Legal Document View

Unlock Advanced Research with PRISMAI

Integrated with over 4 crore judgments and laws — designed for legal practitioners, researchers, students and institutions

- Know your Kanoon - Doc Gen Hub - Counter Argument - Case Predict AI - Talk with IK Doc - ...
Upgrade to Premium
[Cites 26, Cited by 0]

Delhi District Court

New Delhi Muncipal Council vs M/S Raj Builders on 2 April, 2025

     IN THE COURT OF ANURAG SAIN, DISTRICT JUDGE
  (COMMERCIAL COURT-01), PATIALA HOUSE COURTS, NEW
                        DELHI


OMP (COMM) 242/2019


New Delhi Municipal Council
Having its office at Palika Kendra,
Sansad Marg,
New Delhi-110001
                                                          .........Petitioner

      Versus

M/s Raj Builders
A Registered Partnership Firm
through its Partner Sh. Sandeep Tyagi
Having its office at B-2/6-A,
Lawrence Road, Delhi-110035
                                                         .......Respondent


Date of institution                     : 20.12.2019
Date of reserving judgment              : 12.02.2025
Date of pronouncement                   : 02.04.2025


JUDGMENT

1. The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 has been filed by the petitioner for setting aside the Arbitral Award dated 20.09.2019 passed by the Ld. Sole Arbitrator.

2. Briefly stated the facts of the case are that the petitioner invited OMP (COMM) 242/2019 Page 1 of 35 tender for execution and completion of the work named and style as 'Construction of 17 Numbers Type-III flats at Palike Nilay R.K. Puram Marg SH, (a) providing and fixing M.S. Wire mess window shutter shade over existing windows and (b) providing and laying vitrified tiles in kitchen, bathroom and Varandah plastering with wire mesh for rectification of cracks." The respondent submitted its tender for the work which was accepted and the work was awarded to the respondent vide work order dated 26.11.2009 with value of the work as Rs. 34,51,081/- which was followed by work order dated 26.11.2009. The stipulated period of completion was four months to be reckoned from 10 th day of the work order or from the date of the first handing over of the site, whichever is later. The stipulated date of start of work was 05.12.2009 and the date of completion was 04.04.2010. The agreement No. EE/(BM-1)/AB/2009-10 dated 24.12.2009 was executed between the parties. The work could not be completed within the stipulated period and was completed only on 04.11.2011. The final bill was paid to the respondent on 03.01.2012 within two months and well within six months period from the date of completion as per clause 9 of the agreement. The final bill was paid by withholding 10% of the tendered value as per clause 5 of the agreement on account of the case of the respondent for extension of time being pending at that time as the respondent did not submit the duly filled upon performa for EOT to the petitioner which the respondent has to submit to the petitioner for approval of extension of time and instead of OMP (COMM) 242/2019 Page 2 of 35 submitting the same, the respondent kept on writing letters to the petitioner which were of no use though the same were replied by the petitioner vide letter dated 31.05.2013 but the respondent did not submit the duly filled upon performa for EOT. After a lapse of about two years, the case for EOT was processed and compensation @ 10% of tendered amount was levied by the competent authority as per Clause 2 of the agreement. The respondent was informed of the same vide letter dated 25.06.2014.

3. The respondent filed statement of claim and additional statement of claim and the petitioner filed reply to the initial statement of claim, reply to the additional statement of claim and counter claims. The respondent filed reply to the counter claim and rejoinder to the reply to its initial statement of claim and also to the additional statement of claim. The parties made admission and denial of the documents and after completion of the pleadings, the Ld. Sole Arbitrator framed issues in the present case. Both the parties filed affidavit in evidence of the witnesses and both the parties did not cross examine the witnesses of each other and closed their respective evidence. Thereafter, the Ld. Sole Arbitrator passed the impugned award dated 20.09.2019 whereby the Ld. Sole Arbitrator has allowed the part of the claims made by the respondent and rejected the counter claim of the petitioner. The Ld. Sole Arbitrator granted the following relief in favour of the respondent in the impugned award:-

(i) Against claim no.1 of the respondent, The Ld. Sole OMP (COMM) 242/2019 Page 3 of 35 Arbitrator has allowed claim of Rs. 3,45,108/- with interest @ 12% per annum from 22.12.2012 till the date of payment.
(ii) Against claim no.3, Ld. Sole Arbitrator allowed the claim to the extent of Rs. 2,04,000/- as damages on account of payment of salary to the Graduate Engineer during the extended contractual period without interest.
(iii) Against claim no.4, the Ld. Sole Arbitrator allowed the claim of the respondent to the extent of Rs. 1,27,700/- from 22.11.2012 with interest @ 12% per annum till realization as the profit due to the losses suffered by the respondent in respect of work not allowed to be done by the respondent.

(iv) Against the claim no.6, the Ld. Sole Arbitrator allowed cost of Arbitration proceedings to the extent of Rs. 1,00,000/- in favour of the respondent.

(v) The Ld. Sole Arbitrator also rejected the Counter claims of the petitioner in the impugned Award dated 20.09.2019.

4. It is further the case of the petitioner that the impugned award dated 20.09.2019 passed by the Ld. Sole Arbitrator is erroneous, contrary to law and facts and the documentary evidence on record and is liable to be set aside.

5. Feeling aggrieved from the findings of the Ld. Sole Arbitrator, the present petition has been filed by the petitioner on the grounds such as the impugned award passed by the Ld. Sole Arbitrator is contrary to the specific terms of the contract; Ld. Sole Arbitrator has failed to appreciate that the tender was floated by the petitioner for the use of 50cm x 50cm vitrified tiles in the OMP (COMM) 242/2019 Page 4 of 35 17 flats and the bid was submitted by the respondent for such tiles and the bid of the respondent was accepted by the petitioner and once the respondent submitted the bid for the same, it was the duty of the respondent to ensure the availability of such tiles in the market even before submitting the bid for the tender and hence writing letters and letter dated 01.01.2010 are nothing but the lame excuse on the part of the respondent for not starting the work as per agreement and the documents on the face of it show that the contractor was responsible for delay, were ignored and without any proof on record, the Ld. Sole Arbitrator erroneously held that the petitioner was responsible for delay in execution of work; as per the agreement, the work was to be started from 05.12.2009 and the respondent wrote the above letters and delivered to the petitioner on 23.12.2009 and 04.01.2010 but the Ld. Sole Arbitrator found that these letters were of no avail and were not written bonafidely; The Ld. Sole Arbitrator did not appreciate the Status report and has wrongly held that Status report leaves no doubt that the occupants of the flats where the work was to be carried out by the respondent, created hindrance and the flats were not available for execution of work and that the delay in execution was attributable to the petitioner inasmuch as no details have been given as to on what date even after the status report, the respondent tried to execute the work in which flat and was not allowed to execute and complete the work in which flats and it was the conduct of the petitioner itself that has led to no- completion of the work within the stipulated period and also for OMP (COMM) 242/2019 Page 5 of 35 the delay of more than 10 months in completion of work; Ld. Sole Arbitrator has failed to apply the provisions of Section 55 of the Indian Contract Act as the time was the essence of the contract and the respondent failed to adhere the timeline as per contract and therefore, at a later stage EOT was sanctioned with levy of compensation as per provisions of the contract but the Ld. Sole Arbitrator has erroneously held that the time was not the essence of the contract in hand which is contrary to clause 5 of the contract; Ld. Sole Arbitrator has failed to appreciate various clauses of the contract including clause 2 of the agreement which says about the compensation for delay; Ld. Sole Arbitrator has erroneously not considered the Hindrance Register; Interest @ 12% per annum as granted by the Ld. Sole Arbitrator is too high to be accepted as the rate of interest on which the loan is being disbursed by various banks is 8 to 9% per annum and the Ld. Sole Arbitrator has not considered that there is no provision in the contract to claim interest; Further there is no provision in the agreement which entitles the respondent to claim damages in case the work is delayed; Ld. Sole Arbitrator has erroneously allowed 10% profit on the unexecuted work and the view taken by the Ld. Sole Arbitrator is contrary to the provision of clause 13 of the agreement; Ld. Sole Arbitrator has erroneously granted the cost of the arbitration proceedings while rejecting the counter claim of the petitioner. On these premise, the instant petition has been filed on behalf of the petitioner for setting aside of arbitral award dated 20.09.2019 passed by Ld. Sole Arbitrator in the present OMP (COMM) 242/2019 Page 6 of 35 case.

6. Reply to the present petition has been filed by the respondent wherein it has been averred that the grounds of objection petition are beyond the ambit and scope of Section 34 of the Arbitration and Conciliation Act, 1996 and none of the grounds for challenging the award fall under any of the provisions of Section 34(2) of the Arbitration and Conciliation Act, 1996. The Arbitrator after considering the rival contentions of the parties and documents filed and evidence adducted or produced before him after considering and interpreting the terms of the contract in the facts and circumstances of the case, has come to a finding of facts for the reasons given based on the record and evidence available before it. Such interpretation of the contract, view of the documents and evidence taken by the Arbitral Tribunal is plausible view, even if not the only possible view, is final and binding in view of the provisions of Section 19 of the Arbitration and Conciliation Act, 1996 and this court is not sitting in appeal over the award of the Arbitrator and would not go into the merits of the case and would not appreciate the evidence and documents before the Arbitrator. The Arbitral Tribunal has given reasons for his findings and given his thought process for accepting or rejecting the contention or claim of any party and the court in objections to the award under Section 34 (2) of the Arbitration and Conciliation Act, 1996 would not go into reasonableness and or sufficiency of reason as the Arbitrators were/are not supposed to write a detailed judgments like that of the court. The law with OMP (COMM) 242/2019 Page 7 of 35 regard to limited scope of the court under Section 34 of the Arbitration and Conciliation Act 1996 has been settled by the Hon'ble Supreme Court in the case Associate Builders Vs. DDA reported in 2014 (4) Arb. LR 307 (SC) and other judgments and keeping in view the facts and evidence before the Arbitral Tribunal the award is final and binding and the court while hearing the objections to arbitral award will not set aside even if the court by a process of its reasoning could come to different conclusion when the view of the Arbitral Tribunal based on pleadings and evidence before him is a possible view. It has been further averred that the none of the objections are sustainable and objections have been filed to delay the payments of awarded amounts. On merits, in sum and substance, the respondent has denied the averments of the petitioner made in the present petition. On these premises, the respondent has prayed for the dismissal of the instant petition.

7. I have heard Sh. Nilesh Sawhney, Ld. Counsel for the petitioner and Sh. Vivemanand and Sh. Abhishek Semwal, Ld. Counsels for the respondent.

8. I have examined the impugned Award dated 20.09.2019 in question, arbitration proceedings and also given due consideration to the facts and pleadings of the case, written submissions along with citations filed by the parties as well submissions put forth by the respective Ld. Counsel for the parties and the relevant legal position.

9. Ld. counsel for the petitioner has argued that the impugned award OMP (COMM) 242/2019 Page 8 of 35 is against the facts as well as against the law and has been passed by the Ld. Sole Arbitrator without application of mind and the award is a non-speaking award. It has been further argued that the impugned award is based on surmises and conjectures and it has been passed without considering the documents on record and is against the public policy. It has been further argued that the impugned award suffers of various irregularities, violation of principles of natural justice and against the public policy. On these premise, Ld. Counsel for the petitioner prayed that the impugned award be set aside.

10.On the other hand, Ld. Counsel for the respondent has argued that the objections are not maintainable as the award has been passed by the Ld. Sole Arbitrator after considering the material on record and is a reasoned award and it does not suffer from any infirmity or illegality as alleged by the petitioner. He therefore, argued that the objections are without any merit and are liable to be dismissed.

11.Before deciding the validity of the impugned Award, it is relevant to observe that the scope of inquiry in Section 34 of the Arbitration and Conciliation Act, 1996 proceedings is restricted to consideration whether any one of the grounds mentioned in Section 34 (2) of the Arbitration and Conciliation Act, 1996 exists for setting aside the Award. The scope of the interference by the court under Section 34 (2) of the Arbitration and Conciliation Act, 1996 has been time and again restricted in catena of judgments by the Hon'ble Superior Courts and it has OMP (COMM) 242/2019 Page 9 of 35 been held that in proceedings under Section 34 of the Arbitration and Conciliation Act, 1996, the re-appreciation of the facts, evidence or interpretation of the terms of contract is not permissible. What is permissible is, if there is a patent illegality, apparent error on the face of the record, perversity in the Award or misconduct by the Ld. Arbitrator.

12.Section 34(2) of the Arbitration and Conciliation Act, 1996 reads as under:-

"34.Application for setting aside arbitral award-(1)Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).
(2)An arbitral award may be set aside by the court only if-
(a) 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 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;

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or OMP (COMM) 242/2019 Page 10 of 35

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or

(b) the court finds that-

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or

(ii) the arbitral award is in conflict with the public policy of India. Explanation 1 - For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice. Explanation 2.-- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute. (2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:

Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence. (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented OMP (COMM) 242/2019 Page 11 of 35 by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter."

13.Normally, the general principles are that Arbitrator is a Judge of the choice of the parties and his decision, unless there is an error apparent on the face of the award which makes it unsustainable, is not to be set aside even if the court as a court of law would come to a different conclusion on the same facts. The court cannot reappraise the evidence and it is not open to the court to sit in appeal over the conclusion of the arbitrator. It is not open to the court to set aside a finding of fact arrived at by the arbitrator and only grounds on which the award can be cancelled are those mentioned in the Arbitration Act. Where the arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, the award will not call for interference by the court in exercise of the power vested in it. Where the arbitrator is a qualified technical person and expert, who is competent to make assessment by taking into consideration the technical aspects of the matter, the court would generally not interfere with the award passed by the arbitrator.

14.The Hon'ble Supreme Court of India in a case titled as Associate Builders vs. Delhi Development Authority, (2015) 3 SCC 49 has held that the interference with an arbitral award is permissible only when the findings of the arbitrator are arbitrary, capricious or perverse or when conscience of the Court is shocked or when illegality is not trivial but goes to the root of the matter. It is held OMP (COMM) 242/2019 Page 12 of 35 that once it is found that the arbitrator's approach is neither arbitrary nor capricious, no interference is called for on facts. The arbitrator is ultimately a master of the quantity and quality of evidence while drawing the arbitral award. Patent illegality must go to the root of the matter and cannot be of trivial nature.

15.It was further held as under:-

"33. ...when a court is applying the 'public policy' test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award.... Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts.."

16.The Hon'ble Supreme Court of India in a case titled as Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India, 2019 SCC OnLine SC 677 has held that under Section 34 (2A) of the Act, a decision which is perverse while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. A finding based on the documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties and therefore would also have to be characterized as perverse. It is held that a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision OMP (COMM) 242/2019 Page 13 of 35 would be perverse and liable to be set aside on the ground of patent illegality.

17.The Hon'ble Supreme Court of India also cited with approval the dictum laid down in P. R. Shah, Shares & Stock Brokers (P) Ltd Vs. B. H. H. Securities (P) Ltd, [(2012) 1 SCC 594 :

(2012) 1 SCC (Civ) 342)], wherein it has been held as under:-
21. A Court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or re-appreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34 (2) of the Act. The Arbitral Tribunal has examined the facts and held that both the second respondent and the appellant are liable ......

Therefore, in the absence of any ground under Section 34 (2) of the Act, it is not possible to re-examine the facts to find out whether a different decision can be arrived at."

18.It was further held in Associate Builder (supra) as under:-

"...... Construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in a way that it could be said to be something that no fair minded or reasonable person could do....."

19.The Hon'ble Supreme Court of India in a case titled as Atlanta Limited Thr. Its Managing Director Vs. Union of India, CIVIL APPEAL No. 1533 of 2017 decided on 18.01.2022, has held as under:-

"19. It is also a well-settled principle of law that challenge cannot be laid to the Award only on the ground that the Arbitrator has drawn his own conclusion or failed to appreciate the relevant facts. Nor can the Court substitute its own view on the conclusion of law or facts as against those drawn by the Arbitrator, as if it is sitting in appeal. This OMP (COMM) 242/2019 Page 14 of 35 aspect has been highlighted in State of Rajasthan v. Puri Construction Co. Ltd. And Another, where it has been observed thus:
"26. The arbitrator is the final arbiter for the dispute between the parties and it is not open to challenge the award on the ground that the arbitrator has drawn his own conclusion or has failed to appreciate the facts. In Sudarsan Trading Co. v. State of Kerala [Sudarsan Trading Co. v. State of Kerala, (1989) 2 SCC 38] it has been held by this Court that there is a distinction between disputes as to the jurisdiction of the arbitrator and the disputes as to in what way that jurisdiction should be exercised. There may be a conflict as to the power of the arbitrator to grant a particular remedy. One has to determine the distinction between an error within the jurisdiction and an error in excess of the jurisdiction. Court cannot substitute its own evaluation of the conclusion of law or fact to come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. Whether a particular amount was liable to be paid is a decision within the competency of the arbitrator. By purporting to construe the contract the court cannot take upon itself the burden of saying that this was contrary to the contract and as such beyond jurisdiction. If on a view taken of a contract, the decision of the arbitrator on certain amounts awarded is a possible view though perhaps not the only correct view, the award cannot be examined by the court. Where the reasons have been given by the arbitrator in making the award the court cannot examine the reasonableness of the reasons. If the parties have selected their own forum, the deciding forum must be conceded the power of appraisement of evidence. The arbitrator is the sole judge of the quality as well as the quantity of evidence and it will not be for the court to take upon itself the task of being a Judge on the evidence before the arbitrator."
OMP (COMM) 242/2019 Page 15 of 35

20. As long as the arbitrator has taken a possible view, which may be a plausible view, simply because a different view from that taken in the award, is possible based on the same evidence, would also not be a ground to interfere in the award. In Arosan Enterprises Ltd. v. Union of India [Arosan Enterprises Ltd. v. Union of India, (1999) 9 SCC 449] , this Court has held as follows : (SCC p. 475, para 36) ―36. Be it noted that by reason of a long catena of cases, it is now a well-settled principle of law that reappraisal of evidence by the court is not permissible and as a matter of fact exercise of power by the court to reappraise the evidence is unknown to proceedings under Section 30 of the Arbitration Act. In the event of there being no reasons in the award, the question of interference of the court would not arise at all. In the event, however, there are reasons the interference would still be not available within the jurisdiction of the court unless of course, there exists a total perversity in the award or the judgment is based on a wrong proposition of law. In the event however two views are possible on a question of law as well, the court would not be justified in interfering with the award.

xxx xxx xxx xxx

22. In a recent ruling in NTPC [NTPC Ltd. v. Deconar Services (P) Ltd., (2021) 19 SCC 694 : 2021 SCC OnLine SC 498] , decided by a three-Judge Bench of this Court, drawing strength from the decision in Kwality Mfg. Corpn. [Kwality Mfg. Corpn. v. Central Warehousing Corpn., (2009) 5 SCC 142 : (2009) 2 SCC (Civ) 406] , it has been held thus : (NTPC case [NTPC Ltd. v. Deconar Services (P) Ltd., (2021) 19 SCC 694 : 2021 SCC OnLine SC 498] , SCC para 13)

13. From the above pronouncements, and from a catena of other judgments of this Court, it is clear that for the objector/appellant in order to succeed in their challenge against an arbitral award, OMP (COMM) 242/2019 Page 16 of 35 they must show that the award of the arbitrator suffered from perversity or an error of law or that the arbitrator has otherwise misconducted himself. Merely showing that there is another reasonable interpretation or possible view on the basis of the material on the record is insufficient to allow for the interference by the Court(see State of U.P. v. Allied Constructions [State of U.P. v. Allied Constructions, (2003) 7 SCC 396] ; Ravindra Kumar Gupta & Co. v. Union of India [Ravindra Kumar Gupta & Co. v. Union of India, (2010) 1 SCC 409 : (2010) 1 SCC (Civ) 130] and Oswal Woollen Mills Ltd. v. Oswal Agro Mills Ltd. [Oswal Woollen Mills Ltd. v. Oswal Agro Mills Ltd., (2018) 16 SCC 219 : (2019) 1 SCC (Civ) 426] ).

20.It is well settled that the jurisdiction of the Court when called upon to decide the objection raised by a party against an arbitral award is limited as expressly indicated in the Act. The Court has no jurisdiction to sit in appeal and examined the correctness of award on merit with reference to the material produced before the Arbitrator. It cannot sit in appeal overviews of the Arbitrator by re-examining and re-assessing the material. It is equally settled that approach of the Court has to support the award, if it is reasonably possible, rather to declare it illegal. It is not permissible to re-appreciate the evidence or to go into the questions of quality & quantity of evidence. It two views are possible, the Court even, if inclined to take different view from that by the Arbitrator is not entitled to substitute his views over that of Arbitrator but at the same time, it being an award, which sets out reasons yet this Court can set aside the award on finding error apparent on the face of the award or if there is an error of OMP (COMM) 242/2019 Page 17 of 35 law on the face of the award.

21.In the present case, Ld. Sole Arbitrator vide order dated 18.12.2017 framed following issues:-

(i) Whether the claimant is entitled for the claims as raised in the original claim and additional statement of claim?
(ii) Whether the respondent is entitled for the counter claim as raised by them?
(iii) Relief.

22.While deciding issue no.(i), the Ld. Sole Arbitrator has allowed claim of the respondent for Rs. 3,45,108/- with interest @ 12% per annum from 22.12.2012 till the date of payment; The Ld. Sole Arbitrator also allowed the claim of the respondent for Rs. Rs. 2,04,000/- as damages on account of payment of salary to the Graduate Engineer during the extended contractual period without interest; The Ld. Sole Arbitrator also allowed the claim of the respondent for Rs. 1,27,700/- as the profit which would have been earned by the respondent if the contractor would have been allowed to carry out the unexecuted contractual work of the value of about Rs. 12,77,000/- while observing that if the respondent would have been paid the full value of the contract, he would have enjoyed the fruits of the profit and since the part of the profit of the total value of the contract was deprived, therefore, the respondent suffered losses on that account and is entitled for interest and thus, an amount of Rs. 1,27,700/- is allowed with interest @ 12% per annum from 22.11.2012 as demanded in the additional statement of claim and the said interest is liable to be paid till the realization of the amount.

OMP (COMM) 242/2019 Page 18 of 35

23.It is admitted case of the parties that the contractual work was to be completed in a period of four months starting from 05.12.2009 and the completion date was 04.04.2010. Admittedly, the work could not commence on due date i.e. 05.12.2009 and the respondent wrote a letter Ex. C-2A to the Executive Engineer of the petitioner wherein it has been mentioned that vitrified tiles of size 50x50 cm as provided in the contract, were not manufactured by the companies and requested the petitioner to allow the contract to provide and fixing 660x660 mm vitrified tiles which were available in the market, samples of which were already given to the Executive Engineer while further informing that the respondent would not charge any extra claim due to the change of the size in the tiles. The respondent again wrote letter dated 01.01.2010 to the Executive Engineer of the petitioner and brought to the knowledge of the petitioner that the work was standstill due to want of decision on the part of the petitioner for providing and fixing vitrified tiles in all the plinth area as demanded by the occupants of the flats and the petitioner was told that the points mentioned in letter dated 01.01.2010 had to be approved and accepted by the department of the petitioner and without decision on them, the work would be delayed. In reply to the letters sent by the respondent to the petitioner, the petitioner replied that no approval of the department of the petitioner was required for execution of the work and there was no delay on the part of the petitioner on account of any decision/approval as on date and that the work should be completed within the stipulated OMP (COMM) 242/2019 Page 19 of 35 time. The respondent had admitted the receipt of the letter of the petitioner but denied the contents of the document but the respondent, as observed by the Ld. Sole Arbitrator, did not place on file any written document to claim that the facts mentioned in the letter of Executive Engineer dated 14.01.2010 were contradicted by it. Admittedly the work was not started till 14.01.2010 by the respondent.

24.The case of the respondent is that that the vitrified tiles of size 50x50 cm as provided in the contract, were not manufactured but before the Ld. Sole Arbitrator it was not the case of the respondent that the tiles of the size as mentioned in the agreement were not more manufactured by the companies after the contract was assigned to the respondent and the Ld. Sole Arbitrator has observed the same in the impugned award. The observations of the Ld. Sole Arbitrator in this regard as reproduced as under:-

"37......While furnishing the tender and in any case before the work was to be started , the claimant should have found from the market if the requisite tiles were available or not. The non-availability of the tiles was brought to the notice of the respondent on 23.12.2009 whereas the work was to be commenced on 05.12.2009. Further, the demand of the occupants of the flat for providing vitrified tiles in all the area: extra items of FRP Chhajja and about the size of the M.S. Angle were brought to the notice of the respondent vide letter dated 01.01.2010. Thus, the work did not commence almost for the first one and a half month from the date of the start of the work.
38. The respondent wrote letter dated 04.01.2010, Ex. R-1 and informed the claimant that site hand already been handed over to the contractor for execution of the work and the E.E. also inspected the OMP (COMM) 242/2019 Page 20 of 35 site along with contractor to sort out various issues pointed out for execution of work. However, in spite of the this, the work was not started even after a lapse of one month from the stipulated date to start the work.
39. The respondent, vide letter dated 14.01.2020 clarified that tiles would be provided only in the area as mentioned in the contract. The size of the vitrified tiles was sorted out earlier. Other demands as mentioned by the claimant in letter dated 01.01.2010 were not found having any merit and were declined. The claimant was asked to start the work and to finish the assigned job within stipulated time...... However, in spite of this, the work had not been started even after a lapse of more than one month from the stipulated date to start the work.
40. The claimant also raised the issue of non-supply/irregular supply of the cement in its letter dated 12.08.2020: Ex. C-3. The respondent had denied the receipt of the letter. The cement was to be supplied by the respondent at a fixed rate and the amount was to be adjusted in the bills. The respondent has denied the allegations of non supply or irregular supply of cement. It is pertinent to note that cement was required for fixation of tiles and for work of Chajja etc. Since the claimant did not commence the job for more than one month of due date, therefore, its case of non or irregular supply of the cement as raised in the letter Ex. C-3 after about 8 months of the due date of the commencement of the work, is devoid of any merit.
41. The above facts leave no doubt that after the work was assigned to the claimant vide letter dated 26.11.2009, the claimant did not commence the work from due date i.e. 05.12.2009. The work must have been commenced only after 14.01.2010 i.e. the date of the letter of the respondent Ex. R-2. The initial delay in the start of the work was due to the conduct of the claimant OMP (COMM) 242/2019 Page 21 of 35
42. There is nothing on the record to suggest that claimant could not have completed the work within the stipulated period even after it was commenced from or after 14.01.2010. The work continued for a longer period and ultimately on 04.11.2011, the respondent treated the work as complete and mentioned the same in office note Ex. R-5."

25.Ld. Sole Arbitrator has also dealt with the question as to why the whole work could not be completed and also that what led to its non-completion within the stipulated period.

26.As per the case of the respondent, the occupants of the flats either did not permit the workers to do the job or the flats were made available as per convenience of the occupants. In this regard, the Assistant Engineer of the petitioner wrote an office note dated 20.10.2010 which also includes the status report of the work which clarified as to which particulars allottee of the flat for the period from February 2010 to October 2010, did not allow the work to be carried out or work was allowed to be done partially.

27.While dealing with this question, the Ld. Sole Arbitrator has observed that document Ex. C4A, which has also been admitted by the petitioner, leaves no doubt that the occupants of the flats where the work was to be carried out by the claimant, created hindrance. Though the petitioner has placed on record the photocopy of its hindrance register Ex. R-3 dated 04.10.2011 wherein it has been mentioned that there was no hindrance but the status report and the report of the Assistant Engineer of the petitioner Ex. C4A has falsified the entry in the hindrance register as has been observed by the Ld. Sole Arbitrator. The Ld. Sole OMP (COMM) 242/2019 Page 22 of 35 Arbitrator has observed as under:-

".......Since, the respondent failed to make available the site to the contractor to complete the work during the stipulated period or the period after the due date of completion, therefore, the main reason for non completion of the work was non availability of the site to the contractor to complete the work. It was the responsibility of the respondent to provide the site to the contractor. Since, it failed to do so, therefore, the conduct of the respondent itself led to non completion of the work within the stipulated period and also the period thereafter when the contractor continued to do wok without any objection from the side of the respondent."

28.The above findings of the Ld. Sole Arbitrator show that the Ld. Sole Arbitrator has dealt extensively with the objection raised by the petitioner and the above findings rendered by the Ld. Sole Arbitrator cannot be interfered in these proceedings as the appreciation of evidence and construction of documents was within the jurisdiction of the arbitration.

29.With respect to the question whether the time was the essence or not, Ld. Sole Arbitrator has relied upon Section 55 of the Indian Contract Act and observed as under:-

48. The time was not the essence of the contract in hand. It is clear from the facts of the case that even after the stipulated period of the agreement, the respondent did not raise any objection and allowed the claimant to continue to do the work...
49. In the present case, the NDMC allowed the contractor to continue with the work after the expiry of stipulated period and that too without any objection. It is interesting to note that EOT was allowed and it was informed to the claimant only vide letter dated 25.06.2014 Ex. C-10. By that time, the claimant had already filed OMP (COMM) 242/2019 Page 23 of 35 arbitration petition for appointment of arbitrator. The claimant had written letters to the E.E., S.E. and also the Chief Engineer (Ex. C-6 to C-8) prior to writing letter to the Chairperson of the NDMC on 26.07.2013 Ex. C-9 with the request to invoke Clause 25 of the contract to appoint an arbitrator to adjudicate the disputes. It is not the case of the respondent that it had given any notice to the claimant before levy of compensation was imposed or that any hearing was given by the competent authority to the claimant.
50. I find that time was not the essence of the contract and more particularly because EOT was sanctioned by the authority though with imposition of levy......

30.In this regard, Ld. Sole Arbitrator observed that Clause 2 of the Contract speaks about the essence of the timeline as mentioned in the contract or in the extended time and as per Clause 2 of the Contract, if the contractor fails to maintain the required progress in terms of clause 5 or to complete the work in the extended time, the NDMC would be entitled for compensation for such breach. The Ld. Sole Arbitrator has also noted that the main cause of delay as recorded by the officials of the petitioner in Ex. C4-A, is non availability of the site to the contractor to complete the work and the petitioner allowed the contractor to continue with the job even after the expiry of the stipulated period and it was done without raising any objection and observed that under the circumstances, it cannot be said that the respondent was at fault for not completing the work in the extended time and therefore, it was not justified on the part of the petitioner to levy compensation while granting EOT. Though the petitioner has averred that the respondent did not submit the request for EOT in OMP (COMM) 242/2019 Page 24 of 35 prescribed performa in spite of the request made for that purpose however, as has been noted by the Ld. Sole Arbitrator that the respondent has placed on record the letter dated 15.12.2011 addressed to E.E. with the request to issue EOT performa and noting below the said letter confirms that the department of the petitioner had issued the performa on 16.12.2011 and found that EOT was sanctioned by the petitioner but there was no mention that filled in perform was not submitted by the contractor and it caused the levy of compensation and with or without the filled in performa, the petitioner has allowed EOT and thus, there was no occasion for the petitioner to levy the compensation while permitting EOT after more than two and half year of the recording of completion of the contractual work and found that levy of compensation of Rs. 3,45,108/- is not justified.

31.With respect to the No Due Certificate, Ld. Sole Arbitrator has observed that the observations of the accountant and the letter dated 31.05.2013 Ex. R-7 of E.E. of the petitioner, leave no doubt that Ex. R-6 was not a 'No Due Certificate' in respect of the withheld amount and it was meant only for the release of the security amount and infact the petitioner itself never treated Ex. R-6 as 'No Due Certificate' of the respondent in respect of the withheld amount of Rs. 3,45,108/- and observed that the respondent is entitled for the said amount as was withheld by the respondent while granting EOT.

32.Perusal of the impugned award shows that no fault, either factual or legal can be found to be the aforesaid conclusion drawn by the OMP (COMM) 242/2019 Page 25 of 35 Ld. Sole Arbitrator. The Ld. Sole Arbitrator has considered the objections and determined the amount as it deems reasonable. The view/interpretation of the Ld. Sole Arbitrator is neither impossible nor perverse but is plausible view and cannot be set aside.

33.While dealing the claim of losses due to escalation of increased labour rates during the prolongation beyond stipulated period amount to Rs.2,31,300.51, Ld. Sole Arbitrator has interpreted Clause 10 (C) of the Contract Agreement which speaks about payment on account of increase in Prices/Wages due to Statutory Order(s) that if after submission of tender, wages of labour increases as a direct result of the coming into force of any fresh law, or statutory rule or order beyond the prices/wages prevailing at the time of the last stipulated date of receipt of tenders including extensions, if any, for the work during contract period including the justified period extended under the provisions of clause 5 of the contract without any action under Clause 2, the amount of the contract shall accordingly be varied but limited to increase in wages prevailing at the time of stipulated date of compensation or as prevailing for the period under consideration, whichever is less. As per Section 73 of the Indian Contract Act, the respondent was bound to establish that it has suffered damages due to payment of increase wages and it actually paid the increased wages to the workers. However, as has been observed by the Ld. Sole Arbitrator, the respondent has not place on record any document to support its contention that it actually OMP (COMM) 242/2019 Page 26 of 35 paid the increased wages to the workers and also the amount of such increased payment and hence observed that the respondent has failed to establish its case by taking help of Section 10 (C) of the Contract or de hors as damages and the damages, said to have been suffered by the respondent, has not been established and hence the Ld. Sole Arbitrator did not grant damages on account of payment due to increase in wages.

34.As far as the claim on account of loss of staff, overheads and reduced profitability due to prolongation of the contract period by 19 months, amounting to Rs. 5,70,000/-, Ld. Sole Arbitrator has dealt with Clause 36 of the Contract Agreement and observed that the respondent has not placed on the file any document to confirm that it complied with the provisions of Clause 36 of the Agreement inasmuch as CW has not testified before the Ld. Sole Arbitrator that such compliance was made and also neither the persons in whose favour cash vouchers were issued have been examined nor the respondent has placed on the file ledger etc. to confirm the payment and thus, the cash vouchers so relied upon the respondent, were not considered by the Ld. Sole Arbitrator. However, the respondent vide letter dated 12.08.2010 informed the petitioner that one graduate Engineer Mr. Varun Kumar was available at the site during the course of execution of the work and this letter has been admitted by the petitioner. The Ld. Sole Arbitrator has observed that the said Engineer must have been paid the salary by the respondent and considered the rate of wages at the rate of Rs.12,000/- per month to an Engineer as OMP (COMM) 242/2019 Page 27 of 35 genuine. Though the respondent has claimed the salary of the Engineer for the extended period of 19 months of the contract however, the Ld. Sole Arbitrator has observed that the respondent had to keep the Engineer for 17 months only as the petitioner failed to make available the site to the respondent to carry out the contractual work and granted damages to the respondent at the rate of Rs. 12,000/- per month for 17 months which comes to Rs. 2,04,000/-. While dealing with the provisions of Section 73 of the Indian Contract Act, the rest of the claim of the respondent towards damages/loss suffered by the respondent was not considered by the Ld. Sole Arbitrator as the respondent failed to establish the same as no document was placed on record by the respondent.

35.It can be seen from the above findings that the Ld. Sole Arbitrator has considered all the objections and returned the findings pursuant to the formula provided for determining the amount payable on the basis of rate of wages. There is nothing ex facie perverse about the above findings of the Ld. Sole Arbitrator and it cannot be said that the view taken by the Ld. Sole Arbitrator is a plausible view, so as to warrants interference under Section 34 of the Arbitration and Conciliation Act, 1996. The appreciation of the evidence and construction of the documents is within the jurisdiction of Arbitral Tribunal.

36.As far as the loss of profit on balance unexecuted value of the work amounting to Rs. 2,10,000/- is concerned, in the present case, the awarded value of the work was Rs. 34,51,000/- and the OMP (COMM) 242/2019 Page 28 of 35 gross value of the work which the petitioner allowed the respondent to execute till 04.11.2011 was of about Rs. 21,74,000/-. The Ld. Sole Arbitrator while deciding this question has observed that the respondent was always ready and willing to execute and complete the awarded value of the work but the petitioner failed to make available the site to execute the balance work and unilaterally declared the work as complete on 04.11.2011 and consequently, due to the fault and failure on the part of the petitioner, the respondent was denied the execution of the balance awarded work of the value of about Rs. 12,77,000/- and the respondent has suffered due to prolongation of the contract from four months to twenty three months which led to negligible profit and at the same time, the respondent was denied the profit which it would have earned, if the balance work would have been allowed to be carried out by the respondent. The plea of the petitioner for reduction of the work as per the provisions of Clause 13 of the agreement was considered by the Ld. Sole Arbitrator and observed that Engineer In-Charge has not given any notice to the respondent in this regard and thus, the petitioner cannot derive any benefit out of the provisions of Clause 13 of the agreement. Ld. Sole Arbitrator further observed that the respondent is entitled for the losses suffered by him on account of not allowing him to execute the balance contractual work of the value of about Rs. 12,77,000/- and while discussing the case law and considering the facts of the case, the Ld. Sole Arbitrator has allowed 10% profits on the unexecuted work of the value of the OMP (COMM) 242/2019 Page 29 of 35 work of about 12,77,000/- which comes to Rs. 1,27,700/-.

37.The Law is well settled that the Ld. Sole Arbitrator is the Sole Judge of quality and quantity of evidence. The merit based review as sought by the petitioner, has been discouraged over by the Hon'ble Supreme Court of India and the Hon'ble High Courts in catena of judgments. In the present case, it cannot be said that the view taken by the Ld. Sole Arbitrator is not a plausible view to take in the present facts and circumstances. In these circumstances, this Court concludes that challenge to the award is beyond the scope of Section 34 of the Arbitration and Conciliation Act, 1996.

38.As regard the issue of interest, the Ld. Sole Arbitrator has allowed claim of the respondent for Rs. 3,45,108/- with interest @ 12% per annum from 22.12.2012 till the date of payment and further the Ld. Sole Arbitrator also allowed the claim of the respondent for Rs. 1,27,700/- due to the losses suffered by the respondent with interest @ 12% per annum from 22.11.2012 till the realization of the amount. Further the Ld. Sole Arbitrator also allowed the claim of the respondent for Rs. Rs. 2,04,000/- as damages on account of payment of salary to the Graduate Engineer during the extended contractual period but the same was allowed without interest. In the present case, the Ld. Sole Arbitrator also allowed cost of Arbitration proceedings to the extent of Rs. 1,00,000/- in favour of the respondent.

39.It is the case of the petitioner that granting of such exorbitant interest without any reasoning along with costs, is an illegality on OMP (COMM) 242/2019 Page 30 of 35 the part of Ld. Arbitrator and therefore, requires interference by this court. On the other hand, it is the case of the respondent that the Ld. Sole Arbitrator has discretion to award interest at such rate as he may deem to be reasonable.

40.As per Section 31 (7) of the Arbitration and Conciliation Act, 1996, the Ld. Sole Arbitrator is competent to award interest and further in terms of Section 3 of the Interest Act, 1978, the Ld. Sole Arbitrator is competent to award interest at the rates prevailing in the banking transaction. In a case titled as MSK Projects (I) (JV) Ltd. Vs. State of Rajasthan & Anr, 2011 (8) JT 37 (SC), it has been held that the Arbitrator is competent to award interest for the period commencing with the date of award or the date of decree or date of realization, whichever is earlier. While the amount of interest is a matter of substantive law, the grant of interest for the part award period is a matter of procedure. Further the Hon'ble High Court of Delhi in a case between the same parties titled as M/s Wapcos Limited Vs M/s C & C Energy Private Limited, FAO (COMM) 53/2021 dated 20.10.2022 has held that "Insofar as the award of interest is concerned, it is now well settled that the Arbitral Tribunal has wide discretion in awarding interest (See: Punjab State Civil Supplies Corporation Limited (PUNSUP) and Anr. Vs. Ganpati Rice Mills, SLP (C) 36655 of 2016, decided on 20.10.2021". In the said case, the Hon'ble High Court of Delhi has observed that "In the present case, Wapcos had also claimed interest at the rate of 18% per annum and therefore, it is not open for Wapcos now to contend that the said rate is exorbitant and onerous and OMP (COMM) 242/2019 Page 31 of 35 the Hon'ble High Court also finds no fault with the learned Commercial Court in declining to interfere with the impugned award ". In the present case, the Ld. Sole Arbitrator has exercised the discretion by giving reasons for awarding interest @ 12% per annum and the same seems to be reasonable in this case and therefore, the reasoning given by the Ld. Sole Arbitrator while awarding the interest, cannot be said to be unreasonable or perverse. In view of the same, the court does not find any illegality or arbitrariness in the impugned award with respect to the interest so awarded by the Ld. Sole Arbitrator.

41.While deciding issue no. (ii) The Ld. Sole Arbitrator did not find any merit in the counter claim while observing that the act of imposing the levy of compensation while granting EOT was not justified and the respondent was not responsible for the delay in carrying out the work and on the basis of the observations made while deciding issue no. (i), the Ld. Sole Arbitrator held that there is no merit in the counter claim and rejected the same.

42.Perusal of the award reflects that Ld. Sole Arbitrator has taken into consideration the dispute arose between the parties and the grounds raised by the petitioner to challenge the award, are factual in nature which have been already considered and adjudicated in the impugned award. It is outside the scope of Section 34 of the Act to re-appreciate the entire evidence and come to conclusion because such an approach would defeat the purpose of arbitration proceedings. It has been consistently held that when a court is applying the public policy test to an OMP (COMM) 242/2019 Page 32 of 35 arbitration award, it does not act as a court of appeal and consequently, errors of facts cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quality and quantity of evidence to be relied upon when he delivers his arbitral award. Thus, an award based on little evidence or no evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once, it is found that the arbitrator's approach is not arbitrary or capricious, then it is the last word on facts.

43.A bare perusal of the arbitral award shows that Ld. Sole Arbitrator has examined all the relevant aspects of the contract, the correspondences made by the parties, the terms of the contract and the conduct of the parties. Ld. Sole Arbitrator has remained inside the parameters of the contract and construed the provisions of the contract. Ld. Sole Arbitrator while deciding the issues has operated within the four corners of the contract and has not travelled beyond it. Ld. Sole Arbitrator has not decided the issue contrary to the terms of the contract, so it cannot be said that Ld. Sole Arbitrator misconducted himself or the interpretation given by him is not reasonable. The petitioner has failed to establish that Ld. Sole Arbitrator has travelled beyond the terms of the contract.

44.Having examined the various contentions of the petitioner on the touchstone of the parameters of interference as explicitly laid down by the Hon'ble Supreme Court of India in several OMP (COMM) 242/2019 Page 33 of 35 judgments referred to above, I am of the view that the impugned Award does not call for any interference. This Court cannot re- appreciate evidence or interpret the Clauses of the Agreement which the petitioner is calling upon the Court to do. The contentions of the petitioner are thus, rejected having no merits. I am of the view that the arbitration award being a reasoned one and does not suffer from any infirmity or error apparent on the face of the record. It is not for this Court to sit in appraisal of the evidence led before the Ld. Sole Arbitrator and this Court will not open itself to the task of being a judge on the evidence placed before the Ld. Sole Arbitrator which was subject matter of dispute. In the present case, the Ld. Sole Arbitrator has deliberated on the issues under reference which were within him competency. There are no allegations against the Ld. Sole Arbitrator of misconduct nor of having misconducted the proceedings which have either been specifically alleged by the petitioner or established. The Ld. Sole Arbitrator has duly explained the reasons for arriving at him decisions. There is nothing to indicate that the award violates Section 28 (3) of the Act or that, it is in conflict with the basic notions of justice and the fair play and fundamental policy of Indian law or in contravention of the terms of the agreement or that it lacks reasoning as pleaded in the petition.

45.Taking into consideration the various dates and events on record, I am of the considered opinion that the conclusion drawn by the Ld. Sole Arbitrator is based on sound reasons and the Ld. Sole OMP (COMM) 242/2019 Page 34 of 35 Arbitrator has passed the award after considering the facts, evidence and material on record. In the impugned award, the Ld. Sole Arbitrator has given logical reasoning in reaching the just conclusion of the case. The award is well reasoned as per the terms and conditions of the agreement. There is nothing on record to show that impugned award is against the terms of the agreement and against the public policy. Also, there is no patent illegality in the award. The award is a well reasoned award, based on evidence and mathematical calculations and not only a possible but a plausible view.

46.In view of the above discussions, the present objections petition under Section 34 of The Arbitration and Conciliation Act, 1996 is dismissed. No order as to cost.

47.File be consigned to record room. Digitally signed by ANURAG SAIN ANURAG Date:

SAIN (Announced in the Open Court 2025.04.02 16:12:01 +0530 today on 02.04.2025) (Anurag Sain) District Judge (Commercial Court-01), Patiala House Courts Complex, New Delhi OMP (COMM) 242/2019 Page 35 of 35 OMP (COMM.) 242/19 NEW DELHI MUNICIPAL COUNCIL Vs. M/S RAJ BUILDERS 02.04.2025 Present:- None.

Earlier Sh. Nilesh Sawhney, Ld. Counsel for the petitioner has appeared through video conferencing.

Vide separate judgment announced in the open court today, the present objections petition under Section 34 of The Arbitration and Conciliation Act, 1996 is dismissed. No order as to cost. File be Digitally signed consigned to record room. by ANURAG ANURAG SAIN SAIN Date:

2025.04.02 (Anurag Sain) 16:12:20 +0530 District Judge (Commercial Court-01), Patiala House Courts Complex, New Delhi/02.04.2025 OMP (COMM) 242/2019 Page 36 of 35