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1997 Supreme(Del) 321

High Court Of Delhi
P.C.SHARMA AND COMPANY - Appellant
Versus
DELHI DEVELOPMENT AUTHORITY - Respondent
Suit 1727 of 1994
Decided On : 04/01/1997

Advocates Appeared:
A.SALVAN, K.M.SHARMA

The Arbitrator has jurisdiction to interpret the contract and award damages for prolongation of contract and loss of profitability, and the calculation of interest on the awarded amount is in accordance with the law.

Headnote:

ARBITRATION - CONTRACT - CONSTRUCTION - CLAIMS - AWARD - CONFIRMATION - INTEREST - RATE - CALCULATION - DISPUTE RESOLUTION - INTERPRETATION OF CONTRACT - DAMAGES - PROLONGATION OF CONTRACT - LOSS OF PROFITABILITY - OVERHEADS - SITE AVAILABILITY - MATERIAL SUPPLY - DELAY - COMPENSATION - ESCALATION - FORMULA - VALIDITY - JURISDICTION OF ARBITRATOR.

Fact of the Case:

The dispute arose between the parties and they were referred to arbitration. The Arbitrator passed an award in favour of the claimant M/s. P. C. Sharma and Co. and against the D. D. A. The D. D. A. filed objections to the award.

Finding of the Court:

The Court upheld the award of the Arbitrator on all claims except Claim No. 13 and Claim No. 20 which were rejected by the Arbitrator. The Court held that the Arbitrator had not committed any error in interpreting the contract and that the award was reasonable and justified.

Issues: 1. Whether the Arbitrator had erred in interpreting the contract and awarding damages? 2. Whether the Arbitrator had jurisdiction to award damages for prolongation of contract and loss of profitability? 3. Whether the Arbitrator had erred in calculating interest on the awarded amount?

Ratio Decidendi: 1. The Court held that the Arbitrator had not erred in interpreting the contract and that the award was reasonable and justified. The Court observed that the Arbitrator had given cogent reasons for his findings and that there was no infirmity in the award. 2. The Court held that the Arbitrator had jurisdiction to award damages for prolongation of contract and loss of profitability. The Court observed that the contract between the parties provided for arbitration of all disputes and that the claims for damages were directly related to the contract. 3. The Court held that the Arbitrator had not erred in calculating interest on the awarded amount. The Court observed that the Arbitrator had awarded interest at a reasonable rate and that the calculation of interest was in accordance with the law.

Final Decision: The Court confirmed the award of the Arbitrator and directed the D. D. A. to pay the claimant the awarded amount along with interest.

K. Ramamoorthy

( 1 ) THE Arbitrator had passed the award on 30. 7. 1994 in favour of the claimant M/s. P. C. Sharma and Co. and against the D. D. A. The D. D. A. has filed the objections. The contract between the claimant and the D. D. A. was for the constructionof 840dus under S. F. S. in Pocket-VIII, Sector-Cat Vasant Kunj S. H. 64 Cat. Ill, 48 Cat. II and 80 scooter garages i. e. internal development Group II. The disputes arose between the parties and they were REFERRED TO for adjudication.

( 2 ) IN Claim No. 1 the claimant has claimed a sum of Rs. 21,985. 00 on account of refund of rebate deducted for payment of monthly bill without fulfilling the contingent condition. The Arbitrator had stated the claim of the claimant in the following terms: Respondents had accepted claimants condition regarding offer of rebate of 0. 25% on estimated cost of work for making monthly payments provided the gross value of the work done in any month was not less than Rs. 25,000. 00 and this rebate was to be deducted from each running bill. Claimants had pleaded that provisions of the condition of monthly payment was not adhered to by respondents and that in the total time of nearly 56 months taken in completing the work, only 27 running account bills for work done were paid. The Arbitrator dealt with the objection of the D. D. A. in the following terms : Respondents have denied the claim pleading that as per Clause 8 of the contract, bills were required to be submitted by the claimants by a fixed date but they did not do so and hence they could not be paid monthly bills. This argument is not convincing as the practice in D. D. A. is that bills are invariably prepared by the departmental staff as covered in latter part of Clause 8. Since for work done on an average only one payment has been made in two month time, the condition of monthly payment for availing rebate has been violated and hence availing of rebate is not admissible. The Arbitrator has awarded a sum of Rs. 21,985. 00 against Claim No. 1. 1 do not find any infirmity in the reasoning and I confirm this part of the award.

( 3 ) IN Claim No. 2 the claimant has claimed as sum of Rs. 21,986. 00 on account of refund of rebate deducted without fulfilling the contingent condition for payment of final bill within 6 months of the completion of work.

( 4 ) THE Arbitrator had awarded a sum of Rs. 21,986. 00. In the objection filed by the D. D. A. it is stated that the Arbitrator had rendered findings quite contrary to the conditions of the agreement and in particular had ignored Clauses 7 and 8 of the agreement. I have perused the award of the Arbitrator and the reasoning given by him for awarding an amount on Claims I and 2. I do not find any merits in the objections filed by the D. D. A. against Claims I and 2. Therefore, the award of the Arbitrator on Claims I and 2 is upheld.

( 5 ) THE Arbtrator has dealt with Claims 3,5 and 10 together. According to him, these claims relate to the work done by the claimant for which payments have been made at the rates less than agreed rates. These claims are. Claim No. 3 for Rs. 10,245/0 on account of final bill in respect of un-disputed items. Claim No. 5 for Rs. 59,037. 35 for refund of illegal deduction made for alleged defects/deficiencies in work styling them as deduction items and Claim No. 10 for Rs. 35,136. 00 on account of cost of work done but not paid in respect A. C. rain water pipes, providing grooves in plaster and plastering of exposed surface of RCC shelves.

( 6 ) THE Arbitrator has awarded a total sum of Rs. 56,673. 00 in all the three claims together i. e. Claim Nos. 3,5 and 10. The objection filed by the D. D. A. is that the claim did not use ISI mark materials and, therefore, the deduction has been made. The Arbitrator has dealt with this aspect and I do not find any reason to defer from the view taken by the Arbitrator. Accordingly, the award for Rs. 56,673. 00 on Claims 3, 5 and 10 is upheld.

( 7 ) ON Claim No. 4, a sum of Rs. 23




































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