Delhi District Court
M/S Curo India Pvt Ltd vs M/S Shri Ji Project P. Ltd on 4 February, 2017
M/s Curo India Pvt Ltd vs M/s Shri Ji Project P. Ltd
IN THE COURT OF SH. AJAY PANDEY, ADDL. DISTRICT JUDGE05,
ROOM NO. 605, SOUTH DISTRICT, SAKET COURTS, NEW DELHI
In the matter of
ARB No. 20781/2016
Case ID No. DLST010048252016
M/s. Curo India Pvt Ltd.
Through its Authorized Representative
Mr. R.K.Arora
K28, Green Park Extension
New Delhi110019
.............Petitioner
Versus
M/s Shri Ji Projects
30/2, Street No. 10,
Vishwas Nagar, Shahdra
Delhi110032 ..............Respondent
Date of Institution : 15.09.2015
Date of reserving the Judgment : 25.01.2017
Date of pronouncement : 04.02.2017
Decision : Award Set aside
PETITION UNDER SECTION 34 OF THE ARBITRATION AND
CONCILIATION ACT, 1996 FOR SETTING ASIDE THE AWARD
DATED:26.06.2015
JUDGMENT
1. This is a petition u/s 34 of the Arbitration and Conciliation Act, 1996 filed against the Award dated 26.06.2015 passed by Learned Sole Arbitrator.
2. Matter was fixed for pronouncement of judgment on ARB No.173/15 Page 1 of 15 M/s Curo India Pvt Ltd vs M/s Shri Ji Project P. Ltd 07.02.2017. In view of the receipt of the transfer order no. 02/DHC/Gaz/G1/VI.E2(a)/2017 dated 01.02.2017 from Hon'ble High Court of Delhi and in compliance of para 2 of the Notes mentioned therein, the date of pronouncement of judgment is preponed to 04.02.2017.
3. For the sake of convenience, parties are referred according to their ranks in the arbitration proceedings before the learned arbitrator.
4. Brief facts necessary for disposal of the petition are that the claimant who is the respondent herein, filed statement of claim before the learned sole arbitrator stating interalia that the claimant is the registered contractor. He entered into a contract with the respondent for the construction of multiplex blocks through the Letter of Intent (LOI) issued on 17.02.2012. Contract was illegally foreclosed by the respondent on 31.01.2013. On the foreclosure of the contract huge amount of scaffolding materials, belonging to claimant were left at site. Respondent did not return that material. Claimant was pursuing with the respondent for settlement of accounts and sent a letter dated 30.04.2013. Claimant also submitted final bill for an amount of Rs 8238205.95/. An amount of Rs 3747105/ was claimed for non scheduled items also, which included the idle cost of labour materials, hire charges of shuttering and scaffolding material, RCC work, extra height for shuttering etc. Respondent verified an ARB No.173/15 Page 2 of 15 M/s Curo India Pvt Ltd vs M/s Shri Ji Project P. Ltd amount of Rs 207682/ only for the first three items. The cost of shuttering material retained and used by the respondent is Rs 650000/. The respondent did not even clear the running account bills submitted by the claimant on 07.01.2013.
5. These actions of the respondent are stated to be illegal and uncontractual. The claimant is stated to be entitled for loss of profit of 15 % of the contractual value due to illegal closure of the contract. It is stated that respondent released an amount of Rs 5752118/ only to the claimant whereas the balance payment of Rs 15042910/ plus interest @ 15% per annum was still due from the respondent.
6. It was further stated that certain disputes arose between the parties. Claimant invoked the provisions of clause 39 of LOI for appointment of Arbitrator. Ultimately, Hon'ble Justice (Retd.) V.S.Agarwal was appointed as the Sole Arbitrator.
7. Claimant had the following claims before the learned Sole Arbitrator:
1. Claim no. 1: Claimant's claim towards payment of Final Bill Rs 6990791/ : It was alleged that work was illegally foreclosed w.e.f. 30.01.2013 with directions to raise full and final bill. Claimant in his letter dated 30.04.2013 submitted final bill. Final bill was duly verified for total value of work ARB No.173/15 Page 3 of 15 M/s Curo India Pvt Ltd vs M/s Shri Ji Project P. Ltd done for Rs 8095805.35/ as against the bill for Rs 8238205/. As against non schedule items of Rs 3747103.95 an amount of RS 207682/ only was verified by respondent. Respondent released total amount of Rs 5752119/ thus the balance amount of Rs 6090791/ was stated to be payable by the respondent. It appears that by mistake in the title of claim no. 1, this amount was mentioned as Rs 6990791/ instead of Rs 6090791/.
2. Claim no. 2: Claim towards loss of profit due to alleged illegal foreclosure of contract @ 15% of the contact value amounting to Rs 25,50,000/
3. Claim no. 3: Interest @ 18% p.a. for the delayed payment of running bills and final bill.
4. Claim no. 4: Contractors claim towards cost of proceedings Rs 200000/
8. Respondent filed their written statement cum counter claim thereby denying their liability and claiming following amount from the claimant: S. Particulars Amount No. A. Loss of rent @ Rs 1280000/ per month Rs ARB No.173/15 Page 4 of 15 M/s Curo India Pvt Ltd vs M/s Shri Ji Project P. Ltd for a period of 14 months 13 days w.e.f 18456774/ 01.07.2017 till 13.10.2014 B. Penalty for delay @ 5% of the contract Rs 1129609/ value C. Sub Total Rs 19586383/ D. Amount payable to claimant as per para Rs 960883/ 22 and 23 above E. Sub Total Rs 18625500/ F. Litigation expenses for the current Rs 200000/ litigation G. Grand Total E+F Rs 18825500/
9. Claimant filed rejoinder/reply to the written statement/counter claim of the respondent.
10. Learned Arbitrator framed following issues on 07.10.2014: ISSUES:
1. Whether the claimant is entitled to Rs 6990791/ towards the payment of the final bill?
2. Whether the claimant is entitled to loss of profits due to the alleged closure of the contract, if so, how much?
3. Whether the claimant is entitled to interest @ 18% p.a. for the delayed payments of the running bills and the final bill?
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4. Whether the respondent is entitled to any amount for loss of rent, penalty for alleged delay and other amounts stated in para 29 of the counter claim. If so, how much?
5. Whether the respondent is entitled to claim the damages mentioned in para 30 of the counter claim. If so, how much?
6. Whether the respondent is entitled to any interest. If so, at what rate?
7. Relief.
11. Issue no. 4, 5 and 6 relate to the counter claim of the respondent. They were taken together for decision by learned sole arbitrator.
12. All these issues were decided against the respondent.
13. Issue no.1 was partly decided in favour of claimant and claimant was held entitled to Rs 3747103.95/ for providing non scheduled items to the respondent. In addition thereto, the claimant was further held entitled to Rs 1515603/ for recovery of the cost of scheduled work as well as refund of security amount of Rs 408482/.
14. During the course of arguments learned Sh. Somesh Arora, advocate for petitioner who is respondent in the arbitral proceedings, submitted that the award is being challenged by him on three counts.
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15. Firstly, because the learned arbitrator did not decide issue no. 4 though he held that the delay in completion of the contract was attributed to the claimant. Secondly, learned sole arbitrator, against the contract of the parties, ignored the admitted document i.e. R23 which was exhibited as RW1/34. Thirdly, the learned arbitrator considered the claim for non scheduled items on the basis of statement of facts submitted by the claimant without the same being proved on record and ignoring the final settlement/bill arrived at between the parties as well as contractual obligations under the Letter of Intent dated 17.02.2012.
16. Learned Sh. Rajappan has submitted that the objection petition is liable to be dismissed as no ground for interference in the award is made out from the facts and circumstances of the case.
17. Learned Sh. Rajappan while placing reliance on "Shree Krishna Woolen Mills (P) Ltd vs Union of India 7 Anr" 2008 (3) Arb. LR 477 (Delhi) submitted that the scope of interference by court in the award passed by the learned arbitrator is very limited. He submits that the court cannot sit in appeal against the award passed by the learned arbitrator and the petitioner must satisfy that either of the grounds mentioned under section 34 (2) of Arbitration and Conciliation Act, 1996 is made out from his ARB No.173/15 Page 7 of 15 M/s Curo India Pvt Ltd vs M/s Shri Ji Project P. Ltd petition. Learned Sh. Rajappan submits that no ground for setting aside of the award is made out from the petition.
18. In reply to the submissions of the learned Sh.
Rajappan, learned Sh. Somesh has submitted that the award is in contravention with the fundamental policy of the Indian Law as the contract between the parties was ignored while passing the award. He also submits that non deciding the issue framed in the matter was also against the basic notions of justice.
19. Court has considered the arguments advance by the learned counsels for parties.
20. While holding the claimant entitled for recovery of Rs 3747103.95/, learned arbitrator appears to have relied upon the summary sheet - final bill which was enclosed with the letter dated 30.04.2013 sent by the claimant. Total amount of summary sheet/final bill is Rs 11985309.88/. Two heads are included in the said amount are as follows: A Value of Work Done This Bill Cumulative Amount in Rs Bill Amount in Rs (A1) Work Done 8238205.95 8238205.95 Scheduled Items (A2) Work Done Non 3747103.93 3747103.93 Scheduled Items ARB No.173/15 Page 8 of 15 M/s Curo India Pvt Ltd vs M/s Shri Ji Project P. Ltd Total 11985309.88 11985309.8 (A= A1 8 +A2_
21. Learned Sh. Somesh has drawn the attention of the court to clause 40 of the Letter of Intent executed between the parties which provides as follows: "40. Payment Terms: - R/A bill shall be submitted every month after joint measurements taken alongwith Company's Authorized representative at site. Payment shall be made after joint measurement, verification and checking of bills."
22. In page six of the award, learned arbitrator has produced the following statement of account between the parties as per the respondent: S. No. Particulars Amounts (Rs) A. Total amount payable to claimant 8169836/ B. Amount already paid by respondent to 5752198/ the claimant by cheques and RTGS C. Amounts paid by TDS 163398 respondent on WCT 408491 behalf of Service Tax 202611 claimant Cess 81640 Labour Payment 134080 Electricity Bill 45895 D. Security deposit deducted by claimant 408492 in terms of LOI ARB No.173/15 Page 9 of 15 M/s Curo India Pvt Ltd vs M/s Shri Ji Project P. Ltd E. Total amount paid (B+C+D) 7196805 F. Amount payable to claimant (AE) 973031
23. While deciding issue no. 1 learned arbitrator held that the final bill, annexure R23 which is also exhibited RW 1/34 was jointly verified. The said document was the final bill dated 13.04.2012 raised by the claimant, which was issued by the claimant and the dues therein were duly verified by the parties. The said document bears the signature of the partner of the claimant on 06.09.2013 encircling the amount of Rs 8169835.87/ jointly verified by the parties. In the said bill also two heads are included which are as follows: A Value of Work This Bill Cumulative Done Amount in Rs bill amount in Rs (A1) Work Done 8087955.35 8087955.35 Scheduled Items (A2) Work Done 81880.52 81880.52 Non Scheduled Items Total 8213325.55 8213325.55 (A= A1 + A2) Gross 8169835.07 8169835.07 Total
24. Learned counsels for both the parties admit that on 06.09.2013, this amount of Rs 8169835.07 was jointly verified as against this bill.
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25. Counsel for the claimant however submitted that this amount do not include the total cost of non scheduled items. He submits that the award of Rs 3747103.95/ allowed by the learned arbitrator on this account was justified.
26. It is rightly submitted by learned Sh. Somesh that the learned arbitrator ignored the admitted document Ex. RW 1/34 which contain the value of work done for scheduled items as well as work done for non scheduled items. It is further rightly submitted by him that the reliance on the documents dated 30.01.2013 which was jointly verified by the parties was against clause 40 of the LOI. At page 15 of the award, learned arbitrator observed:
"The other dispute is with regard to the non schedule items. Ex. RW 1/34 is a summary but the claimant alleged that does not refer to all non schedule items. The plea of the claimant deserves to be accepted. It is obvious that non schedule items were many and Ex RW 1/34 cannot deal with them all.
One would have gone by the said document but this is a verification which is insignificant as stated above. In the affidavit Ex AW 1/A pertaining to the non schedule item the claimant has lead the following evidence"
27. It is rightly submitted by learned Sh. Somesh that the ARB No.173/15 Page 11 of 15 M/s Curo India Pvt Ltd vs M/s Shri Ji Project P. Ltd observation of the learned arbitrator that non schedule items were many and Ex RW1/34 cannot deal with them all is not brought out from the record. There is nothing in the arbitral record which could suggest that RW1/34 could not deal with the non scheduled items. After the aforesaid observation the learned arbitrator has narrated the description of non scheduled items from " i to ix"
alongwith the respective cost. It is seen that Ex RW 1/34 also contains the description of all these non schedule items. An amount of Rs 51129.52/ was verified between the parties as against non scheduled items no. (i), an amount of Rs 3571/ was also verified on account of item no. (iii). Both these amounts were included in the verified liability of Rs 8169835.87/ under exhibit RW 1/34. Thus, RW1/34 infact dealt with all non scheduled items narrated by the learned arbitrator in his award. Hence, the observation that Ex. RW1/34 cannot deal with non scheduled items was contrary to the record.
28. Learned Sh. Somesh has further rightly submitted that when under the contract i.e. LOI dated 17.02.2012 between the parties, the payment was required to be made after joint measurement, verification and checking of bills, the learned arbitrator cannot have observed that : "One would have gone by the said document but this is a verification which is insignificant as stated above."
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29. It is important to mention here that the joint verification of the final bill Ex RW 1/34 was done by the parties on 06.09.2014, whereas the learned arbitrator has relied upon the non verified bill dated 30.04.2013 for grant of the claim for non scheduled items.
30. It is therefore rightly submitted by learned Sh.
Somesh that the award is against the contractual obligation between the parties and therefore is in contravention with the fundamental policy of Indian law.
31. Submissions of learned Sh. Somesh that complete findings qua issue no. 4 were not given by the learned arbitrator are also found correct.
32. Item B of the table A is related to the penalty for the alleged delay in the performance of contract. While deciding issue no. 2 learned arbitrator held that it was the claimant who was delaying the work and therefore he disallowed the claim for loss of profits allegedly suffered by claimant due to foreclosure of the contract. Despite the observation that claimant delayed the work, he did not give any findings qua the entitlement or non entitlement of the amount claimed for delay in execution of work in the counter claim.
33. Hence, the award appears to be in conflict with the ARB No.173/15 Page 13 of 15 M/s Curo India Pvt Ltd vs M/s Shri Ji Project P. Ltd basic notions of justice. If an issue was framed the same was required to be decided or some observation for non decision thereof was required to be given.
34. It is rightly submitted by learned Sh. Rajappan that court cannot sit in appeal over the award and cannot impose its own findings or the observation over the observation/findings of the learned Arbitrator. But the award herein reflects glaring contravention with the fundamental policy of Indian law and appears to be in conflict with the basic notions of justice.
35. Learned Arbitrator has ignored the admitted document existing on record as per the contract between the parties and has considered extraneous material which was not verified as per the contract between them.
36. Award is therefore liable to be set aside.
37. Held accordingly.
38. Petition under section 34 of Arbitration and Conciliation Act 1996 for setting aside the impugned award dated 26.06.2015 passed by the learned sole arbitrator is allowed.
39. Award dated 26.06.2015 is hereby set aside.
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40. Arbitral Record be sent back.
41. File be consigned to record room.
Announced in the open (AJAY PANDEY)
Court on 04.02.2017 ADJ05 (SOUTH DISTRICT)
(Judgment contains 13 pages) SAKET COURTS, NEW DELHI
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