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2018 Supreme(Del) 3281
IN THE HIGH COURT OF DELHI AT NEW DELHI
S. RAVINDRA BHAT, A. K. CHAWLA, JJ.
Wishwa Mittar Bajaj and Sons - Appellant
Versus
Shipra Estate Ltd and Jaikishan Estates Developers Private Limited - Respondent
FAO(OS) (COMM) 162 of 2017 & CM APPL. 3913 of 2018
Decided On : 14-12-2018
Advocate Appeared:
For the Appellant : Mr. Raghavendra M. Bajaj with Mr. Shreyas Mehrotra, Advs.
For the Respondent: Mr. Amit Mahajan with Mr. Arbaaz Hussain, Mr. Jaiyesh Bakhshi, Mr. Animesh Sinha & Mr. Kabir Chilwar, Advs.
An arbitrator's findings of fact will not be interfered with by a court under Section 34 of the Arbitration and Conciliation Act 1996 unless they are perverse or unreasoned.
Headnote:
ARBITRATION - AWARD - OBJECTIONS - SECTION 34 OF THE ARBITRATION AND CONCILIATION ACT 1996 - [WORK CONTRACT] - [ARBITRATION CLAUSE] - [AMENDMENTS TO WORK ORDER] - [ITEM WISE RATES] - [LUMPSUM CONTRACT] - [DELAY IN PAYMENTS] - [INTEREST] - [HARASSMENT AND MENTAL AGONY] - [ARBITRATION FEE] - [COSTS] - [FORGERY] - [PRODUCTION OF DOCUMENTS] - [WITNESSES] - [EVIDENCE] - [FINDINGS OF FACT] - [INTERFERENCE BY COURT] - [PERVERSE FINDINGS] - [UNREASONED AWARD] - [UPHELD AWARD].
Fact of the Case:
Bajaj, a contractor, entered into a contract with Shipra, a builder, for the construction of a residential complex. The contract provided for payment to Bajaj on a lump-sum basis. However, during the course of the project, the work order was amended four times, resulting in an increase in the total value of the contract. Bajaj claimed that the amendments changed the nature of the contract from a lump-sum contract to an item-wise contract, and that it was entitled to be paid on the basis of the actual quantities of work done. Shipra denied the existence of an arbitration clause in the contract and disputed the authenticity of the amendment letters. Bajaj filed a petition under Section 11 of the Arbitration and Conciliation Act 1996 (the Act), and an arbitrator was appointed to adjudicate the disputes between the parties. The arbitrator allowed Bajaj's claims in part, and Shipra challenged the award under Section 34 of the Act. The single judge allowed Shipra's objections and set aside the award.
Finding of the Court:
The court held that the single judge erred in setting aside the award. The court found that the arbitrator had considered the evidence and documents produced by the parties and had made reasoned findings of fact. The court also found that the single judge had interfered with the arbitrator's findings of fact, which were not perverse or unreasoned. The court upheld the award and allowed Bajaj's appeal.
Issues: 1. Whether the arbitrator erred in allowing Bajaj's claims on an item-wise basis, when the contract provided for payment on a lump-sum basis? 2. Whether the single judge erred in setting aside the award on the ground that the arbitrator had exceeded his jurisdiction?
Ratio Decidendi: 1. The court held that the arbitrator did not err in allowing Bajaj's claims on an item-wise basis, as the amendments to the work order changed the nature of the contract from a lump-sum contract to an item-wise contract. 2. The court held that the single judge erred in setting aside the award on the ground that the arbitrator had exceeded his jurisdiction, as the arbitrator had considered the evidence and documents produced by the parties and had made reasoned findings of fact.
Final Decision: The court allowed Bajaj's appeal and upheld the award.
JUDGMENT :
A.K. CHAWLA, J.
1. The appellant (hereafter “Bajaj”) is aggrieved by the judgment of the learned Single Judge which upheld the objections of the respondent (hereafter “Shipra”) under Section 34 of the Arbitration and Conciliation Act 1996 (in short 'the Act') against the arbitral tribunal’s award dated 03.01.2017 (in short 'the impugned award').
2. The genesis of the dispute is the contract entered into amongst the parties for the construction of a Multistorey Residential Complex - 3 bed Rooms (Block - B6 & B7) [(B+G+10+Pent House), (B+G+6+Pent House)] at Plot No. 14, Phase IV, Indirapuram, Ghaziabad (Civil, Electrical, Public Health & other works) (in short 'the subject works'). The rates, terms and the conditions of the subject works to be executed by Bajaj, were enumerated in the letter Ref. No. SEL/JKEDPL/WMBS/05-06/51 dated 19.11.2005 (in short 'the work order'). A total sum of Rs.7,07,66,614/- was to be paid to Bajaj. The terms and conditions for the execution of the subject works inter alia provided the completion of the works within 16 months from the twenty first day of the date of the issue of the said communication or from the starting of the work, whichever was earlier and that, no mobilisation/secured advance was to be paid under the contract.
3. During the course of the execution of the works under the subject contract, Shipra amended the works, the last of which undisputedly was on 27.04.2009. According to Bajaj, the amendments of work were made by Shipra four times through its communications Ref. No. SEL/JKEDPL/WMBS/05-06/52 dated 27.03.2006, Ref. No. SEL/JKEDPL/WMBS/07-08/52 dated 11.07.2007, Ref. No. SEL/JKEDPL/WMBS/08-09 dated 06.09.2008 and Ref. No. SEL/JKEDPL/WMBS/09-10 dated 27.04.2009. Shipra does not dispute the amendments to the work order by communications dated 11.07.2007, 06.09.2008 and 27.04.2009. Any amendment to work order dated 19.11.2015 by letter dated 27.03.2006 is however, seriously disputed; Shipra states that the latter letter is a forgery and was fabricated by Bajaj. With the amendment of work order by communication dated 11.07.2007, the cost of the work was increased to Rs.7,11,84,940.37. The amendments to the work order provided for the extent of construction and the increase in the cost of work. With amendment of work order dated 06.09.2008, the cost of the work increased from Rs.7,11,84,940.37 to Rs.7,42,25,285.37 and with the amendment of work order dated 27.04.2009, the cost of work increased from Rs.7,42,25,285.37 to Rs.8,15,40,250.54.
4. During the currency of the contract, Shipra used to settle the running bills raised by Bajaj. The last and the final 28th running bill dated 07.10.2010 is said to have been raised and submitted to Shipra on 09.10.2010, though, under the cover of its letter dated 07.10.2010 only. Its non-payment by Shipra inspite of the reminders inter alia vide letters dated 23.11.2010 and 16.12.2010, resultantly resulted in serious disputes amongst the parties. By its letter dated 17.01.2012 Bajaj gave final notice to Shipra for the clearance of the dues demanded by it. Vide its letter dated 05.09.2012, Shipra disputing and denying the demands raised by Bajaj, raised claims to the tune of Rs.82.08 lacs on Bajaj inter alia towards RA bills payments.
5. On 15.01.2015, upon a petition moved by Bajaj before this Court under Section 11 of the Act, an Arbitrator was appointed to adjudicate the disputes amongst the parties including their claims and counter claims, keeping the issue of existence of the arbitration clause equally open for the Arbitrator to decide inasmuch as, according to Shipra, the letter dated 27.03.2006, which inter alia provided for an arbitration clause, was forged and fabricated. Arbitrator entered the reference and vide its award dated 03.01.2017 allowed the claims of Bajaj in part. Shipra challenged the said award by way of filing the
