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2020 Supreme(Del) 1360
IN THE HIGH COURT OF DELHI AT NEW DELHI
Prateek Jalan, J.
Salar Jung Museum & Anr. - Appellant
Versus
Design Team Consultants Pvt. Ltd. - Respondent
Original Miscellaneous Petition (Comm) No. 44 of 2017
Decided On : 21-05-2020
P. Sukumar Pattjoshi, Advocate, Sanjeev Joshi, Advocate, Kiran Yadav, Advocate, Vineet Bhagat, Advocate, Shubham Jain, Advocate
The award of an arbitrator will not be set aside unless it is based on no evidence at all or on a reading of evidence which is irrational or perverse. The Court will not interfere with the arbitrator's decision unless it is found to be contrary to the contract or otherwise unjust.
Headnote:
Arbitration and Conciliation Act - Dispute over Consultancy Fees - Clause 5(a) and 5(b) of the agreement - Award based on proper consideration of contractual terms and evidence - Refund of security money and interest awarded - Petition dismissed
Fact of the Case:
The Salar Jung Museum entered into a contract with M/s Design Team for designing and supervising the construction of additional buildings. Disputes arose regarding the consultancy fees and supervision charges payable to the Architects under the contract. The Architects claimed fees based on the revised cost estimate, while the Museum contended that fees were payable only on the initial estimate. The Museum also resisted the claim for supervision charges and refund of security deposit, citing the reconstitution of the Architects' firm into a private limited company.
Finding of the Court:
The Court found that the award was based on a proper consideration of the contractual terms and evidence. It held that the consultancy fees were payable based on the final cost estimate approved by the Museum, and there was no legal impediment for the company to assert the claim for supervision charges. The Court also upheld the award of refund of security money, interest, and costs.
Issues: Dispute over consultancy fees and supervision charges under the contract, objection to the reconstitution of the Architects' firm into a private limited company, and challenge to the scope of the arbitrator's jurisdiction.
Ratio Decidendi: The Court concluded that the award was not contrary to the contract or otherwise perverse. It held that the order of the Court concluded the issue of entitlement of the company to claim under the contract, and found no ground to interfere with the award.
Final Decision: The petition was dismissed, with no orders as to costs.
JUDGMENT
Prateek Jalan, J. - This petition under Section 34 of the Arbitration and Conciliation Act, 1996 [hereinafter, "the Act"] has been filed by Salar Jung Museum, Hyderabad, seeking setting aside of an award dated 26.12.2008 [hereinafter, "the award"]. The impugned award was rendered by a sole arbitrator in favour of the respondent herein, M/s Design Team, under a contract dated 17.01.1991.
A. FACTS
2. The Salar Jung Museum of Hyderabad [hereinafter, "the Museum"] houses a significant collection of art and other objects. In approximately the year 1989, it decided to open additional buildings in the eastern and western blocks of the Museum, and organized a national level open architectural competition for this purpose. M/s Design Team, a firm of architects from New Delhi [hereinafter, "the Architects"], participated in this competition and submitted designs, models, and rough cost estimates by way of a project report. Its entry was declared the winner of the competition. The Museum and the Architects thus entered into a contract dated 17.01.1991 at Andhra Pradesh Bhawan, New Delhi, for designing, making detailed architectural drawings, and supervision of construction of additional buildings of the Museum. The contract was for a period of 5 years (upto 16.01.1996), and the preliminary estimated cost of construction was initially Rs.5.94 crores.
3. Under the contract, the Architects were required to complete drawings/designs of the building, and subsequently supervise the construction, which was to be undertaken by M/s National Building Construction Corporation [hereinafter, "NBCC"]. As per Clause 5 of the contract (reproduced below), the Architects were entitled to a fee of 4% of the approved preliminary cost estimate and consultancy fees:-
"5. Payment of Remuneration:
a) The Consultancy fees:
The employer agrees to pay to the consultant for the professional services to be rendered by him as hereinabove described at 4(I, II, III, and IV) the following fees:-
A fee calculated at the rate of 4% of the estimated cost of the work as given by the consultant including entrusted services on admissible items (clause 6) subject to a ceiling of cost of the corresponding items as per sanctioned preliminary estimate [Clause 4 I (a) and/or (b)] or in the event of changes in the scope of work leading to recasting of the said estimate, the ceiling shall be based on such revised sanctioned cost of the modified proposal.
Payments will be made after the bills are verified and cleared by the Adviser appointed by the employer.
5.(b) The above fees at 5(a) are inclusive of fees payable by the consultant to any other consultants and the associates and nothing extra shall be payable by the employer.
An amount of Rs.50,000/- paid to the consultant as an honorarium for the preparation of project report and conceptual drawings shall be adjusted in the first bill against above mentioned fees at (a) above. The above amount will be paid in instalments as specified below, subject to recovery of security deposit as per clause 7 below:
Consultancy Fees:
(i) On finalisation of preliminary drawings and preliminary cost estimates (Item 4 1(a,b,c,d,e & f) 20%
(ii) On finalisation of detailed working drawings of all disciplines given below: (Item 4 II a,b,c,d & f)
Civil ...............15%
Electrical and Air Conditioning ................10%
Others ..................5%
____________
Total .............30% ____________
(iii) On finalisation of detailed structural drawings 10%
(iv) On finalisation of detailed estimate and tender documents, in respect of all services viz on completion of stage as per item 4 II (e) .....10%
(v) On finalization and award of all contracts including specifications and handing over constructional drawings to contractor item 4 III (a to e) ......10%
(vi) During construction stage on completion of:-
(a) 50% of work ......10%
(b) 100% of work finalization of all accounts completion drawings and obtaining completion certificates from local bo
