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2008 Supreme(Del) 918
IN THE HIGH COURT OF DELHI AT NEW DELHI
Rekha Sharma
RAJESH KUMAR MENGHANI, - APPELLANT
v.
CHIEF URBAN PLANNER PD CELL, - RESPONDENT.
FAO No. 197 of 2008,
Decided on : August 28, 2008.
Mr. D. R. Bhatia - Appellant.
Forfeiture of security deposit requires proof of actual loss, and the court can award only reasonable compensation.
Headnote:
Forfeiture of Security Deposit - Contract Dispute - Maula Bux vs. Union of India AIR 1970 SC 1955
Fact of the Case:
The appellant was awarded a contract for parking at a metro station. Dispute arose regarding compliance with tender conditions, leading to contract termination and arbitration. The appellant sought refund of security deposit and other compensations, which were dismissed by the arbitrator.
Finding of the Court:
The court upheld the arbitrator's decision, stating that the appellant breached contract terms and was not entitled to refund. The counter claims of the respondent were also rejected, with the arbitrator finding the respondent amply compensated through the forfeiture of the security deposit.
Issues: Dispute over contract compliance, breach, loss suffered, forfeiture of security deposit, entitlement to interest, and relief parties are entitled to.
Ratio Decidendi: The court relied on the principle established in Maula Bux vs. Union of India AIR 1970 SC 1955, stating that forfeiture of an amount deposited pursuant to contract requires proof of actual loss, and the court has jurisdiction to award only reasonable compensation.
Final Decision: The appeal was dismissed, upholding the arbitrator's decision.
REKHA SHARMA, J.
This appeal arises out of judgment of Additional District Judge Shri Raj Kumar Chauhan dated February 29, 2008, dismissing the objections filed by the appellant against an arbitration award dated January 23, 2006 made by a former Judge of this Court. The facts relevant to the disposal of the appeal are as under :-
Pursuant to an open tender, the respondent awarded a contract to the appellant for car/scooter/cycle etc. parking at Kanhaiya Nagar Metro Railway Station. The contract agreement was signed on March 25, 2004 and on the same date, the site was handed over to the appellant. It was alleged by the appellant that the conditions as projected in the tender were not complied with by the respondent particularly with regard to the area of the site made available to him. The respondent disputed the allegation of the appellant and on October 12, 2004 terminated the Agreement. The appellant approached the court of the District Judge for appointment of an Arbitrator whereupon a retired Judge of this Court Justice K. Ramamoorthy was appointed as the sole Arbitrator to adjudicate upon the claims and counter claims of the parties. The appellant raised the following claims before the learned Arbitrator :-
---------------------------------------------------------------- (i) Refund of security deposit Rs. 6,93,833/- ---------------------------------------------------------------- (ii) Compensation for the consequences Rs. 2,30,827/- for the breaches of conditions of contract ---------------------------------------------------------------- (iii) Compensation for under utilization Rs. 6,87,600/- of staff due to pre-matured closure of contract ---------------------------------------------------------------- (iv) Compensation for loss of business Rs. 1,98,000/- which the contractor/claimant had expected to realize. ---------------------------------------------------------------- (v) Cost of litigation due to Rs. 1,50,000/- impertinent and intransigent behaviour of the respondent - DMRC ---------------------------------------------------------------- (vi) Compound interest @ 18% on the above awarded amounts from the date of cause of action up to date of payment. ----------------------------------------------------------------
To be determined through Arbitrator
The respondent also raised its own claims which were as under :-
---------------------------------------------------------------- (i) Total dues of license Rs. 2,73,445.00/- fee & interest from 1.8.2004 to 19.10.2004 ---------------------------------------------------------------- (ii) Expenditure for manning Kanhaiya Rs. 25,046.66/- Nagar parking by Group 4 Securities from 20.10.2004 to 7.12.2004 ---------------------------------------------------------------- (iii) Expenditure for publishing Rs. 63,016.33/- advertisement for re-tendering the parking site. ---------------------------------------------------------------- (iv) Misc. expenses for completion Rs. 25,000.00/- of aforesaid process etc. ---------------------------------------------------------------- (v) Cost of litigation Rs. 1,50,000/- ----------------------------------------------------------------
The learned Arbitrator on the basis of the claims and counter claims framed the following issues for consideration :-
1. Whether the Claimant had acted in accordance with the terms of the contract ?
2. Whether the respondent committed breach of the terms of the contract ?
3. Whether the case of the claimant that he has suffered loss is proved ?
4. Whether the respondent was justified in forfeiting security deposit ?
5. Whether the respondent is entitled to counter claims ?
6. Whether the claimant is entitled to interest ?
