Delhi District Court
M/S Basu Dev Raut Sanitation vs Union Of India on 23 November, 2015
M/s Basu Dev Raut Sanitation v UOI CS 92/11/10
IN THE COURT OF SHRI MANISH YADUVANSHI
ADDITIONAL DISTRICT JUDGE 06: CENTRAL : DELHI.
CS 92/11/10
M/s Basu Dev Raut Sanitation,
RZ16/2, Gali No. 32,
Mangal Bazar Gali,
Indira Park, Palam Colony,
New Delhi. ....... Petitioner.
Versus
1. Union of India
Through Executive Engineer
Constn. Divn. VI
Central PWD, I.P Bhawan,
New Delhi.
2. Shri Divakar Garg,
Ld. Arbitrator,
Ministry of Urban Development
C316, I.P Bhawan,
New Delhi. .......Respondents.
Unique case I.D No.
:
02401C
0003522010
Date of Institution : 07.01.2010.
Date of Reserving Order : Not Reserved.
Date of Order : 23.11.2015.
Result: Petition dismissed. Page 1 of 15
M/s Basu Dev Raut Sanitation v UOI CS 92/11/10
PETITION UNDER SECTION 34 OF
THE ARBITRATION & CONCILIATION ACT, 1996
FOR SETTING ASIDE THE ARBITRAL
AWARD DATED 09.10.2009.
JUDGMENT
1. This judgment shall dispose of the petition/application of the petitioner above named under Section 34 of the Arbitration & Conciliation Act, 1996 (herein after called as 'the Act') against the Arbitral Award dated 09.10.2009 filed on 07.01.2010 against the respondents above named.
2. As per facts in brief, tender for work "Construction of Kitchen and Mess in Yamuna Hostel" JNU Campus, New Delhi was invited by the respondents and the claimant submitted his rates. Work was awarded after negotiation as per C1 dated 9.11.2006 against formal contract no. 27/EE/CDVI/200607 on 9.11.2006 with the date of start i.e 1.12.2006 to be completed by 31.3.2007. Work was actually closed on 9.1.2008 against 31.3.2007. Tendered amount was Rs.22,98,599/ while the estimated cost was Rs.19,39,258/. Arbitration was invoked on 24.4.2008 as per clause 28 of agreement. Respondent no. 2 was appointed as sole arbitrator. Statement of claims was furnished. The award was passed on 9.10.2009.
Result: Petition dismissed. Page 2 of 15M/s Basu Dev Raut Sanitation v UOI CS 92/11/10
3. Contract stipulates below mentioned obligations of respondents viz; A. provide full and hindrance free site for execution of work. B. issue of drawings and details of work C. Issue necessary instructions and decisions D. Making timely payments for the work executed.
4. Hindrances in work were to be removed by the respondent as per assurance. Performance guarantee was deposited but site was not handed over despite reminder dated 8.1.2006. Intimation was again sent on 25.1.2007. The claimant on 1.3.2007 stated that the site was handed over and work started thereupon. However, the same had to be stopped after few days due to interference of the students' union even though, all equipment and manpower was in place. The work did not resume despite reminder dated 3.4.2007. The stipulated date thus expired on 31.3.2007. Another reminder dated 1.5.2007 was issued. Attention of respondent was again drawn to the above issues on 28.11.2007. The petitioner requested for closure of contract and compensation. The contract was closed on 9.1.2008 without any notice referring to in clause 13 of the Agreement.
5. As many as 7 claims were submitted.
6. Qua claim no. 1, the petitioner was compensated to the tune of Rs.2,000/ against work done by him. Qua claim no. 2, Nil amount was granted. Qua claim no. 3, the petitioner was compensated to the tune of Result: Petition dismissed. Page 3 of 15 M/s Basu Dev Raut Sanitation v UOI CS 92/11/10 Rs.10,000/ against preparatory work done by them. Qua claims no. 4 ,5 & 6, "Nil" amount was granted. Thus, total amount of Rs.12,000/ only was granted with interest at the rate of 9% p.a on the above amount w.e.f 25.9.2008 till payment.
7. Notice to this objection petition was issued to respondents no. 1 & 2. Respondent no.1 has filed reply while respondent no.2 has forwarded original arbitration proceedings.
8. The award is challenged on general grounds primarily to the effect that the ld Arbitrator did not follow procedure and adhere to the terms of agreement. It is mainly challenged on the ground that it is against the public policy of India and contrary to substantive provisions of law being illegal and violative of statutory provisions. It is averred that clause 13 of the agreement is not attracted under the circumstances as the petitioner had already requested to close the contract and compensate them for losses.
9. It is contested on the ground that there is no provision in agreement for claiming such damages and to claim such damages on account of any breach of agreement under Section 73 of Indian Contract Act, it is essential for petitioners to issue notice to the respondents under Section 55 of Indian Contract Act at the time of accepting such breach of agreement by the respondent and during the entire stipulated period, no such notice was issued by the petitioners and admittedly no work could Result: Petition dismissed. Page 4 of 15 M/s Basu Dev Raut Sanitation v UOI CS 92/11/10 be take up after 1.3.2007 on account of non availability of site for work. The petitioner also failed to establish his claim with documentary evidences. It is contended that petitioner failed to establish with documentary evidences, if any material was lying at site at the time of closure of contract under Clause 13 other than the temporary water tank and shed made by them in preparation for execution of the work. After receipt of closure notice dated 9.1.2008 under clause 13, the petitioner never intimated the details of such material if available at site and did not made any efforts to get the measurements of such materials, if any, recorded by the respondents. However, it is submitted that they had made the temporary water tank and tin shed at the site of work. It is also contended that Clause 13 of the agreement provides for foreclosure of the contract and the respondent acted accordingly. Further, it is submitted that the time was not extended with mutual consent after the stipulated time was over on 31.3.2007 upto which the time was essence of the contract and thus the agreement was allowed to be lapsed after 31.3.2007 without reserving their rights to claim such damages by the petitioner. It is also taken as a ground of contest that the Performance Guarantee & Earnest money deposit for release to the claimant on 7.8.2008 well before invoking the arbitration by the petitioners and therefore, the ld. Arbitrator held that no interest is admissible on such delayed release of PG & EMD.
Result: Petition dismissed. Page 5 of 15M/s Basu Dev Raut Sanitation v UOI CS 92/11/10 10. No rejoinder was filed.
11.I have heard ld. Counsel for the petitioners/objectors and ld. Counsel for respondents and have gone through the written submissions placed on record by the petitioners. I have also gone through the record including the record of arbitration carefully.
12.Before proceeding further, having regard to the generality in the manner in which the grounds of challenge to the award have been presented in the objections, this Court specifically asked the ld. Counsel for the petitioners to clarify as to which particular ground as available in Section 34 of the Act is being relied upon. According to ld. Counsel, he primarily relied on Section 34 (2)(b)(ii) of the Act. What is given to understand the the ld. Arbitrator did not appreciate the correct purport of Article 13 of th Agreement. Even if this Court considers the above ground of alleged failure of Ld. Arbitrator qua incorrerct interpreaton of Clause 13 adopted by him for awarding the claim, the said ground in itself will be an additional ground of attack under Section 34(2)(a)(iv) of the Act.
13.Before adverting to the fact in issue, I must point out that the petition provides the date of receipt of the award by the petitioner as 4.12.2009. The present objection petition stood filed on 7.1.2010 and therefore, it can be safely deduced that it has been made within three months from the date on which the petitioners received the arbitral award thereby satisfying the conscious of this Court in as much as Section 34(3) of the Result: Petition dismissed. Page 6 of 15 M/s Basu Dev Raut Sanitation v UOI CS 92/11/10 Act is concerned.
14. Next, I must point out about the judicial scope on the basis of various judicial pronouncements which this Court has while dealing with the such objection petition under Section 34 of the Act.
15. In Laxmi Mathur v The Chief General Manager, MTNL, 2000 (3) Arb. Lr. 684 (Bombay) it has been held that a Court can not sit in appeal over the views of the Arbitral Tribunal by reexamining and re appreciating the material.
ii. Parmar Construction Co. v DDA ALR 1996 (2) Delhi 73. The judgment pertains to the Arbitration Act (10 of 1940). There was a contract for construction of S.W drains. It was delayed. Compensation was levied under clause 2 of the agreement. A lumpsum award with pendentelite and future interest was made. Objections were raised that the award was unreasoned award and there was error apparent on the face of the record. The Hon'ble High Court while dealing with the scope of interference of such award in such like case held that, "where objections are to the effect that the same is bad on the ground of error apparent on the face of the record is limited. Arbitrator's award both on facts and law is final. Court can not review and correct any mistake in his adjudication unless objection is to the legality of the award which is apparent on the face of it. An error of law apparent on the face of the record means that you can find in the award or a document actually incorporated thereto Result: Petition dismissed. Page 7 of 15 M/s Basu Dev Raut Sanitation v UOI CS 92/11/10 some legal proposition which is the basis of the award, which you can then say is erroneous. It is not permissible to refer to any other document to show that the award is erroneous. Court can not substitute its own decision for that of the arbitrator. Assessment of evidence is a matter within the province of the arbitrator".
iii. Union of India v Ramesh Lalwani 1997 (Suppl.)Arb. LR64 which held that "award made by arbitrartor is conclusive and the Court is only entitled to set aside the same if the arbitrator has misconducted himself and the scope in this regard is rather limited. The judgment again pertains to the Arbitration Act (10/1940)".
iv. Santokh Singh Arora v Union of India, AIR 1992 SC 1809 which held that "the appellant is not permitted to raise a new dispute in relation to damages claimed to have been sustained by him after the disputes have been referred to arbitration".
v. P.M Paul v Union of India, AIR 1989 SC 1034. The judgment is on the aspect of arbitrator allowing escalation in contract amount wherein it was held after the perusal of the award and documents that the arbitrator had not committed any misconduct. In the said case, dispute was referred to the arbitrator as to who is responsible for the delay, what are the repercussions of the delay in completion of the building and how to apportion the consequences of the responsibility. The arbitrator found that there was escalation and therefore, he came to the conclusion that it Result: Petition dismissed. Page 8 of 15 M/s Basu Dev Raut Sanitation v UOI CS 92/11/10 was reasonable to allow 20% of the compensation under the claim. Same was upheld.
vi. NTPC v R.S Avtar Singh & Co. 2002 (2) Arb. LR 135 (Delhi). This judgment is on the Arbitration & Conciliation Act 1996 and on the scope of Section 34 of the Act. The Hon'ble High Court of Delhi specified in this case that "the scope of interference with an arbitral award is much less under Section 34 of the new Act of 1996 than Section 30 and 33 of the old Act 1940, it was pointed out that this seems to be in consonance with the basic scheme of the new Act as the intention is to limit the judicial interference in the arbitral proceedings. It was also held that interpretation of the contract is a matter for the arbitrator on which Court can not substitute its own decision. That if on a view taken by a contract, the decision of the Arbitrator on certain amounts awarded is a possible view though perhaps not the only correct view, the award can not be examined by the Court".
vii.Shiv Kumar Wasal & Co. v DDA ALR 1990 (1) Delhi 101 wherein it was held that "it is not for the Court to go into the reasonableness of the reasons given by the arbitrator. It was further held that even if two views are possible, the Court cannot substitute its own view for the view expressed by the arbitrator".
viii. M.A Construction Company v DDA & Anr. ALR 1989 (2); 1989 (4) Delhi Lawyer70 to the effect that "where the arbitrator is Result: Petition dismissed. Page 9 of 15 M/s Basu Dev Raut Sanitation v UOI CS 92/11/10 required to give reasons, he is not bound to give detailed reasons. The Courts can not look into the sufficiency of reasons. Arbitrator may award interest from the date of award to the date of decree or realization of the amount whichever is earlier".
16. The main ground of objections are to the effect that the award is against the public policy of India. As per Section 34 of the Act, so far as it pertains to the present facts, an arbitral award may be set aside by the Court, if the Court finds that the arbitral award is in conflict with the public policy of India. As per the explanation appended to Section 34 (2) (ii) of the Act, the award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81 of the Act."
17. The sum and substance of the entire law so far as it pertains to Section 34 of the Act has been provided in Oil and Natural Gas Corporation Ltd sv SAW Pipes Ltd. AIR 2003 SC 2629 (1), the Hon'ble Apex Court has culled out the grounds for setting aside the arbitral award. Same are as under:
"A.(1)The Court can set aside the arbitral award under Section 34(2) of the Act if the party making the application furnishes proof that:
(i)a party was under some incapacity; or
(ii)the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law Result: Petition dismissed. Page 10 of 15 M/s Basu Dev Raut Sanitation v UOI CS 92/11/10 for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
2). The Court may set aside the award :
i). (a) if the composition of the arbitral tribunal was not in accordance with the agreement of the parties;
b) failing such agreement, the composition of the arbitral tribunal was not in accordance with Part I of the Act;
ii). If the arbitral procedure was not in accordance with :
a) the agreement of the parties; or
b) failing such agreement, the arbitral procedure was not in accordance with Part I of the Act.
However, exception for setting aside the award on the ground of composition of arbitral tribunal or illegality of arbitral procedure is that the agreement should not be in conflict with the provisions of Part I of the Act from which parties cannot derogate.
c). If the award passed by the arbitral tribunal is in contravention of provisions of the Act or any other substantive law governing the parties Result: Petition dismissed. Page 11 of 15 M/s Basu Dev Raut Sanitation v UOI CS 92/11/10 or is against the terms of the contract.
3). The award could be set aside if it is against the public policy of India, that is to say, if it is contrary to :
a) fundamental policy of Indian law;
b) the interest of India; or
c) justice or morality; or
d) if it is patently illegal.
4) It could be challenged :
a) as provided under Section 13 (5); and
b) Section 16 (6) of the Act".
18. Having set out the above, I find that the two main grounds, if not sole, for challenge to award are the failure of Ld. Arbitrator to appreciate petitioners' contention that the petitioner has primarily fulfilled his part and that it was the respondent who had attributed to the delay in handing over the complete site and that despite partial work done, the respondents action to invoke Clause 13 of the agreement was improper as it contemplated issuance of notice to the petitioner before taking any action under the said clause. The said clause is otherwise not attractive as the petitioner already made a request to close the contract and compensate for losses. It is settled law that this Court can not reappreciate the evidence as is clear from NTPC's case (Supra). This Court can not go into the reasonableness of the reasons given by the Ld. Arbitrator as Result: Petition dismissed. Page 12 of 15 M/s Basu Dev Raut Sanitation v UOI CS 92/11/10 would be clear from Shiv Kumar Wasal's case (Supra).
19. It would also be clear that the Ld. Arbitrator is not bound to give detailed reasons and the Courts can not look into the sufficiency of reasons as held in M.A Construction Company's case (Supra). It would be clear that the petitioner has not set up any case with any specification either under Section 34 (2)(b)(ii) or for that matter Section 34(2)(a)(iv) of the Act. It was primarily for the petitioner to have proved that it had taken the requested action as it sets out in pleadings. As per clause 13, if at any time after acceptance of the tender, Government shall decide to abandon or reduce his scope of the works for any reason whatsoever and hence, not require the whole or any part of the work to be carried out, the Engineer Incharge shall give a notice in writing to that effect to the contractor. The contractor shall have no claim to any payment of compensation or otherwise whatsoever on account of any profit or advantage which he might have derived from the execution of the works in full but which he did not derive in consequence of the foreclosure of the whole or any part of the works. Further details are provided in Clause 13 (i) to (v) of the Clause itself.
20. Careful perusal of the award would reveal that the above stand was duly incorporated and considered by the Ld. Arbitrator while returning findings on the respective claims. The communication between the parties have been duly taken into account by Ld Artbitrator in clause 1 (I) Result: Petition dismissed. Page 13 of 15 M/s Basu Dev Raut Sanitation v UOI CS 92/11/10 of the award. The main contention regarding clause 13 of the agreement has been duly taken care of by the Ld Arbitrator in deciding the claim 3. It has been categorically held that after receipt of closure notice dated 9.1.2008 (R8) under Clause 13, the claimants never intimated the details of such material if available at site and did not make any efforts to get the measurements of such material, if any, recorded by the respondents. A definite opinion was also given that the claimants have made temporary water tank and tin shed at site of work. Hence, appropriate claim was awarded.
21. Having regard to the discussion as made above, particularly, the ratio of Oil and Natural Gas Corporation Ltd (Supra), it can not be said that the ld. Arbitrator has acted in contravention of any established law and for that matter, the award can not be said to be against the public policy of India. It can not be said therefore, that the Ld Arbitrator acted without appreciating the evidence or that he misconducted himself in not giving detailed reasons. This view is supported from the judgment of M.A Construction Company's (Supra) which shows that the arbitrator is not bound to give details and reasons and Courts can not look into the sufficiency of reasons.
22. I have already said that this Court can not reappreciate the evidence as is clear from NTPC's case (Supra). Further, this Court can not go into the reasonableness of the reasons given by the Ld. Arbitrator as would be Result: Petition dismissed. Page 14 of 15 M/s Basu Dev Raut Sanitation v UOI CS 92/11/10 clear from Shiv Kumar Wasal's case (Supra).
23. The applicant has not raised any objection regarding impartiality of Ld. Arbitrator during the course of entire arbitral proceedings and therefore, a mere assertion to the effect that the Ld. Arbitrator was impartial being employee of respondent no. 1 holds no substance at this stage.
24. Lastly, the entire record does not indicate as to what is the legal entity of the petitioner herein. It is not stated as to whether it is a Partnership firm, a Company or a Proprietorship concern. In my considered view, it was imperative upon the petitioner to have described its legal entity, if any, in order to ascertain whether the said petitioner can sue as a legal entity. Same has not been done.
RESULT.
25. In the result, the present objections fail and are accordingly rejected. The petition is dismissed. Parties to bear own costs. Arbitral proceedings be returned with copy of this order.
26. After compliance, file be consigned to record room.
Announced in open Court. (Manish Yaduvanshi)
Dated: 23.11.2015. ADJ06(Central)Delhi
Result: Petition dismissed. Page 15 of 15