Delhi High Court
M/S. Behl Associates vs Union Of India & Ors on 7 January, 2016
Author: Valmiki J.Mehta
Bench: Valmiki J.Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) No.329A/2001
% 7th January, 2016
M/S. BEHL ASSOCIATES ..... Plaintiff
Through: Ms. Sonam Anand, Advocate for
Mr. Yakesh Anand, Advocate
versus
UNION OF INDIA & ORS ..... Defendants
Through: Dr. Ashwani Bhardwaj, Advocate
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J (ORAL)
I.A. No.3678/2015 (filed by petitioner u/S 14(2) of the Arbitration Act, 1940) & Objections filed by respondents under Sections 30 and 33 of the Arbitration and Conciliation Act, 1940 in CS(OS) No.329A/2001
1. The subject objections have been filed by defendant nos.1 to 3 (respondent nos.1 to 3) under Sections 30 and 33 of the Arbitration Act, 1940 thereby impugning the Award passed by the Arbitrator dated 10.03.2014. The operative portion of this Award reads as under:- CS(OS) No.329A/2001 Page 1 of 20
"72. Accordingly I pass the award:
a) Directing the Respondents to pay the Claimant the sum of Rs.2,13,251/- with interest @ 12% per annum from 18.06.1989 till the date of payment in respect of Claim No.1;
b) Directing the Respondents to pay the Claimant the sum of Rs.20,538/- without interest in respect of Claim No.2;
c) Directing the Respondents to pay the Claimant the sum of Rs.81,204/- with interest @ 12% per annum from 18.06.1989 till the date of payment in respect of Claim No.3;
d) Directing the Respondents to pay the Claimant the sum of Rs.1,50,000/- with interest @ 12% per annum from 18.06.1989 till the date of payment in respect of Claims No.7;
e) Directing the Respondents to pay the Claimant the sum of Rs.20,000/- with interest @ 12% per annum from 01.08.1989 till the date of payment in respect of Claim No.10;
f) Directing the Respondents to pay the Claimant the sum of Rs.1,00,000/- as costs towards the legal and arbitration expenses."
2. The impugned Award was passed with respect to disputes which arose between the parties pursuant to the Work Order dated 07.07.1988 issued by the respondent no.2 upon the plaintiff (herein referred to as petitioner). By the Work Order two contracts were awarded to the petitioner for fabrication and erection of 13 Steel 'OP' Towers and 27 Steel 'OP' Towers to be installed at the site of the respondent no.2 at Sri Ganganagar, Rajasthan. The total price fixed for the first contract of 13 Towers was Rs.13,40,534/- and for the second contract of 27 Towers was Rs.17,05,912/-. This Work Order was followed by the formal Agreement CS(OS) No.329A/2001 Page 2 of 20 between the parties signed on 14.7.1988, however thereafter on 10.8.1988, a Corrigendum was issued by the respondent no.2 amending the number of towers under the first contract from 13 to 32 and in the second contract from 27 to 40. Though the number of towers increased, the quantity of steel remained more or less the same and therefore there was no change in the value of the two contracts. Earlier an Award was passed by an Arbitrator in this case on 11.1.2001 by which all the claims of the present petitioner were dismissed, except Claim nos.4 and 5 which pertained to freight and octroi charges on account of set of 12 numbers of towers being supplied by the petitioner to the respondent no.2 not at Ganganagar but at Jaisalmer in Rajasthan, and which part of the Award has become final as the petitioner has been paid the freight and octroi charges under the first Award dated 11.1.2001. When the earlier Award dated 11.1.2001 was sustained with respect to Claim nos.4 and 5, the same however set aside the Award with respect to other claims of the petitioner which were dismissed. Remanding the matter to the arbitration resulted in the second arbitration proceedings which has led to the impugned Award dated 10.3.2014 whereby the petitioner has been awarded certain claims as stated above. CS(OS) No.329A/2001 Page 3 of 20
3. Before this Court, the following issues were argued by the parties:-
(i) Whether it was the petitioner or the respondent no.2 which was guilty of causing delay and hence breach in performance of the contract?
(ii) Whether the petitioner is entitled to extra expenditure incurred on account of overheads during the extended period of time during which contracts were completed i.e after October, 1988 and till June, 1989?
(iii) Whether the petitioner is entitled to increase of the price of steel as awarded by the Arbitrator for the delayed/extended period of the contract after the original date of completion on 3.10.1988?
(iv) Whether the petitioner is entitled to welding charges which have been awarded for the extra work which the petitioner did under the contract and which welding work was not originally envisaged under the contract as per the case of the petitioner?
(v) Whether the petitioner is entitled to interest on delayed payment?
(vi) Whether the petitioner is entitled to interest and legal expenses as awarded by the Arbitrator?CS(OS) No.329A/2001 Page 4 of 20
4. On the issues with respect to entitlement of the petitioner for claim of overhead charges or increase of the price of steel in the extended period of performance of the contract as a pre-condition for deciding these issues, the issue which requires examination first would be the issue as to whether it was the petitioner who was guilty of causing delay in performance of the contract or it was the respondent no.2. In this regard, the Arbitrator has given his findings that it was the respondent no.2 who was guilty of causing delays and breaches in performance of the contract and which essentially arose because of four counts. First count was that the scope of work of the petitioner had increased because of increase of number of towers. Secondly, the approved drawings for the towers (as approved by the respondent no.2) could not be matched at the ground level to the foundations which were constructed by the respondent no.2 and in which foundations the towers were to be erected. Thirdly, for the installation and erection of the towers, the petitioner had to do extra work of welding. Fourthly and finally, it was found that during the operation of the contract, the officers of respondent no.2 caused certain changes to be made in the drawings of the towers resulting in additional time required by the petitioner for performing of its obligations under the contract. The relevant portion of the Award giving the aforesaid findings is as under:-
CS(OS) No.329A/2001 Page 5 of 20
"28. After carefully considering the arguments advanced by the learned counsel for the parties, I am of the opinion that the Respondents were responsible for causing delay in executing work order and thus for breach of contract. It was admitted case of the parties that both work Orders for supply of 13 Towers and 27 Towers respectively were awarded to the Claimant. As per the contract, the work was to be completed within 45 days. However, vide corrigendum dated 10.08.1988, the Respondents amended the work Orders dated 07.07.1988 by substituting the numbers of Towers from 13 to 32 in one contract and from 27 to 40 in another contract. The work was to start on 19.08.1988 and was to be completed on 03.10.1988. However, curious enough, although the quantity of Towers to be supplied was nearly doubled but neither the contract rate nor the quantity of the steel was increased. The more surprising factor was that time was executing the contract was kept the same namely 45 days. It is admitted for that more men and material and time are required when the quantity of fabrication of Towers have been nearly doubled. In my opinion, this was the starting point of breach of contract.
29. No doubt it appears from the Fabrication Drawing that the same was given to the Claimant on 07.07.1988 at 5.00 P.M. At the same time it may be added that the Claimant was unable to act upon the same since the corrigendum was issued by the Respondents increasing the numbers of the Towers to be supplied under the Contract. Moreover, from the gist of letter dated 23.08.1988 (Annexure C-11, page 54 of Statement of Claim "A"), it is apparent that the drawings provided to the Claimant were giving very contradictory dimensions. At the same time, the Claimant had informed the concerned officer of the Respondent in the said letter that although the first consignment was ready but since the Claimant has been instructed that the Chief Engineer had desired to make some necessary changes after inspection after 25th, the dispatch can only be commenced after the satisfied inspection. At the same time the Claimant in the later part of the said letter had also pointed out that the earlier order was for supply of 40 Towers (27+13), the supplementary order for supply of another 32 Towers (received on 22.08.1988), shall be treated as ensued from this day and completion shall be recorded 75 days from that date. It was also made clear in the said letter that the supplementary order of the 32 Towers shall be treated as additional order. So much so, from the contents of the letter dated 10.10.1988 CS(OS) No.329A/2001 Page 6 of 20 (Annexure C-28-A, at page 88 of the Statement of Claim A), addressed by the Claimant to the Chief Engineer, BSF, New Delhi, it was crystal clear that the Complainant had complained therein that during the execution of the job(regarding supply of O.P.Towers), it is observed that some frequent changes have been made from time to time due to which the further supplies are being held up and had requested to issue the final instructions on the drawing being submitted by the Claimant so that they may plan accordingly and no further time is wasted. It was further stated by the Claimant in the said letter that although fabrication drawing was submitted on 23.08.1988 but till to date no upto date drawings have been issued on 2(two) blue prints are again being sent for necessary instructions.
xxxxx xxxxx
36. In this connection it will be relevant to add that it has already been held in preceding paragraphs that the delay was caused in completing the work since the Respondents failed to handover the complete set of drawings and details due to frequent changes being made in the fabrication design. At the same time it may also be added that in the quotation submitted by the Claimant vide letter dated 27.05.1988 (Annexure C-19 at page 70 of Statement of Claim "A") it was made clear by the Claimant that the material shall be fabricated at one workshop and all the inspection shall have to be made at the workshop by BSF men. However, it was explained by the Claimant in para 12 of his rejoinder that the Claimant was required to manufacture Towers at his factory and was expected to supply the same at the site, wherein the said Towers were to be fixed and attach to the Foundation got prepared by the Respondents through other contractors. But the said Foundations did not match the dimensions of the Towers prepared by the Claimant as per the drawings approved by the Respondents. For that reason, the Claimant had to construct the Towers again as per the Foundation constructed by the Respondents and had to fit the same at the site and in consequence thereof the Claimant alongwith his team including engineers, experts etc had to live the work at site for which additional expenditure had to be incurred. Now it has not been disputed by the Respondents that the engineers and other staff remained at the site to construct the Towers at the site matching with the Foundations got prepared by the Respondents CS(OS) No.329A/2001 Page 7 of 20 from other contractors. Although, the Claimant has not placed on record the copies of the books of account or other documents for showing the extra expenditure actually incurred by him at site but the fact that the full team had to remain at the site for a considerable period due to delay caused in completing the work, due to fault of the Respondents it can be reasonably presumed that the Claimant was forced to incur additional expenditure for taking the entire team consisting of engineers, supervisors, fitters etc. at the site to complete the work, for which he was to be compensated by the Respondents." (underlining added)
5. A reading of the aforesaid paras shows that there is a finding of a fact that it was the respondent no.2 which was guilty of causing various delays such as of change in drawings of the towers, on account of increase of the number of towers, mismatch of drawing with foundations and finally drawings containing certain contradictory dimensions. The findings of fact have been supported by the Arbitrator by means of documentary evidence such as the letters of the petitioner to the respondent no.2 dated 23.8.1988 and 10.10.1988. In fact, in the last line of para 32 of the Award, the Arbitrator notes the fact that even the earnest money was refunded to the petitioner which points to the fact that the respondent no.2 had no claim against the petitioner under the subject contract.
6. This Court can interfere with the findings of facts and conclusions of the arbitrator only if the same are illegal or perverse and in my opinion there is no illegality or perversity in the aforesaid findings and CS(OS) No.329A/2001 Page 8 of 20 conclusions of the Arbitrator for interference by this Court under Sections 30 and 33 of the Arbitration Act, 1940 and therefore objections that the Arbitrator has wrongly held the respondent no.2 guilty of causing delay in performance of the contract are rejected.
7. Once the respondent no.2 is guilty of causing delays, the necessary consequences of delays which have adversely affected the petitioner would be upon the respondent no.2 and these necessary consequences would be either towards overhead charges or increase of the price of the steel and which two claims have been awarded in favour of the petitioner by the Arbitrator.
8. However in my opinion only the claim with respect to Award of increase of the price of steel will stand but not the claim of overhead charges. The claim of overhead charges cannot stand because the petitioner except filing only a typed claim statement did not support actual expenditure towards overheads and therefore once there is no supporting proof of the monetary expenditure being incurred by the petitioner, even if the petitioner has a good case, merely on assumptions and presumptions with respect to evidence, the claim of overhead charges could not have been allowed by the Arbitrator. In fact allowing of claim in this regard would amount to simply CS(OS) No.329A/2001 Page 9 of 20 accepting the ipse dixit of the petitioner, and without the claim being proved as required in law. Therefore I set aside the claim awarded by the Arbitrator being Claim no.1 of overhead charges. Accordingly, Claim no.1 is therefore set aside and which was for an amount of Rs. 2,13,251/-.
9. So far as the claim for rise in price of the steel is concerned, the Arbitrator has referred to the relevant documentary evidence including the circulars of the government as also of Tata Iron Steel Company to show the increase in the price and accordingly awarded increased price of the steel, but not for the entire period of contract and only for the period of contract post the last date of original/ordinary completion date of the contract viz 3.10.1988. The relevant observations made by the Arbitrator in this regard are contained in paras 51 and 52 of the Award and which read as under:-
"51. Now the question arises, as to what amount the Claimant can be paid in respect of increase in prices of steel in respect of Claim A. Admittedly the work was to start on 09.08.1988 and the Claimant had made the last supply of O.P.Towers in May, 1989. The Respondents had agreed to pay the increase in steel prices as on August, 1988 and February/March 1989. Price circular issued by Tata Iron Steel Company Limited (Annexure C-22 at page 81), indicates that the price of Steel (M.S.Billets) as on 01.03.1988 and 01.04.1988 were Rs.5,525/- per ton. As per the circular issued by Joint Plant Committee (Annexure C-21 at page 79), the price of steel (billets) were Rs.7,535/- Per Metric Ton. The Claimant has not placed on record any other circular/document issued by the appropriate authority/Government of India to evince that the steel prices were raised in between the period August 1988 to March, 1989. The Claimant has not explained during which period the steel prices had CS(OS) No.329A/2001 Page 10 of 20 increased by Rs.1,000/- per Metric Ton which have been claimed on 116.2 Metric Ton in respect of supply of first 28 towers. As per the quotation dated 27.05.1988 (Annexure C-19 at page 70), the Claimant was entitled to any statutory increase in the rates of steel by government of India by notification. Since the price of steel on August 1988 were Rs.5,525/- Per Metric Ton and the Claimant failed to show that there was any increase in the steel prices between August, 1988 and 01.03.1989, the Claimant cannot be given the increased price of Rs.1,000/- per Metric Ton for 116.2 metric ton as claimed by the Claimant. As such the said claim is rejected.
52. However, it appears from the contents of the letter dated 13.04.1989 of the Respondents (Annexure C-18 at page 73), addressed to the Claimant firm that 60 nos. of O.P.Towers have since been delivered at Sri Ganganagar as per the terms of the contract, the remaining 12 nos.of Towers be delivered at 64, Bn, BSF, Jaiselmer and in condition
(b) it was stipulated that the prices as on 01.08.1988 and February/March, 1989 will be payable as per condition mentioned in the quotation. The Claimant firm in its letter dated 22.05.1989 (Annexure C-
20 at page 77) made it clear that for supplying 12 nos. of Towers at Jaiselmer, increased prices of steel by Joint Plant Committee shall be charged. Consequently, the Claimant firm was entitled to charge the increase of prices from Rs.5,525/- (which was steel price on the date of start of the work) to Rs.7,535/- which was the steel price as on 01.03.1989 as was evident from the circular of Joint Plant Committee dated 01.03.1989 (Annexure C-21 at page 79). The Claimant is, therefore, entitled to claim the following amount regarding the increase in steel prices with effect from 01.03.1989 on account of supply of 12 Nos. of Towers weighing 40.4 Metric Ton.
40.4MT X Rs. 2010 PMT= Rs.81, 204.00." (underlining added)
10. I do not find any illegality or perversity in the aforesaid findings and conclusions of the Arbitrator as regards awarding the higher price of steel and therefore the objections filed by the respondent no.2 on CS(OS) No.329A/2001 Page 11 of 20 this aspect are dismissed noting that the Arbitrator has arrived at one possible and plausible conclusion on the basis of the documentary evidence which was filed by the petitioner before the Arbitrator and this Court in law cannot substitute its view for that taken by the Arbitrator.
11. So far as the claim of extra work for welding charges is concerned, the Arbitrator has noted that in fact extra work of welding was done. The issue was whether extra welding was or was not within the original scope of the work. On this aspect, the Arbitrator has held that the extra welding was not within the scope of the work because the drawings which were approved by the respondent no.2 and given to the petitioner on the same date of the contract i.e 7.7.1988 contained this extra work of welding and which extra work of welding was not within the original scope of the contract. Arbitrator has therefore justifiably arrived at the conclusion that the extra welding was an extra work and therefore cost of extra work of welding should be awarded to the petitioner. Arbitrator in this regard has rightly given the appropriate conclusions in paras 58, 59, 61, 63, 66 and 67 of the Award and these paras read as under:-
"58. At the same time it has been stressed by the learned Counsel for the Respondents that as per the work orders awarded to the Claimant, the fabrication of the Towers was to be done by riveting or bolting and only base plates (anchor plates) were required to be welded and that the CS(OS) No.329A/2001 Page 12 of 20 Respondents never intended that the entire joint plates should also be welded as all the O.P.Towers were designed for shifting the same in future but due to welding done by the Claimant, the said aim of the Respondents was frustrated as the welded Towers became a permanent structure. According to the learned counsel for the Respondents, the Respondents were never interested in welding of the Towers, keeping in view the future concept of shifting the same and that in fact, the Claimant had done welding to cut short the time, to avoid extra skill which is required for riveting and bolting. On the other hand, it was reiterated by the learned counsel for the Respondents that by doing the welding work, the Claimant had altered the specifications and term as laid down in the agreement and for that reason the Claimant was not entitled to any claim on the ground of welding charges. At the same time, the learned counsel for the Respondents has drawn my attention to Clause 7 of "Special Conditions" of the Agreement in terms of which nothing extra over and above the quoted rates was payable to the contractor for any modifications made by the Department in the design submitted by the firm/contractor for technical considerations. On this ground also the learned counsel for the Respondent has vehemently opposed the Claim of the Claimant with regard to welding charges.
59. On the other hand it has been stressed by the learned counsel for the Claimant that as per the original Work Order, the O.P.Towers had to be erected either by riveting or by nuts and bolts and only anchor (base) plates have to be welded. But drawings prepared by the Claimant as per the specifications provided by the Respondent did not find favour with them as it was found that the huge structures of the Towers could not be sustained with nuts and bolts only and required to be welded. Consequently, the Claimant had prepared the drawings of the Towers specifically marking and showing the element of welding in the drawing and that the drawing brought on record by the Claimant clearly show quantum of welding done on all the Cleats and Fillets. It has also been submitted by the learned counsel for the Claimant that as per the drawing of the Tower there are 160 Fillets on each Tower other than anchor plates and all the Fillets were welded in each Tower. It is also stressed that when the said drawing having welding element in all the joint points in the Towers was approved by the engineer of the Respondents for which the Claimant was forced to do extra work, the Claimant was entitled to CS(OS) No.329A/2001 Page 13 of 20 be compensated notwithstanding the no extra payment clause in para 7 of the 'Special Conditions' of the Agreement.
xxxxx
61. No doubt from the bare reading of the details of fabrication of Towers as quoted above, it was quite evident that only anchor plates, which are the base plates, were to be welded and the rest of the structure above the base plates was to be erected by joining the joints either by riveting or by bolting. But from the drawings of the Towers, (at page 98 of Claim A), it is quite evident that the said drawing was approved by Shri B.L. Gupta (Joint Assistant Director (Works), BSF, Sri Ganganagar) on behalf of the Respondents and was received by the Claimant on 07.07.1988. At Serial No.4 of the said drawing it has been clearly mentioned that "All Fillets Welds are 6 mm size, UNO". In fact, it has been explained by the learned Counsel for the Claimant that welding refers to the process of joining two pieces of metal together and that welders use fillet welds when connecting flanges to pipes, welding cross section of infrastructure and when fastening infrastructure by bolts is not strong enough. Consequently, in view of the fact that the drawing of the Towers itself shows that not only anchor plates were to be welded but Fillets were also to be welded clearly negatives the contentions of the learned counsel for the Respondents that only anchor plates were to be welded and rest of the structures was to be joined either by riveting and bolting.
xxxxx
63. No doubt, there was a prohibitory clause in para 7 of "Special Conditions" of the Agreement (Annexure C-2a at page 37) that nothing extra over and above the quoted unit rates was payable if any modification was to be made by the Department in the design submitted by the firm/Contractor, but keeping in view the fact that the Claimant has done the extra welding work to strengthen the structures of Towers with the approval of the Engineer of the Respondents and had to employ extra labour, the Respondents was liable to compensate the Claimant for their implied obligation. In fact, it has been held by Hon'ble Supreme Court in (2007) 133 SCC 43, that in the absence of any price escalation clause in the original agreement and despite the prohibitory clause in the supplemental agreement, the arbitrator was well within its jurisdiction in CS(OS) No.329A/2001 Page 14 of 20 allowing the contractor's claim on account of escalation of cost under the said heads during the extended period.
It was further held in the above referred case that where there was some implied obligations, rigid interpretation so as to deny such obligation, not warranted.
Consequently, I have no hesitation in rejecting the contentions of the Respondents that since there was a prohibitory clause in the agreement no extra amount should be paid for welding work.
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66. After considering the entire material placed on record, it may be added that the Claimant has not produced the copy of DSR 1985 to prove that the rate of welding were Rs.0.35 per cm. at the relevant time. In fact, the Claimant expressed his inability to produce the copy of the said rules. Consequently, it cannot be held with certainty that welding rates at the relevant time were Rs.0.35 per cm. Apart from that, since the payment of welding charges was not a part of agreement but was being given as compensation, the extra charges of 46.4% over and above the prescribed rates also have no rationality behind it. The Claimant has not produced any document to show the actual amount spent by him in getting the welding work done. Although it is claimed that 122.52 mts. was required in doing the welding work in each of the Tower but the basis of the same is traced to the fact that M/s. Prestige Construction to whom an identical contract was given had calculated 122.52 mts., as welding element while lodging the Claim with the Respondents. It has also been stressed by the Claimant that in the Claim lodged by M/s. Prestige Construction, the Arbitrator had upheld the Claim of said firm and had granted welding charges and the concerned court had dismissed the objections filed by the Respondents and had upheld the claim of grant of welding charges in the said case. Consequently, it is, therefore stressed by the learned counsel for the Claimant that since after the concerned court had dismissed the objections and had made the award given by the Arbitrator in the said case a rule of the court and the Respondents had not filed any appeal against the said order of the concerned court, the Claimant who were also similarly placed are entitled to claim welding charges from the Respondents. However, firstly, no CS(OS) No.329A/2001 Page 15 of 20 evidence was led by the Claimant that M/s. Prestige Construction had lodged the Claim against the Respondents in which the said firm had claimed 122.52 mts. as quantity of welding. No evidence was led to prove that the Arbitrator had allowed the entire claim by accepting that 122.52 mts. of welding element was involved in joining the joint plates of Towers. Even otherwise mere fact that another firm had calculated the quantity of welding as 122.52 mts. is no ground to hold that the same quantity of welding would have been consumed in the case of the Claimant.
Moreover, the Claimant in the notice dated 27.05.1994 (Annexure C-6) given for appointment of an arbitrator had Claimed Rs.1,71,801.84/- in Claim A while in the present case in the Statement of Claim the Claimant has claimed Rs.2,50,249.00 towards welding charges. All these facts and circumstances clearly suggests that the amount claimed by the Claimant was not based on entirely reliable evidence. But the fact remains that the Claimant had done extra work of welding with the consent of the Respondents for which equity demands that the Respondents should fulfil their implied obligation in compensating the Claimant for his extra work.
67. Considering the totality of the facts and circumstances of the case the Claimant is granted a compensation of Rs.1,50,000/- in lump sum in respect of Claim No.7 in respect of both the Claims A and B."
(underlining added)
12. In my opinion, the Arbitrator has arrived at one possible finding and conclusion with respect to welding charges that welding charges were extra work and therefore such finding not being either illegal or perverse and therefore objection petition under Sections 30 and 33 of the Arbitration Act, 1940 in this regard is rejected.
CS(OS) No.329A/2001 Page 16 of 20
13. So far as the claim of interest payment to the petitioner for delay in making payments to the petitioner by the respondent no.2 is concerned, this aspect has been dealt with by the Arbitrator in paras 43, 44, 45 and 46 of the Award and which paras read as under:-
"43. In this connection it may be added that the Claimant vide letter dated 08.06.1989 (Annexure C-14 page 61 of Claim A) had written to the Respondentthat 12 Nos. of O.P.Towers were immediately supplied at Jaiselmer on 23.04.1989 but the payment of the bill of Rs.6.97 lacs has not been made, although the payment was to be made within a week and that interest of 18% shall be charged on that amount till realization. However, in the subsequent letter dated 21.06.1989 (Annexure C-15, page 65 of Claim A), the Claimant had confirmed the receipt of Rs. 3.60 lacs out of the bill of Rs. 6.97 lacs on 08.06.1989 and had reminded the Respondents that 18% interest will be charged on the balance amount w.e.f 01.05.1989 realization.
44. At the same time it may be added that after supply of 60Towers by the Claimant, the Respondents had separately confirmed the Work Order awarded to the Claimant for supply of 12 O.P Towers at Jaiselmer vide Work Order SPL (P)/EXTRA-12/89 dated 06.06.1989 for the tender amount of Rs.5,42,568/-.
From the details of the payments furnished at page 11 of the Reply to the Statement of Claims, it appears that although the Respondents had not given the date of payment of Rs.3.60 lacs but had given the details of the balance payment with regard to the supply of 12 Nos. Towers, 64, Bn, BSF at Jaiselmer. From the said details of payments it appears that a sum of Rs.85,042/- was made, but the date of the payment has not been mentioned by the Respondents. Since this payment was not made till writing of the letter by the Claimant to the Respondents on 21.06.1989, it may be presumed that the said payment of Rs. 85,042/- was made by the Respondents to the Claimant on the said date of 21.06.1989 for the only and solely purpose of calculating the interest. However, a further payment of Rs.50,525/- was made by the Respondents on 08.12.1989 and a further sum of Rs.35,281/- has been paid to the Claimant as late as on 14.11.1991. In this manner a total payment of Rs.5,30,848/- was made to the Claimant in connection with the supply of 12 O.P.Towers at Jaiselmer. CS(OS) No.329A/2001 Page 17 of 20
45. Although it has been claimed by the Claimant in the Statement of Claim(A) that out of the bills of Rs.7 lacs raised by the Claimant the Respondents had paid Rs.3.60 lacs after 30 days and remaining payment was made after 70 days but in the Written Submissions filed by the Claimant, it has been shown that out of Rs.6.97 lacs, the Respondents had made payment of Rs.3.60 lacs on 08.06.1989 and further payment of Rs.35,567/- was made on 08.12.1989 leaving behind the balance of Rs.2,01,443/- which still remains unpaid on the part of the Respondents. But surprisingly, the Claimant has not claimed the said amount in the Statement of Claims.
46. Now, the Claimant Firm has not placed on record the copy of bill of Rs. 6.97 lacs dated 23.04.1989 raised in connection with supply of 12 O.P. Towers, the tender amount of which was Rs. 5,42,568/-. As such for the purpose of calculating the interest, the amount paid and the dates of payment admitted by the Respondents have to be relied upon. It will also be relevant to add that the Respondents after receiving the supply of O.P. Towers, was not entitled to keep the bills for indefinite period and was supposed to clear the same within a week. By delaying the payment without any cause of reason, the Respondents have made themselves liable for paying the interest on such late payments. Consequently, the Respondents in view of the discussions made above, are liable to make the payment of interest on delayed payments. Although the Claimant has claimed interest @ 18% on delayed payments, but I find it fit and reasonable to award the interest @ 12%, as per the details given below:-
S. No. Date of Bill Interest Amount of Date of Period of Rate of Interest w.e.f. Bill (Rs.) Payment Delay interest accrued (Rs.)
1. 23.04.1989 01.05.1989 3,60,000.00 08.06.1989 39 12% 4,616.00
2. 23.04.1989 01.05.1989 85,042.00 21.06.1989 52 12% 1,454.00
3. 23.04.1989 01.05.1989 50,525.00 08.12.1989 223 12% 3,704.00
4. 23.04.1989 01.05.1989 35,281.00 14.11.1991 928 12% 10,764.00 Total: 20,538.00 "
(underlining added)
14. A reading of the aforesaid paras of the Award shows that the Arbitrator has taken specific dates of raising of the bills and specific dates of payment from the correspondence which ensued between the parties and on CS(OS) No.329A/2001 Page 18 of 20 such basis after meticulously making out a chart he has arrived at the periods of delay and accordingly granted interest for the periods of delay. There is therefore no illegality or perversity in such conclusion of the Arbitrator for awarding interest and therefore objections of the respondent no.2 in this regard are rejected.
15. That finally takes us to the Award regarding grant of interest pendente lite and future @ 12% per annum, the Arbitrator has in my opinion not committed any illegality or perversity because surely in commercial world if petitioner had to borrow moneys, petitioner would not have received moneys on interest at less than 12% per annum and therefore no interference is required of this Court with respect to rate of interest.
16. No interference is also required by this Court to the Award by which an amount of Rs.1 lakh as legal expenses have been awarded because the petitioner has been pursuing its claims for a long period from the year 1994 till the impugned Award was passed in favour of the petitioner in March, 2014. Accordingly, the Arbitrator has rightly awarded legal expenses to the petitioner.
17. In view of the above, while the objection petition succeeds so far as setting aside of the claim towards Claim no.1 of award of expenditure CS(OS) No.329A/2001 Page 19 of 20 on overheads is concerned, rest of the objections to the impugned Award dated 10.3.2014 are dismissed. Parties are left to bear their own costs.
JANUARY 7, 2016 VALMIKI J. MEHTA, J.
nn/ib/Ne
CS(OS) No.329A/2001 Page 20 of 20