ARIES CONSTRUCTION CO Vs. DELHI DEVELOPMENT AUTHORITY

JUDGEMENT

(1.) The petitioner/claimant/contractor had entered into a contract with respondent No. 1 - DDA for the work of Development of Village Khizrabad (SH. Construction of Community Hall) vide an agreement No.,96/EE/CDII/DDA/85-86 dated 23rd November 3985. The necessary documents in respect of this agreement were executed. This agreement also contained an arbitration clause wherein the disputes between the parties were to be settled through an arbitrator. Consequent upon certain disputes having arisen between the petitioner and respondent No. 1, respondent No. 2, who was a retired Additional Director General, CPWD, was appointed as Sole Arbitrator who consequent to his entering reference made and published his award on 15th May 1992. By the the said Award the arbitrator awarded a total sum of Rs. 85,321.00 to the claimant against a total claim of Rs. 2,33,750.00 in addition to claim of interest. This is the award under objection and challenge by the respondent - DDA. Evidence by way of affidavit was led by the respondent. There are two principle objections to the award raised by the learned counsel for the objector/respondents. The first one i.e. claim No. 1 relates to cost of materials brought to site which became infructuous due to non execution of work by the respondent. The Contractor claimed Rs. 56,250.00 whereas the arbitrator awarded Rs. 35,321.00. The arbitrator has come to the conclusion after examining all the documents that the contract commenced on 3/12/1985 and the stipulated completion date was 2/04/1986. On 22/06/1988 the contract was closed by the respondents.

(2.) Even the letter of closure dated 22/06/1998 has not imputed any lapse on the part of the claimant nor was any evidence placed before the arbitrator of the handing over of the relevant documents by the respondents in time to the petitioner/claimant. The arbitrator has found that there was no delay or default on the part of the claimant and that the undue delay of 28 months was due to lack of prompt action on the part of the respondents and the lapse was solely held to be that of the respondent. It was also found that the respondent, Delhi Development Authority, did not adduce evidence to controvert the evidence produced by the claimant. The reasoning of the arbitrator is sound and this objection being purely factual can not be sustained. Accordingly there is no merit in this objection. The other objection seriously pressed was objection to claim No. 5 in which Rs. 40,000.00 was claimed on account of deprivation of profit by the contractor. The respondent has relied on clause 13 of the contract. The arbitrator has found the aforesaid clause to be inapplicable on account of its finding in respect of claim 1. The arbitrator found that clause 10 and in particular clause 10CC stipulated that the claimant should be compensated to cover escalation. Clause 10 (CC) postulates 15 per cent margin toward over head profits. The arbitrator has relied upon State of Kerala v. V.K. Bhaskaran, AIR 1985 Kerala 49, to sustain the award of lose of profit. The learned counsel for the petitioner has stated that clause 13 will not come into operation as the work had not even commenced and this clause only operates after the commencement of the work. Clause 13 is clearly inapplicable in the facts of the present case as that clause 13 provides that there shall be no compensation for alterations in or restriction of work to be carried out. The said clause cannot apply in the present situation as work had not commenced at all. In fact the opening words of clause 13 are "If at any time after the commencement of the work ......" Consequently, the reliance upon the said clause 13 by the DDA is not justified.

(3.) The arbitrator had relied upon the judgment of the Hon'ble Supreme Court in M/s A.T. Brij Paul Singh and others v. State of Gujarat, AIR 1984 SC 1903 : (1984)4 SCC 59 where in paragraph 9 the Hon'ble Supreme Court held that in a works contract, when the party entrusting the working commits breach of the contract, the contractor would be entitled to claim damages for loss of profit which he expected to earn by undertaking the works contract. The award of the arbitrator is thus clearly sustainable on the basis of the law laid down by the above judgment.