Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on : February 02, 2012
Judgment Pronounced on: February 08, 2012
+ FAO(OS) 667/2006
DELHI DEVELOPMENT AUTHORITY ..... Appellant
Through: Mr.Bhupesh Narula, Advocate.
versus
M/S.ASSOCIATES BUILDERS ….Respondent
Through: Mr.B.K.Dewan, Advocate.
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MS. JUSTICE PRATIBHA RANI
PRADEEP NANDRAJOG, J.
1. Two issues need to be sorted out in appeal which
lay a challenge to the order dated 03.04.2006 dismissing
objections filed by DDA pertaining to ` 8,27,960/- and
` 7,20,000/- awarded by the learned Arbitrator to the
respondent; the first sum being awarded under Claim No.9, 10,
11 and 15 considered together and the second sum being
awarded for Claims No.12 and 13 considered together.
2. The respondent was awarded a construction work
by the appellant as per Agreement 12/EE/ED-9/92-93. The
total contract value was ` 87,66,678/- but work was executed
only in sum of ` 62,84,845/- and even for said lesser work
completed, the construction activity lingered on for 25 months
beyond the stipulated period of 9 months.
3. The contract had a clause numbered as „10C‟ which
required the contractor to be recompensed if there was a
FAO(OS) 667/2006 Page 1 of 18
statutory increase in price of material and labour beyond 10%
of the price of material and labour rates, in vogue, when the
contract was awarded. Labour rates had to be reckoned with
reference to minimum wages notified by the Government for
skilled/semi-skilled and unskilled labour. Highlighting that as
per the clause, only if the increase was beyond 10%, was the
contractor to be recompensed, but not the whole, recompense
was restricted to the increase beyond 10%.
4. The appellant had rejected the claim and the
learned Arbitrator, while considering Claim No.2 of the
contractor, has awarded a sum of ` 1,62,387/- for statutory
increase in labour wages for the contractual period as also the
period during which the contract got prolonged. Due to
closure of quarries under orders of the Supreme Court,
requiring the contractor to procure stone grit at higher rates,
treating the same to be akin to a statutory increase, under
Claim No.3, the learned Arbitrator has awarded a sum of
` 46,184/- to the contractor and in respect of statutory increase
in price of steel consumed, under Claim No.4, has awarded
` 12,922/- to the contractor. These amounts are not the
subject matter of the appeal as DDA has accepted the award
pertaining to these items of claim as also a few others which
pertain to the dispute regarding extent of work done.
5. We have noted the sums awarded under Claim
No.2, 3 and 4 for the reason they would have some bearing
upon the issue(s) we are to decide in the appeal relatable to
the sum of ` 8,27,960/- and ` 7,20,000/- awarded by the learned
Arbitrator, to which appellant‟s challenge failed before the
learned Single Judge.
FAO(OS) 667/2006 Page 2 of 18
6. We proceed to note the discussion in the award
pertaining to Claim No.9, 10, 11 and 15 which is under a
common reasoning, followed by the discussion in the award
pertaining to Claim No.12 and 13 which is also under a
common reasoning. It reads as under:-
“Claim No.9: `20,950/- claimed on account of
hire charge of centring and
shuttering due to delay in laying of
conduits in the slab.
Claim No.10: Claimants claim `33,450/- due to
sudden stoppage of the work of
Block No.100 and 101.
Claim No.11: Claimants claim `2 lacs payable as
damages on account of hire
charges of tools and plants and
scaffolding.
Claim No.15: Claimants claim damages to the
tune of `6,25,979/- on account of
establishment due to prolongation.
That all the above four claims are
inter linked being related to the overhead
expenses and therefore dealt together.
That the date of commencement of
work was 24.5.92 and the period for
completion was 9 months and therefore, the
stipulated date of completion was 23.2.93 but
the work could be actually completed on
28.3.95.
That there was delay of 25 months in
completion of the work beyond the stipulated
date of completion.
That the Claimants urged that there
had been various delays in the execution of
FAO(OS) 667/2006 Page 3 of 18
the work due to the lapses and defaults of the
Respondents from the very commencement of
the work. The progress was held up time and
again and the Claimants therefore, as back as
17.2.93 advised the Respondents (C-9 page
167) that the Claimants are not interested to
execute the work beyond the stipulate date of
completion and therefore, their contract be
finalized on the stipulated date of completion
and therefore, their contract be finalized on
the stipulated date of completion as the
Claimants shall be exposed to incur heavy
expenditure in overheads for maintaining
establishment, watch and ward and tools and
plants and other shuttering material but the
Respondents did not refute. The chief reason
for delay are highlighted below:-
i) Delay in supply of structural and architectural
drawings.
(ii) That out of 9 Blocks 2 blocks are abnormally
delayed as the site of the said 2 blocks was
made available in piecemeal which stretched
till 26.2.94 whereas the stipulated completion
was 23.2.93.
(iii) Delay in laying the conduit by the electrical
agency resulting in delay in casting of RCC
slab and plastering work besides development
work. The sad hindrance was removed lastly
on 28.3.95.
(iv) Abnormal delay in making availability of the
alignment sketch for electrical cables.
(v) Inordinate delay in supply of stipulated
material such as cement, steel and pipes.
(vi) Delay in decision of finishing work in kitchen
and bath rooms.
(vii) There was inordinate delay in making
availability of colour scheme.
FAO(OS) 667/2006 Page 4 of 18
(viii) That the Respondents also abnormally delayed
the supply of door shutters which were to be
supplied by the Respondents. The same were
supplied as late as 8.11.94.
(ix) Inordinate delay in writing the electrical
conduits resulting in delay in completion of
finishing work.
(x) Suspension of work by the Respondents for the
period 17.1.94 to 25.2.94 and from 7.8.94 to
22.3.95 because of non-removal of hindrances.
(xi) Delayed payment due to non-sanction of
Administrative Approval and Expenditure
Sanction.
That all the delays as set out had
been duly recorded by the Respondents in the
hindrance register Z-1 pages 733 to 739 and
M.A.S. register pages from 747 to 768 as
highlighted by the Claimants. The Claimants
also relied upon certain documents of MAS
Register supplied by the Respondents.
That the Claimants further stated that
the Claimants had also filed reasons for delay
and hold up of the work for various defaults of
the Respondents in Annexure Z-2 pages 740 to
746. The Claimants also highlighted the
correspondence made by the Claimants with
the Respondents.
That the Claimants further stated that
the said hindrance were avoidable but the
Respondents did not take timely steps.
That the Claimants also referred the
contents of the letter dated 10.7.95 (page 885)
wherein it was observed that the
Superintending Engineer appreciated the
working of the Claimants and also observed
that there was no fault of the contractor and
FAO(OS) 667/2006 Page 5 of 18
they have successfully completed the work.
The Claimants further stated that they had
incurred heavy expenditure on overheads
because of the lapses and defaults of the
Respondents.
As against this the Respondents
stated that there was poor planning of the
Claimants and also contended that since the
compensation has been levied under Clause 2
of the agreement, therefore, claim of the
Claimants deserves to be rejected.
That on record it is conclusively
proved that the Respondents committed
breach of contract as they failed to discharge
their obligations in time resulting in
prolongation of the contract. It was further
observed that the Respondents did not deny
the deployment of the tools and plants and
machinery at site besides watch and ward
during the interrogation.
That in the trade of Building Contracts
the general practice is to consider 5%
expenditure as reasonable overheads.
I, therefore, adopt 5% overheads as a
measure of damages to assess the quantum
and there was delay of 25 months. It was also
observed that all the delays set out in the
hindrance register by the Respondents are
because of the Respondent‟s defaults.
I consider the period of 20 months for
assessing the overhead expenses as under:-
The contract value was `87,66,678/-.
In this figure 10% profit and 5% overhead are
included and the estimated value comes to
`74,51,676/-. On this amount 5% overhead
(`3,72,582/- for 9 months) is allowed which
comes to `41,398/- per month and for 20
months it works out to `8,27,960/-. To meet
FAO(OS) 667/2006 Page 6 of 18
the ends of justice I, therefore, award a sum of
`8,27,960/- in favour of the Claimants under
these Claims No.9, 10, 11 & 15.
Claim No.12: Claimants claim damages for a sum
of `7,12,394/- on account of
damages for executing work during
prolongation beyond stipulated
completion.
Claim No.13: `97,500/- claimed as extra @35%
for the work executed of Block
No.100 & 101 as the site for these
two blocks was made available on
28.2.94 though date of
commencement was 24.5.92.
Both these claims are interlinked and
pertain to the work executed during prolongation
stipulated after the stipulated date of completion
and therefore dealt together.
As already stated in claim No.9, 10, 11
and 15 that there was admitted delay in
completion of the work for a period of 25 months
beyond the stipulated date of completion of 9
months. The hindrances in the work were
conclusively proved from the hindrance register
maintained by the Respondents DDA. From the
said hindrance register it was transpired that
there was not a single delay on the part of the
Claimants.
That as per agreement work in question
was to be completed on 23.2.93 but the
Claimants stated that because of the
Respondents it was delayed 25 months beyond
stipulated completion.
The Claimants further argued that they
requested the Respondents vide C-9 dated
17.2.93 to finalise the contract as the stipulated
time is to expire on 23.2.93 and the Claimants
are not interested to execute further work. The
FAO(OS) 667/2006 Page 7 of 18
Respondents did not respond. The Claimants
further argued that they pursued the
Respondents to finalize the work otherwise
increase the rate by 20% due to steep rise in
cost of material and labour for the work to be
executed during prolongation beyond stipulated
completion and highlighted in Claimant‟s C-24
but it appears that the Respondents did not
refute.
The Claimants further argued that the
Claimants had given details vide Annexure „K‟
page 99 on 20% and the Claimants also
prepared the detail of this claim on page 100 on
the basis of the plinth area cost of construction
and also on page 101 based on cost index and at
page 102 Annexure „L‟ with regard to claim
No.13.
The Claimants referred several
documents and also referred to the hindrance
register maintained by the Respondents (Z-1) as
already referred to in Claim No.9, 10, 11 and 15 I
find that the Respondents had committed breach
of contract and rendered themselves liable for
damages.
The Respondents argued that there is no
provision in the agreement for payment of
damages except under Clause 10-c. In addition
to above it was further stated that the delay
caused in the completion of the work by the
Respondents would be considered for grant of
extension of time to the Claimants. The
Respondents further urged that the Competent
Authority had levied the compensation on the
Claimants on 12.3.2001 and therefore, the said
claims did not subsist.
The hindrance register maintained by
the Respondents indicates the total delay in the
execution of the work by the Respondents and
several communications of the Claimants
regarding delay caused by the Respondents are
FAO(OS) 667/2006 Page 8 of 18
unrebutted on the record. I have considered
these submissions of the parties and have
already held that the Respondents are in breach
of contract and the Respondents are thus liable
for damages. It was also observed that the
Respondents did not comment on the details
submitted by the Claimants. Therefore, based
on facts and evidence the Claimants should be
compensated based on cost index which indicate
the increase during a particular period when the
contract was being executed. It was revealed
that out of the total value of the work executed
for a sum of `62,84,845/- the Claimant‟s
executed the work up to the stipulated
completion dated 23.2.93 only to the extent of
`19,11,656/- and therefore, the work of
`43,73,189/- was executed during prolongation
from 24.2.93 to 28.3.95 after deducting the cost
of stipulated material supplied by the DDA for a
sum of `6,71,123/-, balance work of `37,02,066/-
was executed during prolongation.
That as per cost index reflected on page
101 and the detail furnished by the Claimants
the increase works out to 31.65% whereas the
Claimants had claimed against this to the extent
of 20% which is very much within the cost
increase. I am of the opinion that 20% increase
appears to be rational and is justified as it is
much below the cost increase during
prolongation. I, therefore, award a sum of
`7,20,000/-. Therefore, after giving allowance
for some items carrying market rate and some
items not allowed under Claim No.1, I award a
sum of `7,20,000/- in favour of the Claimants
under these Claims No.12 and 13.”
7. The learned Single Judge has negated the challenge
on the reasoning that clause 10C of the contract recompenses
the contractor for the work done during the period of the
contract and not for the period beyond. The learned Single
Judge has held that consequences of delay have more than
FAO(OS) 667/2006 Page 9 of 18
one ramification including the cost of material, supervision
required at the site, the inability of the contractor to utilize the
manpower at some other place, the inability of the contractor
to make profits from some other contract by utilization of the
same resources. Noting that there was a delay of 25 months,
the learned Single Judge has upheld the award pertaining to
the two sums awarded.
8. Claim No.9 was on account of hire charges statedly
paid by the contractor for centring and shuttering due to delay
in laying conduits in the slab. Claim No.10 was on account of
the alleged sudden stoppage of the work in two blocks. Claim
No.11 was towards damages on account of hire charges for
tools (wrongly typed „tills‟ in the award), plant and scaffolding
and Claim No.15 was towards damages on account of
establishment due to prolongation of the work.
9. A perusal of the award would reveal, from the
portions extracted herein above, that with reference to
evidence led before him the learned Arbitrator has held delay
attributable to DDA, a finding of fact which is based on
evidence and rightly conceded to by Sh.Bhupesh Narula,
Advocate who appears for DDA as being beyond judicial review
power of this Court pertaining to a reasoned award. But, while
awarding ` 8,27,960/- the reasoning adopted by the learned
Arbitrator is questioned as being the result of ignoring the
well-recognized legal principles on the subject. Learned
counsel argued that the reasoning is the ipse dixit of the
learned Arbitrator.
10. The learned Arbitrator has arrived at the sum by
taking the contract price of ` 87,66,678/- and deducting 10%
FAO(OS) 667/2006 Page 10 of 18
profit and 5% overhead expenses therefrom i.e. deducting
15% from ` 87,66,678/- has deduced the sum of ` 74,51,676/-
and treating 5% as the overhead on the sum of ` 74,51,676/-
has opined that for 9 months i.e. the contract stipulated period
the same would work out to ` 3,72,582/- i.e. ` 41,398/- per
month and for 20 months the figure arrived at is ` 8,27,960/-.
11. There is one patent and glaring error. The same is
that the learned Arbitrator has ignored that the work which
was completed was only in sum of ` 62,84,845/-, which sum
has been taken note of by the learned Arbitrator while
deciding claims No.12 and 13, and thus corrective action
needs to be taken and should have been taken by the learned
Single Judge while deciding challenge by DDA to the award
with respect to said subject matter thereof.
12. The learned Arbitrator has given no reason as to
why he opines that 5% would be the overhead expenses.
13. Highlighting that the learned Arbitrator has, under a
common reasoning, discussed claim for hire charges towards
centring and shuttering, idle tools, plants and scaffolding and
establishment charges while considering Claims No.9, 10, 11
and 15 followed by discussing Claim No.12 and 13 which were
on alleged damages due to increase in price of material and
labour, the learned Arbitrator has awarded 20% increase on
the value of the work executed i.e. ` 62,84,845/- i.e.
` 7,20,000/-.
14. „HUDSON‟s Building and Engineering Contracts‟
deals with the subject of applying a formula to award these
kinds of claims i.e. overhead expenses, increase in price of
material and labour, recompense towards idle equipment of
FAO(OS) 667/2006 Page 11 of 18
the contractor at site and general damages for not being able
to use the manpower elsewhere and gain a profit.
15. In a recent decision, authored by one of us, namely
th
Pradeep Nandrajog, J. pronounced on 30 November, 2011,
RFA(OS) No.55/2011 „DDA v. J.S.Chaudhary‟ the law on the
subject was summarized in paras 36 to 38 of the decision in
the following words:-
“36. Loss of a contractor‟s profit as a
head of damage in a terminated contract requires
to be distinguished from a quite different claim
which contractors may be able to establish in cases
where an owner‟s breach can be shown to have had
the effect of delaying completion by the contractor.
In a delayed contract the basis of the contractor‟s
loss is the postponement of the time when the
contractor‟s organization, viewed as a profit-
earning entity, is free to move on and earn
elsewhere in the market, the combined profit and
necessary contribution to fixed overheads of which
it is reasonably capable. A construction contractor‟s
enterprise as a whole will incur a range of off-site
expenditure which by its nature will not vary or be
affected by the delay in performance of an
individual contract, or the degree to which that
contract may have been delayed, as a result of
owner‟s breach of contract. This class of
expenditure is commonly referred as „fixed
overhead‟ expenses. A contractor pricing an
individual project, therefore, after providing for the
estimated total „prime-cost‟ of all kinds which will
be required to carry out the contract itself must
then additionally estimate for a combined operating
margin which will not only produce his required net
or „pure‟ profit, but will also serve to make an
appropriate contribution, together with that from
his other projects, to the fixed overheads of the
enterprise as a whole. In case of a delayed contract,
where the concern is to ascertain the „profit‟ which
the contractor might have expected to earn
elsewhere in the market on other contracts, it is
FAO(OS) 667/2006 Page 12 of 18
this necessary combined operating margin of profit
and fixed overhead, which in appropriate market
conditions, the contractor‟s enterprise will have lost
as a consequence of the period of owner-caused
delay on the individual project, and to which he will
be entitled as damages. However, in this regards, a
distinction needs to be drawn, on the one hand,
small contractors having few (and indeed
sometimes no) overheads other than those of the
„jobsite‟ itself, and on the other, large contractors
with centralized offices, transport systems, yards
and depots; and while again some main contractors
may operate as little more than employers of sub-
contractors, with virtually no overheads of their
own. (See Articles 8-176-79, pages 1072-74,
Hudson‟s Building and Engineering Contracts, XIth
Edition).
37. Delay in performance of contract due to
owner‟s breach may also, of course, increase the
contractor‟s prime costs or his site overhead costs.
The contractor‟s various items of prime-cost for a
project will themselves break down into some or all
of the four prime-cost components of materials,
plant, labor and salaries (including supervisory and
other staff) and sub-contracts. Some items of cost
will be obviously referable to individual parts of the
constructed cost, such as the prime-cost elements
of plant, labor and materials or sub-contracts for
constructed concrete or brickwork, and so relatively
easily applied to any additional permanent work
directly necessitated by a breach of contract.
Others, however, usually referred to as „site
overheads‟, may not be conveniently referable to
any particular part of the permanent work (for
example, supervision, access roads, site huts or
tower cranes etc), but will themselves contain some
or all of the four elements. (See Articles 8-180 and
8-190, pages 1074-76 and 1080-81, Hudson‟s
Building and Engineering Contracts, XIth Edition).
38. From the aforesaid, it is clear that in case
of a delayed contract caused due to owner‟s breach
the contractor can claim damages under following
FAO(OS) 667/2006 Page 13 of 18
heads: - (i) loss of profits; (ii) contribution to fixed
overheads; (iii) increase in prime cost which
includes components of materials, plant, labor and
salaries and sub-contracts and (iv) increase in off-
site and on-site overheads caused due to delay in
performance of contract.”
16. On the applicability of the HUDSON‟s formula, we
are noticing that in many judgments the same is being applied
mechanically ignoring certain important passages from the
commentary and especially para 8.201, 8.209 and 8.211 from
th
the 11 Edition of the Book in question. In para 8.201 the
learned Author opines that the formula should be applied
„provided proper site records have been kept, a total cost basis
of claim can be justified, it is submitted; and it is hard to see
how a plaintiff, whether owner or contractor, who has failed to
keep records should be in a better position to subject the
defendant and the Tribunal to the difficulties of assessment
and the reversal of the particular onus of proof, which total
cost involves, unless it can be convincingly shown that the
keeping of useful or relevant record was in the circumstances
impractical or impossible.‟ In para 8.209 the learned Author
opines „Arbitrators in particular should treat their own ability to
insist on proper particularization and to carry out a detail and
critical analysis and separation of quantum as a very important
part of their role in construction litigation, where the
presentation of highly exaggerated or theoretical complaints,
by owners and contractors alike, is a common feature.‟ At
para 8.211 the learned Author has noted „It seems to be the
practise in the construction industry to employ consultants to
prepare a claim almost as soon as the ink on the contract is
dry.‟
FAO(OS) 667/2006 Page 14 of 18
17. There is admittedly no evidence that the contractor
i.e. the respondent had a central establishment. It appears to
be a case where the contractor is a petty contractor and the
only expenses incurred are at the site. The claim is towards
hire charges paid for centring and shuttering, hiring tools,
plants and scaffoldings i.e. the claim is not for the contractor‟s
own equipment lying idle. There is just no evidence that the
contractor paid hire charges as claimed by him. Not a single
bill raised by the alleged person who let on hire the equipment
to the contractor has been filed nor any evidence adduced for
the payment made. Except for listing a 10 HP Water Pump, 4
number 1 HP water pump, 3 mixers, 250 scaffolding bamboos,
150 ballis and 2 vibrators in Annexure-J to the Statement of
Claim, no document proving hiring the same and brought at
the site has been led. We highlight that the claim is on
account of hire charges paid and there is no evidence of said
payment. It does happen that where a work is stopped, the
person who taken an equipment on hire returns the same and
re-hires the same when work recommences. Thus, Claims
No.9, 10 and 11 cannot be allowed because there is no
evidence to support the claims. Damages on account of
establishment expenses incurred during period contract got
prolonged have certainly to be recompensed, but we find no
evidence in the form of books of accounts, vouchers etc. to
show payments to the staff or expenses incurred in
maintaining an establishment at site in the form of a site
office. The wages register, photocopy whereof was filed
before the Arbitrator, pertains to wages paid to the unskilled,
semi-skilled and skilled labour deployed to execute the works.
FAO(OS) 667/2006 Page 15 of 18
The pleadings pertaining to the claim would show that as per
the contractor he had deployed one Executive Officer, one
Graduate Engineer, one Junior Engineer, one Accountant, one
Storekeeper and Supervisor and one Mechanic at the site and
had also deployed watch and ward. Details of the persons
employed have been listed in Annexure-N to the Statement of
Claim and the documents filed to establish the same would
evidence that the contractor has filed photocopies of the
salary register, which are available from pages No.1255 to
1322, but unfortunately for the contractor, the cat is out of the
bag when we look at the documents. They pertain to
payments made for a site at Mayur Vihar. We highlight that
the contract in question pertains to flats and houses at
Trilokpuri and not Mayur Vihar. It is apparent that the
contractor has tried to pull the wool on the eyes of the primary
adjudicator of the claim. It is not the case of the contractor
that these persons were simultaneously supervising the work
at two sites. Assuming this was the case, the matter would
then have been adjudicated with reference to same number of
persons supervising two sites and the time spent at each site
by them.
18. Thus, the award pertaining to Claim Nos.9, 10, 11
and 15 is liable to be set aside and it is so set aside. We need
not therefore take corrective action on the apparent error i.e.
the learned Arbitrator has worked out the claim on the original
contract value of ` 87,66,678/-, of course by reducing it by
15%, but ignoring that final work executed was only in sum of
` 62,84,845/-.
FAO(OS) 667/2006 Page 16 of 18
19. Pertaining to Claim No.12 and 13, the learned
Arbitrator has recompensed the contractor 20% price hike in
the cost of material and labour noting that there was a steep
hike in the period in question when the contract got prolonged
by 25 months. We highlight that though the Arbitrator has
found the delay to be 25 months, recompense has been
restricted to only 20 months.
20. As noted herein above, partial recompense under
Clause 10C, has been granted to the contractor, but the same
i.e. the Clause in question requiring applicability during
contract stipulated period, it is apparent that the contractor
would be entitled to full recompense for price hike during the
extended 25 months period and not the 20 months to which
the learned Arbitrator has restricted the recompense to.
21. But, for the benefit granted under Clause 10C
wherein ` 1,62,387/-, ` 46,184/- and ` 12,922/- have been
awarded under Claim Nos.2, 3 and 4, said amounts have to be
adjusted, but not in full, for the reason these include the
amounts payable during the contract stipulated period.
22. The total of the three sums comes to ` 2,21,493/-.
We have another problem. Neither counsel could help us
identify the components thereof i.e. the component relatable
to the 9 months during which the work had to be completed
and the 25 months during which the contract got prolonged.
Thus, we apply the Rule of „Rough and Ready Justice‟. We
divide the sum by 34 to work out the proportionate increase
per month. ` 2,21,493 divided by 34 = ` 6,514.50 and
multiplying the same by 25, the figure comes to ` 1,62,862.50.
FAO(OS) 667/2006 Page 17 of 18
23. Adopting, for the reasons given by the Arbitrator,
that 20% hike in the balance work done after the contract
stipulated period i.e. benefit to be granted under this head for
work done in sum of ` 37,02,066/- and accepting the sum of
` 7,20,000/-, being the resultant figure, subtracting
` 1,62,862.50, the figure arrived at is ` 5,57,137.50.
24. We modify the award pertaining to the said claim as
per para 23 above.
25. In a nutshell, the appeal stands disposed of, further
modifying the award dated 23.05.2005 published by
Sh.K.D.Bali, Sole Arbitrator by setting aside the same awarding
` 8,27,960/- under Claim Nos.9, 10, 11 and 15 and reducing the
sum awarded pertaining to Claim Nos.12 and 13 from
` 7,20,000/- to ` 5,57,137.50; which sum shall carry interest
@12% held payable by the learned Single Judge.
26. The appellant has deposited the sum as payable in
terms of the order passed by the learned Single Judge with the
Registry pursuant to interim orders passed in the appeal,
which amount has been invested in a fixed deposit. The
Registry would accordingly release such amount as is now to
be paid to the respondent and the balance would be returned
to the appellant.
27. Parties shall bear their own costs.
(PRADEEP NANDRAJOG)
JUDGE
(PRATIBHA RANI)
JUDGE
/
FEBRUARY 08, 2012 dk
FAO(OS) 667/2006 Page 18 of 18
% Judgment Reserved on : February 02, 2012
Judgment Pronounced on: February 08, 2012
+ FAO(OS) 667/2006
DELHI DEVELOPMENT AUTHORITY ..... Appellant
Through: Mr.Bhupesh Narula, Advocate.
versus
M/S.ASSOCIATES BUILDERS ….Respondent
Through: Mr.B.K.Dewan, Advocate.
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MS. JUSTICE PRATIBHA RANI
PRADEEP NANDRAJOG, J.
1. Two issues need to be sorted out in appeal which
lay a challenge to the order dated 03.04.2006 dismissing
objections filed by DDA pertaining to ` 8,27,960/- and
` 7,20,000/- awarded by the learned Arbitrator to the
respondent; the first sum being awarded under Claim No.9, 10,
11 and 15 considered together and the second sum being
awarded for Claims No.12 and 13 considered together.
2. The respondent was awarded a construction work
by the appellant as per Agreement 12/EE/ED-9/92-93. The
total contract value was ` 87,66,678/- but work was executed
only in sum of ` 62,84,845/- and even for said lesser work
completed, the construction activity lingered on for 25 months
beyond the stipulated period of 9 months.
3. The contract had a clause numbered as „10C‟ which
required the contractor to be recompensed if there was a
FAO(OS) 667/2006 Page 1 of 18
statutory increase in price of material and labour beyond 10%
of the price of material and labour rates, in vogue, when the
contract was awarded. Labour rates had to be reckoned with
reference to minimum wages notified by the Government for
skilled/semi-skilled and unskilled labour. Highlighting that as
per the clause, only if the increase was beyond 10%, was the
contractor to be recompensed, but not the whole, recompense
was restricted to the increase beyond 10%.
4. The appellant had rejected the claim and the
learned Arbitrator, while considering Claim No.2 of the
contractor, has awarded a sum of ` 1,62,387/- for statutory
increase in labour wages for the contractual period as also the
period during which the contract got prolonged. Due to
closure of quarries under orders of the Supreme Court,
requiring the contractor to procure stone grit at higher rates,
treating the same to be akin to a statutory increase, under
Claim No.3, the learned Arbitrator has awarded a sum of
` 46,184/- to the contractor and in respect of statutory increase
in price of steel consumed, under Claim No.4, has awarded
` 12,922/- to the contractor. These amounts are not the
subject matter of the appeal as DDA has accepted the award
pertaining to these items of claim as also a few others which
pertain to the dispute regarding extent of work done.
5. We have noted the sums awarded under Claim
No.2, 3 and 4 for the reason they would have some bearing
upon the issue(s) we are to decide in the appeal relatable to
the sum of ` 8,27,960/- and ` 7,20,000/- awarded by the learned
Arbitrator, to which appellant‟s challenge failed before the
learned Single Judge.
FAO(OS) 667/2006 Page 2 of 18
6. We proceed to note the discussion in the award
pertaining to Claim No.9, 10, 11 and 15 which is under a
common reasoning, followed by the discussion in the award
pertaining to Claim No.12 and 13 which is also under a
common reasoning. It reads as under:-
“Claim No.9: `20,950/- claimed on account of
hire charge of centring and
shuttering due to delay in laying of
conduits in the slab.
Claim No.10: Claimants claim `33,450/- due to
sudden stoppage of the work of
Block No.100 and 101.
Claim No.11: Claimants claim `2 lacs payable as
damages on account of hire
charges of tools and plants and
scaffolding.
Claim No.15: Claimants claim damages to the
tune of `6,25,979/- on account of
establishment due to prolongation.
That all the above four claims are
inter linked being related to the overhead
expenses and therefore dealt together.
That the date of commencement of
work was 24.5.92 and the period for
completion was 9 months and therefore, the
stipulated date of completion was 23.2.93 but
the work could be actually completed on
28.3.95.
That there was delay of 25 months in
completion of the work beyond the stipulated
date of completion.
That the Claimants urged that there
had been various delays in the execution of
FAO(OS) 667/2006 Page 3 of 18
the work due to the lapses and defaults of the
Respondents from the very commencement of
the work. The progress was held up time and
again and the Claimants therefore, as back as
17.2.93 advised the Respondents (C-9 page
167) that the Claimants are not interested to
execute the work beyond the stipulate date of
completion and therefore, their contract be
finalized on the stipulated date of completion
and therefore, their contract be finalized on
the stipulated date of completion as the
Claimants shall be exposed to incur heavy
expenditure in overheads for maintaining
establishment, watch and ward and tools and
plants and other shuttering material but the
Respondents did not refute. The chief reason
for delay are highlighted below:-
i) Delay in supply of structural and architectural
drawings.
(ii) That out of 9 Blocks 2 blocks are abnormally
delayed as the site of the said 2 blocks was
made available in piecemeal which stretched
till 26.2.94 whereas the stipulated completion
was 23.2.93.
(iii) Delay in laying the conduit by the electrical
agency resulting in delay in casting of RCC
slab and plastering work besides development
work. The sad hindrance was removed lastly
on 28.3.95.
(iv) Abnormal delay in making availability of the
alignment sketch for electrical cables.
(v) Inordinate delay in supply of stipulated
material such as cement, steel and pipes.
(vi) Delay in decision of finishing work in kitchen
and bath rooms.
(vii) There was inordinate delay in making
availability of colour scheme.
FAO(OS) 667/2006 Page 4 of 18
(viii) That the Respondents also abnormally delayed
the supply of door shutters which were to be
supplied by the Respondents. The same were
supplied as late as 8.11.94.
(ix) Inordinate delay in writing the electrical
conduits resulting in delay in completion of
finishing work.
(x) Suspension of work by the Respondents for the
period 17.1.94 to 25.2.94 and from 7.8.94 to
22.3.95 because of non-removal of hindrances.
(xi) Delayed payment due to non-sanction of
Administrative Approval and Expenditure
Sanction.
That all the delays as set out had
been duly recorded by the Respondents in the
hindrance register Z-1 pages 733 to 739 and
M.A.S. register pages from 747 to 768 as
highlighted by the Claimants. The Claimants
also relied upon certain documents of MAS
Register supplied by the Respondents.
That the Claimants further stated that
the Claimants had also filed reasons for delay
and hold up of the work for various defaults of
the Respondents in Annexure Z-2 pages 740 to
746. The Claimants also highlighted the
correspondence made by the Claimants with
the Respondents.
That the Claimants further stated that
the said hindrance were avoidable but the
Respondents did not take timely steps.
That the Claimants also referred the
contents of the letter dated 10.7.95 (page 885)
wherein it was observed that the
Superintending Engineer appreciated the
working of the Claimants and also observed
that there was no fault of the contractor and
FAO(OS) 667/2006 Page 5 of 18
they have successfully completed the work.
The Claimants further stated that they had
incurred heavy expenditure on overheads
because of the lapses and defaults of the
Respondents.
As against this the Respondents
stated that there was poor planning of the
Claimants and also contended that since the
compensation has been levied under Clause 2
of the agreement, therefore, claim of the
Claimants deserves to be rejected.
That on record it is conclusively
proved that the Respondents committed
breach of contract as they failed to discharge
their obligations in time resulting in
prolongation of the contract. It was further
observed that the Respondents did not deny
the deployment of the tools and plants and
machinery at site besides watch and ward
during the interrogation.
That in the trade of Building Contracts
the general practice is to consider 5%
expenditure as reasonable overheads.
I, therefore, adopt 5% overheads as a
measure of damages to assess the quantum
and there was delay of 25 months. It was also
observed that all the delays set out in the
hindrance register by the Respondents are
because of the Respondent‟s defaults.
I consider the period of 20 months for
assessing the overhead expenses as under:-
The contract value was `87,66,678/-.
In this figure 10% profit and 5% overhead are
included and the estimated value comes to
`74,51,676/-. On this amount 5% overhead
(`3,72,582/- for 9 months) is allowed which
comes to `41,398/- per month and for 20
months it works out to `8,27,960/-. To meet
FAO(OS) 667/2006 Page 6 of 18
the ends of justice I, therefore, award a sum of
`8,27,960/- in favour of the Claimants under
these Claims No.9, 10, 11 & 15.
Claim No.12: Claimants claim damages for a sum
of `7,12,394/- on account of
damages for executing work during
prolongation beyond stipulated
completion.
Claim No.13: `97,500/- claimed as extra @35%
for the work executed of Block
No.100 & 101 as the site for these
two blocks was made available on
28.2.94 though date of
commencement was 24.5.92.
Both these claims are interlinked and
pertain to the work executed during prolongation
stipulated after the stipulated date of completion
and therefore dealt together.
As already stated in claim No.9, 10, 11
and 15 that there was admitted delay in
completion of the work for a period of 25 months
beyond the stipulated date of completion of 9
months. The hindrances in the work were
conclusively proved from the hindrance register
maintained by the Respondents DDA. From the
said hindrance register it was transpired that
there was not a single delay on the part of the
Claimants.
That as per agreement work in question
was to be completed on 23.2.93 but the
Claimants stated that because of the
Respondents it was delayed 25 months beyond
stipulated completion.
The Claimants further argued that they
requested the Respondents vide C-9 dated
17.2.93 to finalise the contract as the stipulated
time is to expire on 23.2.93 and the Claimants
are not interested to execute further work. The
FAO(OS) 667/2006 Page 7 of 18
Respondents did not respond. The Claimants
further argued that they pursued the
Respondents to finalize the work otherwise
increase the rate by 20% due to steep rise in
cost of material and labour for the work to be
executed during prolongation beyond stipulated
completion and highlighted in Claimant‟s C-24
but it appears that the Respondents did not
refute.
The Claimants further argued that the
Claimants had given details vide Annexure „K‟
page 99 on 20% and the Claimants also
prepared the detail of this claim on page 100 on
the basis of the plinth area cost of construction
and also on page 101 based on cost index and at
page 102 Annexure „L‟ with regard to claim
No.13.
The Claimants referred several
documents and also referred to the hindrance
register maintained by the Respondents (Z-1) as
already referred to in Claim No.9, 10, 11 and 15 I
find that the Respondents had committed breach
of contract and rendered themselves liable for
damages.
The Respondents argued that there is no
provision in the agreement for payment of
damages except under Clause 10-c. In addition
to above it was further stated that the delay
caused in the completion of the work by the
Respondents would be considered for grant of
extension of time to the Claimants. The
Respondents further urged that the Competent
Authority had levied the compensation on the
Claimants on 12.3.2001 and therefore, the said
claims did not subsist.
The hindrance register maintained by
the Respondents indicates the total delay in the
execution of the work by the Respondents and
several communications of the Claimants
regarding delay caused by the Respondents are
FAO(OS) 667/2006 Page 8 of 18
unrebutted on the record. I have considered
these submissions of the parties and have
already held that the Respondents are in breach
of contract and the Respondents are thus liable
for damages. It was also observed that the
Respondents did not comment on the details
submitted by the Claimants. Therefore, based
on facts and evidence the Claimants should be
compensated based on cost index which indicate
the increase during a particular period when the
contract was being executed. It was revealed
that out of the total value of the work executed
for a sum of `62,84,845/- the Claimant‟s
executed the work up to the stipulated
completion dated 23.2.93 only to the extent of
`19,11,656/- and therefore, the work of
`43,73,189/- was executed during prolongation
from 24.2.93 to 28.3.95 after deducting the cost
of stipulated material supplied by the DDA for a
sum of `6,71,123/-, balance work of `37,02,066/-
was executed during prolongation.
That as per cost index reflected on page
101 and the detail furnished by the Claimants
the increase works out to 31.65% whereas the
Claimants had claimed against this to the extent
of 20% which is very much within the cost
increase. I am of the opinion that 20% increase
appears to be rational and is justified as it is
much below the cost increase during
prolongation. I, therefore, award a sum of
`7,20,000/-. Therefore, after giving allowance
for some items carrying market rate and some
items not allowed under Claim No.1, I award a
sum of `7,20,000/- in favour of the Claimants
under these Claims No.12 and 13.”
7. The learned Single Judge has negated the challenge
on the reasoning that clause 10C of the contract recompenses
the contractor for the work done during the period of the
contract and not for the period beyond. The learned Single
Judge has held that consequences of delay have more than
FAO(OS) 667/2006 Page 9 of 18
one ramification including the cost of material, supervision
required at the site, the inability of the contractor to utilize the
manpower at some other place, the inability of the contractor
to make profits from some other contract by utilization of the
same resources. Noting that there was a delay of 25 months,
the learned Single Judge has upheld the award pertaining to
the two sums awarded.
8. Claim No.9 was on account of hire charges statedly
paid by the contractor for centring and shuttering due to delay
in laying conduits in the slab. Claim No.10 was on account of
the alleged sudden stoppage of the work in two blocks. Claim
No.11 was towards damages on account of hire charges for
tools (wrongly typed „tills‟ in the award), plant and scaffolding
and Claim No.15 was towards damages on account of
establishment due to prolongation of the work.
9. A perusal of the award would reveal, from the
portions extracted herein above, that with reference to
evidence led before him the learned Arbitrator has held delay
attributable to DDA, a finding of fact which is based on
evidence and rightly conceded to by Sh.Bhupesh Narula,
Advocate who appears for DDA as being beyond judicial review
power of this Court pertaining to a reasoned award. But, while
awarding ` 8,27,960/- the reasoning adopted by the learned
Arbitrator is questioned as being the result of ignoring the
well-recognized legal principles on the subject. Learned
counsel argued that the reasoning is the ipse dixit of the
learned Arbitrator.
10. The learned Arbitrator has arrived at the sum by
taking the contract price of ` 87,66,678/- and deducting 10%
FAO(OS) 667/2006 Page 10 of 18
profit and 5% overhead expenses therefrom i.e. deducting
15% from ` 87,66,678/- has deduced the sum of ` 74,51,676/-
and treating 5% as the overhead on the sum of ` 74,51,676/-
has opined that for 9 months i.e. the contract stipulated period
the same would work out to ` 3,72,582/- i.e. ` 41,398/- per
month and for 20 months the figure arrived at is ` 8,27,960/-.
11. There is one patent and glaring error. The same is
that the learned Arbitrator has ignored that the work which
was completed was only in sum of ` 62,84,845/-, which sum
has been taken note of by the learned Arbitrator while
deciding claims No.12 and 13, and thus corrective action
needs to be taken and should have been taken by the learned
Single Judge while deciding challenge by DDA to the award
with respect to said subject matter thereof.
12. The learned Arbitrator has given no reason as to
why he opines that 5% would be the overhead expenses.
13. Highlighting that the learned Arbitrator has, under a
common reasoning, discussed claim for hire charges towards
centring and shuttering, idle tools, plants and scaffolding and
establishment charges while considering Claims No.9, 10, 11
and 15 followed by discussing Claim No.12 and 13 which were
on alleged damages due to increase in price of material and
labour, the learned Arbitrator has awarded 20% increase on
the value of the work executed i.e. ` 62,84,845/- i.e.
` 7,20,000/-.
14. „HUDSON‟s Building and Engineering Contracts‟
deals with the subject of applying a formula to award these
kinds of claims i.e. overhead expenses, increase in price of
material and labour, recompense towards idle equipment of
FAO(OS) 667/2006 Page 11 of 18
the contractor at site and general damages for not being able
to use the manpower elsewhere and gain a profit.
15. In a recent decision, authored by one of us, namely
th
Pradeep Nandrajog, J. pronounced on 30 November, 2011,
RFA(OS) No.55/2011 „DDA v. J.S.Chaudhary‟ the law on the
subject was summarized in paras 36 to 38 of the decision in
the following words:-
“36. Loss of a contractor‟s profit as a
head of damage in a terminated contract requires
to be distinguished from a quite different claim
which contractors may be able to establish in cases
where an owner‟s breach can be shown to have had
the effect of delaying completion by the contractor.
In a delayed contract the basis of the contractor‟s
loss is the postponement of the time when the
contractor‟s organization, viewed as a profit-
earning entity, is free to move on and earn
elsewhere in the market, the combined profit and
necessary contribution to fixed overheads of which
it is reasonably capable. A construction contractor‟s
enterprise as a whole will incur a range of off-site
expenditure which by its nature will not vary or be
affected by the delay in performance of an
individual contract, or the degree to which that
contract may have been delayed, as a result of
owner‟s breach of contract. This class of
expenditure is commonly referred as „fixed
overhead‟ expenses. A contractor pricing an
individual project, therefore, after providing for the
estimated total „prime-cost‟ of all kinds which will
be required to carry out the contract itself must
then additionally estimate for a combined operating
margin which will not only produce his required net
or „pure‟ profit, but will also serve to make an
appropriate contribution, together with that from
his other projects, to the fixed overheads of the
enterprise as a whole. In case of a delayed contract,
where the concern is to ascertain the „profit‟ which
the contractor might have expected to earn
elsewhere in the market on other contracts, it is
FAO(OS) 667/2006 Page 12 of 18
this necessary combined operating margin of profit
and fixed overhead, which in appropriate market
conditions, the contractor‟s enterprise will have lost
as a consequence of the period of owner-caused
delay on the individual project, and to which he will
be entitled as damages. However, in this regards, a
distinction needs to be drawn, on the one hand,
small contractors having few (and indeed
sometimes no) overheads other than those of the
„jobsite‟ itself, and on the other, large contractors
with centralized offices, transport systems, yards
and depots; and while again some main contractors
may operate as little more than employers of sub-
contractors, with virtually no overheads of their
own. (See Articles 8-176-79, pages 1072-74,
Hudson‟s Building and Engineering Contracts, XIth
Edition).
37. Delay in performance of contract due to
owner‟s breach may also, of course, increase the
contractor‟s prime costs or his site overhead costs.
The contractor‟s various items of prime-cost for a
project will themselves break down into some or all
of the four prime-cost components of materials,
plant, labor and salaries (including supervisory and
other staff) and sub-contracts. Some items of cost
will be obviously referable to individual parts of the
constructed cost, such as the prime-cost elements
of plant, labor and materials or sub-contracts for
constructed concrete or brickwork, and so relatively
easily applied to any additional permanent work
directly necessitated by a breach of contract.
Others, however, usually referred to as „site
overheads‟, may not be conveniently referable to
any particular part of the permanent work (for
example, supervision, access roads, site huts or
tower cranes etc), but will themselves contain some
or all of the four elements. (See Articles 8-180 and
8-190, pages 1074-76 and 1080-81, Hudson‟s
Building and Engineering Contracts, XIth Edition).
38. From the aforesaid, it is clear that in case
of a delayed contract caused due to owner‟s breach
the contractor can claim damages under following
FAO(OS) 667/2006 Page 13 of 18
heads: - (i) loss of profits; (ii) contribution to fixed
overheads; (iii) increase in prime cost which
includes components of materials, plant, labor and
salaries and sub-contracts and (iv) increase in off-
site and on-site overheads caused due to delay in
performance of contract.”
16. On the applicability of the HUDSON‟s formula, we
are noticing that in many judgments the same is being applied
mechanically ignoring certain important passages from the
commentary and especially para 8.201, 8.209 and 8.211 from
th
the 11 Edition of the Book in question. In para 8.201 the
learned Author opines that the formula should be applied
„provided proper site records have been kept, a total cost basis
of claim can be justified, it is submitted; and it is hard to see
how a plaintiff, whether owner or contractor, who has failed to
keep records should be in a better position to subject the
defendant and the Tribunal to the difficulties of assessment
and the reversal of the particular onus of proof, which total
cost involves, unless it can be convincingly shown that the
keeping of useful or relevant record was in the circumstances
impractical or impossible.‟ In para 8.209 the learned Author
opines „Arbitrators in particular should treat their own ability to
insist on proper particularization and to carry out a detail and
critical analysis and separation of quantum as a very important
part of their role in construction litigation, where the
presentation of highly exaggerated or theoretical complaints,
by owners and contractors alike, is a common feature.‟ At
para 8.211 the learned Author has noted „It seems to be the
practise in the construction industry to employ consultants to
prepare a claim almost as soon as the ink on the contract is
dry.‟
FAO(OS) 667/2006 Page 14 of 18
17. There is admittedly no evidence that the contractor
i.e. the respondent had a central establishment. It appears to
be a case where the contractor is a petty contractor and the
only expenses incurred are at the site. The claim is towards
hire charges paid for centring and shuttering, hiring tools,
plants and scaffoldings i.e. the claim is not for the contractor‟s
own equipment lying idle. There is just no evidence that the
contractor paid hire charges as claimed by him. Not a single
bill raised by the alleged person who let on hire the equipment
to the contractor has been filed nor any evidence adduced for
the payment made. Except for listing a 10 HP Water Pump, 4
number 1 HP water pump, 3 mixers, 250 scaffolding bamboos,
150 ballis and 2 vibrators in Annexure-J to the Statement of
Claim, no document proving hiring the same and brought at
the site has been led. We highlight that the claim is on
account of hire charges paid and there is no evidence of said
payment. It does happen that where a work is stopped, the
person who taken an equipment on hire returns the same and
re-hires the same when work recommences. Thus, Claims
No.9, 10 and 11 cannot be allowed because there is no
evidence to support the claims. Damages on account of
establishment expenses incurred during period contract got
prolonged have certainly to be recompensed, but we find no
evidence in the form of books of accounts, vouchers etc. to
show payments to the staff or expenses incurred in
maintaining an establishment at site in the form of a site
office. The wages register, photocopy whereof was filed
before the Arbitrator, pertains to wages paid to the unskilled,
semi-skilled and skilled labour deployed to execute the works.
FAO(OS) 667/2006 Page 15 of 18
The pleadings pertaining to the claim would show that as per
the contractor he had deployed one Executive Officer, one
Graduate Engineer, one Junior Engineer, one Accountant, one
Storekeeper and Supervisor and one Mechanic at the site and
had also deployed watch and ward. Details of the persons
employed have been listed in Annexure-N to the Statement of
Claim and the documents filed to establish the same would
evidence that the contractor has filed photocopies of the
salary register, which are available from pages No.1255 to
1322, but unfortunately for the contractor, the cat is out of the
bag when we look at the documents. They pertain to
payments made for a site at Mayur Vihar. We highlight that
the contract in question pertains to flats and houses at
Trilokpuri and not Mayur Vihar. It is apparent that the
contractor has tried to pull the wool on the eyes of the primary
adjudicator of the claim. It is not the case of the contractor
that these persons were simultaneously supervising the work
at two sites. Assuming this was the case, the matter would
then have been adjudicated with reference to same number of
persons supervising two sites and the time spent at each site
by them.
18. Thus, the award pertaining to Claim Nos.9, 10, 11
and 15 is liable to be set aside and it is so set aside. We need
not therefore take corrective action on the apparent error i.e.
the learned Arbitrator has worked out the claim on the original
contract value of ` 87,66,678/-, of course by reducing it by
15%, but ignoring that final work executed was only in sum of
` 62,84,845/-.
FAO(OS) 667/2006 Page 16 of 18
19. Pertaining to Claim No.12 and 13, the learned
Arbitrator has recompensed the contractor 20% price hike in
the cost of material and labour noting that there was a steep
hike in the period in question when the contract got prolonged
by 25 months. We highlight that though the Arbitrator has
found the delay to be 25 months, recompense has been
restricted to only 20 months.
20. As noted herein above, partial recompense under
Clause 10C, has been granted to the contractor, but the same
i.e. the Clause in question requiring applicability during
contract stipulated period, it is apparent that the contractor
would be entitled to full recompense for price hike during the
extended 25 months period and not the 20 months to which
the learned Arbitrator has restricted the recompense to.
21. But, for the benefit granted under Clause 10C
wherein ` 1,62,387/-, ` 46,184/- and ` 12,922/- have been
awarded under Claim Nos.2, 3 and 4, said amounts have to be
adjusted, but not in full, for the reason these include the
amounts payable during the contract stipulated period.
22. The total of the three sums comes to ` 2,21,493/-.
We have another problem. Neither counsel could help us
identify the components thereof i.e. the component relatable
to the 9 months during which the work had to be completed
and the 25 months during which the contract got prolonged.
Thus, we apply the Rule of „Rough and Ready Justice‟. We
divide the sum by 34 to work out the proportionate increase
per month. ` 2,21,493 divided by 34 = ` 6,514.50 and
multiplying the same by 25, the figure comes to ` 1,62,862.50.
FAO(OS) 667/2006 Page 17 of 18
23. Adopting, for the reasons given by the Arbitrator,
that 20% hike in the balance work done after the contract
stipulated period i.e. benefit to be granted under this head for
work done in sum of ` 37,02,066/- and accepting the sum of
` 7,20,000/-, being the resultant figure, subtracting
` 1,62,862.50, the figure arrived at is ` 5,57,137.50.
24. We modify the award pertaining to the said claim as
per para 23 above.
25. In a nutshell, the appeal stands disposed of, further
modifying the award dated 23.05.2005 published by
Sh.K.D.Bali, Sole Arbitrator by setting aside the same awarding
` 8,27,960/- under Claim Nos.9, 10, 11 and 15 and reducing the
sum awarded pertaining to Claim Nos.12 and 13 from
` 7,20,000/- to ` 5,57,137.50; which sum shall carry interest
@12% held payable by the learned Single Judge.
26. The appellant has deposited the sum as payable in
terms of the order passed by the learned Single Judge with the
Registry pursuant to interim orders passed in the appeal,
which amount has been invested in a fixed deposit. The
Registry would accordingly release such amount as is now to
be paid to the respondent and the balance would be returned
to the appellant.
27. Parties shall bear their own costs.
(PRADEEP NANDRAJOG)
JUDGE
(PRATIBHA RANI)
JUDGE
/
FEBRUARY 08, 2012 dk
FAO(OS) 667/2006 Page 18 of 18