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2019 Supreme(Del) 2053
IN THE HIGH COURT OF DELHI AT NEW DELHI
Jyoti Singh, J.
Oil Industry Development Board - Appellant
Vs.
Godrej & Boyce Mfg Co. Ltd. - Respondent
Original Miscellaneous Petition No. 601 of 2012
Decided On : 16-09-2019
Ajay Kumar Jha, Adv., K.R. Sasiprabhu, Adv., Sumit Chander, Adv., Gurdeep Chauhan, Adv., Smeeksha Pandey, Adv.
The main legal point established in the judgment is that the court upheld the finding that both parties were responsible for the delay in completion of work, based on evidence and documents presented before the arbitrator. The court also set aside the rejection of counter-claims, allowing the petitioner to agitate its claims in accordance with the law.
Headnote:
Arbitration and Conciliation Act,1996 - Challenge to Arbitration Award - O.M.P. 601/2012 - Section 34 - [Arbitration Award Challenge] - [Interior Works Contract] - [Section 34 of the Arbitration and Conciliation Act,1996] - The court discussed the delay in completion of work, imposition of penalty, and rejection of counter-claims. The court upheld the finding that both parties were responsible for the delay and dismissed the petition challenging the award. The court set aside the rejection of counter-claims, allowing the petitioner to agitate its claims.
Fact of the Case:
The petitioner, a statutory body, challenged an arbitration award under Section 34 of the Arbitration and Conciliation Act,1996, related to a contract for interior works. The respondent, a company, emerged as the successful bidder for the contract. The petitioner alleged that the respondent failed to complete the work within the stipulated time, resulting in a delay of 65 weeks. The petitioner imposed a penalty for the delay, which was challenged by the respondent through arbitration. The arbitrator disallowed the petitioner's counter-claims and awarded a sum in favor of the respondent, along with interest. The petitioner challenged the award on various grounds, including violation of Section 31(3) of the Act, imposition of penalty, and rejection of counter-claims.
Finding of the Court:
The court upheld the finding that both parties were responsible for the delay in completion of work. The court dismissed the petition challenging the award, as the finding was based on evidence and documents presented before the arbitrator. The court set aside the rejection of counter-claims, allowing the petitioner to agitate its claims in accordance with the law.
Issues: The issues included the imposition of penalty for delay, rejection of counter-claims, and violation of Section 31(3) of the Act. The court addressed these issues in the context of the arbitration award challenge.
Ratio Decidendi: The court held that the finding of the arbitrator, attributing responsibility for the delay to both parties, was based on evidence and documents presented before the arbitrator. The court also set aside the rejection of counter-claims, citing the object of providing counter-claims to avoid multiplicity of proceedings and divergent findings.
Final Decision: The court dismissed the petition challenging the arbitration award, upheld the finding that both parties were responsible for the delay, and set aside the rejection of counter-claims, allowing the petitioner to agitate its claims in accordance with the law.
JUDGMENT :
Jyoti Singh, J.
O.M.P. 601/2012
1. The present petition has been filed under Section 34 of the Arbitration and Conciliation Act,1996 ('the Act') challenging the Award dated 30.1.2012 passed in the Arbitration proceedings with respect to a Contract dated 25.6.2008.
2. Petitioner is a statutory body established under the Oil and Industry Development Act,1974 and the respondent is a Company incorporated under the Companies Act,1956. The petitioner invited bids for interior works (including internal electrical work) for ground floor, second floor and third floor of the Oil Industry Development Board Office at Noida. The respondent emerged as a successful bidder and the bid was accepted on 4.4.2008 resulting into the execution of a contract between the parties on 25.6.2008.
3. As per the case of the petitioner herein, respondent was required to coordinate with and consult Engineers India Ltd. for the execution of the work. The work was to be completed within 30 weeks from the date of Letter of Acceptance dated 4.6.2008. The time period was inclusive of mobilization and demobilization. The total cost of the project was fixed at Rs.5,11,50,000/-, but the final value of the contract was worked out to Rs.5,87,83,164/-.
4. The respondent submitted a bank guarantee dated 14.6.2008 for an amount equivalent to 10% of the contract value as security deposit. The amount, of course, was enhanced as the contract value at the time of final bill had increased. The ten weeks contract which was to be completed by 13.8.2008 got delayed.
5. It is the case of the petitioner that right from the start the respondent was not well equipped with adequate men and material to execute the work to complete the same within ten weeks. The petitioner had provided the requisite site to complete the work, but the respondent was unable to complete the same. The respondent took a total of 77 weeks to carry out the work and thus there was a delay of 65 weeks. Substantial delay was attributable to the respondent. While considering the imposition of penalty, it was taken into account that all the drawings were not handed over in one go to the respondent, but progressively from 14.6.2008 to 14.1.2009. However, even thereafter the respondent should have completed the work latest by 28.2.2009, as per the revised schedule submitted by the respondent. Thus, the delay of 36 weeks beyond 28.2.2009 was solely attributable to the respondent. As per Clause 21.1 of the General Conditions of Contract ('GCC') penalty/liquidated damages of 1% of the contract value per week of delay was levied which would come to 10% of the contract value. This amount worked out to Rs.58,78,316/- which was realized by the petitioner by encashing a bank guarantee for a sum of Rs.51,15,000/- and by deducting the balance of Rs.7,63,316/- from the final bill.
6. The respondent thereafter raised a dispute and in terms of Clause 82.1 of the GCC sought settlement through arbitration.
7. A Sole Arbitrator was appointed and the respondent filed a list of claims and the petitioner herein filed counter-claims. The claims and the counter-claims are extracted herein as under:-
| S. No. | DESCRIPTION OF CLAIM | AMOUNT (RS.) | REMARKS |
| 01 | Wrongful deduction of LD Charges | 51,15,000.00 |
|
| 02 | LD Charges on extra/additional work | 7,63,316.00 |
|
| 03 | Payment to Electrical contractor | 8,00,000.00 |
|
| 04 | Deduction from settled Bills (RA-7) | 16,82,602.50 |
|
| 05 | Payment to Painter/Sub Contractor on third party | 5,82,708.00 |
|
| 06 | Wrongful deduction on account of Rebate/Recoveries | 14,25,360.00 |
|
| 07 | Liquidation of check list point and handing over documents | 8,83,265.00 |
|
| 08 | Payment towards minor items | 17,88,895.00 |
|
| 09 |
| ||
