Full Judgment Text
50
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. 724/2011
% Judgment dated 15.11.2011
MCD ..... Petitioner
Through: Mr.Himanshu Upadhyaya, Advocate
versus
BHARAT LAL & ANR ..... Respondent
Through: Mr.Sanjay Bansal, Advocate
CORAM:
HON'BLE MR. JUSTICE G.S.SISTANI
G.S.SISTANI, J ( ORAL )
1. Mr.Sanjay Bansal, counsel for the respondent has appeared on an
advance copy and submits that he does not wish to file any reply.
With the consent of counsel for the parties, this matter is taken up for
final hearing and disposal.
2. By this petition under Section 34 of the Arbitration & Conciliation
Act, petitioner has challenged the award dated 10.06.2011. Counsel
for the petitioner submits that the learned arbitrator had earlier
rendered his award on 26.05.2003. On the objections filed by the
respondent herein, claim No.5 and 7 were remanded back to the
arbitrator, who has now passed the award on 10.06.2011.
3. Brief facts, to be noticed for disposal of the present objections, are
that the respondent was awarded the work of construction of staff
quarters at Moti Nagar Hospital, WZ-SH construction of „H‟ Typed
OMP No.724-2011 Page 1 of 8
Quarters. The respondent accepted all the terms and conditions of the
contract. Stipulated period of commencement of work was fifteen
months i.e. 15.5.1993.
4. Counsel for the petitioner submits that learned arbitrator has not
assigned any legal reasons while deciding the claims No.5 and 7 and
thus the decision of the arbitrator is liable to be set aside. It is
contended that as per the settled law the arbitrator has to assign
reasons while passing the award in favour of a party. It is further
submitted that admittedly it is the claimant (respondent herein), who
had not performed his obligations as per the contract and he did not
complete the work on time, which resulted in loss to the petitioner. It
is submitted that the arbitrator has granted benefit under clause 10
(cc) of the Agreement to the respondent and awarded him 50% of the
amount as claimed by him, while holding that the respondent was
also responsible for the delay in completing the work. It is further
submitted that the respondent did not even raise a bill under clause
10 (cc) of the agreement and in the absence of any bill the arbitrator
could not award any amount, much less 50% of the amount claimed.
5. Counsel for the respondent submits that learned arbitrator has rightly
considered the claim of the respondent and in fact should have
awarded the entire amount as claimed and not just 50%, for the
reason that the respondent was not in any way responsible for the
delay in completion of the work which is evident from the fact
that no damages were levied on the respondent for delay
attributable to the respondent in terms of the agreement. It is
submitted that in case the delay was caused by any act of the
OMP No.724-2011 Page 2 of 8
respondent, the petitioner would have invoked clause 2 of the
agreement and would have levied liquidated damages on the
respondent. Counsel further submits that in an identical matter
pertaining to clause 10 (cc) where the arbitrator had awarded 50% of
the claim, the objections (O.M.P. No.173/2010) filed by the
petitioner were dismissed. Copy of the judgment dated 07.04.2010
dismissing the objections (O.M.P. No.173/2010) have been placed on
record. Counsel for the respondent has relied upon the judgment
dated 07.04.2010 passed in MCD Vs. Prabhulal & Anr. and more
particularly paragraph 6 of the same, which is reproduced below:
“6. As far the basis of award of amount under the said Claim
No.5, I find that Arbitrator has awarded 50% of the amount
claimed on the basis of the escalation formula namely Clause
10CC. In my opinion, in the present case the Arbitrator has
indicated the thought process on the basis of which he has
awarded the claim. The Arbitrator is entitled to make some
estimation while awarding claims. In fact, a Division Bench of
this Court in D.D.A. vs. Bhagat Construction Pvt. Ltd.
reported in (2004) 3 ALR 548 has held that Court will not
substitute its opinion for that of the Arbitrator. It was also held
that it was well settled principle of law that an Arbitrator need
not disclose with mathematical precision the breakup of the
amount awarded. If the award shows application of mind and a
view which is plausible, it should not be interfered with. In
this connection, I may also refer to the observations of this
Court in Kochhar Construction Works Vs. Delhi Development
Authority and Anr. reported in 74 (1998) DLT 118 wherein
this Court has held as under:-
“13.7. It is evident from the foregoing that while it may
not be necessary to give the actual calculations but the
reasons must disclose the thought process indicating
OMP No.724-2011 Page 3 of 8
nexus between the material on record and the
conclusions arrived at. However there is bound to be
some estimation even in cases of reasoned award based
on the experience and qualification of the Arbitrator
especially the technically qualified Arbitrators”
6. Counsel for the respondent further submits that in another matter
(O.M.P. No.153/2010) between the same parties, the respondent had
filed objections to the award in which the arbitrator had only granted
50% of the amount claimed under clause 10(cc). It is submitted that
learned single judge had allowed the objections and appeal filed by
the MCD against the order, being FAO(OS)No.232/2011 stands
dismissed and thus the order has attained finality.
7. It is submitted that in the case of MCD Vs. Bharat Lal., O.M.P.
No.153/2010, this court has modified the award of the arbitrator and
approved the reasoning wherein it has been stated that once the
arbitrator has found the petitioner entitled to claim escalation under
Clause 10(cc), there was no justification in restricting the award only
50% to that amount and he could not have reduced the amount
unilaterally. He further relies on the observations of the Court in
O.M.P. No. No.153/2010 wherein the arbitrator has rejected the
stand of the department that the claimant had to produce vouchers to
justify the claim under Clause 10 (cc).
8. I have heard counsel for the parties and carefully perused the award
dated 10.06.2011. The arbitrator has dealt with claim no.5 in the
following manner:
“Claim No.5: Under this claim the claimant has claimed
OMP No.724-2011 Page 4 of 8
Rs.11,06,655.92 under clause 10-cc. Escalation is paid under
clause 10-cc on the value of the work executed during
stipulated period as well validly extended period. In the
present case stipulated date of completion was 19.5.1993 but
actual date of completion was 24.06.1996 and thus there was
almost 3 years and one month delay in completion of work.
From the record it transpires that neither the claimant applied
for extension nor the respondents extended contract period
finally by a written order, however, the work continued till
date of completion which can be termed at this stage as a Pacet
extension of contract period till the actual date of completion.
It is also true that the claimant never applied for extension of
time or even the bills as per provision of the contract the
claimant did not submit any bill for work executed or even bill
under clause 10-66. It is also a matter of fact that no
compensation was levied under clause 2 of the agreement. It
appears that the Respondents did not suffer any damages due
to delay in completion of the work. Clause 2 is operated only
to recover liquidated damages if suffered. Clause 2 is not
required to be operated to justify delays. However, grant of
extension of time upto actual date of completion is considered
that the contractor is; not responsible for any delay. In the
present case extension of time till actual date of completion
was not granted without levy of any completion under clause 2
of the agreement. In this respect both the parties are at fault.
Under such circumstances whether enlargement of contract
period can be termed as validity extended period. In fact it got
extended by conduct of both the parties. Under such
circumstances, it can be presumed only that contract period
was validly extended. Considering both the parties lacking in
its respective actions, I award 50% amount under clause 10-cc,
on value of work executed and claimed by the claimant. The
award amount works out to Rs.5,53,328.00 (i.e. 50% of
11,06,655.92). Accordingly, I direct the Respondents to pay
this amount in satisfaction of claim No.5.”
9. A bare reading of the award would show that the arbitrator has come
to a specific finding that the time was extended by the conduct of
OMP No.724-2011 Page 5 of 8
both the parties. The arbitrator has also come to the finding that the
respondent (petitioner herein) did not suffer any damages due to
delay in completion of the work and in case they had suffered any
damages, they would have recovered the same under Clause 2. The
arbitrator has also observed that grant of extension of time upto the
actual date of completion would clearly establish that the contractor
is not responsible for the delay, although he has also observed that
both the parties are at fault, but it seems that it is for the reasons that
he has given benefit under clause 10 (cc) to the respondent but by
awarding only 50% of the amount claimed.
10. Under Claim 7 the respondent had claimed a sum of Rs.5,83,908/- as
damages suffered during prolongation of contract period for
maintaining his establishment like Engineer, Head Mistri,
Supervisor, Chaukidars, Vibrator, etc. This claim of the respondent
was dealt with by the Arbitrator in the following manner:
“Claim No.7: Under this claim the claimant has claimed
Rs.5,83,908.00 as damages suffered during prolongation of
contract period for maintaining establishment, like Engineer,
Head Mistri, Supervisor, Chaukidars, Vibrator, etc. The
claimant has given the details of claimed amount in Annexures
„D‟ annexed with the statement of claim. Unfortunately no
evidence has been adduced to show that the said staff and
vibrator was engaged and paid at the rate as claimed.
Therefore, except for an Engineer that too pay for 50% of
extended period, balance claim for other staff and vibrator is
not considered as justified.
Accordingly, I award Rs.57,000.00 for 19 months @ Rs.3000/-
p.m. for an Engineer. The rest of the claim is rejected.
In addition to amounts awarded under claim No.5 i.e.
OMP No.724-2011 Page 6 of 8
Rs.5,53,328.00 and Rs.57,000.00 under Claim No.7 I also
award 12% interest on the awarded amounts of claim No.5 & 7
th
from the date of earlier award i.e. 26 March 2003 till the
actual date of payment.”
11. Out of the claim of Rs.5,53,328/- the Arbitrator has only awarded
Rs.57,000/- to the respondent towards the salary of Engineer and that
too only 50%. The Arbitrator has come to a finding that since no
evidence was adduced to show that other staff and Vibrator was
engaged major portion of the claim of the petitioner was rejected. I
find no infirmity with the reasoning of the learned Arbitrator.
12. As the counsel for the petitioner is unable to justify that on account
of the delay, if any by the respondent, petitioner has either suffered
any damages or the petitioner had fixed the liability on the
respondent for the delay, a bare reading of clause 10 (cc) of the
Agreement would also show that the contractor would be given
benefit of this clause, provided there is delay in completion of the
work and such delay is not attributable to the contractor and only
after the contractor has not been held liable under Clause 2 for delay.
Since the arbitrator has come to a finding in favour of the contractor
on both these issues and in view of the stand taken by the arbitrator, I
find no infirmity in the award.
13. It is trite law that the scope of interference in an Arbitral Award
under Section 34(2) of the Arbitration and Conciliation Act is
extremely limited. The interference by a Court in an Arbitral Award
is open only in those cases where the Award is contrary to either the
substantive provisions of law or the contractual provisions and/or is
OMP No.724-2011 Page 7 of 8
opposed to public policy [See Delhi Development Authority v.
R.S.Sharma & Co.: (2008) 13 SCC 80]. Even otherwise, it is settled
law that this court is not a court of appeal, neither this court can
substitute its view with respect to the view of the arbitrator, provided
the finding of the arbitrator is not illegal or perverse or against the
provisions of any act. A reading of the Award shows that the
Arbitrator has decided the matter fairly and the view taken by the
Arbitrator is reasonable and cogent. Accordingly, the objections are
dismissed.
G.S.SISTANI,J
NOVEMBER 15, 2011
ssn
OMP No.724-2011 Page 8 of 8
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. 724/2011
% Judgment dated 15.11.2011
MCD ..... Petitioner
Through: Mr.Himanshu Upadhyaya, Advocate
versus
BHARAT LAL & ANR ..... Respondent
Through: Mr.Sanjay Bansal, Advocate
CORAM:
HON'BLE MR. JUSTICE G.S.SISTANI
G.S.SISTANI, J ( ORAL )
1. Mr.Sanjay Bansal, counsel for the respondent has appeared on an
advance copy and submits that he does not wish to file any reply.
With the consent of counsel for the parties, this matter is taken up for
final hearing and disposal.
2. By this petition under Section 34 of the Arbitration & Conciliation
Act, petitioner has challenged the award dated 10.06.2011. Counsel
for the petitioner submits that the learned arbitrator had earlier
rendered his award on 26.05.2003. On the objections filed by the
respondent herein, claim No.5 and 7 were remanded back to the
arbitrator, who has now passed the award on 10.06.2011.
3. Brief facts, to be noticed for disposal of the present objections, are
that the respondent was awarded the work of construction of staff
quarters at Moti Nagar Hospital, WZ-SH construction of „H‟ Typed
OMP No.724-2011 Page 1 of 8
Quarters. The respondent accepted all the terms and conditions of the
contract. Stipulated period of commencement of work was fifteen
months i.e. 15.5.1993.
4. Counsel for the petitioner submits that learned arbitrator has not
assigned any legal reasons while deciding the claims No.5 and 7 and
thus the decision of the arbitrator is liable to be set aside. It is
contended that as per the settled law the arbitrator has to assign
reasons while passing the award in favour of a party. It is further
submitted that admittedly it is the claimant (respondent herein), who
had not performed his obligations as per the contract and he did not
complete the work on time, which resulted in loss to the petitioner. It
is submitted that the arbitrator has granted benefit under clause 10
(cc) of the Agreement to the respondent and awarded him 50% of the
amount as claimed by him, while holding that the respondent was
also responsible for the delay in completing the work. It is further
submitted that the respondent did not even raise a bill under clause
10 (cc) of the agreement and in the absence of any bill the arbitrator
could not award any amount, much less 50% of the amount claimed.
5. Counsel for the respondent submits that learned arbitrator has rightly
considered the claim of the respondent and in fact should have
awarded the entire amount as claimed and not just 50%, for the
reason that the respondent was not in any way responsible for the
delay in completion of the work which is evident from the fact
that no damages were levied on the respondent for delay
attributable to the respondent in terms of the agreement. It is
submitted that in case the delay was caused by any act of the
OMP No.724-2011 Page 2 of 8
respondent, the petitioner would have invoked clause 2 of the
agreement and would have levied liquidated damages on the
respondent. Counsel further submits that in an identical matter
pertaining to clause 10 (cc) where the arbitrator had awarded 50% of
the claim, the objections (O.M.P. No.173/2010) filed by the
petitioner were dismissed. Copy of the judgment dated 07.04.2010
dismissing the objections (O.M.P. No.173/2010) have been placed on
record. Counsel for the respondent has relied upon the judgment
dated 07.04.2010 passed in MCD Vs. Prabhulal & Anr. and more
particularly paragraph 6 of the same, which is reproduced below:
“6. As far the basis of award of amount under the said Claim
No.5, I find that Arbitrator has awarded 50% of the amount
claimed on the basis of the escalation formula namely Clause
10CC. In my opinion, in the present case the Arbitrator has
indicated the thought process on the basis of which he has
awarded the claim. The Arbitrator is entitled to make some
estimation while awarding claims. In fact, a Division Bench of
this Court in D.D.A. vs. Bhagat Construction Pvt. Ltd.
reported in (2004) 3 ALR 548 has held that Court will not
substitute its opinion for that of the Arbitrator. It was also held
that it was well settled principle of law that an Arbitrator need
not disclose with mathematical precision the breakup of the
amount awarded. If the award shows application of mind and a
view which is plausible, it should not be interfered with. In
this connection, I may also refer to the observations of this
Court in Kochhar Construction Works Vs. Delhi Development
Authority and Anr. reported in 74 (1998) DLT 118 wherein
this Court has held as under:-
“13.7. It is evident from the foregoing that while it may
not be necessary to give the actual calculations but the
reasons must disclose the thought process indicating
OMP No.724-2011 Page 3 of 8
nexus between the material on record and the
conclusions arrived at. However there is bound to be
some estimation even in cases of reasoned award based
on the experience and qualification of the Arbitrator
especially the technically qualified Arbitrators”
6. Counsel for the respondent further submits that in another matter
(O.M.P. No.153/2010) between the same parties, the respondent had
filed objections to the award in which the arbitrator had only granted
50% of the amount claimed under clause 10(cc). It is submitted that
learned single judge had allowed the objections and appeal filed by
the MCD against the order, being FAO(OS)No.232/2011 stands
dismissed and thus the order has attained finality.
7. It is submitted that in the case of MCD Vs. Bharat Lal., O.M.P.
No.153/2010, this court has modified the award of the arbitrator and
approved the reasoning wherein it has been stated that once the
arbitrator has found the petitioner entitled to claim escalation under
Clause 10(cc), there was no justification in restricting the award only
50% to that amount and he could not have reduced the amount
unilaterally. He further relies on the observations of the Court in
O.M.P. No. No.153/2010 wherein the arbitrator has rejected the
stand of the department that the claimant had to produce vouchers to
justify the claim under Clause 10 (cc).
8. I have heard counsel for the parties and carefully perused the award
dated 10.06.2011. The arbitrator has dealt with claim no.5 in the
following manner:
“Claim No.5: Under this claim the claimant has claimed
OMP No.724-2011 Page 4 of 8
Rs.11,06,655.92 under clause 10-cc. Escalation is paid under
clause 10-cc on the value of the work executed during
stipulated period as well validly extended period. In the
present case stipulated date of completion was 19.5.1993 but
actual date of completion was 24.06.1996 and thus there was
almost 3 years and one month delay in completion of work.
From the record it transpires that neither the claimant applied
for extension nor the respondents extended contract period
finally by a written order, however, the work continued till
date of completion which can be termed at this stage as a Pacet
extension of contract period till the actual date of completion.
It is also true that the claimant never applied for extension of
time or even the bills as per provision of the contract the
claimant did not submit any bill for work executed or even bill
under clause 10-66. It is also a matter of fact that no
compensation was levied under clause 2 of the agreement. It
appears that the Respondents did not suffer any damages due
to delay in completion of the work. Clause 2 is operated only
to recover liquidated damages if suffered. Clause 2 is not
required to be operated to justify delays. However, grant of
extension of time upto actual date of completion is considered
that the contractor is; not responsible for any delay. In the
present case extension of time till actual date of completion
was not granted without levy of any completion under clause 2
of the agreement. In this respect both the parties are at fault.
Under such circumstances whether enlargement of contract
period can be termed as validity extended period. In fact it got
extended by conduct of both the parties. Under such
circumstances, it can be presumed only that contract period
was validly extended. Considering both the parties lacking in
its respective actions, I award 50% amount under clause 10-cc,
on value of work executed and claimed by the claimant. The
award amount works out to Rs.5,53,328.00 (i.e. 50% of
11,06,655.92). Accordingly, I direct the Respondents to pay
this amount in satisfaction of claim No.5.”
9. A bare reading of the award would show that the arbitrator has come
to a specific finding that the time was extended by the conduct of
OMP No.724-2011 Page 5 of 8
both the parties. The arbitrator has also come to the finding that the
respondent (petitioner herein) did not suffer any damages due to
delay in completion of the work and in case they had suffered any
damages, they would have recovered the same under Clause 2. The
arbitrator has also observed that grant of extension of time upto the
actual date of completion would clearly establish that the contractor
is not responsible for the delay, although he has also observed that
both the parties are at fault, but it seems that it is for the reasons that
he has given benefit under clause 10 (cc) to the respondent but by
awarding only 50% of the amount claimed.
10. Under Claim 7 the respondent had claimed a sum of Rs.5,83,908/- as
damages suffered during prolongation of contract period for
maintaining his establishment like Engineer, Head Mistri,
Supervisor, Chaukidars, Vibrator, etc. This claim of the respondent
was dealt with by the Arbitrator in the following manner:
“Claim No.7: Under this claim the claimant has claimed
Rs.5,83,908.00 as damages suffered during prolongation of
contract period for maintaining establishment, like Engineer,
Head Mistri, Supervisor, Chaukidars, Vibrator, etc. The
claimant has given the details of claimed amount in Annexures
„D‟ annexed with the statement of claim. Unfortunately no
evidence has been adduced to show that the said staff and
vibrator was engaged and paid at the rate as claimed.
Therefore, except for an Engineer that too pay for 50% of
extended period, balance claim for other staff and vibrator is
not considered as justified.
Accordingly, I award Rs.57,000.00 for 19 months @ Rs.3000/-
p.m. for an Engineer. The rest of the claim is rejected.
In addition to amounts awarded under claim No.5 i.e.
OMP No.724-2011 Page 6 of 8
Rs.5,53,328.00 and Rs.57,000.00 under Claim No.7 I also
award 12% interest on the awarded amounts of claim No.5 & 7
th
from the date of earlier award i.e. 26 March 2003 till the
actual date of payment.”
11. Out of the claim of Rs.5,53,328/- the Arbitrator has only awarded
Rs.57,000/- to the respondent towards the salary of Engineer and that
too only 50%. The Arbitrator has come to a finding that since no
evidence was adduced to show that other staff and Vibrator was
engaged major portion of the claim of the petitioner was rejected. I
find no infirmity with the reasoning of the learned Arbitrator.
12. As the counsel for the petitioner is unable to justify that on account
of the delay, if any by the respondent, petitioner has either suffered
any damages or the petitioner had fixed the liability on the
respondent for the delay, a bare reading of clause 10 (cc) of the
Agreement would also show that the contractor would be given
benefit of this clause, provided there is delay in completion of the
work and such delay is not attributable to the contractor and only
after the contractor has not been held liable under Clause 2 for delay.
Since the arbitrator has come to a finding in favour of the contractor
on both these issues and in view of the stand taken by the arbitrator, I
find no infirmity in the award.
13. It is trite law that the scope of interference in an Arbitral Award
under Section 34(2) of the Arbitration and Conciliation Act is
extremely limited. The interference by a Court in an Arbitral Award
is open only in those cases where the Award is contrary to either the
substantive provisions of law or the contractual provisions and/or is
OMP No.724-2011 Page 7 of 8
opposed to public policy [See Delhi Development Authority v.
R.S.Sharma & Co.: (2008) 13 SCC 80]. Even otherwise, it is settled
law that this court is not a court of appeal, neither this court can
substitute its view with respect to the view of the arbitrator, provided
the finding of the arbitrator is not illegal or perverse or against the
provisions of any act. A reading of the Award shows that the
Arbitrator has decided the matter fairly and the view taken by the
Arbitrator is reasonable and cogent. Accordingly, the objections are
dismissed.
G.S.SISTANI,J
NOVEMBER 15, 2011
ssn
OMP No.724-2011 Page 8 of 8