Delhi High Court
C. Lal Gupta vs Delhi Development Authority on 5 May, 2006
Equivalent citations: 129(2006)DLT531
Author: S.N. Aggarwal
Bench: S.N. Aggarwal
JUDGMENT S.N. Aggarwal, J.
1. This appeal under Section 39 of the Arbitration Act, 1940 filed by the appellant M/s C. Lal Gupta is directed against an order passed by the learned Single Judge on 15.04.2005 by which the arbitral award dated 03.09.1993 has been partly set aside. The challenge in this appeal is restricted to setting aside of award on claims No. 3, 4, 5 and 7.
2. The appellant is a building contractor and was awarded contract by the respondent (Delhi Development Authority) for construction of unauthorised regularized colony of Brahampura Complex SH Drains, Culverts, Roads and Paths etc. at Harijan Colony, Brahampura vide Agreement bearing number 397/EE/HD.XV/84-85.
3. Certain disputes and differences arose between the parties in respect of the aforesaid work done which under Clause 25 of the Agreement were referred for decision to the Sole Arbitrator Mr. A. Shankaran, Retired Additional Director General of CPWD by the then Engineer Member vide his letter bearing number EM2(3)91 Arbn/11486-90 dated 06.09.1991.
4. The learned Arbitrator passed the arbitral award on 03.09.1993 against which objections were filed by the respondent under Section 30 and 33 of the Arbitration Act, 1940. On the objections of Delhi Development Authority, the arbitral award in question was partly set aside by the learned Single Judge vide impugned order which is subject matter of challenge in this appeal.
5. The appellant, in this appeal, is aggrieved by the setting aside of arbitral award on claims No. 3, 4, 5 and 7 which were to the following effect:
Claim No. 3:- The appellant had made a claim of Rs. 3,44,658/- on account of loss due to pending amount of bill and security. However, the amount awarded by the learned Arbitrator to the appellant under this head is Rs. 1,47,002/- only.
Claim No. 4:- Rs. 1,74,320/- was claimed on account of increased rates for work done during the extended period of contract. Under this head, the learned Arbitrator has awarded only Rs. 18,360/- in favor of the appellant.
Claim No. 5:- Rs. 3,36,665/- was claimed on account of professional loss but under this head only an amount of Rs. 85,500/- has been awarded.
Claim No. 7:- Rs. 42,000/- was claimed on account of permanent establishment. Under this head, Rs. 31,000/- has been awarded in favor of the appellant.
6. The learned Counsel for the appellant has argued that the learned Single Judge was wrong in setting aside the arbitral award on claim No. 3 pertaining to interest for pre-suit period. The counsel for the respondent Ms. Anusuya Salwan has refuted the above contention of the appellant's counsel by relying upon the provisions of Section 3(1)(b) of the Interest Act. She has argued that since the mandatory notice of payment of interest for pre-suit period was not given by the appellant, the learned Arbitrator could not have awarded any amount towards interest for the pre-suit period. The contention of the counsel for the appellant is that case is governed by Section 3(i)(a) of the Interest Act and not by Section 3(i)(b) of the said Act as contended by the respondent's counsel. The counsel for the appellant did not dispute that the interest for pre-suit period was not demanded by the appellant prior to the reference of the dispute to the arbitrator.
7. Upon consideration of the rival contentions, we feel that the contention of the appellant in relation to interest for the pre-suit period is not tenable. We are one with the finding of the learned Single Judge that it is Section 3(1)(b) of the Interest Act and not Section 3(1)(a) of the said Act which is attracted to the facts of the present case. Therefore, we hold that the finding of the learned Single Judge was right and accordingly we uphold the impugned order in respect of Claim No. 3 relating to interest for the pre-suit period.
8. The appellant is also aggrieved by the setting aside of the arbitral award by the learned Single Judge in respect of Claims No. 4, 5 and 7. So far as Claim No. 4 is concerned, it was for a sum of Rs. 1,74,320/- on account of increased rates for work done during the extended period of the contract. Against this claim, the arbitrator has awarded a sum of Rs. 18,360/- only. The amount under claim No. 4 was awarded by the arbitrator not as per formula laid down in Clause 10 (cc) of the agreement but by comparing the building cost indices of CPWD. Ms. Anusuya Salwan, learned Advocate for the respondent has relied upon a Division Bench judgment of this Court in Delhi Development Authority v. U. Kashyap reported in 1998 VII AD (DELHI) 300 and has argued that the arbitrator could not have adopted a formula different from that set up in Clause 10(cc) of the agreement while making award in respect of claim No. 4. This contention of the respondent's learned Counsel found favor with the learned Single Judge and he accordingly set aside the award on claim No. 4. We do not find any infirmity in the reasoning of the learned Single Judge on this aspect as the contention of the counsel for DDA is squarely covered by the aforementioned judgment of this Court in U.Kashyap's case. We, therefore, uphold the impugned order in relation to Claim No. 4 also.
9. Against claims No. 5 and 7, the arbitrator has awarded a sum of Rs. 85,500/- and Rs. 31,000/- respectively. Both these claims also relate to delayed payment on account of extension of period of contract. The learned Single Judge has set aside the arbitral award in respect of Claims No. 5 and 7 on the ground that the same were based on no evidence. We have gone through the arbitral award as well as the impugned order of the learned Single Judge. To us it appears that both the views i.e. one taken by the arbitrator in the award and the other taken by the learned Single Judge are possible on the facts of this case. The law is well settled through a catena of judgments that in cases where two views on a matter are possible, the Court considering the objections against an arbitral award cannot substitute its own opinion to that of the arbitrator. Reliance is placed on a judgment of this Court in Delhi Development Authority v. Bhagat Construction Co. and Anr. reported in 2004 (3) Arb LR 548. Since the learned Single Judge has substituted his own view for that of the arbitrator in respect of claims No. 5 and 7 and as the same is not within the permissible para-meters of the well settled principles of law, the impugned order in relation to these two claims cannot stand the test of judicial scrutiny and, therefore, the impugned order to that extent is set aside.
10. In view of the above, this appeal is partly allowed to the extent indicated hereinabove. No costs.