Delhi High Court
K R Anand vs Delhi Development Authority & Anr. on 10 July, 2018
Author: Sanjiv Khanna
Bench: Sanjiv Khanna, Chander Shekhar
$~55
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO(OS) (COMM) 138/2018
Date of decision: 10th July, 2018.
K R ANAND ..... Appellant
Through Mr. Harish Malhotra, Sr. Advocate with
Mr. Rajender Agarwal and Mr. R.K. Modi,
Advocates.
versus
DELHI DEVELOPMENT AUTHORITY & ANR. ..... Respondents
Through Mr. Pawan Mathur, Standing Counsel for
DDA with Mr. P.K. Ex engineer DDA.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE CHANDER SHEKHAR
SANJIV KHANNA J. (ORAL)
C.M. No.26673/2018
There is delay of 5 days in filing of the appeal.
Counsel for the respondents does not oppose the application.
Delay is condoned.
FAO(OS) (COMM) 138/2018
This intra-Court appeal under Section 13 of the Commercial Court,
Commercial Division and Commercial Appellate Division of the High
Courts Act, 2015 read with Section 37 of the Arbitration and Conciliation
Act, 1996 (A and C Act, for short) impugns order dated 10th April, 2018,
passed by the single Judge partly accepting objections raised by the Delhi
FAO (OS) (COMM) No.138/2018 Page 1 of 7
Development Authority (respondent before us) in their application/petition
under Section 34 of the A and C Act.
2. The issue and dispute raised in the present appeal relates to claim
Nos. 7 and 8 for compensation on account of under utilization of
infrastructure, staff establishment, overheads, labour, workers, T and P
machineries etc. during the contract period and during the extended period
due to prolongation of contract period by the respondent. Claims were
predicated on breach of contract by the respondent.
3. Reasoning given by the learned Arbitrator for awarding an amount of
Rs.33,98,270/- against claim Nos.7 and 8 made by the appellant reads as
under:-
"28.3.1 The Claimants' certificate for not claiming
damages for the delay on the proforma for
extension of time and later withdrawal, of the same
Is considered as his own prerogative as the contract
do not bind him in this matter. The circumstances
in which the certificate was given being not known,
it is considered that the Claimants claim for the
additional cost for on overheads cannot be denied
on this score alone. I have no reason to disagree
with the submissions made by the Claimants on this
issue. It is quite common that officers of the
government organization throw hints for levy of
compensation for delay in completion and ask for
such, certificate. Such certificate for not claiming
damages is neither a requirement as per the
proforma prescribed for application for extension of
time to be submitted by the contractor nor a
requirement under any provisions of the contract. In
my opinion, even a contractor of average prudence
will not give such blanket certificate voluntarily. In
view of the above, and also In view of the fact that
the Claimants have withdraw the undertaking
FAO (OS) (COMM) No.138/2018 Page 2 of 7
subsequently, I hold that this cannot be a deterrent
in considering this claim of the Claimants.
28.3.2 As regards, cost of overheads on account of
delay due to execution of the additional work, the
overheads include the cost of additional work paid
to the Claimants as extra item. The provision exists
in the contract for deriving such time for additional
work, and the same has also been allowed while
granting extension of time. Therefore, nothing is
payable to the Claimants for period of delay on
account of the additional work carried out.
28.3.3 As seen in the Extension of Time (EOT)
application and its approval attached with the final
bill, apart from the delay due to additional work,
there are three main reasons for delay cited therein.
They are:
(a) Rains, 99 days
Delay in the mix design, 87 days (all, of which are
concurrent to the period of delay due to rains)
(c) Delay due to extreme weather, 45 days.
All these hindrances have been found valid by the
Respondents and extension of time granted without
levy of any compensation' as seen in the attachment
to the final bill submitted by the Respondents. A
period of 55 days have also been allow4d as delay
due to additional work.
In the EOT papers, while deriving period for
additional work the amount of actual work done Is
taken as Rs.35,78,60,106. however, as per the final
bill submitted by the
Respondents, the gross amount of work done is Rs,
37,26,23,089. Thus, the justified period of delay on
account of the additional work done as per
provisions of the contract works out as under:
FAO (OS) (COMM) No.138/2018 Page 3 of 7
No of days allowed for the additional work =
1.25*(Actual amount of work done --Amount as
per contract)*Stipulated time as per contract (in
days)/ Amount as per contract.
1,25*(372623089 -- 287424811)*184/287424811
= 68 days. (A)
28.3.4 This is noted that the work was awarded
such that, the date of start Itself falls at the start of
the rainy season, though, the tender for the work
was received as early as In; Dec, 2012 with the bids
to remain valid for 90 days only. Such long period
of delay in awarding the work Is abnormal.
Therefore, the Respondents cannot absolve
themselves of the responsibility of bringing the
period of execution of work during rains. Similarly,
the contract stipulates, approval of design mix by
CRRI or such organization. The Respondents again
cannot absolve themselves of the responsibility of
delay by CRRI which is a government organization
like that of the Respondents and Respondents were
in good position to get this expedited. The initial
delay in award of work has also resulted into
bringing the work running into extreme cold
weather of winter season. Since the work is
predominantly bituminous work which is not
advisable to be executed during extreme cold
weather and the period has rightly been allowed by
the Respondents as a genuine delay. In view of this,
it is considered that the Claimants need to be partly
compensated for extra expenditure on overheads for
the part of the period other than the period of delay
due to extra work."
(In view of the limited issue, which arises for consideration, we have not
quoted the computation made by the Arbitrator).
4. Learned counsel for the appellant submits that the Arbitrator in
paragraph 28.3.1 had referred to his experience and rightly opined that it
FAO (OS) (COMM) No.138/2018 Page 4 of 7
was common for the officers in government to throw hints for levy of
compensation for delay in completion and ask for no objection certificates
when the contractors apply for extension of time. Our attention was also
drawn to paragraph 28.3.4 to urge that there was delay in approval of
„Design Mix‟ by CRRI for which the appellant was rightly compensated.
5. Appellant had submitted their bid pursuant to notice inviting tender on
27th December, 2012. Appellant‟s bid was accepted by the respondent and
tender was awarded to them on 29th June, 2013. Appellant did not object or
protest against any delay in award of work. They did not withdraw or claim
that as the work was awarded in June, 2012, they should be paid an
additional amount. Pursuant to the award of work, a written contract
binding between the parties was signed. Contract term had clearly stipulated
the date of commencement and completion as 9th July, 2013 and 8th January,
2014, respectively. In these circumstances, we cannot accept the reasoning
given by the Arbitrator that there being delay in acceptance of the bid made
in December, 2012 vide in acceptance on 25th June, 2013, the appellant
should be compensated for extension of time post award of work due to rain
and bad weather. Post acceptance of the bid, written contract was executed.
Claim for compensation for breach would arise if the terms of the written
contract were violated. Time or term of completion was six months from
date of commencement i.e. 9th July, 2013. This was the agreed and accepted
term. Assuming that the tender was accepted in March or April, 2013, the
next six months would have included the monsoon period in July and
August.
6. On the question of approval of „Design Mix‟, the appellant in the
application for extension of time had stated that there were rains for 99 days.
FAO (OS) (COMM) No.138/2018 Page 5 of 7
Delay in „Design Mix‟, it was stated, was for 87 days that were concurrent
to the period of delay due to rains. Last reason given by the appellant was
„extreme weather‟ because of which there was delay of 45 days. Impugned
judgment refers to clause 28.5 of the contract, to highlight, the
contractor/appellant's obligation under the contract to get the „Design Mix‟
approved from CRRI or any other premier government institution. The
appellant was well aware that this could take time. It was not the obligation
of the respondent to get the „Design Mix‟ approved. Thus, there was no
question of breach of obligation by the respondent. Even assuming there was
some delay attributable to CRRI, the respondent would not be liable to pay
damages merely because CRRI was a government organization. Completely
ignoring the contractual mandate, the award erroneously holds that the
respondent had committed breach of contract and was liable to pay damages.
7. Learned single Judge has also commented and referred to the findings
in paragraph 28.3.1., where in the arbitrator had accepted that that the
"circumstances in which extension application was made by the appellant
were not known".
8. We are in agreement with the single Judge that this was a fit case in
which interference was required and necessary in exercise of jurisdiction
under Section 34 of the A and C Act. Impugned order refers and quotes from
Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49, to
observe that when the finding is based upon no evidence, or arbitral tribunal
takes into account something which is irrelevant for the decision and ignores
vital evidence in arriving at its decision, such decision would necessarily be
perverse. Third ground of public policy, justifies interference when the
FAO (OS) (COMM) No.138/2018 Page 6 of 7
award is against justice or morality. An award is stated to be against justice
when it shocks conscience of the Court. The said parameters, when applied
to the facts of the present case, would vindicate and affirm impugned
judgment.
9. In view of the aforesaid discussion, the appeal is dismissed, with no
order as to costs.
SANJIV KHANNA, J.
CHANDER SHEKHAR, J. JULY 10, 2018 MR/NA FAO (OS) (COMM) No.138/2018 Page 7 of 7