Delhi High Court
Bhag Kathuria Engineers (P) Ltd. vs Delhi Development Authority & Another on 4 September, 1995
Author: K. Ramamoorthy
Bench: K. Ramamoorthy
JUDGMENT K. Ramamoorthy, J.
1. In April 1986 the plaintiff in the suit filed his claim statement. There are ten claims. The 10th claim relates to payment of interest pendente lite. Dispute before me is only relating to Claims 1, 2, 3, 4 to 6 and 10. Therefore, I do not find it necessary want to refer to the averments in the claim petition in extenso. In August 22, 1985 the respondent filed the counter statement.
2. In Claim No. 1, the petitioner has made a claim for Rs. 45,000/- towards reimbursement in respect of the statutory charges or wages to labourers and the price of material. In the claim statement itself, after giving credit to the amounts spent by the respondent, the claimant had registered its claim to the sum of Rs. 33,579.81. The defense by the objector DDA is that the claimant had not produced any materials to prove its claim.
3. In Claim No. 2, the claimant has claimed Rs. 3,13,536.67 for the work done but not measured by the objector.
4. This is denied by the objector.
5. In Claim No. 3 the claimant has claimed Rs. 11,36,626.81 towards enhancement of rates for the work done during the extended period by 25.25%. The following dates will be relevant :-
11-7-1980 Date of Tender (Form No. 7).
28-11-1980 Date of Acceptance.
8-12-1980 Stipulated date of commencement of work.
9 months was the stipulated period.
7-9-1981 The stipulated date of completion.
13-4-1985 The actual date of completion.
(4) It is stated in the claim statement there was a delay of 51 days in handing over the site, 932 days in the supply of drawings and there was delay of supply of stipulated material. The claimant has put the claim in the following manner :-
Value of the work done : Rs. 45,01,492.45 On this 25.25% is claimed after the stipulated date as enhanced rate of completion Rs. 11,36,626.81 (5) The defense by the objector is as follows :-
"For enhancement of rate by 25.25% for the work executed after the stipulated date of completion.
(i) As indicated earlier it is further stated that the respondent has duly and punctually performed its obligations. However, the claimant failed to keep due pace and strive for timely completion of work. In fact the claimant due to breaches and lapses on his part and lack of proper management failed to make the optimum utilisation of resources at his disposal and complete, the work in time.
(ii) It has already been stated that there was no breaches on the part of the respondent. The claimant be put to strict proof for justification.
(iii) It has been amply made clear in reply to paras of statement of facts that the respondent did discharge, punctually and regularly, its obligation under the agreement. All the requisite materials were supplied in the commensurate with the demand by the claimant as per labour engaged by him and the progress of the work as a result of which the claimant had never been short of materials. The claimant even failed to make optimum utilisation of material put to his disposal. In other words he failed to give due impacts to work due to lack of proper planning and mismanagement, also disturbed the schedule of department and blocked the deptt's capital which would be realised by way of early allotment of flats the claimant completed the work in time. Thus instead of claiming for damages, he should be made to compensate the deptt. for blocking its capital.
(iv) There is no Clause of the agreement by which the claimant's demanded can be justified. Hence denied. However, the claimant be put to strict proof.
(v) In view of explanation in item (IV) above it is denied.
(vi) In view of explanation in item IV and V above. It is denied. However, the claimant be put to strict proof.
(vii) In view of explanation given above, the claim of the claimant is denied.
The justified extension of time had been granted to the claimant vide relevant Clause of the agreement. Therefore the learned Arbitrator is requested to set aside the claim."
6. The objector maintained in the counter statement before the arbitrator that there was no delay in supply of the material and no mention is made about any exemption clause in and by which the objector could absolve itself from any liability in this behalf.
7. In the written arguments submitted before the Arbitrator, what is stated by the objector as follows :-
Claim No. 3 : Under this claim it is stated that the respondent rely on the counter statement of facts submitted on 22-8-1986.
Further, kind attention of the learned Arbitrator is attracted to specification and condition (specification No. 4.1 and General No. 1) of the agreement which are reproduced as below :-
General Conditions
1. The contractor must get acquainted with the proposed site for the works and study specification and conditions carefully before tendering. The work shall be executed as per programme approved by the Engineer-in-charge. If part of site is not available for any reason or there is some unavoidable delay in supply of materials stipulated by the department, the programme of construction shall be modified accordingly and the contractor shall have no claim for any extra or compensation on this account.
Specification 4.1 The contractor shall carry out the work of sewer lines in close coordination with works of other services in the area. The contractor shall have no financial or other claims arising out of lack of co-ordination."
7. What was relied on before the Arbitrator was the general condition mentioned at page 42 (in the printed Format) of the contract. What it states is that the objector is absolved only if there is some unavoidable delay in the supply of materials. It may be mentioned that the objector did not rely upon before the Arbitrator Clause 10 of the contract.
8. In the objection petition before this Court in I.A. 1388/88 in paragraph (f) is what is stated by the objector :
"That the findings of the learned Arbitrator with respect to Claim No. 3 thereby awarding a sum of Rs. 9,33,660/- is erroneous on the face of it and the errors of judgment are apparent on the face of it. It is submitted that the learned arbitrator by awarding the said sum of Rs. 9,33,660/- has acted contrary to the terms of the agreement more particularly Clause 10 of the said agreement which was a bar for granting any compensation for any delay which had caused due to late supply of cement, steel and shutters. It is further submitted that the learned arbitrator has erred in holding that there was delay in handing over part site on account of irregular supply of cement, steels, shutters, drawings and designs, whereas the position altogether reverse as the evidence clearly establishes, that there was no such delay on the part of the D.D.A. as everything was supplied commiserating to the progress of the work and the work was delayed only because of inadequate labour with the contractor. The learned Arbitrator has ignored the material evidence in this regard and the findings of the learned arbitrator on the point of delay is perverse on the face of it as it is totally contradictory to the established evidence on the record. It is further submitted that the learned Arbitrator has altogether lost the sight of the fact that the contractor as the same is contrary to the provisions of 73 of the Contract Act. alleged delay and in the absence of any evidence of any loss being suffered by the contractor no amount could have been awarded by means of damages to the contractor as the same is contrary to the provisions of 73 of the Contract Act. The learned Arbitrator by awarding the said sum of Rs. 9,33,660/- has acted mechanically and the said award of damages has no nexus with the loss if any suffered by the contractor which fact was never pleaded. The learned Arbitrator has gone on the basis of percentage basis and has awarded whatever has been claimed by the contractor without looking into the genuineness of the claim of the contractor which clearly shows the interest of the arbitrator in the contract. Even otherwise the learned Arbitrator has failed to record any reason for awarding the said amount thereby indicating his thought process as to how and on what basis the said damages are being awarded to the contractor which is clearly of misconduct on the part of the learned Arbitrator and the award is bad in law."
9. In Claim No. 4, the claimant had made a claim of Rs. 77,167.04 being payment due on quantities of items measured less and the details are given in Annexure 4 of the claim statement.
10. In Claim No. 5, a sum of Rs. 5,667.33 is claimed as amount short paid and on part rates and the details are given in annexure.
11. In Claim No. 6, the claimant had claimed Rs. 4,982.94. The claimant had given credits to the payments made subsequently and the details are given in Annexure 6 to the claim petition.
12. In Claim No. 10, the claimant claimed interest pendente lite at 18% per annum. This was also denied by the objector.
13. On 4-12-1987 the Arbitrator passed the award.
14. On Claim No. 1 the Arbitrator had observed that the claimant has given details of statutory increase in wages of labours from 1-3-1982 and increase in price of bricks and Executive Engineer has not given any convincing reason for the non payment of the amount to the claimant.
15. The argument advanced on behalf of the objector is that no proof has been adduced by the claimant and, therefore, the Arbitrator had committed a misconduct in allowing the claim. The Arbitrator had referred to Annexures 1A and 1B, filed with the S.O.F., the amount payable under Clause 10(C) and 1 do not find any merit in the contention of the objector and the objection is rejected. The award by the Arbitrator on this claim is confirmed.
16. In Claim No. 2, out of the total claim of Rs. 3,50,000/-, the Arbitrator has considered the claims separately under 12 sub heads and has allowed the claim of the claimant to the extent of Rs. 28,833/-. The Arbitrator, in my view, has fully applied his mind to the claim of the claimant and also the objections by the respondent and has come to the conclusion.
17. The argument advanced on behalf of the objector is that no reasons have been given by the Arbitrator, as required under Clause 25 of the Agreement, and, therefore, the award on this ground is vitiated. I do not appreciate the contention of the objector. The Arbitrator has gone into the details of the claim and he has stated that the work done was also verified. No more reason is required. It cannot be contended by the objector that the Arbitrator had no jurisdiction and the objector has not been able to show any other infirmity in the view taken by the Arbitrator. Sitting under Section 30 of the Arbitration Act, I have no hesitation in rejecting the contention of the objector and I confirm the award by the Arbitrator on Claim No. 2.
18. With reference to Claim No. 3, it was asserted in the counter statement before the Arbitrator that there was no delay in supply of materials, that has not been substantiated. In the written arguments before the Arbitrator, Clause 10 is not relied on and is not even referred to. Therefore, it is not open to the objector to raise this point now before this Court.
19. I am inclined to infer that there is a reason for the objector not taking the point before the arbitrator. General condition relied on by the objector before the arbitrator which has been extracted by me above, mentions that only if there is unavoidable delay the objector can seek to escape from its liability, there was no such plea by the objector.
20. Under the normal rules of the construction of contract the intention of the parties has to be gathered by a reading the document as a whole. The intention was that in supplying materials the objector should have been some unavoidable delay. There is no whisper about it and, therefore, the objector did not rely upon Clause 10. Clause 10 of the contract reads as follows :-
"Stores supplied by Delhi Development Authority. If the specifications or schedule or items provided for the use of any special materials to be supplied from Engineer-in-charge's stores or it is required that the contractor shall use certain stores to be provided by the Engineer-in-charge as shown in the schedule of materials hereto annexed the contractor shall be bound to procure and shall be supplied such materials and stores as are from time to time required to be used by him for the purposes of the contractor only, and the value of the full quantity of material and stores so supplied at the rates specified in the said schedule of materials may be set off or deducted from any sums then due, or thereafter to become due to the contractor under the contract, or otherwise or against or from the security deposit or the proceeds or sale thereof if the same is held in Government securities, the same or a sufficient portion thereof being in this case sold for the purpose. All materials so supplied to the contractor shall remain the absolute property of Delhi Development Authority and shall not be removed on any account from site of the work, all shall be at all times open to inspection by the Engineer-in-charge. Any such materials remaining unused and in perfectly good condition at the time of the completion or termination of the contract as shall be returned to the Engineer-in-charge at a place directed by him, by a notice in writing under his hand, if he shall so require but the contractor shall not be entitled to return any. Such materials unless with such consent, and shall have no claim for compensation, on account of any such materials so supplied to him as aforesaid not being used by him or for any wastage in or damage to any such materials. Provided that the contractor shall in no case be entitled to any compensation or damages on account of any delay in supply or on supply thereof all or any such materials and stores. Provided further that the contractor shall be bound to execute the entire work if the materials are supplied by the Delhi Development Authority within the scheduled time for completion of the work plus 50 per cent thereof (scheduled time plus 6 months if the time of completion of the work exceeds 12 months) but if a part only of the materials has been supplied within the aforesaid period then the contractor shall be bound to do so much of the work as may be possible with the materials and stores supplied in the aforesaid period. For the completion of the rest of the work the contractor shall be entitled to such extension of time as may be determined by the Engineer-in-charge whose decision in this regard shall be final.
21. What is argued is that under Clause 10 the contractor shall in no case be entitled to any compensation or damages on account of any delay in supply or on supply thereof all or any such materials and stores. This particular sentence is taken out of its context and it is submitted that whatever may be the position with reference to supply of material the objector cannot be fastened with any liability.
22. The learned Counsel for the objector relied on the judgment of Kirpal, J. (As he then was) in suit No. 2185/87 dated 20-7-1990, the learned Judge referred to Clause 10 of the contract (The same Clause as in the present case) and as the objector did not raise the point before the arbitrator this decision is of no help to the objector. Further, general condition, which was relied on by the objector, was not brought to the notice of the learned Judge. Therefore, the objector cannot rely upon the above decision as a precedent for the proposition propounded by the objector.
23. The learned Counsel for the objector relied upon the decision reported in Continental Construction Co. Ltd. v. State of Madhya Pradesh . This decision turned down the interpretation of a Clause totally different from what we find in this case. In the Supreme Court case the relevant Clause read as follows :-
"3.3. 15 Clause 15. Time limit for unforeseen claims : Under no circumstances whatever shall the contractor be entitled to any compensation from Government on any account unless the contractor shall have submitted claim in writing to the Engineer-in-charge within one month of the cause of such claim occurring."
24. The learned Counsel for the objector relied on the judgment of the Supreme Court reported in Associated Engineering Co. v. Government of Andhra Pradesh and another . This decision of the Supreme Court does not help the objector. The learned Counsel for the objector also relied on the decision of the Full Bench of the Kerala High Court Government of Kerala and another v. V. P. Jolly . The Kerala High Court had dealt with a different point and the Court was not dealing with a situation similar to the one that is before me Therefore, the decision of the Kerala High Court cannot be of any help to the objector.
25. The learned Counsel for the objector referred to the decision reported in R. S. Rana v. Delhi Development Authority and another (1993(2) Arb. LR 165), a decision by this Court. The learned Judge was invited to decide the question whether the arbitrator has jurisdiction to decide on issues on which the decision of the Department is made final under the contract. The point that has arisen for decision in the instant case is quite different and, therefore, the above decision cannot at all be called in aid by the objector.
26. The learned Counsel for the objector relied upon the decision reported in Ishwar Singh & Sons v. D.D.A. (1994(1) Arb. LR 526). The learned Judge of this Court has considered Clause 10 of the agreement. This case is of no assistance to the objector for two reasons. First is Clause 10 was not relied upon by the objector before the arbitrator, secondly the attention of the learned Judge was not brought to the general condition which speaks of unavoidable delay. Therefore, I fail to appreciate how this decision can be relied on by the objector.
27. Therefore, in my view, the arbitrator has considered the claim of the claimant on the basis of materials made available and there is no error apparent on the face of the record and it cannot be said that the arbitrator committed any misconduct in coming to a decision on Claim No. 3. No doubt, the arbitrator while deciding on Claim No. 3 has not referred to what is stated in the written arguments before him. As I had noticed above, no defense is taken on the basis of Clause 10 read with general condition No. 1. The scope of Clause 10 and general condition No. 1 is different and they operate in different fields. Clause 10 speaks of the obligations by the Objector during the period of the contract and, therefore, during the currency of the period stipulated in the contract if there is any delay in the supply of materials the contractor cannot make any claim. When there is a delay on account of the objector and the period of contract is extended the situation is met by general condition No. 1. Here is a case where the period was extended owing to the various acts on the part of the objector and it is not stated by the objector anywhere that the contractor was responsible for the extension of the period. Therefore, general condition No. 1 would come into play and unless the objector proves that there was unavoidable delay in the supply of materials the objector cannot escape the liability. That is the intention of the contract also. It is a matter of common knowledge that every year the schedule of contract is revised by the Government and when 9 months period is fixed in a contract the parties would not have had the intention that there will be no any increase in the rates and, therefore, the contractor shall do the work on the schedule of rates fixed in the contract when the rates would apply to only that financial year. But if the period is extended by nearly four years it is not definitely the intention of the parties that the contractor should do the work on the rates fixed in the contract which was based on the schedule fixed by the Government in that particular year. I am aware that during the extended period the parties would be governed by the terms of the original contract for all purposes but on that score it cannot be contended that the objector or it can set itself free from the obligation by virtue of Clause 10, proprio vigore even if there is no plea of unavoidable delay we have to reconcile Clause 10 and General Conditions of the Act. If that is done the intention would clearly emerge. Therefore, the reliance on the Clause 10 in this case is wholly misconceived. The objection of the respondent is, therefore, rejected and the award on Claim No. 3 is confirmed.
28. With reference to Claims 4 to 6, the arbitrator has given cogent reasons. The argument advanced on behalf of the objector is that the arbitrator has stated while deducting amounts, as mentioned in the bill, when presented by the contractor no show cause notice was given by the objector and, therefore, the reason given by the arbitrator is vitiated. According to the learned counsel while making deductions in the bill, submitted by the contractor, there is no obligation on the part of the objector to give show cause notice to the contractor. The arbitrator has considered all aspects deciding the claims and I do not find any reason to set aside the award on the ground urged by the learned Counsel for the objector. There is no jurisdiction point involved. Therefore, the award made by the arbitrator on Claims 4 to 6 is confirmed.
29. In respect of Claim No. 10 for interest pendente lite, it has been decided by the Supreme Court that the arbitrator has jurisdiction to award interest pendente lite. The quantum cannot be challenged by the objector because the transaction is a commercial one and I am of the view that the grant of 18% per annum simple interest is reasonable and the award on this aspect cannot be said to be vitiated on any ground. I confirm the award on this claim also.
30. The objections are rejected. The award is made rule of the Court and there shall be a decree directing the objector to pay the claimant-petitioner the sum of (1) Rs. 11,12,431.00 with interest at 18% per annum from 30-3-1984 up to the date of realisation;
(2) the sum of Rs. one lac with interest at 18% per annum from 27-2-1986 up to the date of realisation.
31. There shall be no order as to costs.
32. Objections rejected.