WEE AAR CONSTRUCTIVE BUILDERS Vs. DELHI DEVELOPMENT AUTHORITY

JUDGEMENT

(1.) THIS petition under Section 14 of the Arbitration Act, 1940 (hereinafter referred to as "the Act" only) was filed with a prayer to direct filing of the Award dated 29.1.1994 and are making it a rule of the Court. After notice the petitioner as well as respondent filed objections. The objections filed by the petitioner-claimant were registered as IA. No.6532/93 and the objections filed by DDA-respondent was registered as I.A No.271/94. Replies/rejoinder to the objections were filed. On 23.5.1996 the following issues were framed by the Court:- 1. Whether the award is liable to be set aside or modified on the basis of the objections raised by the parties and to what extent? I have heard learned counsel for the parties. I have gone through the records and affidavits. The facts relevant for the disposal of the objections, briefly stated, are that the respondent DDA awarded to the petitioner the work of construction of 450 Janta Flats at Dakshinpuri Extension, Group-I, New Delhi. In terms of the agreement the work was to start on 1.9.1985 and was to be completed by 31.3.1986. The work was not completed within the stipulated time and as such the respondent rescinded the contract on 17.12.1987. In view of disputes between the parties Shri S.Nagarajan, a retired Additional Director General, CPWD, was appointed an Arbitrator who made his Award on 29.1.1994. After the filing of the Award both the parties filed objections and thereafter lead evidence by affidavits. The petitioner-claimant has not pressed its objections. The respondent, however, has pressed objections in regard to Claim Nos.1,2,4,5 and 6 and counter claim No.3. My findings on the issue are as under: ISSUE NO.1 Before adverting to the objections filed by the respondent, this Court would like to clarify that the Court while dealing with objections under Section 30/33 of the Act should not scrutinize the objections as an Appellate Court and substitute its own view to that of the Arbitrator. The Arbitrator chosen by the parties is to be given primacy in the matter of appreciating and adjudicating the controversies between the parties. The Court must not interfere with the findings unless it is established that the Arbitrator has misconducted himself or the proceedings or the Award has been made after the super cession of the arbitration by a Court or the Award has been improperly procured or is otherwise invalid. In "State of U.P. Vs. Harish Chandra and Co." reported in (1999) 1 SCC page-63, the Apex Court has clearly held that the questions relating to the merits of the Award cannot be raised in objections under Section 30 of the Act inasmuch as the proceedings thereunder are not in the nature of an appeal against the Award. In "Municipal Corporation of Delhi vs. M/s.Jagan Nath Ashok Kumar and Anr." reported in AIR 1987 Supreme Court P-2316, the Supreme Court of India had held that the reasonableness of the reasons given by an Arbitrator in making his Award cannot be challenged in a Special Leave Petition and it was also held that the Arbitrator is the sole Judge of the quality as well as quantity of evidence and the fact that the Court could have arrived at a different conclusion than the one arrived at by the Arbitrator cannot be a ground for setting aside the Award of an Arbitrator. Claim No.1 relates to the amount awarded by the Arbitrator to the petitioner in regard to the extra work that petitioner had to undertake for the cutting, lifting and removal of a large quantity of the hard rock at site. The agreement had provided for the excavation of soft/loose soil only but the site was changed where the petitioner had to undertake excavation of hard rock and that too in large quantities. The petitioner raised claim in respect of the excavation of ordinary rock, hard rock as well as the transportation of rock from the site. The respondent acknowledge this extra work and made a payment of Rs.7,60,229.08 but after considering the claim of the petitioner the arbitrator came to the conclusion that a further sum of Rs.3,15,875.98p. was payable. Reports of the Local Commissioner and magnitude of work were taken note of while assessing this amount. Enhancement was given @ 125 per cent although Ex.-C-58 showed that the respondent had paid in some other cases enhancement @ 135 per cent for a similar work. The plea of the respondent-objector is that the enhancement @ 125 per cent was not justified in as much as in Ex.R-18 the petitioner himself was claiming enhancement @ 75 per cent. THIS plea cannot be sustained in as much as Ex.R-18 was regarding the work which was part of agreement and not the work which was beyond the agreement between the parties. Ex.C-58 shows that enhancement of 135 per cent was given by the respondent for similar work. The arbitrator, who was a Retired Additional Director General of CPWD and a technical man of respondent's choice had considered this controversy in detail and as such the Court must sustain his view in regard to the claim of the petitioner for this extra work. It, therefore, cannot be said that findings on claim No.1 were as a result of any impropriety or that the arbitrator had misconducted himself or the proceedings while making an award in respect thereof. In ragard to Claim No.2 on pages 13/14 of the Award the plea of the respondent-objector is that the arbitrator had no justification in setting aside the deductions made by the respondent. Learned Arbitrator was of the view that the deductions were made in the final bill long after the recission of the contract and as such there was no justification for deductions. The Arbitrator allowed deduction of Rs.5457.26p. and came to the conclusion that the deductions in regard to other items were not justifiable. He, however, allowed deductions regarding supply of material and income tax. These findings of fact cannot be interfered with by the Court and as such the objections raised by the respondent in respect thereof are not sustainable. In regard to Claim No.4, the learned Arbitrator came to a definite conclusion that the delay was caused by the respondent only and not by the petitioner and as such the petitioner was entitled to escalation under Clause 10 C(C) of the Agreement. The petitioner-claimant had raised a claim of Rs. One lakh on the ground that it was entitled to this amount due to increase in the price index up to the stipulated period for the completion of the work and also for further period till the date of the recission of the contract as the respondent had delayed the project and defaulted in the performance of the agreement by changing the site and the plinth level. The details of the claim were given in Annexure 3 to the claim in which a sum of Rs.84952.27p. was claimed. On the other hand the respondent-objector had pleaded that the pace of work undertaken by the petitioner was slow right from the beginning and as such petitioner was not entitled to any payment under Clause 10 (C)(c) of the agreement. The learned Arbitrator found that the date of the completion of the work was unilaterally extended by the respondent upto 31.12.1987 and as such the petitioner was entitled to payment under Clause 10 CC upto the date of the recission of the contract. It was also held that the delay in the work was not on account of any fault of the petitioner and accordingly the claim of Rs.84952/- was sustained.. The plea of learned counsel for the respondent-objector that the reasons given by the Arbitrator were not sufficient for upholding this claim cannot be sustained in as much as it is satisfactorily shown on record that the project was delayed on account of the acts and omissions of the respondent-objector only. The first notice Ext.RC-2 was dated 16.1.1987 and the second notice Ext.RC-3 was dated 22.10.87. The petitioner gave replies. If the petitioner had been delaying the project why no objection was raised between 31.3.1986 and 16.1.87 and again between 22.1.87 to 28.10.87. If the petitioner was delaying the project, the contract ought to have been rescinded much earlier. Therefore, the learned Arbitrator was fully justified in holding that the petitioner was entitled to payment under Clause 10 C(c). These findings of the learned Arbitrator are supported by good reasons and call for no interference. In regard to Claim No.5 the plea of respondent-objector is that the petitioner-claimant is not entitled to a refund of the security deposit of Rs.1 lakh in as much as this deposit was for the due performance of the contract and since the contract had been rescinded on account of non-completion of the work in time, the respondent was entitled to forfeit the security deposit. After examining the material on record, the learned Arbitrator came to the conclusion that the delay and default were on the part of respondent-objector only and as such it was not entitled to forfeit the security deposit. The evidence on record clearly shows that right from beginning the respondent was making it difficult for the petitioner to complete the contract. It not only changed the site but changed the plinth level also. Structural drawings were delayed, the supply of cement and other material by the respondent was also not within time and as such the default was on the part of the respondent only. Therefore, the learned arbitrator was fully justified in holding that the respondent was not entitled to forfeit the security deposit of Rs.one lakh. These findings are not liable to be interfered with by this Court. Regarding Claim No.6, learned counsel for the respondent/objector has argued that the award of Rs. 6 lakhs to the petitioner on account of loss of profit and damages has no justification as the additional condition No.1 of contract specifically bars the claim of damages/compensation in case there is delay on the part of the respondent in handing over site or the material. It is also submitted that there was no material on record to establish as to how the petitioner had suffered loss and as such the learned Arbitrator had misconducted by awarding compensation to the petitioner under this head. The petitioner had claimed compensation of Rs.10 lakhs on the ground that the respondent had delayed the entire project by various acts of omission and commission. The petitioner gave particulars of the investments made by it and calculated over Rs.14 lakhs as the loss suffered by it. The cost of the work awarded to the petitioner was over Rs.65 lakhs which was to be completed within 7 months but from the beginning itself the respondent created problems for the petitioner. The respondent-objector made it impossible for the petitioner to complete the work within the stipulated period under the contract. It is also found that the respondent had varied the contract midway by asking the petitioner to complete 262 flats first. The site for remaining 188 flats was not made available to the petitioner till December, 1987 when the contract was rescinded. The learned Arbitrator found that the respondent was in breach of its contractual obligations not only during the period of original contract but during the extended period also. Even the recission of the contract by the respondent was found to be arbitrary. The learned arbitrator rightly split the claim of the petitioner under this head in two parts. The first part was the loss suffered by the petitioner on account of prolongation of the contract and the second part was the loss of profit in regard to balance work of 188 flats which was taken away by the respondent from the petitioner arbitrarily. After perusing the reasons given by the arbitrator, this Court finds that the Arbitrator was justified in awarding compensation to the petitioner under this head and it cannot be said that the Arbitrator had misconducted himself or the proceedings on this count. Additional condition No.1 relates to only change of the site partly and delay in supply of material and not the loss suffered by the petitioner on account of illegal recission of the contract. Counter claim No.3 relates to the jurisdiction and powers of Arbitrator to go into and adjudicate this claim of petitioner. As discussed above, the Arbitrator was well within his powers to decide Claim No.6 as made by the petitioner. In "Dwarka Das Vs. State of Madhya Pradesh and Anr." reported in 1999(1) SCALE P-376, while discussing the implications of Section 73 of the Contract Act, it was held by the Apex Court that the damages for the breach of a contract can be claimed by a contractor where government is proved to have committed breach by improperly rescinding the contract. It was also held that for estimating amount of damages, the Court should make a broad evaluation instead of going into minute details. It was also observed that a contractor was entitled to claim damages for loss of profits, which he expected to earn by undertaking the work under the contract and Court is justified in quantification of damages even if it is based on guess work. THIS Court, therefore, is of the considered view that the objections filed by the parties against the Award have no merit. The objections filed by the petitioner as well as respondent against the Award, therefore, are dismissed. The Award dated 29.1.1994 is made rule of the Court and a decree is passed in terms thereof. The petitioner-claimant shall be entitled to future interest on the decretal amount @ 9% per annum from the date of this order till realization.