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IN THE HIGH COURT OF DELHI
Vibhu Bakhru, J.
Malibu Estate Pvt. Ltd. - Appellant
Versus
Kiri Associates Pvt. Ltd. - Respondent
O.M.P. (COMM) 391 of 2019
Decided On : 04-05-2022
| Table of Content |
|---|
| 1. nature of contractual dispute and claims (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. challenging awards based on grounds of arbitrariness (Para 8 , 9) |
| 3. agreement to set aside specific claims and re-arbitrate (Para 10 , 11) |
| 4. appointment of a sole arbitrator for fresh adjudication (Para 12 , 13 , 14 , 15) |
| 5. disposal of petition with consent (Para 16 , 17) |
JUDGMENT
Vibhu Bakhru, J. (Oral)--The petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter `the A&C Act') impugning an arbitral awarded dated 10.05.2019 passed by an Arbitral Tribunal comprising of three members (hereafter `the Arbitral Tribunal').
2. The impugned award was rendered in the context of the disputes that have arisen between the parties in connection with a contract for construction of a shopping arcade named `Malibu Shopping Arcade'.
3. In the month of October, 2004, the petitioner had issued a Notice Inviting Tender (NIT) for construction of the said shopping arcade. The respondent had submitted its bid pursuant to the said NIT.
4. On 12.02.2005, the petitioner issued a Letter of Intent (LoI), in favour of the respondent, for the execution of the works at a lumpsum value of Rs.4.59 crores. It is stated that thereafter, the parties entered into negotiations and the value of the work was reduced to Rs.3.60 crores. However, the petitioner agreed to provide steel and cement free of cost.
5. On 21.02.2005, the respondent furnished an undertaking, whereby it agreed that the petitioner would supply cement and steel at an aggregate value of Rs.98 lakhs, free of cost.
6. Thereafter, the petitioner issued a Letter of Award dated 21.02.2005 (LoA), which according to the respondent was backdated.
7. Certain disputes had arisen between the parties in connection with the said contract. The disputes were referred to arbitration. Before the Arbitral Tribunal, the respondent raised various claims. The summary of the claims made and the amounts awarded by the Arbitral Tribunal against the said claims, is set out below:
Summary
| Claim No. | Claim | Amount Claimed Rs. | Amount Awarded Rs. | |
| 1. | Balance payment of work done (final bill) refund to security deposit etc. | 49,08,076 | -- | |
| Sub Claim-1 | Balance payment of work done (final bill) | 47,09,865 | (-)40,97,804 | |
| Sub Claim-2 | Security deposit not refunded by the Respondents | 10,00,000 | 10,00,000 | |
| Sub Claim-3 | Cost of items of store physically handed over | 58,835 | 58,835 | |
| Sub Claim-4 | Cost of aluminum sample arising out of withdrawal of aluminum work | 50,000 | 20,000 | |
| Sub Claim-5 | Extra financial burden due to post award altering of basic terms and conditions of the Contract and drawings and wrong/excess deductions of Work-Contract Tax (WCT) | 40,006 | 40,006 | |
| 2 | Loss of profit due to the reduction in scope of work | 2,63,448 | 78,816 | |
| 3 | Cost of cement not supplied by the Respondents | 15,59,301 | 15,59,301 | |
| 4 | Cost of cement for RMC not supplied by the Respondents | 18,25,663 | 18,25,663 | |
| 5 | Balance payment of additions/variations in the work. This claim consists of 13 Sub-claims | 74,11,708 | ||
| Sub Claim-1 | Cost of PVC pipe in place of L.A. Class C.I. pipes rendered redundant due to specifications and incompatibility with structural drawings. | 1,50,000 | 55,831 | |
| Sub Claim-2 | Balance payment of variation bills 1 & 2 | 6,22,962 | Nil | |
| Sub Claim-3 | Variation Bill No. 3 for fire-fighting works due to change in specifications and capacities | 3,17,000 | 1,71,0159 | |
| Sub Claim-4 | Extra work relating to revised cable route from LT panel to new finalized location of Generators | 60,000 | 35,169 | |
| Sub Claim-5 | Variation Bill No. 4 due to change in specifications, capacities of Control Panels | 1,20,157 | 1,20,157 | |
| Sub Claim-6 | Variation Bill No. 6 due to change in the scope of work and site condition due to delay caused by design change | 10,63,429 | 1,25,994 | |
| Sub Claim-7 | Variation Bill No. 7 | 20,47,459 | 1,28,244 | |
| Sub Claim-8 | Payment of hardware fittings | 50,594 | 50,594 | |
| Sub Claim-9 | Additional fire fighting works in tower and Restaurant area | 10,28,197 | 10,28,197 | |
| Sub Claim-10 | Variation Bill No.8 due to change in specifi | |||
The court clarified that portions of an arbitral award can be set aside if found contrary to agreements, and parties may request re-arbitration to address disputes cooperatively.
An arbitral tribunal's ruling on rates for substituted contract items and overhead compensations due to project delays is binding unless manifestly erroneous.
The entitlement to compensation for overheads incurred during the extended period of the agreement and the calculation of rates for extra items were central legal points established in the judgment.
The arbitral tribunal's decision to deny claims for damages due to lack of supporting evidence is valid under Section 34 of the Arbitration and Conciliation Act, emphasizing minimal judicial interfer....
The main legal point established in the judgment is the limited grounds for challenging arbitral awards under Section 34 of the A&C Act, emphasizing the principles of public policy and fundamental In....
Claims can still be made post-final bill if made under coercion; the final arbiter's decisions should not contravene public policy.
The main legal point established in the judgment is that the decision of the Arbitral Tribunal must be based on evidence and material on record, and the Court will not interfere with the award unless....
The court will not disturb an arbitral award unless it is shown to be based on a clear lack of evidence or procedural irregularity, reaffirming the finality of arbitration in dispute resolution.
In terms of Section 21 of the A&C Act, the arbitral proceedings commence on the date of receipt of notice invoking the arbitration agreement.
The Arbitral Tribunal's jurisdiction to consider claim amounts and reject specific claims under the Arbitration and Conciliation Act, 1996.
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