High Court Of Delhi
SURESH CHANDER - Appellant
Versus
DELHI DEVELOPMENT AUTHORITY - Respondent
Suit 261 of 1994
Decided On : 02/28/1997
ARBITRATION - AWARD - SETTING ASIDE - GROUNDS - NON-COMPLIANCE WITH MANDATORY PROVISIONS OF AGREEMENT - CLAIM FOR REVISION OF RATES - FAILURE TO LODGE CLAIM WITHIN 7 DAYS FROM RECEIPT OF ORDER AND SUBMIT ANALYSIS OF RATES - ERROR APPARENT ON FACE OF RECORD - AWARD SET ASIDE.
Fact of the Case:
The petitioner, a contractor, entered into an agreement with the respondent for the construction of 300 Janta houses. Disputes arose between the parties, which were referred to arbitration. The arbitrator passed an award in favor of the petitioner, which was challenged by the respondent.
Finding of the Court:
The court upheld the arbitrator's award in part and set it aside in part. The court found that the arbitrator erred in awarding the petitioner an amount for revision of rates, as the petitioner had failed to comply with the mandatory provisions of the agreement by not lodging the claim within 7 days from the receipt of the order and not submitting an analysis of the rates.
Issues: 1. Whether the arbitrator erred in awarding the petitioner an amount for revision of rates without compliance with the mandatory provisions of the agreement? 2. Whether the arbitrator erred in awarding damages for delay in completion of work twice over on the same count?
Ratio Decidendi: 1. Yes, the arbitrator erred in awarding the petitioner an amount for revision of rates without compliance with the mandatory provisions of the agreement. Clause 12(a) of the agreement required the petitioner to lodge the claim for revision of rates within 7 days from the receipt of the order and submit an analysis of the rates. The petitioner failed to comply with these mandatory provisions, which deprived the Engineer-in-charge of the opportunity to exercise his discretion to cancel the orders if the rates were unsuitable. 2. No, the arbitrator did not err in awarding damages for delay in completion of work twice over on the same count. The award for claim No. 4 was for increases in the prices of materials beyond the stipulated date of completion, while the award for claim No. 7 was for infructuous expenditure incurred by the petitioner on staff and Tandp during the stipulated contract period due to the delay caused by the respondent.
Final Decision: The court allowed the respondent's objections to the extent indicated and modified the award accordingly. The court set aside the award in respect of the claim for revision of rates and modified the award in respect of interest on the award amount.
( 1 ) DISPUTES having arisen between the parties in respect of the contract entered into between the petitioner and the respondent No. 1 for execution of the work of construction of 300 Janta houses in connection with internal development in Trans Yamuna area in Zone No. 2, the same were referred to the respondent No. 2 for adjudication in terms of the arbitration clause. The respondent No. 2 entered upon the reference and after hearing the parties and receiving the statement of claims and reply thereto and evidence produced by the parties on record, passed an award in respect of the aforesaid disputes on 29th December, 1993. The notice of the award was stated to have been received by the petitioner on or about 30. 12. 1993.
( 2 ) THE petitioner thereafter filed the petition in this Court under Section 14 of the Arbitration Act for directing the respondent No. 2 to file the award in the Court with records of the arbitration proceedings. This Court issued notice to the Arbitrator on the said petition and upon service of such notice, the Arbitrator filed the award along with the records of the arbitration proceedings in this Court. Notice having been issued to the respondent No. 1i and upon service thereof, the respondent No. I filed objection against the award passed by the Arbitrator which is registered as I. A. 6547/1994. The objection filed by the respondent No1 appears to be against all the claims of the petitioner as allowed by the Arbitrator.
( 3 ) MR. Poddar appearing for the petitioner and Mrs. Salwan appearing for the respondent No. 1 took me through the award passed by the Arbitrator and also the records of the arbitration proceedings and I have heard them at length.
( 4 ) CLAIM No. 1 (i) : In respect of the aforesaid claim of the petitioner, the Arbitrator has awarded an amount of Rs. 27,185. 87. It appears from the award passed by the Arbitrator that the respondent No. 1 could not bring out any discrepancy concerning the items that have been claimed by the petitioner. The quantities and rates claimed by the petitioner were also not contested by the respondent No. 1. In that view of the matter, this award is upheld.
( 5 ) CLAIM No. 1 (ii): This claim relates to incorrect derivation of rates for certain extra / substituted items in respect of which the Arbitrator has awarded a sum of Rs. 1,00,270. 80. The conclusion of the Arbitrator for awarding the aforesaid amount appears to be based on reasons and on appreciation of the evidence on record and therefore there could be no valid objection as against the aforesaid award.
( 6 ) CLAIM No. 1 (in): Mrs. Salwan appearing for the respondent No. 1 submitted that this part of the award passed by the Arbitrator awarding Rs. 49,262. 39 is not justified and is required to be set aside. The learned Counsel drew my attention to Clause 12 (a) of the agreement wherein it is provided that in the case of contract or substituted items which individually exceed the quantities stipulated in the contract by more than the deviation limit, the contractor is required to, within 7 days from the receipt of the order, claim revision of the rates supported by proper analysis in respect of such items for quantities in excess of the deviation limit. According to the learned Counsel, the petitioner failed to comply with the provisions of Clause 12 (a) and did not lodge the claim within 7 days from the date of the order nor did it submit the analysis of the rate. The analysis of rates appears to have been furnished on 13. 1. 1986. It further appears from the records that the petitioner claimed market rates for the first time on 18. 9. 1985 without submitting any analysis of rates. It is, therefore, apparent that the petitioner failed to comply with the mandatory provisions laid down in Clause 12 (a) of the agreement to claim revision of rates within 7 days from the receipt of the order supported by proper analysis of rates. In view of such failure on the part of the petitioner, the Engin
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