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1998 Supreme(Del) 975
High Court Of Delhi
SHANTI DEVI - Appellant
Versus
DELHI DEVELOPMENT AUTHORITY - Respondent
Decided On : 11/24/1998
Headnote:Arbitration Act, 1940 - Section 30 & 33 — Curtailment of work — Power conferred to restrict the work awarded to contractor with specific denial of compensation in this regard — Award of compensation is beyond the jurisdiction of Arbitrator.
Held:
A careful perusal of the language of clause 13 would show that the said provision is intended to give absolute power to respondent No. 1 to curtail the work as specified in the tender for any reason whatsoever and at any point of time after the commencement of the work. Admittedly, the notice as required under clause 13 was issued by respondent No. 1 to the claimant after the commencement of the work. The respondent No. 1 is thus empowered for any reason whatsoever to decide that it does not require the whole of the work as specified in the tender to be carried out and withdraw and/or curtail such part of the work. The only restriction imposed in exercise of that power is to issue a notice by respondent No. 1 to the contractor which in this case stands fulfillled and complied with. In the face of the aforesaid express stipulation between the parties as provided for under clause 13 the claimant contractor could not have claimed any amount on account of any loss of profit and/or compensation whatsoever on account of any profit or advantage which he might have derived on execution of the full work. The aforesaid stipulation clearly empowers the respondent No. 1 to withdraw any part of the work contracted to be done on any reason and further provides that the contractor cannot have any claim to any payment of compensation whatsoever on account of any profit or advantage which he might have otherwise derived from the execution of the work in full which he did not derive on account of the consequence of the work not having been earned out.
In the present case by agreeing to the provisions of Clause 13 the parties set limits that even in case of withdrawal and/or curtailment of a part of the work from the whole, no compensation could be payable to the contractor, and thus the arbitrator was required to follow the aforesaid limits and if the arbitrator acts in excess of his jurisdiction in holding that the contractor is entitled to compensation he acts in excess of his jurisdiction and then the award is required to be set aside.
( 1 ) THE predecessor-in-interest of the petitioners entered into a contract with the respondent No. I for execution of the work of construction of 900 SFS houses at Sarita Vihar. During the execution of the aforesaid contract disputes arose between the parties and accordingly arbitration agreement contained in the said contract was invoked. The respondent No. 1 appointed respondent No. 2 as the sole arbitrator to adjudicate upon and decide the disputes arising between the parties. During the aforesaid proceedings before the arbitrator the predecessor-in-interest Shri O. P. Sharma expired on 6. 2. 1991 and the petitioners were brought on record. The arbitrator, after hearing the parties and after receiving evidence made and published his award on 15. 11. 1991. The said award was filed in this court, on receipt of which objections have been Filed by the respondent No. 1. By this common judgment and order I propose to dispose of the said objections filed by respondent No. 1 as also the suit pending in this court arising out of application filed by the petitioners for filing the award in this court.
( 2 ) THE award passed by the arbitrator is in respect of claims No. 1,2 and 3 of the petitioners. CLAIM NO. 1:
( 3 ) THIS claim relates to a claim of petitioners claiming an amount of Rs. 3. 51 lacs for deprivation of profit/loss because of unjustified action taken by the respondent No. 1 in curtailing the scope of the work and awarding it to another agency. In order to appreciate the contents of the aforesaid claim it would be necessary to provide certain background facts giving rise to the aforesaid claim of the petitioners. The contract awarded to the predecessor-in-interest of the petitioners was for construction of 18 blocks. Subsequently however, by a letter dated 10. 8. 1988 the respondent No. 1 curtailed the work and restricted the scope of work from 18 blocks to 14 blocks. According to respondent No. 1 the aforesaid action of curtailing the construction work to 14 blocks had to be taken in view of the stay order issued by Court. It was also stated that the said action of curtailing the work to 14 blocks is justified in terms of clause 13 of the agreement which provides that the respondent could curtail the scope of the work for which the contractor shall not be entitled to any compensation. A notice dated 10. 8. 1998 (Ex. C-2) as required under clause 13 of the agreement was also served on the predecessor-in-interest of the petitioners. The petitioner challenged the aforesaid action of curtailing the work from 18 blocks to 14 blocks and also submitted that provisions of clause 13 of the agreement do not apply to the tacts and circumstances of the present case inasmuch as such provision would apply only when the work was not required, whereas in the present case the work of construction of 4 blocks was required and was got done by respondent No. 1 through another agency at later stage.
( 4 ) AS against above, the counsel appearing for respondent No. 1 submitted that the predecessor-in-interest of the petitioners was also asked to submit his tender as against the aforesaid work got done later on. But he did not choose to submit any tender and he insisted that he should be allowed to do the work at the rate Fixed in the original contract but was not agreeable to do the work at a lesser rate at which the contract was sought to be awarded to another agency.
( 5 ) THE aforesaid contentions were also raised before the arbitrator. The arbitrator, after recording the submissions of the parties held that the restriction of the scope of the work in the present case was not justified especially in view of the fact that when respondent No. 1 themselves assured even after expiry of the contract period that the site for the remaining 4 blocks would be handed over to the claimant as soon as it is handed over to the Engineer Division by the Land Department/dda. The arbitrator held that since respondent No. 1 invited tenders f
