SANYUKIT NIRMATA Vs. UNION OF INDIA

JUDGEMENT

(1.) M/s. Sanyukt Nirmata, hereinafter to be called "claimant" entered into a contract with Union of India, hereinafter to be called the "objector", for construction of CPWD Training Institution Residential Accommodation at Ghaziabad. The stipulated date for commencement of the work was 11,03.1990 and the date of its completion was 10.12.1990. The work was actually completed on 25.5.1992. In the proceedings under Section 20 of the Arbitration Act, 1940, this Court by order dated 20.10.1997 made a reference of the dispute, which had arisen out of and in relation to the aforesaid work contract, for adjudication by arbitration to the sole Arbitrator, respondent No. 2. The Arbitrator on 22.7.2000 filed the Award in this Court in view of Section 14 of the Arbitration Act, 1940. However, on getting advance of filing of the said Award, the objector on 29.9.2000 filed the objections, purported to be under Sections 30 and 33 of the Arbitration Act, 1940 and deposited the entire awarded amount in the Court. The counsel for the objector on 30.10.2000 also gave no objection to the release of the amount deposited, except the amount involved in claim Nos. 1 and 3, to the claimant. The amount has since been released. The balance amount, however, has been kept in a fixed deposit in the Registry of the Court. The claimant filed LA 1562/02 for treating the Award as having been made and published in accordance with the provisions of Arbitration and Conciliation Act, 1996 (for short, "the Act") and for dismissing the objections filed by the objector under Sections 30 and 33 of the Arbitration Act, 1940. This Court on j 28.8.2002 held that the objections filed by the Union of India are to be decided in accordance with the provisions of the Act, The objections filed by the objector under Sections 30 and 33 of the Arbitration Act, 1940 were accordingly treated to be an application filed under sub-section (2) of Section 34 of the Act for setting aside the Award dated 12.4.2000.

(2.) At the outset, learned counsel for the objector submitted that the objections are filed to challenge the Award in respect of claims Nos. 1 and 3 only. The finding of the Arbitrator rendered in respect of claims Nos. 1 and 3 in the Award dated 17.4.2000 being relevant, is reproduced as below:- Claim No. 1: Claimants claim on account of Items not paid or paid at lower than due rates : Rs. 8,56,106 The handrail has been provided on the parapet as an extra item and the claimants had claimed a rate of Rs. 776.90 per meter for the same. The respondents have however sanctioned a rate of Rs. 124.96 only. The claimants claim is for the payment of the rate claimed by them viz. Rs. 776.90. Both claimants and respondents have submitted their analyses of rates for the item. A perusal of the analysis of rate based on which the respondents have released payment shows that the rate has been derived based on D.S.R. 1985 a per clause 12(iv) of the contract. The claimants have based their analysis of rate on their quoted rate of item no. 10.4 of the agreement for the staircase railing; the rae derivation is thus on the basis of clause 12(ii) of the contract. I find that clause 12(ii) has a priority over clause 12(iv) of the contract and hence the analysis filed by the claimants is the one, which should form the basis for making payment of this item. The rate is to be derived on the basis of the quoted rate for the item of staircase railing. On scrutiny of the analysis submitted by the claimants, I assess that the claimants are entitled to receive a rate of Rs. 700 per m. for this item. The claimants have already been paid @ Rs. 124.96 per meter. The claimants are entitled to receive an extra payment of Rs.682.96 x (700-124.96)=Rs.3,92,729.31. Claimants are awarded an amount of Rs. 3,92,729.00. Claim No. 3 : Claimants claim for Rs. 33,36,806 on account of interest, compensation and damages I have carefully gone through the pleadings and arguments both written and oral made by the parties regarding delay in the execution of the work. It is clear that the work extended beyond the stipulated date of completion due to late issue of drawings. Certain changes were made at the site in the layout of the buildings even after the layout plan was issued. There was delay in giving the decision about the number of type I quarters to be constructed under the contract. Some other decisions concerning manufacture of shutters, W.C. and kitchen details, colour scheme etc. were also issued late. There was delay in getting the electrical conduits laid and this also resulted in dislocating claimants work. All these delays are attributable to respondents only. It is also a fact that the respondents have sanctioned extension of time upto the recorded date of completion without levy of compensation which also goes to establish that the claimants were not responsible for the delays in the execution of the work. The claimants are therefore found to be entitled to receive damages on account of losses that they suffered due to prolongation of the contract. I have examined the respondents pleading about the voluntary undertaking given by the claimants concerning not to claim damages for delays in the execution of the work. Claimants during oral hearings had pleaded that the undertaking as occuring in Exhibit R-22 was given by them under duress. The respondents had been threatening to levy liquidated damages under clause 2 of the contract even though there had been no delay on their part and the entire delay was attributable to the respondents if an undertaking as in . Exhibit R-22 was not given. I find that the claimants had submitted the extension of time application to the respondents on 12.2.1992 and that at the time of submission of this application no undertaking was there on the application. The claimant gave the undertaking at a much later date viz on 20.8.1992, i.e. nearly six months after the application was submitted. The extension of time was thereafter sanctioned by the superintending engineer on 16.10.1992. It is evidently clear from the dates mentioned above that no action was taken by the engineer in charge to process the application for a period of approximately six months after its submission in February, 1992 till the claimants gave them the undertaking as in Exhibit R-22 in August, 1992. There was no need for the engineer to charge to hold the application for granting extension of time if they required no undertaking from the claimants. The delay in processing of the application till the claimants gave an undertaking clearly establishes that the undertaking was given by the claimants at respondents' instance only. It is also seen from Exhibits R-4 to R-15 that the payment of a sum of nearly Rs.6.81 lacs towards escalation charges was pending for want of sanction of extension of time and the claimants would have lost this money if the extension had been sanctioned by the respondents with levy of liquidated damages. Sufficient ground of economic duress thus existed on 20.8.1992 when the claimants gave the undertakings. The undertaking given by the claimants on 20.8.1992 is reproduced below: -

(3.) The ground of challenge to the Award in respect of claims Nos. 1 and 3 as mentioned In the objections in paras-7, 8 and 9 are as follows:-