BAMCEF CGHS LTD Vs. HANUMAN PROMOTERS & ORS

JUDGEMENT

(1.) The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 has been filed challenging the award dated 8th November, 2010 passed by the Ld. Sole Arbitrator.

(2.) The Delhi Development Authority allotted land to the Petitioner Society- BAMCEF Group Housing Society, Rohini (hereinafter, "Society") for construction of dwelling units for the members of the Society in the year 1984. The Society consists of members of the backward and minority community, belonging to the lower middle salaried class. The purpose of the allotment was to construct economical and affordable dwelling units for the members. With that purpose in mind, the Society engaged a contractor - M/s Moluram and Sons to undertake the construction of the 90 dwelling units in the form of 4 storied flats. For various reasons, the part construction, which was undertaken by the said contractor, was in fact demolished and a tender was called for allotment of the work to an alternative Contractor. The Respondent M/s. Hanuman Promoters submitted its bid on 23rd July, 1990. Respondent Nos.2 and 3 are the promoters of Respondent No.1 and are thus, together referred to as the "Contractor", for the sake of brevity. Considering the financial status of the members of the Society, various deductions were negotiated with the Contractor, even prior to acceptance and finally on 13th August, 1990, the acceptance letter was issued to the Contractor.

(3.) The agreement dated 17th September, 1990 was then entered into between the parties. The work was to be executed within a period of 18 months. Construction was commenced and various running bills were submitted by the Contractor from time to time. Some disputes arose amongst the office bearers of the Society as it was felt that some of the members had colluded with the Contractor. The perception was that the Contractor was being overpaid, by the said members. It is the Society's case that a total amount of Rs.1,87,88,044/- was paid upto 31st March, 1997, which included the actual payment of Rs.1,43,20,000/- and the Society's supplies of Rs.42,68,044/-, as also TDS of about Rs.2,00,000/-. However, there was delay in the construction. Vide letter dated 21st April, 1997, time for construction was extended till December, 1997. It is the Society's case that the Contractor did carry out the balance work but only of GICI pipes, etc. and failed to complete the entire work. In a meeting on 11th May, 1997 held by the Society, a decision was taken to terminate the contract as, by then, the Contractor had already left the site and no work was going on. The members of the Society were put to enormous pressure and suffering owing to the non-completion of the project. The Contractor was then called for joint measurements. The same could not be completed as the Contractor left the site. At that stage, vide direction dated 17th September 1997, the Assistant Registrar (North-West) of Cooperative Societies, under the Cooperative Societies Act barred the Society from holding elections and also from cancelling the contract of the Contractor. Despite this direction, on 21st September, 1997 the General Body of the Society ratified the termination of the contract. Notice was then issued on 24th November, 1997 to the Contractor demanding the excess payments made. At that stage, the Registrar of Cooperative Societies had intervened and stayed the decision of the General Body of the Society. The Society perceived the action by the Registrar as having been prompted due to the interference by the Promoters of the Contractor.