CENTRAL WAREHOUSING CORPORATION Vs. DEEN DAYAL

JUDGEMENT

(1.) This appeal has been filed with the following prayers:

(2.) Before delving into the merits of the matter it is pertinent to give a factual background surrounding the present appeal. The impugned judgment dtd. 7/2/2024 of the learned District Judge (Commercial Court) (Digital -04) South, Saket Courts, New Delhi had dismissed the Sec. 34 petition under the Arbitration and Conciliation Act, 1996 ('the Act', hereinafter). The appellant had sought setting aside of the arbitral award dtd. 1/2/2023 whereby, Claim Nos.1, 2 and 5 of the respondent/contractor were allowed and Claim Nos.3, 4 and 6 were rejected. The learned District Judge while considering the appeal had noted that the appeal was filed within the limitation period under Sec. 34(3) of the Act. Another observation by the learned District Judge was that in the present appeal, the learned Sole Arbitrator was unilaterally appointed by the appellant. The impugned judgment noted that the appellant was the appointing authority and is also the appellant/petitioner and hence, it was concluded by the learned District Judge that even though the arbitrator was unilaterally appointed the appellant should not be allowed to take advantage of it's own wrongdoing. It was thereafter that the order reserving the judgment was recalled and the matter was argued and finally decided vide the impugned judgment.

(3.) The appellant/petitioner invited e-tenders with an estimated cost of Rs.108.44 lacs for carrying out a work for replacement of AC/GS sheet roofing with pre-coated Galvalume sheets for its godowns at Devangere, Karnataka. The stipulated time for the completion of said work was four months. The respondent was awarded this contract since it had emerged as the L1 bidder for an amount of Rs.1,05,90,400.56 on 24/4/2019 vide letter of acceptance dtd. 24/4/2019. Thereafter, the respondent/ contractor submitted a performance bank guarantee on 8/5/2019 and the site was handed over to the respondent on 9/5/2019. As per the agreement, the stipulated time for finishing the work was to end on 8/9/2019 i.e., after four months. The work could not be completed within the stipulated time frame and the appellant vide letter dtd. 19/12/2019 granted a provisional extension upto 28/2/2020 for finishing the said work, while reserving its right to recover liquidated damages from the respondent/contractor as per Clause 2 of the agreement dtd. 26/6/2019. The work was finished on 25/8/2020 i.e., after a delay of about 352 days. The appellant had given a benefit of 16 days for the execution of extra work and of about 92 days on the account of the Covid-19 pandemic. Thus, leaving a balance of a delay of 244 days which was attributed to the respondent/contractor, thereby the appellant seeking a recovery of Rs.8,61,352.00 from the final bill which was paid to the respondent/contractor. The recovery which was sought to be claimed under Clause 2 of the agreement stipulated that a penalty at the rate of one percent per month may be claimed for the delay in execution of the work. Clause 2 of the agreement is as follows: