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2002 Supreme(Del) 590

High Court Of Delhi
M.L.MAHAJAN - Appellant
Versus
DELHI DEVELOPMENT AUTHORITY - Respondent
Decided On : 04/24/2002

Headnote:a) It was held as per Sections 14, 17, 30 and 33 of the Arbitration Act,1940, that, where contract stretches beyond the stipulated period plus 50 % thereof, then the claim for escalation in prices is not barred under Clause 10C and it does not exclude the claims for increase in cost of material and wages of labour after the specified period within which the work is to be completed b) The case questioned whether the post award proceedings under Sections 14, 17 30 and 33 of the Arbitration Act, 1940, could be interfered with – It was held that interference may be required if the error of law or fact is perverse and apparent on the face of award, which results in miscarriage of justice – Unless the error is apparent interference is uncalled for c) The case questioned whether the claim for damages on account of prolongation of the contract was permissible under Sections 14, 17 30 and 33 of the arbitration Act, 1940 – It was observed that respondent incurred unnecessary expenditure due to prolonging of contract by the appellant – It was held that the claim was maintainable as per Sections 73 and 74, that entitled the respondent to claim damages d) The case discussed the validity of the claim for damages on account of the rise in market price, for delay of the project beyond the stipulated date of completion –It was held on facts that the award was valid and it could not be predicated that the arbitrator’s interpretation of the sundry clauses of the contract was not probable e) It was adjudged under Section 30 and 33 of the arbitration Act, 1940, that, the standard form agreement must be strictly construed against the party, who drafted it

VIKRAMAJIT SEN

( 1 ) IN this appeal M/s. M. L. Mahajan (hereinafter referred as the Contractor) has assailed the judgment of the learned Single Judge dated 20/07/1990 whereby the award of a sum of Rs. 2,21,600. 00 in respect of Claim No. 20 (which was for a total sum of rs. 4,60,000/-) had been set aside. This Claim was lodged on account of the alleged rise in the market price beyond the stipulated date of completion. The appellant/contractor has prayed that the Award dated 15. 9. 87, in respect of Claim No. 20, be made rule of the court and that interest thereon at the rate of 18% per annum from the date of the Award till the date of the payment be also granted along with costs. The facts in brief are that the Contractor was awarded the work of construction of 40 MIG/lig and 20 Janata Houses at dilshad Garden, Group A, Pocket II, Delhi, vide letter dated 25. 3. 1977. Thereafter an Agreement bearing No. 6/hd/xix/76-77 dated 31. 3. 1977 was executed between the parties. The work was to commence on 4. 4. 1977 and was to be completed by 3. 8. 1978, i. e. 16 months. As it transpired, the project was completed as late as in august 1980, i. e. after a delay of approximately 24 months.

( 2 ) THE Contractor invoked arbitration by his letter dated 29. 9. 1982. After one year, the Engineer member of the DDA appointed Shri R. L. Hans, S. E. DDA, as the Arbitrator who however, resigned in December, 1985. Thereafter, the Engineer Member, DDA, in terms of his letter dated 9. 1. 1986, appointed Shri G. R. Hingorani, Chief Engineer, DDA, as the Arbitrator and referred to him the 24 Claims raised by the Contractor. The Arbitrator made and published his Award on 15. 9. 1987. He disallowed the Claims 3,6,7,9 to 18, 21 to 24. In other words, out of 24 Claims only seven were allowed in varying amounts. Under Claim No. 1 an amount of Rs. 54,279. 00 was awarded, although Rs. 1,20,000. 00 was claimed; under Claim No. 2, for the release of Bank guarantee, was allowed; under Claim No. 4 an amount of rs. 8250/- was awarded against the claim of rs. 16,500/-; under Claim No. 5, an amount of Rs. 5,380. 00 was awarded against the claim of Rs. 45,000. 00; under claim No. 8 an amount of Rs. 3,938. 00 was awarded against rs. 4000/-; under Claim No. 19 a sum of Rs. 9000. 00 was awarded for keeping the Bank Guarantee alive beyond the stipulated date of completion. Interest at the rate of 18% was awarded from 29. 9. 1982 upto the date of payment or decree whichever was earlier. As has already been indicated above, in this Appeal the Contractor has only prayed for the restoration of the sum of Rs. 2,21,600. 00 awarded in Claim No. 20 i. e. "on account of rise in the market price beyond the stipulated date of completion. "

( 3 ) THE Arbitrator has dealt with Claim No. 20 in the following words :

"claim No. 20 for Rs. 4,60,000. 00 on account of rise in market price beyond stipulated date of completion. The work was started on 4. 4. 1977 and stipulated date of completion was 3. 8. 1978. The claimant has stated that the completion was delayed mainly on account of respondents delays in (a) giving decisions and designs. (b) issuing cement. As regards (a) he referred to ex. C-18,19,20,21,22,23 and 46 none of which were controverted by the respondent. As regards (b), he referred to Ex. C-24,25,18,26 none of which were controverted. In fact the respondent has admitted (C-27) that materials are being supplied as and when available in D. D. A. Stores. As the work has been delayed due to defaults of D. D. A. the contractor is entitled to compensation due to rise in prices for which he had claimed 10% extra in 1978 (C-49 ). He has now claimed 20% extra on the basis of increase in C. P. W. D. cost index of buildings from 100 (1-10-1976) TO 157 (On 10. 4. 1980 ). The value of work done after 3. 8. 1978 was as under : 247. htm from the above it is clear that the Arbitrator s finding was that the delay was due to the default of the DDA. These are findings of fact which would normal
















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