Arbitral awards must provide intelligible reasoning, and failing to consider a claim for pre-reference interest constitutes a legal flaw under Section 34 of the Arbitration and Conciliation Act, 1996.

JUDGMENT

[Hearing held through video conferencing]

Vibhu Bakhru, J. (Oral)--The petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter the `A&C Act`) impugning an arbitral award dated 02.12.2020 to the extent that the Arbitral Tribunal has not awarded pre-reference interest in respect of petitioner`s Claim Nos. 1 to 4.

2. The respondent (hereinafter `the DDA`) had issued a notice inviting tenders for the work of "Construction of 1600 SFS houses category II & III at Trilok Puri, Pocket `B' SH: Construction of 160 SFS houses category II & III 80 Nos. Two bedroom category II, 80 nos. three bedroom category III & 120 scooter garages under SFS pocket `E' including internal development Group V".

3. Subsequently, by a letter dated 10.03.1986, the DDA awarded the said work to the petitioner. The works were to be completed within a period of twelve months from the 10th day of issuance of the letter of award, that is, by 20.03.1987. The petitioner states that it completed the contracted works on 29.08.1989 and there appears to be no dispute that the works were taken over by the DDA. However, the petitioner states that the completion of the works was not recorded and the petitioner`s final bill was not made. The petitioner claims that it was informed that the Quality Control Cell of the DDA had inspected the works and therefore, the final bill could not be finalised until the Quality Control observations were closed. The petitioner claims that it continued to pursue with the DDA for processing its final bill. However, the DDA did not do so. The petitioner further claims that it was informed by the DDA that the original agreement executed between the parties was not traceable. The petitioner states that thereafter, the DDA directed the petitioner to handover surplus store material so that the final bill could be prepared by the department. The petitioner complied with the said direction, but the DDA failed to finalise the bill. The petitioner had issued a Bank Guarantee, which was renewed from time to time as the preparation of the final bill was pending.

4. The petitioner by its letter dated 09.04.2007 once again requested the DDA to finalise the bill. However, the same was not done.

5. Aggrieved by the inaction on the part of the DDA in not releasing the payments and not finalising its bill, the petitioner approached the Grievance Cell of the DDA. On 26.06.2009, the petitioner`s complaint to the Grievance Cell was referred to the concerned office.

6. By a letter dated 10.12.2010, the Executive Engineer Eastern Division No.3, DDA informed the petitioner that its case was under active consideration. Thereafter, the DDA constituted a Committee to examine the petitioner`s complaint. The said Committee submitted its report on 05.01.2011. The petitioner claims that the Committee recommended that the amount withheld, be released.

7. The petitioner claims that thereafter, on 17.01.2011, the petitioner was informed that the Final Bill had been prepared and was lying in the DDA`s office. The petitioner claims that the said Final Bill was not in conformity with the measurements recorded by the DDA in various measurement books. However, the said Bill was accepted by the petitioner under protest. Thereafter, on 31.01.2011, the petitioner submitted its Final Bill in accordance with the measurements recorded in various measurement books.

8. Thereafter, the DDA released part payment for a sum of Rs.1,64,000/- to the petitioner by a cheque dated 16.03.2011.

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