DELHI DEVELOPMENT AUTHORITY Vs. ANAND AND ASSOCIATES

JUDGEMENT

(1.) THIS appeal arises out of an order dated 18/4/07 passed by a Learned single Judge of this Court whereby OMP No. 144/05 under Section 34 of the arbitration and Conciliation Act 1996 filed by the appellant has been dismissed.

(2.) DISPUTES relating to a certain work contract executed between the appellant DDA and the respondent contractor were referred for adjudication to mr. Avadh Behari Rohtagi a former Judge of this Court. Before the arbitrator, the respondent contractor made as many as ten claims inclusive of interest and cost of arbitration while the appellant made a counter claim for payment of a sum of Rs. 40,781/- which was given up in terms of a statement made on behalf of the appellant before the arbitrator on 08/9/02. The arbitrator eventually came to the conclusion that the appellant DDA had committed defaults in the discharge of its obligations under the agreement thereby rendering the termination of the contract illegal. On that finding, the Learned Arbitrator held the contractor entitled to the refund of a sum of Rs. 1 lac towards security deposit and a sum of Rs. 10,42,136/- representing the balance amount payable to the contractor for the work done by it but not paid. The arbitrator further held the respondent contractor entitled to a sum of Rs. 3,50,000/-towards increase in the price of materials and a sum of Rs. 1,91,659/- on account of increase in the labour charges. A further sum of Rs. 3,48,563/- was awarded by the arbitrator on account of loss of anticipated profit on the balance of the work which the contractor could not complete on account of termination. A total sum of Rs. 20,32,358/- was thus awarded by the arbitrator in favour of the respondent with interest @ 18% per annum from 25/4/87 till realisation with cost. The arbitrator directed that if the amount awarded by him was paid by the DDA within a period of two months from the date of this award, the rate of interest would stand reduced to 12% per annum for the entire period mentioned above.

(3.) AGGRIEVED by the award made by the arbitrator, the appellant DDA filed a petition under Section 34 of the Arbitration and Conciliation Act 1996 for setting aside the same on several grounds. These grounds were examined by Ms. Reva Khetrapal, J. and rejected in terms of an order dated 18/4/07. Relying upon the decisions of the Hon'ble Supreme Court in Santa Sila Devi Vs. Dhirendra nath Sen reported in AIR 1963 SC 1677; Hindustan Tea Co. V/s K. Sashikant and anr. AIR 1987 SC 81; International Airports Authority V/s K. D. Bali AIR 1988 SC 1099, Gujrat Water Supply and Sewerage Board V/s Unique Erectors (Gujrat (P)Ltd. AIR 1989 SC 973; Bhagwati Oxygen Ltd. V/s. Hindustan Copper Ltd. AIR 2005 sc 2071 the Court held that while dealing with the objections to the arbitral award it was not sitting in appeal over the findings recorded by the arbitrator nor could the Court examine the correctness of the award on a reappraisal of the evidence adduced before the arbitrator. The Court affirmed the finding of the arbitrator that time was not the essence of the contract and that the appellant authority had committed a breach of its obligations under the contract thereby entitling the contractor to the refund of the amount of security lying in deposit with it. The Court also affirmed the finding of the learned arbitrator that the extra cost incurred by the contractor on account of the breach of its obligations by the appellant authority entitled the contractor to claim the reimbursement of the same from the authority. The forfeiture of the security amount could not, observed the Court, be justified in the light of that default. So far as the claim of Rs. 10,42,136/- on account of the work done by the contractor and not paid for is concerned, the learned Single Judge held that the claim was rightly allowed by the arbitrator on the basis of joint measurement of the work recorded under the order of the High Court. Similarly, the award of a sum of Rs. 3,50,000/- on account of the increase in the price of material was also held to be justified as was the sum of Rs. 1,91,659/- on account of increase of labour charges. Relying upon the decision of the Hon'ble supreme Court in Brij Paul Singh Vs. State of Gujrat AIR 1984 SC 1703" the court upheld the award made by the arbitrator even in regard to a sum of Rs. 3,48,563/- on account of loss of profit. The Court upheld even the award of interest by the arbitrator relying upon the decision of Hon'ble Supreme Court santok Singh Arora Vs. Union of India and Ors. AIR 1992 SC 1809 and dismissed the petition.