E. has finalized the rate and paid the said final rate for certain items in 5th R/A bill and 6th R/A bill which were not objected by the claimants after receipt of said bills. Similarly Engineerincharge had also modified the earlier proposed rates from subdivision and himself proposed modified full rate (as indicated in prefinal bill/6 th R/A bill) while forwarding the same for sanction of S.E. The claimants could not point out any mistake in so finalized/ proposed full rate with documentary evidences. On the other hand the respondents also failed to justify the said reduction in proposed rate of E.E. by S.E. for any genuine mistake in proposed full rate of E.E., with documentary evidences. The designated authority to determine the final rate for extra substituted item in the clause 12.2 in Engineerincharge (EE in this case) and not the S.E. otherwise also the rates were to be determined on market rate of materials and labour required and Engineerincharge who is actually getting the work executed under his direct supervision, is in better position to assess the requirement of material & labour and the actual market rates for such inputs.
Under the circumstances, I hold that claimants are not entitled for any additional payment against the item mentioned by them at S.No.1, 2, 3 of the table given in the Claim No.3 in statement of fact as the Engineerin Arbt. No.24/2018 Page 38 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
charge had finalized the rates and paid the claimants at such final rate in VIth R/A bill or Vth R/A bill. However against S.No.4 of extra items of PVC sheet and S.No.5 cutting grooves the proposed full rate by subdivision at Rs.59.7 per sqm. and Rs.528.11 per mtr. respectively, the E.E. had modified the full rate to Rs.52/ per sqm. and Rs.458.23 per mtr. in the 6th R/A bill respectively. As such I hold that these are the final rates proposed by E.E. and the claimants are entitled for these rates. Thus I hold that claimants are entitled for Rs.368787.87 [13658.81 x (5225) = 36878787] against the of PVC sheet and Rs.743551.69 [6000.74 x (458.23 - 334.32) = 743551.69] against the item of making grooves. Thus I hold that claimants are entitled for the total Rs.1112340/ [368787.87 + 743551.69 = 1112339.5 say 1112340.00] against Claim No.3.
Although the respondents had objected to increase in the claimed amount from the amount referred by C.E.; however the issue has already been decided under para 1.1. As such I hold that the claimants should be awarded the actual amount as found admissible on the merit of various parts of claim. Thus I award Rs.1112340/ to the claimants against Claim No.3."
The aforesaid findings qua the amendment have also the backing of the Contract which was executed between the parties also. The Clause 25 of the Contract also provides that the Arbitration shall be conducted in accordance with the provisions of the Arbitration and Conciliation Act,1996 (26 of 1996) or any statutory modifications or reenactment thereof and the rules made thereunder. Moreover, the Ld. Arbitrator has made the Arbt. No.24/2018 Page 39 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
construction of the contract and documents which is the plausible construction and the dispute qua claim no.3 was referred under Clause 25 of the Contract between the parties and the claimant/respondent No.1 had sought only correction/amendment in the amount which is claimed in the claim No.3 and it cannot be said that the Ld. Arbitrator has acted beyond the scope of Agreement between the parties or beyond the reference. The same is not in violation of the clause 25 of the Agreement. I am fully in agreement with the aforesaid findings of the Ld. Arbitrator. The findings of the Ld. Arbitrator are correct and this Court does not find any perversity or arbitrariness or there is no error in the aforesaid findings arrived by the Ld. Arbitrator. With respect to claim No.4 On account of damages due to breach of contract, the claimant/respondent had claimed Rs.5,00,000/, however, the Ld. Arbitrator has awarded only an amount of Rs. 32,000/ in favour of the respondent. On account of Interest regarding claim No.5, the Ld. Arbitrator has granted interest only @ rate of 10% and on account of cost of arbitration proceedings, the Ld. Arbitrator only allowed an amount of Rs. 5,000/ under this Claim.
The award passed under Arbitration and Conciliation Act, 1996 (in short ACA) can be challenged on limited grounds given under Section 34 (2) of ACA. In the facts of the present case, none of the grounds mentioned in the said sections are made out by the Petitioner/Objector. Even in the Objection petition filed by Petitioner there is no averment or pleading by the Petitioner as to Arbt. No.24/2018 Page 40 of 42 Union of India Vs. M/s. Gupta Construction Co. & Anr.
which part of Section 34(2) is attracted in the present case and vitiates the award passed by the Ld. Arbitrator. In terms of provision of Section 34(2) of ACA, power of judicial review and scope of interference in the award is very limited and the court hearing objections against award cannot act as the first appellate court as if the award was a decree passed by a trial court. Further the court cannot substitute its own view for that of the Arbitrator to do what it considers to be justice. It is also well settled law that the merits of the award are required to be examined only in certain specified circumstances, for examining whether the award is in conflict with the public policy of India. I did not find that the Award to be against the Public Policy of India. The Petitioner/Applicant /Objector have failed to bring any grounds for interference of the Award within the parameters circumscribed under Section 34(2) of the Arbitration and Conciliation Act,1996 or the principles as enunciated by the Hon'ble Apex Court in various Judgments.
RELIEF:
Accordingly, in view of the discussions, as adumbrated above, I hereby pass the following :: FINAL ORDER::
(a) The Petition /Application/Objection under Section 34 of the Arbitration and Conciliation Act of the Petitioner/Objector is dismissed.
(b) The impugned Award dated 06/05/2011 is hereby confirmed.
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(c) No order as to costs in the present petition. The parties shall bear their own respective costs.
File be consigned to Record Room after due compliance. Announced in the open court on this 14th Day of November, 2019.
(ARUN SUKHIJA) ADJ07 (Central) Tis Hazari Courts, Delhi Arbt. No.24/2018 Page 42 of 42