Delhi High Court
Shri Ramesh Chander Gupta vs Delhi Development Authority & Another on 21 July, 2009
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS)202-A/1996
% Date of decision: 21stJuly, 2009
SHRI RAMESH CHANDER GUPTA .... Plaintiff
Through: Mr. Girish Aggarwal, Advocate
Versus
DELHI DEVELOPMENT AUTHORITY
& ANOTHER .... Defendants
Through: Ms. Anusuya Salwan, Advocate
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. Whether reporters of Local papers may
be allowed to see the judgment? No
2. To be referred to the reporter or not? No
3. Whether the judgment should be reported
in the Digest? No
RAJIV SAHAI ENDLAW, J.
1 The suit was filed under Section 14 of the Arbitration Act, 1996 for filing of the arbitral award dated 20th December, 1995 in this Court. Upon the award being filed, the notice of filing thereof was issued to the parties. The defendant / DDA filed IA No.3134/1996 in this Court under Section 30 and 33 of the Act. The plaintiff Ramesh Chander Gupta also filed objections to the award under Section 30 and 33 of the Act by way of IA No.6082/1996. On completion of pleadings in both set of objections, the usual issues were framed on 21st February, 1997. The counsel for the parties at the time of framing of the issues agreed that no evidence was required to be adduced and the records of the arbitration proceedings be read as evidence. The plaintiff died during the pendency of the proceedings before this CS (OS) 202A/1996 Page 1 of 9 court and vide order dated 20th February, 2004 the legal representative of the plaintiff allowed to be substituted. 2 The matter was called for final hearing today. However it transpired that neither the arbitral award nor the arbitral record was contained in the two files. However the matter being old, the counsel for the parties in all fairness stated that the matter be not adjourned and made their submissions and wherever necessary made their own records available for appreciation of the submissions being made by them. The copy of the arbitral award is placed on the file of the present suit.
3 The counsel for the plaintiff at the outset stated that he has instructions to withdraw IA No.6082/1996, being the objections to the award preferred on behalf of the plaintiff and withdraw the same. The counsel for the defendant has no objection to the same. IA No.6082/1996 is dismissed as withdrawn.
4 The counsels have been heard on IA No.3034/1996. 5 The counsel for the defendant/DDA with respect to the award generally contended that the award on various claims of the plaintiff was without any reasons, though under the agreement, the arbitrator was required to record reasons; it is also contended that the arbitrator ignored important documents and has thus misconducted himself.
6 Claim No.1 of the plaintiff was for Rs.15,000/- illegally withheld. The award records that the defendant/DDA admitted that CS (OS) 202A/1996 Page 2 of 9 the said sum had been withheld and in fact during the pendency of the arbitration proceedings released/refunded Rs.4755.89 p. out of therefrom. The arbitrator for the reason that defendant/DDA could not produce any cogent evidence justifying withholding of the balance amount, directed refund of the balance of Rs.10244.11 p. It is contended by the counsel for the DDA that the said monies were withheld for defective work done and towards reduction/deduction items statement and that the arbitrator has ignored Ex.R-25 under which the work was accepted at reduced rates.
7 However this court in the jurisdiction even under Section 30 and 33 of the 1940 Act cannot interfere with the factual findings arrived at by the arbitrator. Reference if any required can be made to Coimbatore District Podu Thozillas Samgam Vs. Bala Subramania Foundry AIR 1987 SC 2045 and Arosan Enterprises Ltd. Vs. U.O.I. (1999) 9 SCC 449. In the absence of any plea of bias, I do not find any reason not to believe the arbitrator when he has recorded that the DDA did not produce before the arbitrator any cogent evidence for deduction of the said sum of Rs.10244.11 p. Moreover it cannot be lost sight of that the DDA had initially withheld a total sum of Rs.15,000/- out of which Rs.4755.89 p. was released on claim being made by the plaintiff. The same is also indicative of the withholding of the balance amount also being without any reason.
8 Claim No.2 of the plaintiff before the arbitrator was for Rs.13593/- on account of illegal recoveries made from the bill. The defendant DDA claimed to have made the said recoveries at penal CS (OS) 202A/1996 Page 3 of 9 rates for material issued to the plaintiff for carrying out of the works and non-return of excess material by the plaintiff to the defendant. The arbitrator found that the said material, in terms of the agreement was to be kept in the joint custody of the plaintiff and the defendant and further that the defendant had not issued any notice claiming the balance material or notifying the loss suffered if any on that account. The arbitrator finding the claim to the extent of Rs.11601/- only to be justified, allowed the same. The objection of the defendant is that the excess material not returned, was under clause 42 to be recovered at double the issue rate and thus it is contended that the award on this account is bad. 9 The defendant / DDA has not controverted the findings of the arbitrator of the material under the agreement being required to be kept in joint custody or of the defendant having not issued any notice required to be issued under clause 42(1). In the absence of contravention of the reasons given by the arbitrator, it cannot be said that there is any error apparent on the face of the award or that the arbitrator has misconducted himself.
10 Claim No.4 of the plaintiff was for Rs.85,000/- under clause 10(c) of the contract. The award records that the plaintiff however restricted the claim for Rs.46624.70 p. only. The arbitrator found that no delay had been attributed to the plaintiff and found the claim of the plaintiff for Rs.39,237/- to be justified and allowed the same. The objection of defendant/DDA is that the said claim was not raised during the course of execution of the work and the conditions of clause 10 (c ) were not satisfied by the plaintiff i.e. the plaintiff did not submit any details to prove that there was any CS (OS) 202A/1996 Page 4 of 9 statutory increase during the execution of work and payment to the labour had been made at the increased rate of wages. Thus it was averred that the award under the said claim was liable to be set aside. The counsel for the defendant/DDA however in all fairness admitted that in the present case there was delay on the part of the defendant/DDA. She contended that the plaintiff neither at the relevant time of execution nor before the arbitrator showed any proof of increase in prices of material or increase in wages. 11 I may however notice that the arbitrator has while allowing the said claim to extent aforesaid, recorded that the Executive Engineer of the defendant had at no time demanded records from the plaintiff in terms of clause 10 (c ). Clause 10 (c ) provides for variation of the amount of the contract on account of delay, if in the opinion of the Superintendent Engineer not attributable to or not within the control of the contractor. The said clause also imposes an obligation on the contractor to keep such books of accounts and other documents as are necessary to show the amount of increase claimed and also requires the contractor to allow inspection of the same by a duly authorized representative of the DDA. The said clause also requires the contractor to give notice within a reasonable time of becoming aware of increase in prices, stating that the same is given in pursuance to the said clause. The objection of the defendant/DDA is not that the plaintiff did not give notice of increase but is that proof of increase was not submitted. One possible interpretation of the said clause is of the contractor being required to only give a notice of increase within reasonable time and to keep proof of increase ready with him and to give inspection thereof if demanded. The arbitrator has found that the CS (OS) 202A/1996 Page 5 of 9 defendant did not demand the said inspection. No fault can be found with the said reasoning or logic of the arbitrator. The counsel for the defendant/DDA has also contended that the arbitrator has not recorded as to how he has arrived at the figure of Rs.39237/- awarded. The same also in my view does not constitute a ground to interfere with the award. The arbitrator has recorded that he has considered and applied his mind to the pleadings evidence etc. and the matter in dispute. The arbitrator has not given a lump sum figure but has arrived at a specific figure of Rs.39237/-. The award, merely for the reason of the arbitrator having not given the break up of the amount awarded, does not warrant interference.
12 Claim No.5 of the plaintiff of Rs.1,26,000/- was on account of damages for keeping the establishment, T&P Machinery in the extended period of delay. The arbitrator finding the delay to be of 634 days, held that owing to the delay the plaintiff was compelled to maintain the establishment and overheads amounting to about 3.5% of the cost of the work and awarded a sum of Rs.41832.50p. to the plaintiff on this account. The contention of the counsel for the defendant / DDA is that the arbitrator having allowed the claims under clause 10 (c ) for the reason of delay and having further allowed claim No.7 for extra cost spent in executing the work after stipulated period on account of rise in cost of man and material, ought not to have allowed the claim No.5 for establishment charges. It is urged that the same amounts to overlapping and giving to the plaintiff something not provided for under the agreement. The argument is that once the agreement provides the formula for compensating the contractor for delay, no other CS (OS) 202A/1996 Page 6 of 9 amounts for delay can be allowed. Per contra the counsel for the plaintiff has contended that the claims under clause 10 (c ) are dehors the claims on account of delay for establishment charges which had to be maintained by the plaintiff for throughout the period of delay.
13 This court in Narain Das Israni Vs. DDA CS(OS) 2488/2000 decided on 28.10.2005 has held that claims for damages on account of delay under heads other than those provided for in the agreement can be awarded. In the present case there is considerable delay, admittedly attributable to the defendant/DDA. The damage to the contractor on account of such delay, for the reason of establishment costs is inherent. No misconduct / perversity can be found in the award under claim No.5. 14 Claim No.7 was made by the plaintiff for Rs.312978/- on account of extra cost spent in executing the work after the stipulated period and due to rise in cost of man and material. The arbitrator has on the basis of the sale price index of materials, worked out the claim of the plaintiff on this account at Rs.59933.40 p. The counsel for the defendant has challenged the said award for the reason of the plaintiff having agreed in documents filed before the arbitrator that the delay was on his part. In this regard it may be noticed that it is not in dispute that the delay was on the part of the defendant. Once that is admitted, then the work done after the stipulated date and the cost index applied by the arbitrator is not controverted. The award on this ground is also not found to be interferable.
CS (OS) 202A/1996 Page 7 of 9 15 Lastly the counsel for the defendant has made submissions with respect to high rate of interest of 18 % per annum awarded by the arbitrator. Per contra the counsel for the plaintiff has contended that the plaintiff was awarded merely a sum of about Rs.1.62 lacs and the arbitrator had given an opportunity to the defendant to pay the said amount within three months; the defendant having failed to pay the amount, there is justification for award of future interest at 18% per annum.
16 The arbitrator has awarded pre suit interest to the plaintiff at the rate of 12% per annum. No interference is required with the same. The arbitrator has also awarded interest at 18% per annum for the period the arbitration proceedings remained pending before him. Considering the short term thereof, I do not find any reason to interfere with the same also. The proceedings have remained pending before this court for long. Objections to the award were preferred by the plaintiff also and have been withdrawn today only. In view of falling interest rates, sustaining interest @ 18% p.a. is not found justified. Thus as far as the award of future interest at 18% per annum is considered, following of the dicta in Krishna Bhagya Jala Nigam Vs. G. Haris Chandra Reddy AIR 2007 SC 817 and Flex Engineering Limited Vs. Antartica Construction Co. 2007 (2) Arbitration Law Reporter 387 Delhi, the rate of interest post award is reduced from 18% per annum to 10% per annum till decree. The plaintiff shall also be entitled to future interest from the date of the decree under Section 29 of the Act on the principal amount at the rate of 10% per annum for a period of 60 days here from. If the defendant fails to pay the decreetal CS (OS) 202A/1996 Page 8 of 9 amount within 60 days, the plaintiff shall thereafter be again entitled to interest at 18% per annum.
17 The arbitral award as modified for interest as aforesaid is thus made rule of the court and judgment is pronounced in terms thereof. Decree sheet be drawn up. Parties to bear their own costs.
RAJIV SAHAI ENDLAW (JUDGE) July 21, 2009 j CS (OS) 202A/1996 Page 9 of 9