Delhi District Court
Delhi Development Authority vs Madan Lal Magoon on 2 May, 2009
IN THE COURT OF Dr. KAMINI LAU: ADDL.
DISTRICT JUDGE13: CENTRAL DISTRICT: DELHI
Suit No. 135/2008
Delhi Development Authority
Through its Chief Engineer, Dwarka,
WD13, DDA Office Complex,
Kirti Nagar, New Delhi.
............Petitioner
VS.
Madan Lal Magoon
M247, Vikas Puri,
New Delhi.
Sh. Pramod Kumar
SE Arbitration II
Sole Arbitrator
DDA, Office Complex,
B2B Janak Puri, New Delhi
..... Respondents
Date of Institution: 26.8.2008
Arguments Heard on: 2.5.2009
Date of Decision: 2.5.2009
: J U D G M E N T :
These objections under Section 34 of the Arbitration and Conciliation Act has been filed by the objector/ petitioner DDA to the award dated 27.5.2008 passed by the sole Arbitrator i.e. respondent no. 2. Briefly 1 the facts relevant to the disposal of the same are as under:
PETITIONER/ OBJECTOR/ NON CLAIMANT'S CASE:
The case of the objector is that a a tender for the work construction 2693/2714, EWS and 358/376 LIG Houses in Bindarpur, PocketIII, Dwarka SH c/o 284 EWS and 36 LIG Houses in BlockB PocketIII submitted by the respondent with the Objector was accepted by the Objector and the parties had accordingly entered into an agreement No. 10/EE/WD3DDA/9091 / 19/EE/WD13/DDA/9192 in this behalf incorporating various terms and conditions of the said work. As per the said agreement between the parties the date of start of the work was 18.5.1991 and the stipulated date of completion was 17.5.1992 but the respondent contractor could not complete the construction work of the aforesaid work by the schedule date and the said work was actually completed on 6.5.1994 and thereafter the respondent contractor had submitted certain claims with the DDA in consequence of which Engineer Member DDA has referred 2 the claims to the Arbitration. Pursuant to the same Sh. Pramod Kumar SE ArbIII, gave an award dated 27.5.208 received by the objector on 28.5.2008. According to the objector the impugned award dated 27.5.2008 in respect of claims is absolutely bad in law and is liable to be set aside because there is an error apparent on the face of it, but also the arbitrator has exceeded his jurisdiction and committed legal misconduct, and against the principles laid down and is against the public policy of India. It is alleged that the impugned award in respect of claims/counter claims is illegal and is based on no reasons in as much as the Arbitrator has committed serious irregularities as the same is not the part of the agreement and the clauses as per agreement has not been considered at all.
The objector has further pleaded that in respect of claim no. 1 the Ld. Arbitrator has awarded a sum of Rs.2,64,000/ but he has not considered the completion certificate dated 6.5.1994 where in it has been admitted by the contractor that the defects are remaining and he shall complete the same and the contractor is liable to complete 3 the flats in all respect and as per the agreement the claimant shall be responsible for its security so that no damage is caused and therefore, the contractor is estopped from claiming any amount as the work was yet to be completed and the labour and staff at his own risk and cost had to be deployed by the Contractor till the completion of the work. It is stated that the work was not completed by the contractor and he has not placed any thing on record to show that he has completed all these works and also has not written any letter to the petitioner that he has completed the work and the petitioner should take the possession of the flats and therefore the Ld. Arbitrator has exceeded his Jurisdiction to grant the Watch and Ward to the contractor. It is further stated that the claim is without any basis and no details have been furnished by the respondent/claimant with respect to the amount claimed and whether any person has been employed or any payment had been made to the persons for watch and ward has not been furnished by the respondent before the Ld. Arbitrator. It is also pleaded that the Ld. Arbitrator has not considered the clauses of the agreement which were pointed 4 out to him during arguments in the proceedings held on 6.12.2007 and has not even considered the clauses of the circular and the supplementary agreement that the claimant shall complete the work of the main agreement in all respect which the claimant had not completed. It is also stated that the condition no. 39 at page 81 has also not been considered by the Ld. Arbitrator according to which the claimant shall be responsible for watch and ward of the fitting and has also not considered the condition of the contract before awarding the amount and therefore, the claimant shall not be entitled to any amount whatsoever. It is stated that the claimant has claimed a sum of Rs.2,64,000/ in the present claim and clearly sows that their claim is unjustified and bogus and the arbitrator had awarded a sum of Rs.2,64,000/ which is unjustified and unreasonable and against the pleadings of the parties and against the arguments of the parties. According to the objector, the claimant/respondent has nowhere pleaded that he had written any letter for the completion of the work and for taking over of the possession. It is stated that the oral submissions without any basis cannot be considered as the 5 basis of the award and when the defects were specifically pointed out at the time of recording of completion certificate and no evidence has been produced when defects as pointed out were completed. It is further stated that the Ld. Arbitrator has further committed the misconduct in the arbitration proceedings and acted without jurisdiction and travelled beyond the procedure set out in the agreement as per clause 6, 7 and 8 of the agreement between the parties is bilateral and not a unilateral Act. According to the objectors, once having agreed to the said procedure and since the defects at the site were not removed, the claimant/ respondent under these circumstances is estopped from claiming the watch and ward of the premises. It is further stated that the Provisional completion certificate was recorded on 6.5.1994 subject to the rectification of defects which claimant had to do during the maintenance period and was not been completed by him. It is stated that the defects were to be rectified by the respondent as per checklist and of QC/CTE observations which he has failed to do and therefore, till the date the defects were not removed by the 6 Contractor, the contractor is bound to deploy his labour and staff for the completion of the work so watch and ward is the duplication of the claim by the contractor as has already received the payment for the execution of the work and the Ld. Arbitrator without jurisdiction and without considering the evidence on record i.e. letter dated 24.6.1997 EX C2A, 18101995 Ex C3, has passed an award due to which reason it is liable to be set aside.
It is also stated that the Ld. Arbitrator has not considered the letters filed by the claimant wherein he admits that the defects are remaining and he shall complete the same and shall do the watch and ward till allotment and completion the work and therefore, the contractor is estopped from claiming any amount towards watch and ward as the ward was yet to be completed and the labour and staff at his own risk and cost had to be deployed by the contractor till the completion of the work. The work was not completed by the contractor till 2003 and the respondent has not placed any thing on record to show that he has completed all these works and also has not written any letter to the petitioner that 7 he has completed the work and petitioner should take the possession of the flats.
Further, in respect of claim no. 2 it is stated that the security deposit of Rs.1,50,000/ has been ordered to be released but according to the objector the work was not completed in all respects and the payment is not required to be made in the watch and ward and therefore, the amount was rightly recovered by the petitioner through the security deposit as the defects as per the main agreement were also not completed by the claimant. It is further stated that as per clause 29 of the agreement the objector has right to recover the amount of Security deposit if has been said to be paid and therefore, the claim no. 2 is liable to be set aside which is in contradiction to the finding on claim no. 3 and applies as resjudicata. It is also stated that in claim no. 8 the claimant has claimed a sum of Rs.4,50,000/ for under utilization of its resources in the extended period of contract and Ld. Arbitrator has awarded Rs.3,02,000/. According to the objector the said claim passed by the Ld. Arbitrator is against the facts on record and is a mere duplication/doubling of the 8 claim by the contractor and nothing extra is payable on this account to the contractor and the claim is against the law and public policy. The respondent contractor has claimed the under utilization of the staff which amounts to the indirect loss and the claimant has not proved anything on record as to how he has under utilised the staff. As the cost of the work includes the cost of the staff also and the escalation stands already paid under clause 10 CC therefore, the claim is not payable and liable to be set side. It is stated that the claimant has not filed documentary evidence showing that he made the payment to the staff at the rate alleged by the claimant. It is further pleaded that the delay was also on the part of the contractor and the petitioner/ objector is not liable to pay for the remote damages for which no details has been furnished by the contractor and loss of the profit for which there had been no pleadings and not even supported by the any documentary evidence and no evidence to that had been given by the contractor. According to the objector, it has nowhere been pleaded that for the loss of profit the contractor was to get some work from other source and they 9 had taken any steps to mitigate the losses and hence the claim is not maintainable and is liable to be set aside. It is also stated that the claim is arbitrary, fictitious, vague and due to mismanagement and poor planning of the contractor and the work was delayed by the contractor and was never stopped. It is submitted that due to overlapping of the period and there was no delay on the part of the petitioner and it was beyond the control of the petitioner.
The petitioner/ objector has placed its reliance on clause 22, 10, 10C, general specification and conditions no. 1 and it is stated that the Ld. Arbitrator has travelled beyond the terms of the agreement hence the claim is liable to be set aside. It is also stated that Ld. Arbitrator has awarded the amount on presumption and there is no reasoning being given as to how he has arrived Rs.15,100/ and for 20 months comes to Rs.3,02,000/ when the arbitrator is giving the finding that the delay of 106 days is on the part of the claimant, as the award has to be passed as the reasoned award as per clause 25 of the agreement and therefore, the amount arrived at by the Ld. Arbitrator is vague, arbitrary, 10 and without any basis. According to the objector/ petitioner, no notice, has ever been given by the contractor to the DDA during the currency of the wok and the contractor has agreed for all the rates and time extension without any objection to the same. It is also stated that the petitioner/objector is not liable to pay the remote damages for which no details has been furnished by the contractor and the claim is arbitrary, fictitious, vague and due mismanagement and poor planning of the contract. According to the objector the Ld. Arbitrator holding that extension of time granted without levy of compensation and that the delay is on the part of the DDA whereas the levy of compensation has been there of 20% of the estimated costs, is illegal. It is submitted that as per clauses of the agreements the claimant is only entitled to the extension of time and shall not be entitled to any compensation or damages, more so when the claimant has given an undertaking that he has suffered no financial loss and the Ld. Arbitrator has not considered the clause 10 of the agreement.
11
It is further pleaded that the objector DDA had raised the objections to the said claims and also specifically pleaded that the claimant is manipulating the records which aspect the Ld. Arbitrator has not even discussed under the claim no. 1 and the claimant had failed to provide any evidence in respect of the claim. He has even failed to procedure the books of accounts, Salary/wages register, returns to the Employees Provident Fund and Employees Insurance Scheme to establish that the said contingent of staff had been engaged by the claimant.
According to the objector, the Ld. Arbitrator has not considered the undertaking given by the claimant not to claim any damage and the claimant has not suffered any financial loss has also not been considered by the Ld Arbitrator. The Extension of time performa shows the same has not been considered and discussed by the Ld. Arbitrator. It is stated that 10 CC has also been paid during the stipulated period of the work also hence the claimant is not entitled to any amount under this claim and the same is duplication of the claim. It is further stated that merely by 12 claiming the amount does not show that the contractor has actually spent the amount. The indirect and remote damages cannot be allowed to be paid since in the present case the claimant has not given any evidence what amount they have actually spent and the respondent has not taken any steps to mitigate the losses as alleged and neither given any evidence to that effect. Reliance has been placed on the provisions of Section 74 of the Contract Act, 1972 which provides that the actual loss in term of money for breach of contract can be ascertained in accordance with the established rules, the party claiming compensation, must prove the actual loss whereas in the present case without bringing any evidence on record the Ld. Arbitrator has acted beyond and granted an Hypothetical amount. It is also stated that as per clause 10 of the agreement the claimant shall not be entitled to any loss or damages or compensation on any account and therefore the claim no. 8 is liable to be set aside.
In so far as the claim no. 9 is concerned the Ld. Arbitrator has awarded the interest which according to the objector is against the Public Policy and in duplication of the 13 claim no.8 as the same is the component of damages which has been awarded to the claimant. It is also stated that the Ld. Arbitrator has awarded 8% on the awarded amount from the date of award which is on the higher side and there is no agreement clause for the payment of interest and parties have intentionally not agreed for the payment of interest to either of them. It is also pleaded that once either of the parties gives up their right to claim interest at the time of entering into an agreement, than they should not be allowed to raise such a claim. It is alleged that the Ld. Arbitrator has not considered that the claimant has inflated claims and duplicate claims and therefore, the same is liable to be set aside.
The petitioner has also challenged the findings of the Ld. Arbitrator in respect of counter claim no. 1 and 2. It is stated that the Ld. Arbitrator has not considered the submissions of DDA and the same is against the specific terms of the agreement and the claimant had failed to complete the flats in all respects and the completion certificate also records the same and the several notices were given to complete the flats but the Ld. Arbitrator has not 14 considered the admission of the claimant vide their own letters for the completion of flats which work was got executed from M/s. Ramesh Kumar Mali. It is stated that the completion certificate records as repair of plaster, providing and fixing, white washing, grinding of flooring, cover of GI pipe etc. and the same has been wrongly taken by the Ld. Arbitrator as that no similar work was executed as such the Ld. Arbitrator has given the findings which is against the facts on record. It is pleaded that a number of letters dated 24.6.1997 to 2.8.2003 were written to the claimant for doing the balance work but the claimant has not completed the same and hence the award is against the facts on record. It is stated that even at the time of execution of the supplementary agreement the quantities of the main agreement were left over by the claimant.
RESPONDENT/ CLAIMANT'S CASE:
The respondent has filed his reply to the petition of the objector wherein a preliminary objection has been raised that the present petition is not maintainable in as much 15 as the same is false, frivolous and has been filed with the sole intention to harass the respondent. It is further pleaded that there is no cause of action for filing the present petition since the same does not fall under any grounds as provided under Section 34 of the Arbitration and Conciliation Act. It is stated that the impugned award is a reasoned award wherein the Ld. Arbitrator has carefully perused the pleadings of the parties, documents filed by the parties, arguments advanced and the judgments cited by and on behalf of the parties. It is also stated that the objector has failed to either bring on record any document or proof substantiating the said allegations levelled by and on behalf of the applicant which allegations are contrary to the award passed by the Ld. Arbitrator appointed by the DDA itself, which arbitrator is a serving Superintendent Engineer, therefore, there is no possibility of the said Arbitrator of exceeding his jurisdiction of passing the award against the public policy of India. It is pleaded that the Arbitrator has passed the award within the framework of the contract between the parties and strictly as per the stipulations contained in the said contract.16
According to the respondent, the Ld. Arbitrator has considered and appreciated each and every claim and both the counter claims raised on behalf of the parties and has carefully perused the documents and pleadings. It is also stated that the said award fulfils the yard stick of being a reasoned award and this is clear and apparent from the fact that as against 10 claims raised by the respondent only the claims no. 1 and 2 have been allowed whereas the claim no.
8 has been allowed partially and the other claims i.e. 3,4,5,6,7 and 10 have been rejected in toto. As against the claim of interest @ 8% per annum the Ld. Arbitrator has awarded interest @ 8% per annum which is much lower than the prevailing interest of the FDRs which is between 10% to 12%.
On merits, the respondent has denied all the grounds raised by the petitioner/ objector. ARGUMENTS & FINDINGS:
The ld. Counsel appearing on behalf of the objector/ DDA has vehemently argued that the impugned 17 award dated 27.5.2008 passed by the Ld. Arbitrator is bad in law and is liable to be set aside firstly there being an error on the face of the award; secondly the arbitrator having exceeded his jurisdiction; thirdly the Arbitrator having committed legal misconduct; fourthly the award being against the settled principles of law and against public policy of India; fifthly the arbitrator not having given any reasons for awarding the various claims to the respondent and declining the counter claim to the petitioner and lastly the Arbitrator having committed serious irregularity by ignoring the various clauses and terms and conditions of the agreement. In this regard ld. Counsel for the objector/ petitioner has placed his reliance on the catenate of judgments copies of which have been placed on record which are as under:
1. Mohan Constructions Vs. DDA reported in 1998 (1) Arb. LR 548.
2. State of Rajasthan Vs. Nav Bharat Construction Co. reported in 2001 (3) Arb. LR 561 (SC). 18
3. Ramnath International Construction (P) Ltd. Vs. Union of India reported in 1 (2008) SLT 82.
4. M.L. Mahanjan Vs. DDA reported in 76 (1998) DLT
701.
5. M/s. R.B. Chy. Ruby Ram Khattar Vs. DDA reported in 1997 (1) Arb. LR 372.
6. Anant Raj Agencies Vs. DDA & Anrs. reported in 2005 (1) Arb. LR 590 (Delhi).
7. DDA Vs. U. Kashyap reported in 1999 (1) Arb L.R.
88.
8. Dev Dutt Pandit Vs. State of J&K and Anr. reported in 1999 (7) SCC 339.
9. Continental Construction Co. Vs. State of Madhya Pradesh reported in (1998) 3 SCC 82.
10. Steel Authority of India Vs. J.C. Budhraja reported in AIR 1999 Supreme Court 3275.
Ld. Counsel appearing on behalf of the respondent has on the other hand submitted that the objections filed by the objector/ petitioner are not maintainable since they have been filed without any cause of action and the grounds raised by the petitioner are not covered under the provisions of Section 34 of the Arbitration 19 and Conciliation Act. It is contended that the objections filed by the DDA contains vague and evasive allegations and the applicant has failed to bring on record any document or proof to substantiate the said allegations. It is argued that the Arbitrator who is an employee of the DDA being the serving Superintendent Engineer is a technical person being an expert in a particular field and has given the award on the basis of the cogent reasons. It is argued that this court cannot sit in an appeal against the award given by the Arbitrator and to reevaluate the entire material while dealing with the objections and in case if two views are possible then under these circumstances, this court is not competent to interfere and substitute its own view with that of the Arbitrator. Ld. Counsel for the respondent in this regard has placed his reliance on the various authorities which are as under:
1. B.V. Rasha Krishna Vs. Sponge Iron India Ltd.
reported in (1997) 4 SCC 693.
2. Umed Singh Vs. DDA reported in 91 (2001) DLT 126.
3. Naraindas R. Israni Vs. UOI reported in 49 (1993) DLT 100 20
4. MCD vs. M/s. Jagan Nath Ashok Kumar reported in AIR 1987 SC 2316
5. M. L. Mahajan Vs. DDA in 99 (2002) DLT 512 (DB)
6. Anant Raj Agencies Vs. DDA & Anr. in 35 (1998) DLT 22
7. Sanyukt Nirmata Vs. UOI & Ors. in 2002 (62) DRJ 858
8. D.C. Kapur Vs. DDA & Anr. in 130 (2006) DLT 94
9. Goa, Daman and Diu Housing Board Vs. Ramakant V.P. Darvotkar in (1991) 4 SCC 293
10. Puri Construction Pvt. Ltd. Vs. UOI in AIR 1989 SC 777
11. Govt. of Kerala Vs. Som Datt Builders Ltd. in AIR 2003 KERALA 61
12. B.V. Radha Krishna Vs. Sponge Iron India Ltd. in AIR 1997 SC 1324
13. M/s Continental Construction Ltd. Vs. Food Corporation of India in AIR 2003 DELHI 32 21
14. M/s Hindustan Tea Co. Vs. M/s K. Sashikant & Co.
& Anr. in AIR 1987 SC 81
15. S. Harcharan Singh Vs. UOI in AIR 1991 SC 945
16. U.P. State Electricity Board Vs. Searsole Chemicals Ltd in (2001) 3 SCC 397
17. M/s Arosan Enterprises Ltd. Vs. UOI & Anr.
reported in VII (1999) SLT 104
18. Union of India vs. Raila Ram reported in AIR 1963 SC 1685.
19. Paramjit Singh Vs. Satyawati reported in 2002 (64) DRJ 798.
20. 75 (1998) DLT 388
21. OMP No. 385/2007 decided by Delhi High Court.
22. 2005 (1) Arb. L.R. 590 (Delhi)
23. FAO (OS) 47/2006 decided by Delhi High Court.
Before proceeding to dispose off the objections raised by the objector briefly the law relating to Section 34 of the Arbitration and Conciliation Act is briefly discussed as under 22 The provisions of Section 34 (1) of the Act provide that the arbitral award may be set aside by the court on an application for setting aside the same being made on any grounds specified in the sub-section (2) and within the time prescribed. The provisions of Section 34 (2) (a) are reproduced as under:
''2(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:
23 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
(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.'' Sub section 2 (a) also provides that party making such an application shall furnish proof to the court in support of such application. The court is entitled to set aside the award only if the grounds mentioned in sub-section (2) of Section 34 read with grounds stated in Section 13 and Section 16 of the Act are proved to its satisfaction by the party making such application for setting aside the award and too if satisfy the court that the allegations are true. The onus of proving that the grounds as per sub-section (2) of Section 34 of the 24 Act exists and that the award is liable to be set aside lies on the party making such an application.
The Delhi High Court has in the case of Govt. of N.C.T. Delhi Vs. Khem Chand reported in 2003 (2) RAJ 437, by relying upon the ruling of the Hon'ble Apex Court in AIR 1963 SC 677, observed that:
"..........a Court should approach an award to support it if it is reasonable, possible rather than to dispute it, by calling it illegal. The law in this regard as it existed prior to enactment of Arbitration and Conciliation Act, 1996 still holds the field....."
It was further observed that:
".........the jurisdiction of the Court when called upon to decide the objections raised by a party against an arbitral award is limited, as expressly indicated in the Arbitration and Conciliation Act, 1996. The court has no jurisdiction to sit in 25 appeal and examine the correctness of the award on merits with reference to the material produced before the arbitrator, it can not sit in appeal over the view of the arbitral ......."
The Hon'ble High Court in the above case relied upon the observations made by Russel in the case of Secretary Irrigation Department, Govt. of Orissa and Others etc. Vs. G.C. Roy reported in 1992 (1) Arbitration Law Reporter, 145 which observations are as under:
''It is not misconduct on the part of an Arbitrator to come to an erroneous decision, whether his error is one of fact or law, and whether or not his findings of fact are supported by evidence. It may, however, be misconduct if there are gross errors in failing to hear or improperly receiving evidence.'' 26 Similar view was also taken in the case of India Tourism and Development Corporation Vs. T.P. Sharma reported in 2003 (3) Recent Arbitration Judgments 360 wherein it was observed that:
".....findings of the arbitrator on the factual matrix need not to be interfered with as the Court does not sit in appeal and the Courts are also refrained from re-appreciating or re-evaluating the evidence or the material before the arbitrator unless perversity is writ large on the face of the award or the award suffers from the vice of jurisdictional error, sanctity of award should always be maintained...."
Similar view was taken by Hon'ble High Court in Sh. M.C. Katosh Vs. Union of India & Ors. reported in 2005 (1) AD Delhi 1979(Supra) wherein it was held by the Delhi High Court that arbitrator being sole and final judge or fact and the Court is bound by the findings of arbitrator and 27 cannot review them unless unsupported by evidence or unless appears from award itself that there was no evidence to support findings.
Similarly in the case of Indian Tourism Development Corporation Ltd. Vs. Buddiraja Electrical reported in 2003 (2) RAJ 216 (Delhi), it has been held that "........the arbitrator has exceeded his jurisdiction and the award was against public policy of India.
Clause 2(b)(ii) of the Section 34 of Arbitration and Conciliation Act, 1996 provides that the arbitral award, if it is found to be in conflict with public policy, same may be set aside by the court. An explanation is added to the provision providing that an award shall be treated to be in conflict with public policy of India if 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....."
28 This expression ''public policy of India'' was also considered by Hon'ble Apex Court in Renu Sagar Power Co. Ltd., Vs. General Electric Co. reported in AIR 1994 SC 860 where it was held that "......if the award is found to be contrary to fundamental policy of Indian Law or Indian interest or justice and morality, the same can also be held to be contrary to public policy of India. On facts, it was found that the arbitrator had recorded his reasons for coming to the conclusion for allowing the claim and no specific case should be made out to prove and establish that the arbitrator exceeded his jurisdiction in making the award. As such, same cannot be said to be in any manner coming within the ambit of the provisions of Section 34 of the Arbitration and Conciliation Act, 1996...."
The Hon'ble Supreme Court has in the case of Oil and Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd. 29 reported in AIR 2003, Supreme Court, 2629, has while discussing the phrase Public Policy observed as under: -
''Therefore, in our view, the phrase ''public policy of India'' used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is on the face of it, is patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgement/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term ''public policy'' in Renu Sagar Power Co. Ltd. Vs. General Electric Co., 1994 Supp (1) SCC 644 30 it is required to be held that the award could be set aside if it is patently illegal. The result would be award could be set aside if it is contrary to;
(a) Fundamental policy of Indian Law, or
(b) the interest of Indian: or
(c) justice or morality; or
(d) in addition, it is patently illegal Illegally must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy.
Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court.
Such award is opposed to public policy and is required to be adjudged void.'' In the case of Bhagwati Oxygen Ltd. Vs. Hindustan Copper Ltd. reported in AIR 2005 SC 2071, it has been observed by the Hon'ble Apex Court that:- 31
".........In Rajasthan State Mines & Minerals Ltd. Vs. Eastern Engineering Enterprises & Another, (Supra), this court after considering several decisions on the point held that if an Arbitrator has acted arbitrarily,irrationally, capriciously or beyond the terms of the agreement, as award passed by him can be set aside. In such cases the Arbitrator can be said to have acted beyond the jurisdiction conferred on him....."
It was further observed that:
"........In U.P. State Electricity Board Vs. Searsole Chemicals Ltd. (Supra), that: where the Arbitrator had applied his mind to the pleadings, considered the evidence adduced before him and passed an award the court could not interfere by reappraising the matter as if it were an appeal......"
".......In Indu Engineering & Textiles 32 Ltd. Vs Delhi Development Authority (Supra) that: ''An Arbitrator is a judge appointed by the parties and as such the award passed by him is not to be lightly interfered with......"
".......In Bharat Coking Coal Ltd. Vs. M/s Annapurna Construction (Supra) that: there is distinction between error within jurisdiction and error in excess of jurisdiction. The role of the Arbitrator is to arbitrate within the terms of the contract and if he acts in accordance with the terms of the agreement, his decision cannot be set aside. It is only when he travels beyond the contract that he acts in excess of jurisdiction in which case the award passed by him becomes vulnerable and can be questioned in an appropriate court....."
Also in the case of Kesar Enterprises Vs. D.C.M. Shriram Industries Ltd. & Another reported in 2000 VII Apex Decisions (Delhi) 794 Hon'ble Mr. Justice Vikramajit 33 Sen, Judge Delhi High Court has in para 8 dealt with case titled M/s Sundaram Finance Ltd. Vs. M/s. NEPC India Ltd., reported as A.I.R. 1999, SC 565 and observed as under:-
''............ the following passage from M/s Sundaram Finance Ltd. Vs. M/s. NEPC India Ltd. reported as A.I.R. 1999, SC 565 wholly clarifies the view of the Apex Court: -
''The 1996 Act is very different from the Arbitration Act, 1940. The provisions of this Act have, therefore, to be interpreted and construed independently and in fact reference to 1940 Act may actually read to misconception. In other words, the Provisions of 1996 Act have to be interpreted being uncommenced by the principles underlying the 1940 Act. In order to get help in construing these provisions it is very relevant to refer to the UNCITRAL MODEL LAW rather than 1940 Act.'' 34 It was further observed that :
".........These provisions have been amended clearly with a view to circumscribe to a narrow point, the objections that can be entertained where an Arbitral Award is assailed.
To widen the scope of Section 34 would be ignoring and setting at ought the legislative intent, which perhaps was itself a response to the judicial lament extracted above....." ".........In these circumstances, I am unable to read and interpret the words ''public policy of India'', as being at all attracted in cases where a particular party alleges that a point was raised before the Arbitrator but not subsequently dealt with by him in the Award. I am in no manner of doubt, that such a conduct, even if it did happen, would not amount to an infraction of public policy, or for that matter, the rules of natural justice..." Further in the case of Tribal Co-operative Marketing Development Federation of India Ltd. Vs. Auto 35 Industries Limited, reported in 2002 VII Apex Decisions (Delhi) 194 it was observed as under:-
"..........Any finding of the Arbitrator either on factual or on legal matrix if on subsequent examination is found to be wholly unsound the award is liable to be set aside as it amounts to factual or legal misconduct. In ordinary course the Court does not sit in Appeal nor is it required to reappreciate the evidence and the material on record produced before the Arbitrator. Even if there are erroneous findings of the Arbitrator as to the facts the Court should always refrain from interfering with it. What should irk the Court is that perversity of illegality should be writ large on the fact of the award....."
Hence, in view of the various authoritative pronouncements discussed above it is clear that this court is not sitting in appeal against the award passed by the sole arbitrator and the court is not required to re-appreciate or re- 36 evaluate the evidence led before the arbitrator.
It is a settled law that this court cannot substitute its own decision that of arbitration and that the award of the arbitrator both on facts and law is final. In this regard the observations of the Mumbai High Court in the case of Laxmi Mathur vs. the Chief General Manager, MTNL reported in 2000 (3) Arb. L.R. 684 is very clear:
"......Arbitral award is not invalid merely because on the basis of some inferences and some arguments it may be alleged that Arbitral Tribunal has committed some mistake in arriving at its conclusion on merits of the dispute referred to it for adjudication.
When the court is called upon to decide the objections raised by a party against the arbitral award, the jurisdiction of the court is limited as expressly indicated in Section 34 of the Act and it has no jurisdiction to sit in appeal and to examine the correctness of the award on merits with reference to the material 37 produced before the Arbitral Tribunal. The court cannot sit in appeal over the view of the Arbitral Tribunal by re-examining and re- appreciating the material....."
The Hon'ble court has further observed that:
"......The arbitral award is not open to challenge on the ground that the Arbitral Tribunal has reached to a wrong conclusion or has failed to appreciate the facts and evidence. It is well settled that the parties constitute the Arbitral Tribunal as the sole and final judge as of the disputes arising between them and they bind themselves as a rule to accept the arbitral award as final and conclusive. The arbitral award is not liable to be set aside on the ground that either on facts of in law it is erroneous......"
In the case of Union of India vs. Ramesh Lalwani reported in 1997 (Suppl.) Arb. L.R. 64 the Delhi High Court has observed that an award made by the 38 Arbitrator 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 limited. It is a settled preposition of law that it will not be open for the court to re-appriase the evidence and to arrive at a contrary conclusion which have already been rendered by the arbitrator on cogent grounds.
Hon'ble Mr. Justice C.M. Nayar has in the same judgment relied upon the judgment in the case of Municipal Corporation of Delhi vs. M/s. Jagan Nath Ashok Kumar reported in AIR 1989 SC 2316 wherein the observations made by Lord Goddard, Chief Justice in Mediterranean & Eastern Export Co. Ltd. vs. Fortress Fabrics Ltd. reported in (1948) 2 All ER 186 are as under:
"........The day has long gone by when the courts looked with jealously on the jurisdiction of the arbitrators. The modern Tendency is in any opinion more especially in commercial arbitrations, to endaveour to uphold awards of the skilled persons that the parties 39 themselves have selected to decide the questions at issue between them. If an arbitrator has acted within the terms of the submissions and has not violated any rules of what is so often called natural justice the courts should be show indeed to set aside his award....."
Also in the case of Municipal Corporation of Delhi vs. M/s. Jagan Nath Ashok Kumar reported in AIR 1989 SC 2316 it has been observed that:
".......when the reasons given by the arbitrator are germane, relevant and have rational nexus with the conclusions arrived at by him, the reasonableness of the reasons cannot be challenged and it cannot be said to be unreasonable. The word "reasonable" has in law the primafacie meaning of reasonable in regard to those circumstances of which the actor called on to act reasonable knows or ought to know.40
Reasons vary in its conclusions according to the idiosyncrasy of the individual and the times and circumstances in which he thinks......"
In the case of M/s. Sanykt Nirmata vs. DDA and Anr. Reported in 1997 III AD (Delhi) 400 it has been observed as under:
"......It is well established that an award made by an arbitrator is conclusive as a judgment between the parties and the court is entitled to set aside the award only if the arbitrator has misconducted himself for the proceedings or when the award has been made after the use of an order by the court superseding the arbitration or if the arbitration proceedings have become invalid under Section 35 of the Act, or where an award has been improperly procured or he has proceeded beyond jurisdiction or is otherwise 41 invalid under Section 30 of the Act. The award may be set aside by the court on the ground of error on the face of the award but an award is not invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator had committed some mistake in arriving at some conclusion.............."
Further, the Delhi High Court has relied upon the judgments in the case of Jivaraj Bhai Ujamshi Sheth and Ors. vs. Chintamanrao Balaji reported in AIR 1965 SC 214 and in the case of State of Rajasthan vs. M/s. R.S. Sharma reported in (1988) 4 SCC 353, it has been observed that:
"........The scope of interference by the court of limited Appraisement of evidence by the arbitrator is ordinarily never a matter which the court questions and considers. The parties have selected their own forum and the deciding forum must be conceded the power of appraisement 42 of evidence. The court has no jurisdiction to sit in appeal and examine the correctness of the award on merits. The arbitrator is the sole judge of the quality as well as quantity of the evidence and it is not for the court to taken upon itself the task of being a judge of the evidence before the arbitrator. It may be possible that on the same evidence the court might arrive at different conclusions than the one arrived at by the arbitrator but that by itself is no ground of setting aside the award of an arbitrator where there is no violation of principles of natural justice nor there is any allegations of misconduct nor that the arbitrator has not considered the material procedure before him or has not heard the parties or has not given opportunity to lead evidence......."
It was held in the case of New India Civil Contractors Pvt. Ltd. vs. Oil and Natural Gas 43 Corporation reported in JT 1997 (2) SC 633 that normally the courts would not interfere with the arbitral award and the attempt of the court should always be to support the award within letter of law.
Also in the case of M/s. Parmar Construction Co. vs. DDA reported in 1996 (2) Arb.L.R. 73 it was held by the Hon'ble Mr. Justice Devinder Gupta that:
".....If the award of the arbitrator is a reasoned one and reasons have been assigned for making award against each claim. Learned counsel for the objector, during the course of arguments dealt specifically with each claim and questioned the findings recorded by the arbitrator thereupon.
The scope of interference to the arbitrator's award in such like case 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 cannot review and correct any 44 mistake in his adjudication unless objection is to the legality of 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 some legal preposition which is the basis of the award which you can they say is erroneous. It is not permissible to refer to any other document to show that the award is erroneous. Court cannot substitute its own decision for that of the arbitrator. Assessment of evidence is a matter within the province of the arbitrator......."
Applying the settled principles of law to the various objections raised by the objector it is evident that in so far as the Claim no. 1 is concerned by way of which the Arbitrator has awarded a sum of Rs.2,64,000/ to the respondent, it has been argued by the Objector that the Arbitrator has not considered the completion certificate dated 6.5.1994 wherein it is admitted that the defects are remaining 45 which he would complete and therefore, under these circumstances, the contractor was liable to complete all the flats in all respects and was responsible for its security so that no damage is caused and therefore, he is estopped from claiming any amount as the work is yet to the completed and the labour and staff was to be deployed at this own costs and risks till the completion of work. It is stated that the work was not completed by the contractor nor has he placed anything on record to show that he has completed those works so much so there is no communication on behalf of the respondent to the petitioner informing them that the works had been completed and they should take possession of the flats due to which reason the arbitrator has exceeded his jurisdiction to grant the watch and ward to the contractor. In this regard it is evident that the claimant (present respondent) had submitted before the Arbitrator that he had deployed and maintained the watch and ward till the flats were finished and furnished. It is evident that while releasing the payment of the watch and ward DDA had certified that the watch and ward has been made by the contractor for smooth possession 46 of the flats to the allottees and no labour complaint was received. It was further certified that no T&P issued to the contractor and the contractor has done the finishing items, fixing of the fitting etc. at the time of handing over of the flats to the allottees. This being so it is evident that the payment had been released by the DDA after being satisfied that the watch and ward had been deployed and therefore, I find no error in the findings of the Arbitrator since even otherwise it is evident that the supplementary agreement had been executed between the parties after compliance of the conditions contained in the circulars issued by the Objector department which governs the payment of watch and ward during the intervening period as well as the currency of the agreement and the respondent having acted upon the said supplementary agreement and having provided for watch and ward till the flats were taken over by the respondents, the objector now cannot be allowed to escape their liability. However, it is evident that the interim payment has already been released by the DDA/ objector to the contractor and therefore, it is clarified that the entitlement of the claimant/ 47 respondent would be subject to the adjustment of the interim amount already released to the respondent under this head.
In so far as the claim no. 2 is concerned it has been argued that the security deposit of Rs.1,50,000/ has been ordered to be released but since the work was not completed in all respects and the payment has not to be made in the watch and ward and the amount was rightly recovered by the DDA through security deposit and therefore, the claimant has wrongly claimed the said amount as the same is recoverable as per Clause 29 of the agreement. Ld. Counsel has also pointed out that the aforesaid claim is liable to be set aside as it is in contradiction to the findings on claim no. 3 and applies as resjudicata.
I have gone through the findings of the Ld. Arbitrator with regard to the claims no. 2 and 3 which are connected with each other. Vide claim no. 3 the respondent had argued that the circular dated 8.9.2003 for recovery of Rs.2,41,127/ was paid and therefore any amount so deducted was liable to be released. However, pursuant to the said circular no loss had been detected. Therefore, under 48 these circumstances, the Arbitrator was right in holding that the respondent was not entitled to the release of the said amount. However, in so far as the claim no. 2 is concerned it has been admitted that the amount of Rs.1,50,000/ was lying as security deposit with the objector/ DDA in the shape of bank guarantee but since the objector wanted to forfeit the same claiming that a sum of Rs.2,41,127/ was required to be recovered in respect of the payment of watch and ward already released to the claimant and therefore, the security amount was withheld. However, in view of the findings of the Ld. Arbitrator in respect of Claim no. 1 since the arbitrator has held the claimant to be entitled to the watch and ward charges @ Rs.6,600/ per month as per the supplementary agreement and the interim payment @ Rs.6,600/ per month is admitted to have been released by the DDA to the contractor, therefore, under these circumstances, I find no infirmity in the findings of the Ld. Arbitrator in respect of claim no. 2 except for the clarification that the entitlement of the claimant to the recovery of watch and ward charges as observed under Claim 49 no. 1 shall be subject to the adjustment of the interim amount already paid by the respondent under the said head by the DDA and the objector/ DDA is entitled to the release of security amount for a sum of Rs.1,50,000/ under claim no. 2 to the respondent.
In so far as the claim no. 4,5 and 6 are concerned, there is no challenge. The petitioner/ objector has challenged the findings of the Ld. Arbitrator in so far as the claim no. 8 is concerned, on the ground that the said claim is against the facts on record and is only a duplication/ doubling of the claim by the contractor and nothing extra is payable on this account to the Contractor and the claim is against the law and public policy. It is argued that the contractor has claimed the under utilization of the staff which amounts to the indirect loss and the claimant has not proved anything on record that how he has underutilized the staff. Further, since the cost of the work includes the cost of the staff also and the escalation stands already paid under clause 10 CC therefore the present claim no.8 is not payable. 50
Ld. Counsel appearing on behalf of the objector has argued that the petitioner is not liable to pay the remote damages for which no details has been furnished by the contractor and the loss of profit for which there had been no pleadings and not even supported by any documentary evidence on record. It is pointed out that there is no clause for payment of the damage in the agreement and the contractor is bound by the terms of the agreement and therefore, the Ld. Arbitrator while granting the aforesaid claim has travelled beyond the terms of the agreement and the claim has been given without any reasoning.
It is settled principle of law that where there is a provision in the agreement, the parties to the said agreement would be covered by the said terms and conditions and the claimant would not be entitled to remote damages or indirect loss of the damages sustained by reasons of breach. Ld. Counsel for the petitioner/ objector has also placed his reliance on the provisions of Section 55 of the Contract Act which disentitled the respondent for any remote damages.
I have considered the provisions of Clause 10 C, 51 10 CC and 22 of the General Specification and Condition no. 1 of the agreement. It is evident from the provisions of Clause 10 that the contractor would not be entitled to any remote damages on account of any delay in supply or non supply thereof or any material or stores. It is also evident from the arbitration proceedings that the contractor has placed before the Arbitrator the detailed vouchers in respect of deployment of the staff during the period of delay. Further, the hindrance register was also placed before the Arbitrator which reveal that the contractor had been attributing the delay on account of various delays in execution of work on the part of the DDA as recorded in the hindrance register. The extension of time had also been granted by the petitioner/ objector without levy of compensation for 85% of the delayed period i.e. for 106 days out of 717 days. Rather, the extension of time was granted without levy of any compensation. The Ld. Arbitrator has on the basis of the material placed before him in the form of hindrance register concluded that the prolongation was on account of the non fulfillment of the contractual obligation 52 on the part of the DDA. Therefore, in view of the provisions of Section 73 of the Indian Contract Act which stipulates payment of liquidated and unliquidated damages on account of breach of contract by the opposite party or breach of any obligation arising out of the contract. I hereby hold that there is no illegality or infirmity in the findings of the Ld. Arbitrator with regard to the aforesaid claim. Further, it is not open for this court to sit in appeal and to reevaluate the findings of the Ld. Arbitrator on merits. Even otherwise in case where two views are possible then this court will not shake the view taken by the Arbitrator and substitute with its own view with the same which is impermissible under the law.
In so far as the claim no. 9 and 10 are concerned it is argued that the interest so awarded by the Arbitrator is highly excessive, without any jurisdiction and against the judgment of the Hon'bl e Supreme Court of India where the rate of interest as 6% has been granted. I have considered the submissions made before me. In so far as the grant of 53 interest is concerned the Hon'ble Supreme Court has in the case of Secretary Irrigation Department, Govt. of Orissa and Others etc. Vs. G.C. Roy reported in 1992 (1) Arb. Law Reported 145 after discussing the law in detail held as under::
".......an arbitrator has jurisdiction to award pendente lite interest where the arbitration agreement so provides but no pendente lite interest can be allowed by the arbitrator if the agreement expressly provides that no pendente lite interest should be allowed. Where there is no express prohibition, such power must be inferred....."
In the same judgment the Hon'ble Apex Court has laid down the following principles:
" The question still remains whether arbitrator has the power to award interest pendente lite, and if so on what Principal. We must reiterate that we are dealing with the situation 54 where the agreement does not provide for grant of such interest nor does it prohibit such grant. In other words , we are dealing with a case where the agreement is silent as to award of interest. On a conspectus of aforementioned decisions, the following Principles emerge:
(i) A person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation call it by any name. It may be called interest, compensation or damages.
This basic consideration is as valid for the period the dispute is pending before the arbitrator as it is not the period prior to the arbitrator entering upon the reference. This is the Principal of Section 34 CPC and there is no reason or Principal to hold otherwise in the case of arbitrator.
(ii) An arbitrator is an alternative form for resolution of disputes arising between the parties If so, he 55 must have the power to decide all the disputes or differences arising between the parties. If the arbitrator has no power to award interest pendente lite the party claiming it would have to approach the court for that purpose even though he may have obtained satisfaction in respect of other claims from the arbitrator.
This would lead to multiplicity of proceedings.
(iii) An arbitrator is the creature of an agreement. It is open to the parties to confer upon him such powers and prescribe such procedure for him to follow, as they think fit, so long as they are not opposed to law.
(The proviso to Section 41 and Section 3 of Arbitration Act illustrate this point). All the same the agreement must be in conformity with law. The arbitrator must also act and make his award in accordance with the general law of the land and the agreement.
(iv) Over the years, the English and 56 Indian Courts have acted on the assumption that where the agreement does not prohibit and a party to the reference makes a claim for interest the arbitrator must have the power to award interest pendent lite.
Thawardas has not been followed in the later decisions of this court. It has been explained and distinguished on the basis that in that case there was no claim for interest but only a claim for unliquidated damages. It has been said repeatedly that observations in the said judgement were not intended to lay down any such absolute or universal rule as they appear to, on first impression until Jena's case almost all the courts in the country had upheld the power of the arbitrator to award interest pendente lite Continuity and certainty is a highly desirable feature of law.
(v) Interest pendente lite is not a matter of substantive law. Like interest for the period anterior to 57 reference (pre-reference period).
For doing complete justice between the parties, such power has always been inferred."
"..........where the agreement between the parties does not prohibit grant of interest and where a party claims interest and that dispute (alongwith the claim for principal amount or independently) is referred to the arbitrator, he shall have the power to award interest pendente lite. This is for the reason that in such a case it must be presumed that interest was an implied term of the agreement between the parties and therefore when the parties refer all their disputes or refer the dispute as to interest as such - to the arbitrator he shall have the power to award interest. This does not mean that it in every case the arbitrator should necessarily award interest pendente lite. It is a matter within his discretion to be exercised in the light of all the facts and circumstances of 58 the case. Keeping the ends of justice in view...."
In the case of Bhagwati Oxygen Ltd. Vs. Hindustan Copper Ltd. (Supra) the Hon'ble Court has discussed the law relating to grant of interest at three different stages i.e. pre-reference, pendente lite and post award interest. The law laid down in Secretary Irrigation Department Govt. of Orissa & Other Vs. G.C. Roy (Supra) has been discussed in para-36 of the said judgment.
So far grant of pendente lite interest is concerned, in para-38 of this judgment titled Bhagwati Oxygen Ltd. Vs. Hindustan Copper Ltd. (Supra) the grant of pendente lite has been discussed thereby following principles laid down in the case of Secretary Irrigation Department, Govt. of Orissa & Others Vs. G.C. Roy (Supra).
In para-39 of judgment titled Bhagwati Oxygen Ltd. Vs. Hindustan Copper Ltd. (Supra) grant of interest for post award period has been discussed as under:- 59
".......As to post-award interest, the point is covered by the decision of this Court in Hindustan Construction Co. Ltd. Vs. Jammu & Kashmir, (1992) 4 SCC 217. It was held there that an arbitrator is competent to award interest for the period from the date of the award to the date of decree or date of realization , whichever is earlier....."
In Union of India Vs. Suchita Steels (India) reported in 2006 (1) Arbitration Law Reporter 83 (Delhi) (DB) it has been held that : -
".....Law of arbitration is well settled. If there are two probable views this court will not interfere with the award merely because it feels that the view of the court is more plausible or better than the one taken by the arbitrator...."
In the case of Delhi Development Authority Vs. S.S. Jetley reported in 2001 (1) Arbitration Law Reporter 60 289 (Delhi) (DB), Hon'ble Mr. Justice Arun Kumar (as his Lordship then was) and Hon'ble Mr. Justice A.K. Sikri Judge, Delhi High Court have discussed regarding award of pre suit and pendete lite interest and also the scope of Section 73 and 74 of the Indian Contract Act, 1872.
Further in the case of Saraswati Construction Co. Vs. Delhi Development Authority reported in 2004 (2) Arbitration Law Reporter 429 (Delhi) our own Hon'ble High Court has decided in respect of future interest to be payable on entire amount comprising of claims as well as number suit and pendentelite interest as under: -
''.......Learned counsel for the Decree Holder has relied upon a judgment of Apex Court in Oil and Natural Gas Commission Vs. M.C. Clelland Engineers S.A., (1999) 4 SCC 327 = 1999 (2) Arb. LR 509 (SC) in which their Lordships considered the question of interest on interest and held that the power of the Arbitrator to grant interest on the amount of interest, which may be termed as 61 interest on damages or compensation for delayed payment, would also become part of the principal amount and as such, Section 3 of the Interest Act does not come into play to forbid the payment of such interest. He has also relied upon a judgement pronounced by a learned Single Judge of the Punjab & Haryana High Court in Union of India Vs. Harbans Singh Tuli & Sons Builders (P) Ltd., AIR 2000 P&H 313 = 2000 (2) Arb.
LR 360 (P&H) (DB) in which the aforesaid judgement of the Apex Court was relied upon to hold that the interest on the amount of interest may be termed as interest on damages / compensation for delayed payment and would become part of the principal sum adjudged....."
In the same judgment it has been held that : -
"........In view of the aforesaid judgments, this Court is of the considered view that after the passing of an Award or the dismissal 62 of the objections by the Court and passing a decree in terms of the Award, not only the amount of a claim upheld by the Arbitrator of the Court but the pre-suit and pendente lite interest awarded in favour of the Decree Holder crystallizes into the decretal amount and the future interest becomes payable on the entire amount comprised of the claims as well as the pre-suit and pendente lite interest. Therefore, from the date of passing of decree, the future interest is not to be calculated merely on the amount of the claims upheld by the Arbitrator/Court but also on the amount of the interest awarded by the Arbitrator or the Court. In many cases, as in the present case, the amount of interest upto the date of the passing of the Award or passing of the decree is much higher than the principal amount and in case a view is taken that the future amount is not payable on the amount of interest, a 63 decree holder may be put to substantial monetary loss by an unscrupulous judgement Debtor by withholding the amount and ultimately paying future interest only on the amount of claims. Courts cannot permit any party to take undue advantage of law and exploit legal provisions to cause wrongful loss to the opposite party....."
Applying the settled principles of law to the present case, it is evident that the interest so granted by the Arbitrator can hardly be stated on the higher side rather the claimant had demanded an interest @ 12% whereas under the given facts and circumstances, the Arbitrator had granted a simple interest @ 10% per annum on the awarded amount under Claim no. 1 and 2 w.e.f. 6.7.2003 to the date of award and 8% per annum on the awarded amount from the date of payment to the payment or decree, whatever is earlier.
In so far as the findings of the Arbitrator in respect of Counter Claim no. 1 and 2 is concerned since the 64 counter claim is connected with the claim no. 1 of the claimant, the Arbitrator has already held the claimant entitled to the watch and ward charges therefore, under these circumstances, I find no infirmity in the findings of the Ld. Arbitrator. Further in so far as the findings of the Arbitrator on the claim no. 2 is concerned, I have gone through the same and it is evident that the Arbitrator has given a detailed reasoning for arriving at his conclusion in declined the counter claim. It is an admitted case of both the parties that physical completion of work took place on 6.5.1994 and the expiry of the defect liability period on 5.11.1994. Therefore, till the date of handing over of the flats to the petitioner/ objector on 5.7.2003 the work had been executed at the risk and cost of the respondent/ claimant. The arbitrator had observed that the DDA/ objector had failed to place on record any communication to show that the work was defective or that the defective work liable to be removed and redone at the risk and cost of the respondent/ claimant.
Rightly so, the Arbitrator has taken a view that the process of having over of the flats to the individual allottee cannot be 65 continued for an indefinite period and therefore, the counter claim of the petitioner after the actual physical completion of work is only an after thought and a counter blast to the claims of the claimant. At no point of time the DDA had written any letter to the respondent alleging the defects within the defect liability period or even upto handing over the balance flats to them. Certain payments had been released to the respondent vide two running bills even after the execution of the supplementary agreement and no demur was made regarding the alleged defects. It has also been observed that even at the time of releasing the said payments specific certificates were given to the effect that the contractor has provided watch and ward and fittings and fixtures have been installed as per the supplementary agreement, therefore, now it does not lie within the mouth of the objector to state that they had got the aforesaid done at their cost and risks of the respondent.
The award dated 27.5.2008 given by the Arbitrator is a speaking and reasoned award running into 21 pages. The petitioner/ objector has not been able to prove 66 the alleged misconduct of the Arbitrator or that he had exceeded his jurisdiction or that the Award is against the public policy of India. Allegations have been made against the Arbitrator of having misconducted the proceedings but the petitioner has failed to prove and substantiate the said allegation. Further, the allegations regarding the award against the public policy have also not been substantiated.
The Arbitrator has duly explained the reasons for arriving at his decisions with which I find no ground to intervene.
Hence in view of the aforesaid reasons I hereby hold that the objector/ petitioner has failed to make out any case for requiring any interference with the award under Section 34 of the Arbitration and Conciliation Act, 1996 and I accordingly hold that the objections are devoid of merits.
The petition is dismissed. Parties are directed to bear their own costs. File be consigned to record room.
Announced in the open court (Dr. KAMINI LAU) Dated: 2.5.2009 Addl. District Judge: Delhi 67