2018 Supreme(Del) 917
IN THE HIGH COURT OF DELHI AT NEW DELHI
JAYANT NATH, J.
UNION OF INDIA - Petitioner
Versus
M/S JIA LALL KISHORI LALL PVT.LTD - Respondent
O.M.P. (COMM) 222 of 2017
Decided On : 29-01-2018
For the Petitioner: Mr.Saurabh Chaddha, Adv.
For the Respondent: Mr.Arvind Sharma, Adv.
The main legal point established in the judgment is that the Arbitrator's findings of fact and interpretation of the agreement are binding, and the petitioner's vague and unsubstantiated plea about bias did not warrant interference with the award.
Headnote:
Arbitration - Delay in Execution of Work - Arbitration and Conciliation Act, 1996 - Section 34
Fact of the Case:
The petitioner sought to set aside the Award of the Sole Arbitrator dated 5.12.2016 and the corrected Award dated 6.12.2016, 18.12.2016, 19.12.2016 and 9.1.2017, claiming that the respondent contractor failed to execute the work within the stipulated time and imposed a penalty for the delay.
Finding of the Court:
The court found that the delay in completion of the work was attributed to the petitioner's failure to provide a hindrance-free site and working drawings, and the respondent was entitled to damages for the delay. The court also dismissed the plea of bias against the Arbitrator.
Issues: The issues revolved around the responsibility for the delay in completion of the contract and the legality of the damages awarded to the respondent.
Ratio Decidendi: The court upheld the Arbitrator's findings of fact and concluded that the respondent was entitled to damages for the delay caused by the petitioner's breaches of the contract. The court also emphasized that the interpretation of the agreement and the determination of bias were within the domain of the Arbitrator.
Final Decision: The court dismissed the petition, finding no merit in the petitioner's submissions and upheld the award passed by the Arbitrator.
JAYANT NATH, J.
1. Present petition is filed under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘The Act’) seeking to set aside the Award of the Sole Arbitrator dated 5.12.2016 and the corrected Award dated 6.12.2016, 18.12.2016, 19.12.2016 and 9.1.2017. The respondent is a contractor engaged by the Public Works Department for construction activities. The petitioner called bids to carry out construction of the bridge and widening of the roads at four lane bridge over Bara Pula Nala at Ring Road near Sarai Kale Khan, New Delhi. Pursuant to the bidding the contract was awarded to the respondent. An Agreement dated 8.7.2005 (in short ‘the said Agreement’) was executed. The stipulated date of start of work was 30.7.2005. Seventeen months’ time was allowed for execution of the contract from the date of start. As per the said Agreement the date of completion of the work was 29.12.2006. It is the case of the petitioner that the respondent has executed the work in 34 months. It is also the case of the petitioner that the respondent has failed to achieve the milestone within the stipulated time as he had failed to properly mobilize the resources due to his own defaults in payment to the Sub-Contractors. Since there was a delay in execution of the work the petitioner issued a letter dated 1.1.2009 imposing a penalty of Rs.64,70,049/- on account of delay in execution of the work. The said letter was challenged by the respondent in a suit being Suit No. 250/2009 seeking a decree of declaration that the letter dated 01.01.2009 is null and void before this court in Suit No.250/2009. The respondent sought reference of the said dispute to the learned Arbitrator who had been appointed as disputes had arisen between the parties. This court accepted the plea of the respondent and referred the said dispute also to the already constituted Arbitral Tribunal.
2. Before the learned Arbitrator several claims were made by the respondent. The details of the claims made and the Award made in favour of the respondent are as follows:-
Claim No.
Claimed on a/c of
Claim amount (Rs.)
Award Amount (Rs.)
1.
Prolongation of contract
2,32,63,000
84,44,737
2.
Price Escalation
85,00,000
35,84,498
3.
Extra Work
1,11,24,510
78,07,018
4.
Losses due to reduction in scope of work
59,59,566
8,59,693
5.
Cost of arbitration
5,00,000
NIL
6.
Withheld amount
1,02,53,560
66,30,255
7.
Physical, social and mental agony.......
1,45,00,000
NIL
Addl. Claim
Illegal levy of compensation
64,70,049
64,70,049
TOTAL
8,01,70,685
3,37,96,250
3. I have heard learned counsel for the parties. Learned counsel for the petitioner sought to impugn the Award on stated grounds.
He has firstly stated that the Award is liable to be set aside on account of the bias of the learned Arbitrator. It has been urged that the Sole Arbitrator has given large number of opportunities to the respondent for filing details, documents, evidence and submissions of the respondent. However, he became impatient on the very first hearing earmarked for the petitioner. It is also claimed that he has sought to take revenge against the petitioner on account of some old differences during his service tenure with the department.
It was secondly submitted that the entire dispute hinges around as to who was responsible for the delay in completion of the contract. It has been urged that the findings recorded by the learned Arbitrator that the delay took place on account of the petitioner are mischievous, erroneous and incorrect. It is urged that the respondent took possession of the site in July, 2005. At no stage did the respondent protest that there were hindrances at the site. This plea was raised later on as an after thought and as a