DELHI STATE INDUSTRIAL & INFRASTRUCTURE DEVELOPMENT CORPORATION LTD Vs. KRISHNA CONSTRUCTION COMPANY

JUDGEMENT

(1.) M/S The Krishna Construction Company was awarded a contract for "Construction of Boundary Wall and Preparation of WBM surface at DTC Bus Depot, Kair (Najafgarh), Delhi". The estimated cost of the project was Rs.3,83,70,882/-. However, the contractor had tendered for a sum of Rs.2,81,39,269/- which was awarded. The date of commencement of the work, as per the agreement, was 28th October, 2009 and the work was to be completed within six months i.e. by 27th April, 2010. The actual date of completion, however, was 10th October, 2011. It is not in dispute that extension of time was granted without levy of any compensation or liquidated damages. Disputes arose between the parties which was referred to arbitration.

(2.) The Ld. Sole Arbitrator passed the award dated 12th September, 2014 which is under challenge. Both the parties have raised a challenge in respect of the payment directed by the Ld. Arbitrator under para 1.5(iii) in respect of items of GSB. The argument of Mr. Raman Kapoor, Ld. Senior Counsel is that the Ld. Arbitrator has failed to apply clause 12.2(a)/(b) as would have been applicable. The amounts have not been worked out by properly comparing the difference between the agreement rate of the substituted item and the market rate of the item so substituted.

(3.) Insofar as substituted items are concerned, there are two issues. One, the pricing/rate of the substituted item and two, the extent to which the amount is to be awarded and whether there is any deviation. These two issues are independent of each other. Clause 12.2, as a whole, determines the manner in which the price for the substituted item is to be determined. The question as to whether there is any deviation, and to what extent the deviation has to be considered, is distinct and separate. A perusal of the award shows that the manner in which clause 12.2 has to be applied has been misconstrued by the Ld. Arbitrator. Clause 12.2 (a) and (b) of the present agreement are reproduced herein below: