Delhi High Court
Shri Umed Singh vs Delhi Development Authority on 2 February, 2001
Equivalent citations: 2001IIIAD(DELHI)679, 91(2001)DLT126, 2001(3)RAJ228
Author: J.D. Kapoor
Bench: J.D. Kapoor
ORDER J.D. Kapoor, J.
1. The award dated 30th June, 1992, which was registered as a suit has been sought to be made rule of the Court.
2. The respondent-DDA has challenged the award mainly in respect of claim Nos.4,5,6 & 8. As regards claim No.4, the petitioner's claim of Rs.2,05,000/- on account of payment under clause 10(c) of the agreement due to statutory increase in price in material and wages was allowed on the basis of the increase in wages for the labour as per Government's statutory orders and in accordance with the provision of clause 19 of the agreement.
3. According to the counsel for the respondent clause 10(c) provided that if during the progress of the work, the price of any material incorporated in the work and/or wages, labour increases as a direct result of the coming into force of any fresh law or statutory rule or order and such increase exceeds 10% of the price and/or wages prevailing at the time of receipt of the tender for the work, the contractor shall for the purpose of this condition keep such books of accounts and other documents as are necessary to show the amount of any increase claimed or reduction available and shall allow inspection of the same by a duly authorised representative of DDA and shall at the request of the Engineer-in-Charge furnish, verify in such a manner as the Engineer-in-Charge may require any document so kept and such other information as Engineer-in-Charge may require. It is contended that since the claimant did not produce such books of accounts and other documents in this regard his claim was allowed against the terms of clause 10(c) of the agreement and thereby the arbitrator travelled beyond the terms which was not permissible under the law.
4. I am afraid, this contention does not hold water as the learned arbitrator after considering the Government statutory orders and other material on the record based his findings. Even otherwise the main objection of the respondent was that the documents in support of the claim have not been shown to them. The respondent has not challenged the correctness of the Government statutory orders which formed the basis for allowing the claim and even in objection s also none of the Government statutory orders have been challenged. Since the finding of the arbitrator in this regard is purely that of fact and based upon the documentary evidence with has remained uncontroverter, the objection is groundless.
5. The next objection is with regard to claim No.5 amounting to Rs.12 lacs on account of losses/damages of 38% over and above the agreement rates due to increase in market price of the various materials in respect of the work executed by them after the stipulated date of completion.
6. The contention of the respondent is that the arbitrator has again attempted to travel beyond the terms of the agreement. In the agreement it was clearly stipulated that if part of the site is not available for any reason or there is some unavoidable delay in the supply of the material stipulated by the department the programme of construction shall be modified accordingly and the contractor shall have no claim for any extras or compensation on this account and, therefore, the award in this regard is liable to be set aside.
7. It is beyond the pale of controversy that any award given by the arbitrator, not as per the terms of the agreement, is an award without jurisdiction. The words 'unavoidable delay' mentioned in additional clause(1) did not completely oust the Arbitrator from assessing the claim for extras of compensation as these words cast obligation of the respondent to explain the delay and it was for the Arbitrator to find whether it was avoidable delay or unavoidable delay. The case the respondent succeeded in explaining that the delay was unavoidable the claimant could not claim any compensation on this count.
8. This clause came up for interpretation by this Court in case Sunder Lal Khatri Vs. DDA IA 3048/92 & Suit No.3470-A/92 wherein it was held by Hon'ble Mr. Justice Vijender Jain that the arbitrator's award was not in relation to the material which was to be supplied by the respondent but with regard to the material which the contractor had to purchase at a higher rate on account of escalation in prices because of extension of stipulated period of contract on account of non-performance of the obligation on the part of the respondent. It was held that the use of words 'unavoidable delay' is not without meaning and since the amount was worked out by the arbitrator by taking into consideration the quantum of work executed in a particular period and allowing on the basis of index number after taking the cost of material issued by the respondent, the claimant was held to be entitled to claim the damages on account of the delay.
9. It is further contented that the award in this regard is without jurisdiction being totally contrary to the terms and conditions in clause(1) of the agreement which specifically prohibited granting claim for damages on account of part of the site being not made available for any reason or on account of delay in supply of the material stipulated by the department and any award in this regard amounts to misconduct on the part of the arbitrator.
10. Reliance has been placed upon Steel Authority of India Limited Vs. J.C.Budhiraja, Government and Mining Contractor, 1999(3) Arb.LR 335(SC), wherein Clause 32 & 39 of the contract called for construction and scope. Clause 32 stipulated as under:-
"That no claim whatsoever for not giving the entire it on award of work and for giving the site gradually will be tenable and the contractor is required to arrange his working programme accordingly."
Clause 39 provided as under:-
"That no failure or omission to carry out the provisions of the contract shall give rise to any claim by the Corporation and the contractor, one against the other, if such failure of omission arises from compliance with any statute or regulation of Government or other reasons beyond the control of either the Corporation or the Contractor."
Clause (vi) of General conditions of the contract provided as under:-
"Failure or delay by the Corporation to hand over to the contractor possession of the lands necessary for the execution of the work, or to give the necessary drawings instructions or any other delay by the Corporation which due to any other cause whatsoever shall in no way affect, or vitiate the contract or alter the character thereof or entitle the contractor to damage or compensation therefore provided that the Corporation may extend the time for completion of the work by such period as it may consider necessary and proper."
11. It was in view of these clauses of agreement that the Hon'ble Supreme Court made the following observations:-
"These conditions specifically prohibit granting claim for damages for the breaches mentioned therein. It was not open to the Arbitrator to ignore the said conditions which are binding on the contracting parties. By ignoring the same, he has acted beyond the jurisdiction conferred upon him. It is settled law that arbitrator derives the authority from the contract and if he acts in manifest disregard of the contract, the award given by him would be arbitrary one. The deliberate departure from the contract amounts not only to manifest disregard of the authority or misconduct on his part, but it may tantamount to mala fide action. In the present case, it is apparent that awarding of damages of Rs.11 lakhs and more for the alleged lapses on delay in handing over work is, on the face of it, against the terms of the contract."
"It is to be reiterated that to find out whether the Arbitrator has travelled beyond his jurisdiction and acted beyond the terms of the agreement between the parties, agreement is required to be looked into. It is true that interpretation of a particular condition in the agreement would be within the jurisdiction of the Arbitrator. However, in cases where the question of interpretation of any term of the contract and still the Arbitrator ignores it and awards the amount despite the prohibition in the agreement, the award is without jurisdiction. Whether the contract or has travelled beyond his jurisdiction would depend upon facts. The Arbitrator may have jurisdiction to entertain claim and yet he may not have jurisdiction to pass award for particular items in view of the prohibition contained in the contract and it would be jurisdictional error. For this limited purpose reference to the terms of the contract is a must."
12. I am afraid the difference in facts of two cases is that of mist and mast. As is apparent from clause 32 of the above referred case there was a condition which specifically prohibited granting claim for damages. It was specifically provided that in case it was not possible for the Corporation to make the entire site available on the award of work the contractor will have to make his programme accordingly and no claim whatsoever will be tenable in this respect.
13. Clause (1) of the contract in question did not totally prohibit the claim on account of delay. It is only in case where the delay is unavoidable in the supply of the material that the claimant was barred from claiming any compensation. However in the instant case the delay has remained not only unexplained but it was long inordinate delay of four years. The perusal of the award shows that the Arbitrator has been more liberal towards the respondent by not awarding the entire claim of the claimant. He referred to several documents namely C-1 to C-46 spanning from 7th February, 19836 to 10th November, 1989 wherein the claimant laid stress on the fact that the foundation details were not supplied in time, one of the blocks had to be shifted 6 meters after the excavation work was over as the decision regarding laying of cement concrete in foundations was delayed, there was delay inn payment, delay in supplying of stipulated material. But nowhere the respondent explained that the delay was beyond its control or was unavoidable.
14. It has been specifically observed by the Arbitrator that the work has been prolonged due to non-fulfilment of the contractual obligations on the part of the respondent resulting in losses and damages. Though vide Exhibit C-5A the claimant claimed the damages on the basis of the prevailing cost indices as on 10.1.83, 9.1.84 and 10.11.89 which is the date of the actual completion, the amount for the work done as on 20.1.84 was Rs.15,48,203/- and amount for the work done up to the final bill was Rs.70,37,338/-. The amount of the work done after stipulated dated of completion was Rs.54,89,135/- and the cost of the stipulated date of completion was Rs.16,33,113/-. Thus the average increase during the execution period worked out to be 53.03% whereas the claimants vide letter (Exhibit C-13) demanded increase of 38% restricting their claim only to the extent of Rs.12 lacs, though actual claim worked out to be Rs.13,50,945/-. After taking all the facts and circumstances into consideration the arbitrator only awarded Rs.10.50 lacs.
15. No party can be allowed to take advantage of its own wrong. The respondent failed to fulfill its obligation inasmuch as that it has neither revealed before the Arbitrator as to the fact whether the delay occasioned was unavoidable nor has explained this aspect in the objections to the award. One is expected to cleanse one's finger before pointing or accusing at the other.
16. The ration of the authority cited above is on the general principles of law governing the award passed by the Arbitrator and is always in respect of facts of a particular case. It is only where the arbitrator departs from the contract or its terms and the award is beyond its boundaries or parameters that the award is to be held sa(SIC)s jurisdiction and untenable.
17. Again the reliance by the counsel for the respondent in case Rajasthan State Mines and Minerals Ltd. Vs. Eastern Engineering Enterprises and another, 1999(3) Arb.LR 350(SC), is misplaced as in the above referred case the expressed term of the contract was that while carrying out the excavation/mining operations from the aforesaid areas, blasting wherever required, shall be undertaken by the contractor at his cost. The remuneration payable under this contract for the work aforesaid was inclusive of this element which included cost of explosives, it accessories transportation, salary and wages of its crew/blasters etc. or otherwise. But the claimant claimed reimbursement and additional payments of compensation on account of escalation of cost of the work and there was a dispute as to the rate per cubic meter and the arbitrator awarded Rs.1.07 crores against the terms of the agreement whereby the contractor was bound to obtain necessary permission from the Director General of Mines Safety and/or other competent authorities for undertaking the blasting operation independently.
18. It was in view of these provisions in the agreement, it was held that the arbitrator had travelled beyond his jurisdiction and deliberately departed from the contract as the reference to the Arbitrator was solely based upon the agreement between the parties where the clauses were so clear and unambiguous that they needed no interpretation.
19. In the instant case the clause itself is subject to interpretation as unless and until the respondent had explained or taken the stand that the delay of four years was unavoidable, it forfeited its right from preventing the claimant to claim any extra compensation on account of delay. However, as regards the remaining claims no serious or tenable objection has been raised as the award is based upon finding of facts and on the strength of the material and the documents. Even otherwise the objection in this regard is not of the nature that the Arbitrator had travelled beyond the terms of the agreement.
20. In the result the objections prove damp squib and are dismissed. The award is made a rule of the Court and decree is passed in terms of the award with future interest @ 15% per annum till the realization of the amount.