Pradeep Nandrajog, J.
1. Present order disposes of IA. No. 9160/01 filed by respondents 1 to 3, being objections under Section 30 of the Indian Arbitration Act, 1940 to the award dated 29.11.2000/15.12.2000 pronounced by Shri S.S. Aggarwal, Sole Arbitrator appointed between the parties. For clarity, it may be noted that the award is dated 29.11.2000. 15.12.2000 is the date on which the learned arbitrator published the award..
2. Objections have been filed by the respondents. Petitioner prays that award be made rule of the Court and decree be drawn accordingly.
3. Dispute between the parties pertained to the work 'lining of supplementary drain including construction of connate from RD 20850 m to 20950 m of supplementary drain' under agreement No. EE/SDD-III/89-90/6 dated 22.8.1989.
4. Petitioner had 7 claims against the respondents. 8th claim being for interest. Said claims were referred to the sole arbitration of Shri S.S. Aggarwal. Claim No. 2 had 18 sub-heads. Award of the learned arbitrator would reveal the following :
Sl. No. Claim No. Claim AwardedAmount Amount (Rs.) (Rs.)1. 1 2,40,845.12 80,000.002. 2.1 1,73,314.80 1,73,314.803. 2.2 35,135.10 14,000.004. 2.3 23,086.50 23,086.505. 2.4 44,620.00 25,000.006. 2.5 41,560.91 25,000.007. 2.6 2,258.70 13,000.008. 2.7 2,672.48 1,600.009. 2.8 8,920.00 NIL10. 2.9 3,541.59 NIL11. 2.10 1,082.19 NIL12. 2.11 1,082.19 NIL13. 2.12 7,093.26 NIL14. 2.13 4,812.44 NIL15. 2.14 4,117.44 NIL16. 2.15 1,276.20 11,276.2017. 2.16 42,572.88 NIL18. 2.17 2,070.43 NIL19. 2.18 30,836.00 27,230.0020. 3 4,00,000.00 NIL21. 4 2,62,000.00 1,25,000.0022. 5 2,07,000.00 10,000.0023. 6 8,07,000.00 2,00,000.0024. 7 20,000.00 20,000.00
5. Objections have been filed under each and every item of claim allowed by the learned arbitrator.
6. Perusal of the award would reveal that it runs into 51 pages. The learned arbitrator has given reasons in support of the findings.
7. Claim No. 1 of the contractor pertained to the work which the contractor was claiming to have been executed but not paid for. This claim had three components. The first component pertained to excavation carried out as also lifting and removal of soil. The second component pertained to a claim for extra work executed for extra width of diversion channel. The third component related to a claim for extra quantity of work in or under water and foul conditions.
8. The learned arbitrator has dealt with this claim in paras 1.1.1 to paras 1.1.9 of the award. Perusal of the award would reveal that in para 1.1.2, arbitrator has noted the three components of the claim. Award on this issue would reveal that the learned arbitrator has taken note of the entries recorded on page No. 69 of the Measurement Book No. 288 and entries recorded on page 100 of Measurement Book No. 225. Learned arbitrator has taken note of the running bills. Pleadings of the parties before the learned arbitrator would reveal that there was a dispute between the parties, whether there was excavation at sloped areas at both ends of the main drain (channel). Admitted position was that there was excavation. In the context of the Measurement Books and the running bills, in para 1.1.4, learned arbitrator has noted as under :-
'1.1.4 The respondents have mentioned that triangular excavation done by the claimants at the down stream end was already measured at page 100 of M.B. No. 225 and accordingly the above quantity of 232.20 was paid to the claimants as the same was carried forward to the 'Abstract of cost of 13th running bill' on page 73 of M.B. No. 288. The respondents have also mentioned that no such triangular excavation was involved on the upstream end, since Sultanpuri Road Bridge existed, below which the excavation had already been done. It is evident from the above that the respondents have not denied the excavation on the down stream side but they denied such excavation on the up stream side. The respondents have mentioned that the triangular excavation amounting to 232.20 cum. on the down stream side was already measured and paid to the claimants but the claimants have mentioned that the entry at page 100 of M.B. No. 225 for the quantity of 232.20 cum. pertains to the quantity of the earth work for which the claim has been raised by them. The question arises as to whether the said excavation of 232.20 cum. pertains to the claim raised by the claimants?'
9. The learned arbitrator has thereafter noted that the contractor had raised a claim for 3,048.69 cum. for the excavation on the down stream side but the respondents had shown a quantity of 232.20 cum. Learned arbitrator has thereafter taken note of Annexure 'R-7' submitted by the respondents which gave over all measurements of the main channel as per cross sections recorded in the Measurement Book. After analysingthe same, the learned arbitrator has concluded that the sloped areas on either side is not included in the said calculations and that the respondents would be liable to pay for the same.
10. Objections filed by the respondents is that the learned arbitrator has given the award wrongly and by distorting facts and figures. It is stated in the objection that the award of Rs. 80,000/- in favor of the contractor was without any proper calculations. It is stated that as per the specifications of the contract, CPWD specifications and ISI specifications have to be followed. It is alleged that the arbitrator has not followed the said specifications.
11. As noted, award is a reasoned award. The first facet of claim No. 1 pertained to excavation of earth. It hardly involves application of any specifications. Adjudication required determination of the volume of excavation carried out. Dispute was purely on an issue of fact. The learned arbitrator has referred to the Measurement Books where volume of work has been recorded. The learned arbitrator has relied upon the documents of the respondents being Annexure 'R-7'. The learned arbitrator has taken the cross sections recorded in the Measurement Books. The learned arbitrator has arrived at the finding that the volume of work determined pertained to 145 meter length of the channel and excludes the sloped areas on either side. The learned arbitrator has further noted that the areas of cross sections at the starting and the last point of the main drain was 249.68 and 359.94 sq. mtrs. He has rightly concluded that obviously one of the two areas should have been used for computation of the volume at the down stream end of the channel for averaging it with zero area at the top of the slope.
12. The objection of the respondents to the said part of the award is wholly frivolous and had to be rejected.
13. As regards the objection that the calculation of Rs. 80,000/- by the learned arbitrator is without reasons, it may be noted that as per the claim, the contractor had worked out the volume of excavation and had applied the contract stipulated rates for the said work. The claim of the contractor on said count pertaining to claim No. 1 was in sum of Rs. 85,116.72 as per the justification in support of the claim. It may be true that while awarding Rs. 80,000/- on the said count, learned arbitrator has not given any calculations as to how the said amount was being arrived at, but that would not render the award as a non-speaking award. As is noted from the reasoning of the learned arbitrator, learned arbitrator has analysed the basis for which volume of work had to be determined. As noted, the claim of the contractor on this count pertaining to claim No. 1 was Rs. 85,116.72.
14. That for a decision to be a reasoned decision, there must be some rational emanating in the decision itself, cannot be taken exception to, but the said rule needs to be applied with care and caution. Reasons are not deficient merely because every process of reasoning is not set out. Conversely, reasons would not be insufficient if they do not deal with every point in issue. Generalisation cannot be made. Subject matter has to be looked to. One cannot lose sight of the fact that an arbitrator is not to function like a Judge in a Court. The arbitrator is not bound by any technical rules of evidence. As observed by Awadh Bihari, J. in : AIR1982Delhi365 , DDA v. M/s Alakarani, 'the ropes and the pulleys that he used in the arbitral process are different from the foot rules and set squares that we use in the judicial process. From the arbitrator what is wanted is a practical decision on the disputed issue.'
15. Arbitration is an alternative method of dispute redressal. Businessmen want to go on with business and not with arguments. Arbitrators are not to give judicial justice but justice in the sence of arriving at a fair conclusions. Parties chose experts in the filed as arbitrators and there is an implied faith in the personal judgment of an expert arbitrator. If parties rely upon the expertise of an expert arbitrator, meticulous reasons are not to be looked into, in the decision made by the expert arbitrator.
16. A situation similar to the present case (pertaining to claim No. 1) arose before the Apex Court. In the judgment reported as 1995 (22) ALR 1, State of Rajasthan v. Puri Construction Company, challenge was made to the award of damages without quantifying the same in accordance with any rational principle. The challenge to the award, noted in para 16 of the judgment as under :
'16. The award of damages without quantifying the same in accordance with any rational principle has been assailed by contending that in a case of speaking award, the quantification of damages must be based on some principle and cannot be quantified arbitrarily by adopting rule of thumb.'
17. Repelling the said argument in para 31 of the judgment, it was held as under :
'Considering the magnitude of work involving costly machinery and materials, if the two arbitrators in their wide experience have quantified the total damage and has given the award of Rs. 1 crore in favor of the respondent it cannot be held that such an award is so patently unjust and irrational and shocking to the conscious of the Court, that the same should be interfered with.'
18. On the afore stated touchstone of law, decision of the arbitrator pertaining to claim No. 1 is upheld.
19. Sums claimed under the other two components under claim No. 1 have been rejected. However, since its rejection was used as a ground to show the alleged inconsistency in the award pertaining to certain subsequent claims, I would be advised to take note of the reasons of the learned arbitrator on this issue. Learned arbitrator has rejected the claim for work under water and foul conditions by holding that the contractor was supposed to have visited the site and acquainted himself with the existing surroundings. He further held that abnoxious gases emanating from the storm water drain could well have been envisaged by the contractor and, thereforee, nothing was payable.
20. Claim No. 2 as noted had 18 sub-heads, out of which, sub-heads (1) to (7), (15) and (18) have been allowed in full or in part. Rest have been rejected. Objections have been filed to each and every amount awarded by the learned arbitrator.
21. Claim No. 2.1 in the sum of Rs. 1,17,314.80 was on account of 2 extra lead for disposal of excavated earth beyond 50 meter lead. Learned arbitrator has dealt with this sub-head in paras 2.1.2 to 2.1.11 of the award. Objection is that the award is without verifying the quantity, rate or figure from the official record. Further objection is that the learned arbitrator has not calculated the volume of work on the basis of official documents. Further objection is that condition No. 1 of the specifications, at page 123 of the contract prescribed the method to determine the measurements. In substance, what is stated is that the arbitrator has misconducted himself.
22. Award of the learned arbitrator on this issue would reveal that in para 2.1.3 he has taken note of the submissions of the respondents that Special Condition No. 1 at page No. 123 of the agreement needs to be applied. Learned arbitrator has thereafter noted the submissions of the contractor to the effect that the said term of the contract has to be read in conjunction with the Special Terms & Conditions Of The Contract, being 2(i). The learned arbitrator has taken note of the Special Condition No. 2(i) of the contract and has noted that the same clearly states that excavation under Item No. 1, 1(b) and 1(c) will include excavation as per drawing and disposal of the same. Learned arbitrator has, in para 2.1.7, specifically noted that the words 'that the work includes all leads and lifts' have been scored out in the original contract. The learned arbitrator has thereafter taken note of letters dated 5.5.1992 and 25.8.1992 on this issue. Learned arbitrator has taken note of the fact that this issue was deliberated between the parties and the respondents, vide letter dated 5.5.1992, had conveyed to the petitioner to intimate the extra amount. In para 2.1.9, learned arbitrator has concluded that the Special Condition No. 1 of the agreement has to be read in conjunction with the Special Terms & Conditions Of The Contract. So holding, the learned arbitrator has allowed sub-head 1 of claim No. 2 in the sum of Rs. 1,17,314.80.
23. It is settled law that an arbitrator is the final adjudicatory authority between the parties to interpret the contract. It is not the case where the learned arbitrator has supplemented or supplanted words to the contract. Admittedly, the contractor was required to remove the excavated earth up to 50 meters lead. Dispute between the parties was whether the Special Condition No. 1 of the agreement governed the payment or whether the other terms and the Special Terms & Conditions Of The Contract were also to be looked into.
24. A document requires to be looked as a whole to ascertain the intention of the parties. The learned arbitrator has specifically taken note of the fact that the words ' that the work includes all leads and lifts' were scored of in the clause being relied upon by the department. The learned arbitrator has noted that the stand of the respondent was that said clause required removal of the entire excavated earth without limit of distance. Taking note of the words scored of in the clause of the contract relied upon by the department and taking note of the other terms of the contract, learned arbitrator has awarded the claim of the contractor for disposal of the excavated earth beyond 50 meters.
25. The learned arbitrator has acted within his mandate. Mandate of the arbitrator was to interpret the contract between the parties. I do not find that the learned arbitrator has supplemented or supplanted words in the agreement between the parties. The objection of the respondents pertaining to sub-head 1 of claim No. 2 is accordingly rejected.
26. Sub-head 2 of claim No. 2 related to claim of the contractor in the sum of Rs. 35,135.10 on account of removal of slush/malba from the bed of channel and diversion channel. The learned arbitrator has dealt with this sub-head of claim No. 2 in paras 2.2.2 to 2.2.7. The amount awarded is Rs. 14,000/-.
27. Objection of the department is that having rejected part of claim No. 1 for compensation for working under foul conditions, learned arbitrator has rendered a contrary finding while awarding Rs. 14,000/- to the contractor under sub-head 1 of claim No. 2.
28. Perusal of the reasons of the learned arbitrator would reveal that while dealing with sub-head 2 of claim No. 2, learned arbitrator has dealt with the issue in the context of volume of work done. He was conscious of the fact that whole dealing with claim No. 1, he was dealing with a claim for an extra sum predicated on the ground that the contractor had worked in foul conditions.
29. That a particular work is done is an altogether different issue that the work was done in foul conditions. Rejection of the latter does not lead to rejection of the former.
30. Award of the learned arbitrator would reveal that he has taken note of the terms and conditions of the contract. The learned arbitrator has taken note of the fact that the contract provided for extra rates for working in or under water and for working under foul conditions being condition No. 2(ii) on page 123 of the agreement.
31. As noted pertaining to sub-head(1) of claim No. 2, arbitrator would be the final adjudicatory authority between the parties to interpret the contract. Again, it is not a case where words have been supplemented or supplanted to the agreement. The objection of the respondents is accordingly rejected.
32. As regards the quantification, I may note that in para 2.2.6, learned arbitrator has taken note of the concession of the contractor, concession being that the contractor was ready to re-determine the amount at the rate of Rs. 3 per cum. He has also noted the concession of the contractor that there was a mistake in the quantities claimed.
33. The arbitrator is an Engineer. There is complete justification and reasoning as to why the claim is being allowed. Merely because exact calculations are not to be found would not mean that the award is a non-speaking award. I find that the arbitrator has acted within his mandate. Claim was found to be principally justified. Sum claimed was Rs. 35,135.10. Sum awarded is Rs. 14,000/-. Reason of reduction is stated in the award.
34. Sub-head 3 of claim No. 2 in sum of Rs. 23,086.50 has been allowed in toto. As noted above, the claim was on account of pumping of water caused by spring tidal or river seepage, broken water mains or drains and the like. Objection is that no such work was done. It is stated in the objection that the contractor led no evidence to show that he had installed pumps, labour etc. for doing the work. It is stated in the objection that Clause 19-D at page 36 of the agreement required the contractor to give proper details of the labour deployed at the site. In other words, the objection is that the award of the sum is without any evidence and contrary to the terms of the contract between the parties.
35. Arbitrator has dealt with this sub-head in paras 2.3.2 to 2.3.8 of the award. Learned arbitrator has noted that the length, breadth and height of the diversion drain in which de-watering was claimed to have been carried out was 155, 10.5 and 1.8 meters respectively. Learned arbitrator has further noted that in the 4th running bill, under extra item No. 3 at page 37 of the Measurement Book No. 234, de-watering done up to stage when 4th running bill was raised was entered in the Measurement Book and payment made. Learned arbitrator has concluded there from that this shows pumping out of water from site. Learned arbitrator has thereafter taken note of the contractor's letter dated 24.7.1991. Said letter which was admittedly received by the department records that de-watering of the diversion drain prior to construction of diversion drain in Sanjay Gandhi Hospital Complex was not being noted by the Junior Engineer due to non approval from the higher authorities. Learned arbitrator has noted that the said letter was never received by the respondents. The Learned arbitrator has further noted that in the said letter, quantity of work done was recorded by the contractor.
36. Pertaining to sub-head 3 of claim No. 2, it cannot be said that the arbitrator has acted beyond his mandate. Learned arbitrator has determined the issue of facts; namely, whether de-watering was done. Learned arbitrator has taken note of the 4th running bill. The learned arbitrator has taken note of the contractor's letter dated 24.7.1991 which was never refuted. Finding is purely on a pure question of fact. The objection of the respondents is accordingly rejected.
37. Sub-head 4 of claim No. 2 was on account of construction of coffer dam and its maintenance, care and watch. Claim was in the was in the sum of Rs. 44,620/-. Sum awarded is Rs. 25,000/-.
38. Learned arbitrator has dealt with this sub-head in paras 2.4.2 to 2.4.6 of the award. The learned arbitrator has noted the defense of the respondents, being that the coffer dam was constructed but from the excavated earth from the drain. He has also noted the defense that the coffer dam required no periodic maintenance.
39. Learned arbitrator has opined that the removal of earth and its stacking is different from the erection of a coffer dam. He has held that construction of a coffer dam, requires compaction and shuttering supported with earth filled bags to keep it protected from cutting due to flow of water.
40. Reasoning of the arbitrator cannot be said to be perverse. If the reasoning is not perverse, this Court is not to go into the justification/soundness of reasoning. This Court is not to go into whether the award on this score is right or wrong. Even otherwise, the learned arbitrator is correct when holds that stacking of earth is entirely different than the compaction and placement of earth to create a coffer dam. On the issue of awarding Rs. 25,000/- as against the claim of Rs. 44,620/-, I may note that though there is not computation as to why the learned arbitrator has arrived at the figure of Rs. 25,000/-, but it has to be noted that the arbitrator was an Engineer.
41. Advantage of an expert arbitrator is that parties can take benefit of his knowledge and experience. This, to my mind, is an advantage of arbitration proceedings viz.a.viz. Court adjudication. A technically qualified arbitrator who determines the volume of work done can well estimate the value of the work. When parties refer disputes to a technically qualified person, there is presumption that the parties agree to abide by his decision, which may be based on the application of arbitrator's personal knowledge to the kind of work involved. I may only note that the arbitrator has taken note of the fact that the respondents never denied that earth filled bags were used by the contractor. The learned arbitrator has further noted that vide letter dated 24.7.1991, the contractor had laid a grievance for non-payment. Learned arbitrator has taken note of the fact that this letter was never replied by the department. It cannot, thereforee, be said that the learned arbitrator has acted on the basis of no material or evidence. Objection of the respondents cannot be sustained.
42. Sub-head 5 of claim No. 2 in the sum of Rs. 41,560.91 has been allowed by the learned arbitrator in the sum of Rs. 25,000/- as noted above. Claim was on account of brick work with bricks class designation 75 in foundation and plinth in cement mortal ratio 1:4 in Sanjay Gandhi Hospital wall and extra for brick work and superstructure above plinth. defense of the respondents was that the contractor damaged the wall of Sanjay Gandhi Hospital while executing the work thereforee cost of rectification had to be borne by the contractor.
43. Learned arbitrator has dealt with this sub-head of claim No. 2 in paras 2.5.2 to 2.5.15 of the award.
44. Learned arbitrator, in para 2.5.5 of the award has taken note of respondent's letter dated 16.9.1991 which called upon the contractor to restore outer wall of Sanjay Gandhi Hospital which was damaged due to heavy rains. Learned arbitrator has taken note of the response of the contractor, being that he was ready to repair the wall but not at his cost as the damage had occurred not due to any fault of the contractor but due to exposure of the foundation of the wall in question as the drain which had to be excavated was to run along the wall and was to be excavated much deeper than the foundation of the wall. Learned arbitrator has taken note of the contractor's letter dated 17.9.1991. Learned arbitrator has also taken note of a note in the Site Order Book dated 5.1.1990 maintained by the respondents. The learned arbitrator has taken note of clause 7 of The Special Conditions & Specifications of the agreement relied upon by the respondents.
45. For the reasons mentioned pertaining to sub-heads 1 to 4 of claim No. 2, objection of the respondents pertaining to sub-head 5 of claim No. 2 has to be rejected. It has to be noted that the objection of the respondents is predicated on clause 7 of the contract agreement, a clause which has been noted by the arbitrator and interpreted. Needless to reiterate that the arbitrator has not supplemented or supplanted words to the agreement between the parties.
46. Sub-head 6 and 7 of claim No. 2 pertained to plastering of the wall of Sanjay Gandhi Hospital which was subject matter of sub-head 5 of claim No. 2. As against claim of Rs. 2,258.70 and Rs. 2,672.48 for said sub-heads, learned arbitrator has awarded Rs. 1300/- and Rs. 1600/- respectively.
47. Objection of the respondents is predicated on clause 7 of the agreement.
48. For the reasons mentioned pertaining to sub-head 5 of claim No. 2, objection is without merit and is rejected. On the issue quantification, I need not reiterate that my reasoning predicated on parties appointing a technically qualified person as an arbitrator implies that parties consent that the arbitrator can rely upon his knowledge and experience in quantifying the amount based on volume of work. Said objection pertaining to sub-heads 6 and 7 of claim No. 2 is rejected.
49. As noted above, sub-heads 8 to 14 of claim No. 2 have been rejected and there being no objection by the contractor, I need not deal with the award pertaining to the said sub-heads.
50. Sub-head 15 of claim No. 2 in the sum of Rs. 11,276.20 has been allowed in toto. Claim was on account extra rate for RR masonary with hard stone in superstructure above plinth level and up to the floor 2 level.
51. defense of the respondents was that this item of work executed by the contractor was a substituted item in place of dry stone pitching over filter on the side slopes of the drain above the berm level. As per the respondents, this item of RR masonary was available in the agreement as item No. 8 since the bandh and patra were already constructed in RR masonary.
52. Award of the arbitrator on this issue is in paras 2.15.2 to 2.15.5. Award shows that the learned arbitrator has taken note of the respective contentions of the parties.
53. In para 2.15.5, learned arbitrator has noted that as per normal practice, rates for RR masonary in other locations are different from those given for the work in the foundation and plinth. Learned arbitrator has further noted that the defense of the respondents was that this item of work was substituted in place of dry stone pitching over filter for side slopes of the drain above the berm level. Learned arbitrator has concluded that admittedly this was a substituted item for which petitioner had to be reasonably compensated.
54. Learned arbitrator has given justification in support of his findings. The learned arbitrator has taken note of the respective stand of the parties. The learned arbitrator has further noted the admission of the respondents that item of work was a substituted item.
55. The objection is that double payment has been effected by the learned arbitrator. Second objection is that there is not calculation as to how the sum of Rs. 11,276.20 was worked out.
56. As regards the first objection that double payment has been effected, learned counsel for the respondents could not point out from any document that payment for this was already made. Objection that double payment has been effected is accordingly rejected. On the issue of quantification; for the reason that the learned arbitrator was a technically qualified person, sum involved being Rs. 11.276.20, I am of the opinion that the arbitrator has acted within his mandate when he worked out the compensation based on his personal knowledge and past experience.
57. Sub-heads 16 and 17 of claim No. 2 have been rejected and the contractor having filed no objections, I need not deal with the same.
58. Sub-head 18 of claim No. 2 in the sum of Rs. 32,836/- has been awarded in the sum of Rs. 27,230/-. Learned arbitrator has dealt with this sub-head in para 2.18.2 of the award.
59. Claim was on account of earth work in excavation over areas exceeding 30 cm. in depth as well as 10 sq. mtrs. on plan including disposal of excavated earth to lead up to 50 meters and lift up to 1.5 mt. in soft/loose soil for removal of the coffer dam as also for extra rate of said work on the ground that work was executed under foul conditions.
60. The learned arbitrator has noted the defense of the respondents that there was no record pertaining to this work.
61. Learned arbitrator has held that admittedly, the coffer dam was constructed. He has noted that admittedly, the same does not exist. It was obviously removed. Learned arbitrator has noted that the only other method by which the coffer dam could vanish was if it had been washed away.
62. Learned arbitrator has reasoned that if the coffer dam was washed away, there could hardly be any evidence to establish the said fact. But, the learned arbitrator has noted positive evidence that the coffer dam was removed, being a letter dated 23.4.1993 signed by Shri Arora, Assistant Engineer of the respondents which clearly recorded that the coffer dam was removed by the contractor. The learned arbitrator has thereby concluded that claim was justified. However, learned arbitrator has rejected the claim for extra rates claimed by the contractor on the allegation that the contractor worked in foul conditions.
63. The arbitrator has acted on the basis of the material and evidence before him. Finding cannot be said to be perverse or unreasonable. Finding cannot be said to be on the basis of no evidence. The objection of the respondents is meritless and is accordingly rejected.
64. Claim No. 3 of the contractor in the sum of Rs. 4,00,000/-, being damages on account of increase in prices, labour and material has been rejected by the learned arbitrator. The contractor has not filed any objection and I, thereforee, need not deal with the same.
65. Since common objections to claims 4, 5 and 6, as awarded by the arbitrator have been filed by the respondents, I may deal with the said three objections under one head.
66. As noted above, claim No. 4, 5 and 6 were in the sum of Rs. 2,62,000/-, Rs. 2,07,000/- and Rs. 8,07,404/- respectively. The 3 claims have been partially allowed in the sum of Rs. 1,25,000/-, Rs. 10,000/- and Rs. 2,00,000/- respectively.
67. Objection to the award of the said three claims is that the award is contrary, unjustified, against facts and provisions of the agreement and without proper documentation. It is stated that no calculations are to be found in the award in support of the awarded amounts. It is stated that compensation was levied on the contractor under Clause 2 of the agreement and that the learned arbitrator while deciding claim No. 1 had held that levy of compensation was justified.
68. Mr. Salim Ahmad, learned counsel for the respondents urged that after levy of compensation was held to be justified, learned arbitrator rendered a contrary finding in awarding claim No. 4, 5 and 6 to the contractor.
69. A reference to para No. 1.2.2 of the award would reveal that pertaining to claim No. 1 i.e. unpaid amount for the work done under the contract, contractor had claimed a sum of Rs. 3,000/- being the sum deducted by the respondents from the security deposit of the contractor while refunding the security deposit. This deduction was on account of the penalty levied by the respondents for the alleged delay. While refusing to allow the said claim of the contractor, learned arbitrator has held that the issue of liquidated damages being an accepted matter, he could not go into this issue. He held that it was for the contractor to challenge the levy of liquidated damages before the appropriate forum. It is thus apparent that learned arbitrator has not upheld levy of compensation. He has recorded that being an accepted matter, he could not adjudicate upon the same.
70. Learned arbitrator in para 1.2.11 of the award has held that as per law, issue of liquidated damages had no concern with the issue of general damages for breach of contract.
71. Claim No. 4 was on account of the idle staff and labour inasmuch as the contractor claimed that the respondents delayed the execution by about 20 months. Claim No. 5 was on account of expenditure incurred on de-watering arrangement due to prolongation of the work. Claim No. 6 was on account of loss of profit and head office expenses due to prolongation of the work by about 20 months.
72. Learned arbitrator has dealt with the above claims in paras 4.2 to 4.13, 5.2 to 5.8 and paras 6.2 to 6.7 of the award.
73. On the issue of delay, learned arbitrator, on the basis of evidence has held that partial delay was attributable to the respondents. Determination of the dispute is a pure question of fact. Learned arbitrator has held that the contractor was entitled to be reimbursed for idle staff and labour to whom payment has been made by the contractor. As against the claim of Rs. 2,62,000/-, Rs. 1,25,000/- has been awarded.
74. Learned arbitrator has dealt with letters exchanged between the parties and the evidence on record. The finding is based on the evidence. I am not to sit as an appellate authority.
75. Pertaining to claim No. 5, as against claim of Rs. 2,07,000/-, Rs. 10,000/- has been awarded. The learned arbitrator has held that de-watering, as claimed, was required to be done during the prolongation of the work. On the entitlement to be reimbursed, learned arbitrator has opined that the amount payable was by taking into considering the volume of work done. Sum of Rs. 10,000/- has been awarded. Obviously, arbitrator has used his experience and knowledge. I find nothing wrong.
76. Pertaining to claim No. 6 in the sum of Rs. 8,07,404/- being on account of alleged loss of profit and head of expenses due to prolongation of work, sum awarded is Rs. 2,00,000/-.
77. Reasons of the arbitrator are to be found primarily in para 6.7 of the award.
78. Admittedly, there was prolongation of work. Learned arbitrator has held that for the kind of work with which he was dealing with, the overheads are generally 7.5% of the value of the work. Learned arbitrator has held that there was extra work which was done during this period for which contractor would have earned some profits. Considering the delay attributable to the respondents and the value of the work, figure of 7.5% of the value of work being apportionable to overheads, sum of Rs. 2,00,000/- has been awarded.
79. Award of the same cannot be said to ipsi dixit if the arbitrator. Claim has been restricted to overheads and not loss of profit. The objections pertaining to claim No. 6 is accordingly rejected.
80. On issue that learned arbitrator having held that levy of liquidated damages was non arbitrable and hence he could decide on claims 4 to 6 which related to prolongation of work, I may only note the judgment of the Apex Court reported as 2002 4 SC 45, General Manager, Northern Railway and Anr. v. Sarvesh Chopra:
'15 In our country question of delay in performance of the contract is governed by Sections 55 and 56 of the Indian Contract Act, 1872. If there is an abnormal rise in prices of material and labour, it may frustrate the contract and then the innocent party need not perform the contract. So also, if time is of the essence of the contract, failure of the employer to perform a mutual obligation would enable the contractor to avoid the contract as the contract becomes voidable at his option. Where time is 'of the essence' of an obligation, Chitty on Contracts (28th Edn. 1999, at p.1106, para 22-015) states
'a failure to perform by the stipulated time will entitle the innocent party to (a) terminate performance of the contract and thereby put an end to all the primary obligations of both parties remaining unperformed; and (b) claim damages from the contract-breaker on the basis that he has committed a fundamental breach of the contract ('a breach going to the root of the contract') depriving the innocent part of the benefit of the contract ('damages for loss of the whole transaction').
If, instead of avoiding the contract, the contractor accepts the belated performance of reciprocal obligation on the part of the employer, the innocent party i.e. the contractor, cannot claim compensation for any loss occasioned by the non-performance of the reciprocal promise by the employer at the time agreed, 'unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so'. Thus, it appears that under the Indian law, in spite of there being a contract between the parties whereunder the contractor has undertaken not to make any claim for delay in performance of the contract occasioned by an act of the employer, still a claim would be entertainable in one of the following situations : (i) if the contractor repudiates the contract exercising his right to do so under Section 55 of the Contract Act, (ii) the employer gives an extension of time either by entering into supplemental agreement or by making it clear that escalation of rates or compensation for delay would be permissible, (iii) if the contractor makes it clear that escalation of rates or compensation for delay hall have to be made by the employer and the employer accepts performance by the contractor in spite of delay and such notice by the contractor putting the employer on terms.
16. Thus, it may be open to prefer a claim touching an apparently excepted matter subject to a clear case having been made out for excepting or excluding the claim from within the four corners of 'excepted matters'.
81. Claim No. 7 was for cost of arbitration. A sum of Rs. 20,000/- has been awarded as cost of arbitration. Awarding of cost is within the jurisdiction of the arbitrator. I do not find that the sum of Rs. 20,000/- awarded as cost of arbitration is too excessive, unreasonable or unjustified.
82. Claim No. 8 was for grant of interest pre-arbitration and pendente lite.
83. Learned arbitrator has awarded simple interest @ 18% p.a. w.e.f. 1.4.1992 till the date of award on the amounts awarded except for the amount under claim No. 7 i.e. cost of arbitration. Learned arbitrator has also awarded interest @ 15% p.a. on the total amount of the award from the date of award till the date on which payment is made.
84. While awarding interest @ 18% p.a. from 1.4.1992 till the date of award, learned arbitrator has taken note that vide letter dated 12.8.1993 contractor, while raising the demand had clearly indicated that the work was complete on 24.10.1991 and final bill raised, but no payment was received. It was indicated that if no payment was tendered within 15 days, interest @ 18% p.a. on the amount due from the date of completion i.e. 24.10.1991 would be charged.
85. Learned arbitrator has awarded interest not w.e.f. 24.10.1991 but from 1.4.1992. Admittedly, the work was completed on 24.10.1991. Though not mentioned in the award, final payment would be due to the contractor after final measurements are recorded; final bill raised, bill verified and thereafter payment tendered. The learned arbitrator has acted reasonably in awarding interest w.e.f. 1.4.1992.
86. On the issue of interest, learned counsel for the respondents urged that there was no stipulation in the contract that interest would be payable @ 18% p.a. Counsel urged that the arbitrator has awarded interest by applying the provisions of the Interest Act, 1978. Counsel urged that as per Section 3 of the Interest Act, 1978 read with Section 2(b), contractor would not be entitled to interest, over and above, interest which was being paid by scheduled banks on fixed deposits.
87. I concur with the argument of the learned counsel for the respondents. Contract between the parties does not stipulate any rate of interest. By virtue of Section 3 read with Section 2(b) of the Interest Act, 1978, rate of interest has to be the maximum interest paid by scheduled banks on deposits.
88. Unfortunately, none appeared for the petitioner. Learned counsel for the respondents could not indicate the date when arbitration proceedings commenced. I may note that as per the award, contractor had to file a petition under Section 20 of the Arbitration Act, 1940 to have the arbitrator appointed. Arbitration proceedings would, thereforee commence when the contractor took resort to the petition under Section 20 of the Arbitration Act, 1940.
89. Dispute between the parties admittedly surfaced in the year 1992 evidenced by legal notice served by the contractor on the respondents. Rate of interest offered by the scheduled banks in the year 1992 on fixed deposits was 10%.
90. Since I do not have the date when arbitration proceedings commenced and it is not possible for me to split the pre-arbitration and pendente lite period, I modify the award pertaining to claim No. 8, in that, I hold that the contractor would be entitled to simple interest @ 10% p.a. from 1.4.1992 till the date of award.
91. Objections of the respondents are accordingly rejected except the objection pertaining to grant of interest which is partially modified. IA. No. 9160/01 is disposed of rejecting all the objections, save and except, limited objection pertaining to grant of interest.
92. Award dated 29.11.2000 published by Shri S.S. Aggarwal, Sole Arbitrator is made rule of the court, subject to the modification of para 8.10 of the award, in that, interest awarded to the contractor would be 10% p.a. w.e.f. 1.4.1992 till the date of award except for interest on claim No. 7. It is further directed that further interest from the date of award till the date of decree and post decretal interest till the date of realization would also be 10% p.a.
93. Decree be prepared accordingly.
94. Since none appeared for the petitioner, no costs.