Delhi High Court
Kochar Construction Co. vs Union Of India And Another on 21 January, 1994
Author: Arun Kumar
Bench: Arun Kumar
JUDGMENT Arun Kumar, J.
1. This is contract's (claimant) appeal against the judgment and decree dated 12th March, 1987 passed by the learned Single judge whereby the award dated 31st January, 1986 was set aside with respect to claim No. 3 and the claim regarding further interest. For the rest a decree was passed in terms of the award granting interest at the rate of 12 per cent per annum from the date of decree till payment in the event of failure of the respondent to pay the decretal amount within two months from the date of decree. The appellant is aggrieved by the decision of the learned Single Judge in setting aside the award regarding claim No. 3 and refusal to grant interest from the date of award till the date of decree on the claims which were allowed by the learned Single Judge.
2. The appellant's tender for construction of vertical extension of T.E. Building, Chankya Puri, New Delhi, was accepted by the respondents on 29th July, 1980. The work was to commence on 13th August, 1980 and was to be completed by 12th August, 1981. The work could not be completed by the stipulated date and the agreement was rescinded vide letter dated 21st August, 1982. According to the appellant the rescission of the contract by the respondent was illegal and unjustified. The contractor invoked arbitration clause. The claims raised by the contractor and the counter claims of the respondent were finally adjudicated upon by Shri N. N. Chakraborty, Superintending Engineer. The learned arbitrator gave his award on 31st January, 1986 holding that the rescission of the contract by the respondent was unjustified. As per the award the following claims were allowed :
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"No of claim Name of claim Amount claimed Amount allowed
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Claim No. 1 Refund of Security Rs. 32,000 modified Rs. 3,641
deposit to Rs. 33,641
Claim No Claim for further Rs. 12,188.89 later Rs. 655 2(a)
payment for part
modified to Rs.
rates items 8,996.98
Claim No. Claim for further Rs. 1,443.83 Rs. 631 2(a)
payment for extra
items
Claim No. Claim for further Rs. 43,698.22 Rs. 18,355 2(d)
payment for the
work already done
Claim No. 3 Claim for extra Rs. 2,91,390 Rs. 2,86,895
payment due to
modified to Rs
escalation of rates 2,91.693
Claim No. 5 Claim for payment Rs. 4,000 Rs. 2,143
of dismantling
alleged to have
been done by
chiselling
Claim No. 15 Claim for pendente
(i) interest at 12% p.a. from March lite interest
3, 1983 to the date of the award on
items No. 1, 2(a), 2(b) and 2(d) and
(ii) from the date of the award till
the date of of payment or decree on the
entire amount of Rs. 3,42,320."
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3. The matter came up before the learned Single Judge for making the award rule of the court and for passing a decree in terms thereof. Objections to the award were filed on behalf of the respondent Union of India. After considering the objections the learned Single Judge set aside the award regarding claim No. 3. The learned Single Judge also disallowed interest on the amount awarded with respect to other claims from the date of award till the date of decree. The appellant has challenged the judgment of the learned Single Judge regarding both these points.
4. So far as the question of non-grant of pendente lite interest i.e., interest from the date of award till the date of decree on the claims allowed, the learned counsel for the respondent conceded at the time of hearing that in view of the latest judgments of the Supreme Court the appellant is entitled to pendente lite interest on the claims allowed by the learned Single Judge. Therefore, the only point of controversy in the present appeal has been regarding the decision of the learned Single Judge on claim No. 3 is concerned.
5. Claim No. 3 pertains to extra payment due to escalation of rates for the work performed after the due date completion of works. The case of the appellant regarding the said claim is that under the agreement the work was to commence on 13th August, 1980 and was to be completed by 12th August, 1981. The respondents, however, finalised the drawings and gave the same to the contractor only in December 1980. They failed to provide access to the terrace where the work was to be executed. The side stair case was constructed only in July 1981. In the circumstances the contractor could not start the execution of the work before July 1981. The contractor had to execute the work of the value of Rs. 5,11,741.45 after August 1981, i.e., after the due date of completion of work. The market rate of construction material to be procured by the contractor had gone up by 57% over the tender cost and, therefore, the contractor was entitled to 57% of Rs. 5,11,741.45, i.e., Rs. 2,91,693/-. The time was not the essence of the contract and under these facts the rescission of the contract was unjust and illegal. In their reply the respondents almost admitted the fact that delay in commencement of the work was on their account. The respondents, therefore, had granted extension of time to the contractor.
6. Considering all the circumstances the learned Arbitrator held that the respondents had been in default and had committed breach of contract inasmuch as the delay in commencement of work was on their account. The learned arbitrator further held that the contractor/claimant had executed work of gross value of Rs. 4,78,159/- after the stipulated date of completion of work and was entitled to increase at the rate of 60 per cent on the said amount which worked out to Rs. 2,86,895/-. The Contractor was thus allowed this amount under claim No. 3.
7. The learned Single Judge has upheld the finding of the arbitrator that the rescission of the contractor by the respondents was illegal and unjustified. The learned Single Judge also did not find any fault with the finding of the learned arbitrator that prolongation of work was caused by the defaults and breaches on the part of the respondent and that the contractor was entitled to claim revision of rate because of increase in the cost of construction. Further on the merits of the claim the learned Single Judge did not sustain the finding of the learned arbitrator and, therefore, the claim was disallowed. The real point in issue in this connection is - whether there was any material on record to sustain the claim of the claimant for the amount claimed by it under this head ? The appellants have mainly relied on cost analysis submitted by them which is Annexure 'D' to their statement of claim. According to the appellants the respondents failed to file any reply to the said analysis or dispute the same and therefore, the appellant is entitled to the amount claimed by it on the basis of analysis submitted by them. A reference has been made to the arbitration proceedings dated 3rd August, 1985 wherein the arbitrator directed the respondents to file their reply to the said analysis. The arbitration proceedings concluded on 23rd November, 1985. A reply to the cost analysis of the claimant was filed by the respondent before the arbitrator on 6th January 1986 and the claimant filed a rejoinder thereto on 21st January, 1986. Thus according to the learned counsel for the appellant up to 23rd November, 1985 no reply to the cost analysis of the appellant was filed by the respondent. Therefore, it should be taken as a case of non-traverse and the appellant should be held entitled to the amount claimed. It is further submitted on behalf of the appellant that quality or quantity of evidence or sufficiency of evidence is not to be gone into by the court and since the arbitrator had felt satisfied about the evidence in this behalf the claim ought to have been decreed. The learned counsel for the appellant has relied on Delhi Municipal Corpn. v. M/s. Jagan Nath Ashok Kumar and Jagdish Chander v. Hindustan Vegetable Oils Corpn. to contend that when the arbitrators is a man of the concerned trade, being an experienced Engineer in the present case and being a senior officer of the respondent, the award of such an arbitrator ought not to be interfered with.
8. In reply the learned counsel for the respondent has submitted that it is not a case of quantity or quality of evidence or sufficiency of evidence, but it is a case of no evidence at all. According to the learned counsel filing of cost analysis alone is not sufficient. In order to sustain its claim the claimant has to lead some evidence in its support. No evidence was at all lead by the claimant on the point except filing of the chart containing cost analysis. Apart from this our attention has been drawn by the learned counsel for the respondent to the fact that admittedly the claimant had executed the work of the value of Rs. 4,78,159/- after the date of completion of the work. This figure of Rs. 4,78,159/- included a sum of Rs. 2,60,711.57 which was the price of steel and cement supplied by the department to the contractor on the original agreed rates, meaning thereby that there was no question of escalation in the cost to this extent. If the amount of Rs. 2,60,711.57 was excluded from the figure of Rs. 4,78,159/- the contractor had spent only Rs. 2,17,447.43 by way of material and wages and at the most increase could be allowed on this amount and not on the total amount. Thus, according to the respondents, the learned arbitrator misconducted himself and the proceedings in allowing the increase on percentage basis on the total amount of work done by the contractor after the due date of completion.
9. Both the above submissions on behalf of Union of India found favor with the learned Single Judge and, therefore, the claim on account of escalation in the cost of construction after the stipulated due date of completion was disallowed and the award in this respect was set aside. We find ourselves in total agreement with the reasoning of the learned Single Judge in this behalf. In the facts and circumstances of the case mere filing of cost analysis cannot be accepted as the evidence of expenditure on account of increased cost of construction even if the cost analysis was not traversed by the respondent. While on question of traverse it may be mentioned that the respondent had filed a reply in opposition, though after the date of completion of arbitration proceedings and the claimant filed a rejoinder thereto. These were both before the date of the award.
10. The fact remains that no independent evidence has been led in support of the claim. The case, therefore, is one of total lack of evidence. Apart from this we also agree that assuming escalation could be allowed on percentage basis, the same could not be allowed on the total amount of work done after the date of due completion, i.e. on Rs. 4,78,159/-. The cost of steel and cement supplied by the respondent at the agreed rates, i.e. without any escalation, amounting to Rs. 2,60,711.57 was in any case liable to be excluded from the said total amount. Under the circumstances we find no merit in the submissions on behalf of the appellant on claim No. 3.
11. However, in view of the latest position in law emerging from Secretary, Irrigation Department, Govt. of India v. G. C. Roy , and Hindustan Construction Co. Ltd. v. State of J&K , the appellant is entitled to pendente lite interest. The impugned judgment and decree dated 12th March, 1987 is modified to the extent that the appellant decree holder is entitled to interest on the amount of Rs. 55,425/- at the rate of 12 per cent per annum from the date of award till the date of payment. The appeal is disposed of in these terms leaving the parties to bear their respective costs.