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1994 Supreme(Del) 581

High Court Of Delhi
SUNDER LAL KHATRI - Appellant
Versus
DELHI DEVELOPMENT AUTHORITY - Respondent
Interim Application 3048 of 1992
Decided On : 09/01/1994

Advocates Appeared:
A.SALVAN, O.N.Vohra

An arbitrator's award will be upheld by the court if it is valid, in accordance with the terms of the contract, and not vitiated by misconduct, lack of evidence, or non-consideration of relevant aspects of the matter.

Headnote:

ARBITRATION - AWARD - OBJECTIONS - VALIDITY - INTERPRETATION OF CONTRACT CLAUSES - DAMAGES - INTEREST - REASONED AWARD - JURISDICTION OF ARBITRATOR - SUFFICIENCY OF EVIDENCE - CONTRACTOR'S CLAIMS - DELAY - PRICE ESCALATION - OVERHEAD EXPENSES - INTEREST ON AWARD.

Fact of the Case:

The petitioner, a contractor, entered into an agreement with the respondent, DDA, for the construction of 88 LIG and 144 MIG houses in Shalimar Bagh, New Delhi. The estimated cost of the work was Rs. 1,01,84,875.00. A dispute arose between the parties, and the matter was referred to arbitration. The arbitrator awarded the petitioner a sum of Rs. 70.548.45 paise towards the rise in wages of labour, Rs. 9,287.00 towards the rise in the price of bricks, Rs. 9,27,750.00 towards overhead expenses, and interest at the rate of 12% per annum from the date of the award till its realization.

Finding of the Court:

The court held that the arbitrator's award was valid and that there was no infirmity in the award in relation to Claim No. 3 in favor of the petitioner. The court also held that the arbitrator had not misconducted the proceedings by awarding damages on account of damages suffered by the petitioner on account of non-completion of the project as the delay was attributed to the respondent. The court further held that the arbitrator had taken into account sufficient evidence before awarding damages to the petitioner and that the award was not vitiated by non-reception of material or non-consideration of the relevant aspects of the matter.

Issues: 1. Whether the arbitrator's award was valid and in accordance with the terms of the contract? 2. Whether the arbitrator had misconducted the proceedings by awarding damages on account of damages suffered by the petitioner? 3. Whether the arbitrator had taken into account sufficient evidence before awarding damages to the petitioner? 4. Whether the award was vitiated by non-reception of material or non-consideration of the relevant aspects of the matter?

Ratio Decidendi: 1. The court held that the arbitrator's award was valid and in accordance with the terms of the contract. The court observed that the arbitrator had given detailed reasons for his findings and that the reasons were cogent and based on the materials on record. 2. The court held that the arbitrator had not misconducted the proceedings by awarding damages on account of damages suffered by the petitioner. The court observed that the arbitrator had taken into account the evidence on record and had arrived at a reasonable conclusion. 3. The court held that the arbitrator had taken into account sufficient evidence before awarding damages to the petitioner. The court observed that the arbitrator had considered the cost index filed by the petitioner, the rates at which other contractors were awarded work by the respondent during the relevant period, and the records of establishment employed by the petitioner during the execution of the work. 4. The court held that the award was not vitiated by non-reception of material or non-consideration of the relevant aspects of the matter. The court observed that the arbitrator had considered all the relevant evidence and materials before arriving at his decision.

Final Decision: The court dismissed the objections application of the respondent and made the award rule of the Court. A decree in terms of the award was passed, and the petitioner was entitled to interest at 12% per annum from the date of the decree till its realization.

Vijender Jain

( 1 ) THIS is an objection application filed on behalf of the respondent under Sections 30 and 33 of the Indian Arbitration Act, 1940. The award is in relation to an Agreement entered into between the petitioner and the respondent- DDA for construction of 88 L. I. G. and 144 M. I. G. houses at Shalimar Bagh, New Delhi. The estimated cost of work was Rs. l,01,84,875. 00. Pursuant to Clause-25 of the Agreement Arbitrator was appointed, the award is dated 11. 10. 91. Ms. Ansuya Salwan, learned Counsel for the respondent-DDA, has argued that the award is a non-reasoned award and the Arbitrator has not given reasons for allowing certain claims of the petitioner, in alternative, she has argued that if this Court comes to a conclusion that reasons are given, the same are perverse. Assailing the award under claim Nos. 3 and 4, Ms. Salwan has argued that the Arbitrator cannot in law award any claim under Clause-10c of the Agreement as that would be squarely hit by Clause-2 of the Agreement. In the objections filed by the respondent the finding of the Arbitrator on this claim has been assailed staling inter alia that the bulk of flats had been completed during 1986 and the rectification of the defects was done upto January 1988 and the Arbitrator has failed to appreciate that if the defects had been got rectified by the respondent, respondent was entitled to claim for the amount spent by it for carrying out of the rectification of the defects and the Arbitrator has failed to consider the said materials and documents and, therefore, the award is vitiated. However, in ground-] of the objections application, the stand of the respondent on claim under Clause-IOC of the Agreement is as under :- "the a ward in any case is contrary to Clause-3 whereunder the decision of the Engineer-in-Charge that the petitioner failed to execute the work within the stipulated time is final and binding. "

( 2 ) LEARNED Counsel for the respondent has argued that the Superintending Engineer has determined compensation in terms of Clause-2 of the Agreement on account of work not done in the stipulated period of contract, the adjudication of compensation by Superintending Engineer, whose decision is final and binding, therefore, Arbitrator had no jurisdiction to award any claim under Clause-10c of the Agreement. In support of her arguments, she has cited the case of R. S. Rana v. DDA 1993 (2) ALR 165 and M/s. Bharat Furnishing Co. v. DDA and Anr. 1991 (4) Delhi 24 Lawyer 35. The submission urged before me by the learned Counsel tor the respondent on the face of it is devoid of any force. Clause-10c specifically provides tli. i i if during the progress of work the price of any mnaterial incorporated in the works, and /or wages of labour increases as direct rvsult of law coming into force of any fresh law, or statutory rule or order shall accordingly be varied. The only exception is that if in the opinion of Superintending Engineer (whose decision shall be final and binding) delay in the execution of the contract is attributable to the contractor or within the control of the contractor. Whereas, Clause-2 provides that the time allowed for carrying out the work shall be strictly observed by the contractor and shall be deemed to be essence of the contract and if the same is not done with due diligence the contractor shall be entitled to pay compensation as fixed by Superintending Engineer, DDA.

( 3 ) IN the matter before me 25. 5. 79 was the starting date of the work and the stipulated date of completion was 24. 5. 80. No notice of rescission of the contract was given after stipulated date of completion of work nor any compensation on account of delay attributable to the contractor was levied during the period in which work was stipulated to be completed. The contract was rescinded by the respondent only on 1. 9. 84. Therefore, in the absence of anything on record, the Arbitrator was right in holding that the respondent is underobligation in terms of Cla














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