Delhi High Court
Kalyan Chand Goyal vs Delhi Development Authority on 3 November, 1998
Equivalent citations: 1998VIIAD(DELHI)257, 1998(47)DRJ772
ORDER Dr. M.K. Sharma, J.
1. The respondent awarded a work contract in favour of the petitioner for construction of 1088 Janata Houses at Raghubir Nagar. While executing the aforesaid works certain disputes arose between the parties and the same were referred for arbitration in terms of clause 25 of the arbitration agreement. The arbitrator appointed by the persona designata, entered upon the reference, received evidence and thereupon published and made his award on 14/15.1.1992. The aforesaid award was filed in this court as against which an objection has been filed by the respondent which is registered as IA 13759/1992. The petitioner, on the other hand seeks for making the award a Rule of the Court.
2. In respect of the aforesaid, I heard Mr. G.N.Aggarwal, appearing for the petitioner and Mr. V.K.Sharma, appearing for the respondents at length and I give my decision on the same claim wise in the following manner:
3. A preliminary objection has been raised in the objections contending inter alia that the claims of the claimant are time barred in terms of provisions of clause 25 of the agreement. Clause 25 provides that the Contractor is to make a demand for arbitration within 90 days of receiving the intimation that the final bill is ready for payment. According to the respondent the final bill in the present case was ready and accepted by the petitioner on 25.1.1989 on the bill form whereas the petitioner invoked the arbitration clause only on 6.5.1989 which is after expiry of 90 days limitation period. The aforesaid preliminary objection was also raised before the Arbitrator and the said arbitrator, upon evidence on record held that the limitation period of 90 days in the facts and circumstances of the present case should be counted from the date of last payment in April, 1989 and when so computed the claim is within the period of limitation. Thus the arbitrator rejected the preliminary objection raised by the respondent. Limitation for putting up a claim for reference to arbitration by invoking the arbitration clause is governed by the provisions of Section 137 of the Limitation Act. The period prescribed therein for raising the claim and for invoking the arbitration clause is provided as 3 years from the date when the right to apply first accrues. In State of Orissa Vs. Damodar Dass, reported in 1996(1) Civil Law Times 294, it was held that no right to apply would accrue until there is a clear and unequivocal denial of that right by respondent. My attention was also drawn to the notification dated 8.1.1997 notifying the Indian Contract (Amendment) Act, 1996 amending the provisions of Section 28 of the Contract Act which provides thus:-
"Every agreement:
(a) By which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunal, or which limits the time within which he may thus enforce his rights; or
(b) Which extinguishes the rights of any party thereto, or discharges any party thereto from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to that extent."
prescribing that an agreement by which a party thereto is restricted absolutely from restricting his rights under or in respect of any contract, which limits the time within which he may thus enforce his rights, is void to that extent. However, I need not enter into the aforesaid aspect of the matter in view of the fact that the Arbitrator in the present case on consideration of the evidence on record found that the claim of the petitioner is within the period of limitation of 90 days and thus even the limitation prescribed under clause 25 of the agreement has not expired. The arbitrator, on consideration of the evidence on record came to the conclusion that the limitation period of 90 days should be counted from the date of last payment in April, 1989. The aforesaid conclusion was based on several factors as mentioned therein which appear on the face of the records. No error could be pointed out by the counsel appearing for the respondent in the aforesaid conclusions arrived at by the arbitrator and therefore, it cannot be held that the claim of the petitioner was barred by limitation as prescribed under clause 25 of the Agreement. The preliminary objection is, therefore, rejected and I accordingly proceed to dispose of the objections on merits.
4. Objections have been raised by the respondent in respect of the award of the arbitrator given against claims No.2,7,10 & 11.
CLAIM NO.2:
5. This claim relates to claim of the petitioner in 5 parts. The objection is however, filed in respect of part (a), (c) and (e) of the aforesaid claim No.2. Part (a) of claim No.2 relates to a claim of an amount of Rs.29,291/- which was found to be justified by the arbitrator. The claim in respect of the aforesaid arose in view of the fact that the petitioner offered a rebate of 0.50% for regular monthly payment, 0.50% for making payment of final bill within 6 months of completion of work, 0.50% for release of security deposit within one month of expiry of maintenance period. All these rebates were indicated in its award letter dated 27.12.1985 'on the estimated cost of the work'. The estimated cost of the work as mentioned in the said letter was Rs.62,34,759.
6. According to the respondent, during execution the estimated cost of work exceeded to Rs.81,87,511/- and thus the respondent claimed that they are entitled to avail of the rebate to the aforesaid amount instead of the original estimated cost of work at Rs.62,34,759/-. The arbitrator considered the aforesaid plea of the respondent and on consideration of the records found that the estimated cost of the work was clearly stated in the award letter and that the same cannot be re-adjusted for the purpose of availing the rebate on the value of actual work done. The arbitrator thus, held that the applicable rebates could only be availed of by the respondent on the estimated cost of Rs.62,34,759/- and the same does not extend to Rs.81,87,511/-.
7. Mr. Sharma, appearing for the respondent submitted that since the estimated cost mentioned in the tender had increased, the rebate as granted by the petitioner could be availed of on the estimated cost factually and not as per notice inviting tender. The award letter dated 27.12.1985 specifically states that the rebate is offered and accepted and thus available on the estimated cost of the work. The contract, therefore, was to avail of the rebate on the estimated cost of work as prevailing on that date. The arbitrator has also given the same reasoning to arrive at his conclusion. It is settled law that even if on appreciation of evidence the court could come to a different conclusion by analysis and reasoning the court would not substitute the findings of the arbitrator. Thus although there could be an argument that estimated cost of the work should factually be read as Rs.81,87,511/- the same should not be done by a Court by re-appreciating the evidence and reinterpreting the clauses of the contract arrived at between the parties. Thus the objection raised as against the aforesaid award is rejected.
8. The next objection against the award passed by the arbitrator is in respect of part (b) of claim No.2. In respect of the aforesaid claim the arbitrator has found the claim to be justified for an amount of Rs.31,177/-. According to the petitioner the date of completion of work was recorded as 8.8.1988 and for availing the rebate as per the offer of the petitioner the final bill of the petitioner was to be paid on or before 8.2.1989. The final bill as prepared by the respondent was however, paid on 20.2.1989. According to the respondent although the payment of the final bill was delayed beyond six months still the respondent is entitled to avail the rebate as intimation for preparation of the final bill was given to the petitioner on 25.1.1989. But the fact remains that the payments in respect of the final bill stated to have been prepared on 25.1.1989 was made on 20.2.1989. It is also revealed from records that an amount of Rs.1,53,156/- was withheld for various reasons from the said final bill and few other amounts were also not paid to the petitioner. In the light of the aforesaid factual position as emerging from the records the arbitrator found that the final bill of the claimant was not paid within six months of the date of completion and thus the respondent is not entitled to avail of the rebate offered for payment of the final bill. The aforesaid conclusion has been arrived at by the arbitrator on consideration and appreciation of the records and this court cannot reappreciate the aforesaid documents and the reasoning of the arbitrator and come to a contrary finding although on the facts there could be a contrary opinion. This part of the award is, therefore, not interfered with and is upheld.
9. The last part of claim No.2 in respect of which the objection has been filed relates to part (c) of claim No.2. The claim of the petitioner for an amount of Rs.1,985/- was found to be justified by the arbitrator. The aforesaid conclusion is also based on reasons and has been arrived at on appreciation of evidence and on the same ground the aforesaid award is not interfered with and is upheld.
CLAIM NO.7:
10. In respect of this claim the petitioner claims an amount of Rs.3,48,000/- on account of losses suffered due to delay which was attributable to the respondent. In respect of the aforesaid claim the arbitrator after considering the records and the entire facts and circumstances found the claim to be justified only to the extent of Rs.29,500/- which he has awarded under the present award. The aforesaid award has been passed in respect of claim for over-head charges on account of prolonged establishment charges towards salary of Engineer, salary of Supervisor-cum-Store Keeper and watch and ward staff for 10 months.
11. Mr. Sharma objected to the aforesaid award on the ground that the claim of the petitioner was for losses due to delay whereas the arbitrator has awarded the salaries of the staff for 10 months amounting to Rs.29,500/- thereby making totally a new case for the petitioner. The aforesaid submission, in my considered opinion, is without any merit, for the simple reason that the aforesaid claim of the petitioner for payment of an amount of Rs.3,48,000/- was on account of losses suffered due to delay. Expenditure incurred by the petitioner for maintaining staff on account of prolonged establishment could also be included within the wider expression of the word "loss suffered due to delay". The contention, therefore, that the arbitrator has made out a new case for the petitioner and awarded the amount on the basis of the same is without merit. The stipulated period for completion of work was 15 months with its date of completion as 5.4.1987 but the work could be completed only on 8.8.1988 with a delay of 16months. The arbitrator found that the delay in completion of the work was on account of the failure of the respondents and thus the arbitrator awarded an amount of Rs.29,500/- on account of prolonged establishment, holding that the petitioners are entitled to damages/compensation under Section 53 read with Section 73 of the Indian Contract Act. The delay in completion of work was for 16 months. The arbitrator has taken note of the provisions of clauses 10 and 10CC of the agreement which provides that if there is any delay on account of issue of the stipulated materials, the Contractor can not claim any compensation for delays upto six months. The arbitrator has therefore, denied the claim for initial six months and has granted compensation on account of prolonged establishment for 10 months. As it is found on the evidence on record that the delay in completion of the work was due to the failure on the part of the respondent, the petitioner is required to be compensated for the loss suffered by him for maintaining staff beyond the stipulated date of completion. Position might have been different if the claim was for escalation of prices of materials and wages but no claim has been allowed on that count. No stipulation is there in the agreements debarring the contractor from making such a claim. The award of the arbitrator is based on reasons and no error apparent could be pointed out by the counsel for the respondent and therefore, this award also stands upheld.
CLAIM NO.10:
12. The next objection filed by the respondent relates to the award passed by the arbitrator in respect of claim No.10. The petitioner claimed for payment of the amount of Rs.55,014.60 which was deducted by the respondent from the final bill of the petitioner on account of penal rate recovery made by the respondent on alleged overuse of cement. The arbitrator found that there was no allegation of theft, pilferage or wastage and also that there was no surplus at site on completion of work. He also found that no notice was served on the petitioner under clause 42 of the agreement to return the surplus material. According to the respondent the aforesaid recovery was made strictly in accordance with the agreement and that the arbitrator could not have decided the matter contrary to the terms of the agreement.
13. The respondent has also filed an objection in respect of the award passed by the arbitrator against claim No.11. The aforesaid claim is based on the fact that similar deduction towards penal recovery was made by the respondent on the alleged ground of over-consumption of steel beyond the permissible variation limit provided under clause 42 of the agreement. According to the respondent, after re-conciliation of the left-over measurements under claim No.9, the respondents have re-calculated the theoretical consumption of steel and after allowing the permissible variations, which according to the respondent works out to Rs.2,571/-, the same is recovered from the petitioner. Since the objection raised in respect of the aforesaid award is also similar to that of claim No.10 I propose to take up both the objections in respect of claim No.10 & 11 together.
14. According to the respondent recovery has been made for over-consumption in excess of permissible variations, in accordance with the provisions of the agreement. In this connection my attention was also drawn to the provisions of clause 42 of the agreement. The said clause 42 of the agreement came to be amended in respect of clauses (2) & (3) thereof. Unamended clause 42(1) came to be considered in this court in the decision of Salwan Construction Company Vs. Union of India and others, reported in 41 (1990) Delhi Law Times 374. Clause 42 also came to be considered by me in the case of Hargobind Jaggi Vs. Executive Engineer, DDA and others, reported in 1997(1) Arbitration Law Reports page 425. In the said decision in Hargobind Jaggi's case (supra) it was held that the conclusion of the arbitrator that in the absence of loss having been suffered or proof of actual loss, if suffered, the department was not entitled, having already recovered the issue rate, to recover double the issue rate of cement consumed by the claimants in excess of theoretical calculations. In the present case also the respondents have not placed on record any evidence indicating incurring of loss, if any, suffered by them. When there is no evidence on record to show that any loss was suffered by the respondents no penal rate can be charged by the respondents which is in the nature of penalty. In my considered opinion the decision relied upon by the counsel for the respondent in New India Civil Erectors Pvt. Ltd. Vs. Oil and Natural Gas Corporation, reported in JT 1997 (2) SC 633, is not applicable to the facts and circumstances of the case in view of the fact that the said decision is distinguishable on facts. The same reasoning is also applicable to the award given by the arbitrator in respect of claim No.11. Thus I am of the considered opinion that the arbitrator did not commit any error of law and/or facts in coming to the conclusion that the respondent is not entitled to levy penal charges as sought to be done and thus the award of the arbitrator for revision of the amount levied at penal rate is found to be justified. The award passed by the arbitrator in respect of both the claims is upheld.
15. Thus there is no merit in the objections filed by the respondents, the same are accordingly dismissed. The award dated 14/15.1.1992 passed by the arbitrator is made a Rule of the Court. Decree in terms of the award be drawn. Decree sheet be prepared accordingly. The petitioner, in addition shall be entitled to interest @ 15% per annum from the date of the decree till payment. The suit as also the objections stand disposed of in terms of above.