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2006 Supreme(Del) 1171

High Court Of Delhi
Manju Goel
R.K.SHARMA - Appellant
Versus
NDMC - Respondents
IA 4777 Of 1996
Decided On : 07/18/2006

Advocates Appeared:
ARVIND SHAH, G.N.AGARWAL

The main legal point established in the judgment is the requirement for an Arbitrator to provide reasons for the award, consider material documents, and adhere to established legal principles, particularly regarding interest payable.

Headnote:

Arbitration Act - Petition for direction to file original Award - Sections 14, 30, 33 - The judgment discusses the original Award dated 1. 12. 1995 passed by the sole Arbitrator-respondent No. 2 and objections under Sections 30 and 33 of the Arbitration Act, 1940. The court analyzed the claims made by the petitioner and the reasons for the Arbitrator's decisions, ultimately setting aside the award and remanding the case back to the Arbitrator for passing a fresh award.

Fact of the Case:

The petitioner filed a petition under Section 14 of the Arbitration Act, 1940 for a direction to file the original Award dated 1. 12. 1995 passed by the sole Arbitrator-respondent No. 2 and objections under Sections 30 and 33 of the Act against the Award. The Award dealt with eight claims of the petitioner, and the petitioner raised objections to the Arbitrator's decisions on each claim.

Finding of the Court:

The court found that the Arbitrator failed to give reasons for the award and ignored material documents, thereby misconducting the proceedings. The court also noted that the Arbitrator's opinion on interest payable was against established legal principles. As a result, the court set aside the award and remanded the case back to the Arbitrator for passing a fresh award.

Issues: The issues revolved around the Arbitrator's failure to provide reasons for the award, ignoring material documents, and the opinion on interest payable.

Ratio Decidendi: The court's decision was based on the Arbitrator's failure to give reasons for the award, misconducting the proceedings by ignoring material documents, and the incorrect opinion on interest payable.

Final Decision: The objection petition (I. A. No. 4777/96) was allowed, and the arbitrator's award was set aside and remanded back to the Arbitrator for passing a fresh award in the dispute. The respondent was ordered to bear the cost of the proceedings in this suit. Suit decreed and IA allowed.


MANJU GOEL, J.

( 1 ) THIS is a petition under Section 14 of the Arbitration Act, 1940 (hereinafter referred to as 'the Act') for a direction to file the original Award dated 1. 12. 1995 passed by the sole Arbitrator-respondent No. 2 and objections under Sections 30 and 33 of the Act against the Award. Respondent No. 1 entrusted the work titled'improvement of Piazza of Connaught Place from A to F' Blocks' to the petitioner vide a letter dated 28/7/1989 and Agreement No. 8/pm (Cont. Place)/89-90. On account of the disputes arising in respect of the contract at work, the petitioner asked the Administrator of respondent No. 1 to appoint an Arbitrator and respondent No. 1 having failed to do so, the petitioner filed an application under section 20 of the Act, beingsuitno. 2555 A/1991, which was allowed vide an order dated 6/1/1995 and respondent No. 1 appointed respondent No. 2 as the sole arbitrator to adjudicate the claim of the petitioner. The Arbitrator thereafter announced the Award on 1/12/1995 for a sum of Rs. 5,000. 00 against the claim of rs. 5,15,560. 00. Since the Arbitrator was appointed pursuant to an order of this court, an application under Section 14 is presented to this Court for a direction to the Arbitrator to file the Award.

( 2 ) THE Award deals with eight claims of the petitioner. Claim No. 1 was for a sum of Rs. 12,700. 00 for putting up infrastructure by way of a site godown and barricading, apart from deploying site Engineer, Chowkidars, etc. NDMC admitted that only a symbolic sort of a godown had been set up without any barricades. The Arbitrator awarded a sum of Rs. 1,000. 00 to the claimant towards the cost of the symbolic godown. Claim No. 2 was towards the cost of barricading, which was declined by the Arbitrator as no sufficient proof of the expense allegedly incurred towards the barricading was adduced before the Arbitrator. Claim No. 3 was for rs. 13,095/- towards the cost of samples of Dholpur and Red Sand Stone which were to be laid. On account of termination of the work, the petitioner claimed, the samples went waste causing this damage. The Arbitrator found that no proof of the cost incurred forthose stones had been furnished. Since thendmc, i. e. respondent no. 1, did not deny having received some samples, a sum of Rs. 4,000. 00 was allowed on this account. Claim Nos. 4, 5 and 6 were on account of loss of profit, non-utilisation of tools and plants and ungainful engagement of staff amounting to rs. 3,08,913. 00, Rs. 81,640. 00 and Rs. 73,612. 00 respectively. The Arbitrator observed that the total value of the work was Rs. 7. 87 lacs and, therefore, a profit of over rs. 3. 00 lacs could not have been expected. Further, there was no evidence to show mobilisation of tools and plants, etc. Further, the Arbitrator found that since no work was done, there was no ground for claiming salary of an engineer. The claimant/petitioner himself was found to be in breach and, therefore, not entitled to any of the three claims. Thus, claim Nos. 4, 5 and 6 were totally declined. Claim no. 7 was for a sum of Rs. 10,000. 00 towards the cost of the arbitration proceedings, which the Arbitrator declined on the ground that the claimant himself was in breach and, hence, not entitled to the cost of the arbitration. Claim No. 8 was for pre-suit, pendente lite and future interest @ 21% per annum compounded annually. The arbitrator held that there was no provision in the agreement for payment of interest and no interest was payable. The Arbitrator, therefore, awarded a total sum of rs. 5,000. 00 only.

( 3 ) ON the Arbitrator's Award on claim No. 1, the petitioner submits in his objection that since it was admitted by respondent No. 1 that the petitioner had set up a godown, the entire claim on this account should have been allowed. On the arbitrator's Award on claim No. 2, the petitioner reiterates that the petitioner had submitted a document which was Annexure 2 which the Arbitrator misread. On the arbitrator's Award








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