Delhi High Court
Union Of India vs M.L. Dalmia & Co. Ltd. on 23 November, 1995
Equivalent citations: 61(1996)DLT70
Author: M.J. Rao
Bench: M.J. Rao
JUDGMENT
Anil Dev Singh, J (1) This order will dispose of Fao (OS) Nos-70 and 67 of 1995. This is an appeal against the order of the learned Single Judge dated October 25,1994 in Suits Nos. 342A and 343Aof 1986 whereby the award of the Arbitrator dated October 31,1985 was made a rule of the Court except in regard to claim No. 5. It appears that certain disputes arose between the appellant, Union of India, and respondent, contractor, on whom the appellant placed work order for the construction of 200 meter high Rcc Tv Tower at Jullundur. The disputes were referred to arbitration. The Arbitrator gave his award in respect of the claims and counter claims raised before him. In this appeal we are concerned only with the order of the learned Single Judge in so far as it upholds the award of the Arbitrator in respect of Claim Nos. 3,4 and 8 preferred by the respondent.
(2) Under claim No. 3 the Arbitrator awarded a sum of Rs. 14,95,460.76 in favor, of the respondent-contractor. The claim of the respondent was for a sum of Rs. 22,81,930.00 on account of damages for undue prolongation of the project from September 16,1976 to March 31, 1979 due to the defaults of the appellant.
(3) In order to appreciate the claim made by the respondent it is necessary to mention a few dates. On January 1, 1975 the work of erection of Tv antenna Jullundur was commenced by the respondent. The stipulated date of completion of the work as per the contract between the parties was March 31,1976. According to the appellant the work was completed on January 31, 1981 but according to the respondent the work could be completed only on September 15,1983. The delay in completion of the work according to the respondent is attributable to the appellant and was occasioned due to the following factors :
1.Delay in handing over the site. 2. Delay in carrying out of Wind Tunnel test and delay in approval of drawings. 3. Delay in decisions of specifications and design. 4. Delay in fixing of agency for fabrication of antenna mast. 5. Non-supply of priority quota certificate for structural steel. 6. Delay in decision of fabrication of band Iii antenna. 7. Supply of defective antenna panels. 8. Supply of defective gripping nets for feeder cables. 9. Non-supply of microwave dishes. 10. Delay in issue of import license and foreign exchange for hazard beacon. 11. Delay in supply of cement and steel.
(4) The Arbitrator found that the delay from January 2, 1978 to January 31,1979, consisting of 454 days, was attributable to the appellant on account of its defaults. He has given reasons for holding the appellant responsible for the stoppage of work during that period. "The Arbitrator also came to the conclusion that while the rate of compensation for idle establishment and incidental expenses incurred by the respondent would come to Rs. 1,95,885.76, the rate of compensation payable for idle machinery would work out to Rs. 12,99,575.00. In arriving at the compensation payable on this account, the Arbitrator calculated the compensation for idle machinery (c) Rs. 2,862.50 per day and multiplied the compensation for one day with numeral 454, representing the days for which the machinery remained tied up with the project due to delay of the appellant. Before the learned Single Judge as also before us the learned Counsel for the appellant submitted that during the aforesaid period, viz. January 2, 1978 to Jan. 31, 1979 the work was at a stage where no machinery was needed and therefore the Arbitrator was not justified in awarding the compensation on this account. The learned Single Judge found that such a plea was not raised by the appellant before the Arbitrator. Before us the learned Counsel for the appellant fairly conceded that no such plea was raised before the Arbitrator but still canvassed that there was no need for the respondent to have kept the machinery at site. We have considered the submission of the learned Counsel for the appellant but we regret our inability to accept the same as such an argument was not advanced before the Arbitrator. It is not for us to judge whether the machinery was needed at the site from January 2,1978 to January 31,1979. The Arbitrator has given reasons for coming to a finding that the appellant was liable for compensation for prolongation of the work. The Court cannot sit in appeal over the decision of the Arbitrator. It can only interfere with the award of the arbitration if there is an error apparent on the face of the award or the finding is perverse or the Arbitrator has misconducted the proceedings. Since none of the contingencies exist for setting aside the award of the Arbitrator in regard to claim No. 3, the learned Single Judge was right in upholding the same. Accordingly the plea of the appellant for setting aside the order of the learned Single Judge in regard to claim No. 3 is rejected.
(5) In so far as claim No. 4 of the respondent is concemed, which was in regard to extra cost on account of fabrication of antenna mast by Nangal Workshop of Bhakra Beas Management Board, the Arbitrator awarded a sum of Rs. 5,54,303.00- in favor of the respondent. The Arbitrator noticed that the case of the respondent was that it was free to employ any agency for carrying out the fabrication and galvanizing work of antenna mast but the appellant insisted on the work being done by Nangal Workshop. This according to the respondent resulted in extra payment to the tune of Rs. 6,71,239.16. The Arbitrator on going through the evidence on record came to the conclusion that the appellant compelled the respondent to get the work executed at Nangal workshop of Bhakra Beas Management Board and consequently the respondent had to incur extra cost. The Arbitrator was of the opinion that on principle the respondent was right in its submission but the amount claimed was on the higher side. On consideration of the matter, the Arbitrator came to the conclusion that the respondent was entitled to a sum of Rs. 5,54,303.00 being the amount in excess of the liability of the respondent on account of fabrication and galvanizing of Antenna Mast. The learned Single Judge having found no infirmity in the award of the Arbitrator in regard to the instant claim upheld the same. 73 (6) Before us learned Counsel for the appellant argued that the respondent had filed a suit against Nangal Workshop of Bhakra Beas Management Board for delivery of fabricated and/manufactured Antenna Mast including unutilised material and for recovery of Rs. 2,61,214.15 paid in excess to the Nangal workshop. The suit was, however dismissed. Learned Counsel submitted that at the most the respondent could have asked for a sum of Rs. 2,61,214.15 which is alleged to have been paid in excess to Nangal Workshop of Bhakra Beas Management Board. We are not persuaded to accept the submission of the learned Counsel as undisputably the aforesaid plea was neither raised in the pleadings nor urged before the Arbitrator. Besides the respondent had paid a sum of Rs. 6,25,000.00 to Nangal Workshop for fabrication and galvanizing of Antenna Mast. This sum was beyond the liability of the respondent. Any amount paid by the respondent which was in excess of its liability was, therefore, recoverable by it. Thus we find no infirmity in the order of the learned Single Judge in so far award on claim No. 4 is concerned.
(7) As regards award of interest under claim No. 8, learned Counsel for the appellant submitted that the Arbitrator was not justified in awarding interest from March 5, 1981 when the Arbitrator was appointed. Learned Counsel pointed out that the first Arbitrator resigned even before issuing notice to the parties and, therefore, interest, if any, should have been awarded with effect from July 25,1983 when the subsequent Arbitrator Shri B.S. Mathur entered upon reference. It cannot be disputed that the Arbitrator has the jurisdiction to grant interest under the Interest Act, 1978 during the period the arbitration proceedings remained pending (See: Secretary, Irrigation Department, Government of Orissa and Others v. G.C.Poy. . The only controversy is about the date from which the pendente lite interest was required to be awarded by the Arbitrator.Whether the interest was to be awarded from March 25, 1981 when the reference was made to the Arbitrator in the first instance or was it to be awarded from July 25, 1983, when the matter was referred to the new Arbitrator is the question to be considered. In Santokh Singh Arora v. Union of India and Others disputes between the parties were referred to arbitration. During the proceedings several Arbitrators dealt with the matter. The first Arbitrator was appointed on December 18,1968. He was succeeded by another Arbitrator, who gave his award on November 21,1983 but the matter was remitted back to him by the Supreme Court. He, however, refused to deal with the same. Ultimately another Arbitrator was appointed who gave the final award on October 28, 1987. As per the final award pendente lite interest was awarded on a months adjudged in favor of the appellant, with effect from November 21, 1983 when the new Arbitrator was appointed, and not from December 18, 1968 when the initial appointment of the Arbitrator was made i.e. when the first Arbitrator was appointed. The Supreme Court allowing the appeal of the appellant held as follows : "8.THEappellant has raised an objection that interest should have been awarded for the entire period i.e. with effect from April 1,1968, the date the respondents withheld the payments and the appellant took legal action in the matters, and that it should not have been confined to the period during which the matter was pending arbitration before the learned Arbitrator and his predecessor, Shri Justice A.C. Gupta. We find considerable merit in this submission. In Secretary, Irrigation Department, Government of Orissa v. G.C. Roy (C.A. No. 1403 of 1986 decided on December 12, 1991)(reported in 1992 Air Scw 389), a Constitution Bench of this Court has dealt with the question of award of interest pendente lite by the Arbitrator and it has been laid down that in a case where the agreement between the parties does not prohibit grant of interest and the parties have referred all their disputes to arbitration without reference to the Court, the Arbitrator has a power to award interest pendente lite. Here, the matter has been pending in arbitration ever since the Chief Engineer appointed Lt. Col. L.K. Raisinghani as the Arbitrator by order dated December 18,1968. The learned Arbritrat or has awarded interest (c) 12% per annum for the period November 21,1983, the date on which the dispute was referred to the arbitration of Shri Justice A.C. Gupta, till the date of the award made by the learned Arbitrator. "This indicates that the lamed Arbitrator wanted to award interest in respect of the period during which the matter was pending in arbitration before him and Shri Justice A.C. Gupta. Since interest was being allowed for the period during which the matter was pending in arbitration before Shri Justice A.C. Gupta and the learned Arbitrator, the interest should also have been allowed in respect of the period during which the matter had been pending in arbitration even since the Chief Engineer appointed Lt. Col. L.L Raisinghani as the Arbitrator by order dated December 18,1968 and the matter was pending before the said Arbitrator or his successors or in the Courts in connection with proceedings arising out of the said arbitration. We are of the opinion that the appellant is entitled to be compensated for denial of his legitimate dues during the period from December 18,1968 till the date of the award of the learned Arbitrator. The appellant is also entitled to be compensated for the costs incurred in prosecuting his remedies before the Arbitrators as well as in Courts below and before this Court."
(8) Keeping in view the aforesaid observations of the Supreme Court, we are of the view that the learned Single Judge was right in upholding payment of interest to the respondent from March 5,1981 when the Chief Engineer made reference to the Arbitrator in the first instance. Since all the points raised by the appellant fail, the appeal (FAO(OS) No. 70/ 95) is dismissed with costs which are quantified at Rs. 2,500.00. The appellant contractor has challenged before us the judgment of the learned Single Judge in so far as the setting aside of the award of the Arbitrator pertaining to claim No. 5 is concerned. In regard to Claim No. 5 the Arbitrator had awarded a sum of Rs. 82,751.00 for the extra expenditure incurred by the appellant in buying structural steel from open market. The case of the appellant contractor before the Arbitrator was that the priority quota certificate was not arranged by the respondent and had the same been issued in its favor, the appellant would have got the steel at lower rates fixed by the Joint Plant Committee. On the other hand the case of the respondent Union of India is that the steel was freely available in the open market and there was no need to issue priority quota certificate. Besides It was canvassed that the respondent applied for priority quota certificate late without giving particulars. The Arbitrator was of the opinion that the question was not about the availability of the steel but had the priority quota certificate been arranged by the respondent, the appellant would not have incurred extra expenditure because there was difference between the price fixed by the Joint Plant Committee and Stockyard rates.The Arbitrator without going into questions as to whether the appellant delayed in applying for the priority quota certificate and whether the appellant failed to furnish the requisite particulars, decided the claim in favor of the appellant. Having regard to the nature of the controversy, we are of the opinion that the Arbitrator ought to have gone into the aforesaid question before making the award in respect of the said claim in favor of the appellant contractor.The learned Single Judge, therefore, rightly came to the conclusion that the Arbitrator should have decided the said questions but erred in rejecting the claim and not remitting the same for further determination by the Arbitrator. It is not for the Court to adjudicate the claims of the parties but it is the function of the Arbitrator to deeded them in the light of the evidence on record.Accordingly,we allow the appeal and set aside the order of the learned Single Judge and remit Claim No. 5 to the Arbitrator for fresh determination.