| SooperKanoon Citation | sooperkanoon.com/689344 |
| Subject | Arbitration |
| Court | Delhi High Court |
| Decided On | Apr-10-1997 |
| Case Number | Suit No. 1713 of 1994 & is No. 9835 of 1995 |
| Judge | K. Ramamoorthy, J. |
| Reported in | 70(1997)DLT702 |
| Appellant | P.C. Sharma and Co. |
| Respondent | D.D.a |
| Appellant Advocate | Sh. K.M. Sharma, Adv |
| Respondent Advocate | Ms. Anusuya Salwan, Adv. |
K. Ramamoorthy, J.
1. The Arbitrator had passed the award on 19-5-1994 in favor of the claimant M/s. P. C. Sharma & Co. and against the Delhi Development Authority. The Delhi Development Authority has filed the objections. The contract between the claimant and the Delhi Development Authority was for the construction of 840 DUs under S.F.S. in Pocket-VIII, Section-C at Vasant Kunj. S.H. 64 Cat. III, Cat. II and 80 scooter garages i.e., internal development Group II, Disputes arose between the parties and they were referred for adjudication.
2. In Claim No. 1 the claimant has claimed a sum of Rs. 21,985.00 on account of refund of rebate deducted for payment of monthly bill without fulfillling the contingent condition. The Arbitrator had stated the claim of the claimant in the following terms :
Respondents had accepted claimants' condition regarding offer of rebate of 0.25% on estimated cost of word for making monthly payments provided the gross value of the work done in any month was not less than Rs. 25,000/- and this rebate was to be deducted from each running bill. Claimants had pleaded that provisions of the condition of monthly payment was not adhered to by respondents and that in the total time of nearly 56 months taken in completing the work, only 27 running account bills for work done were paid.
The Arbitrator dealt with the objection of the D.D.A. in the following terms :
Respondents have denied the claim pleading that as per Clause 8 of the contract, bills were required to be submitted by the claimants by a fixed dated but that did not do so and hence they could not be paid monthly bills. This argument is not convincing as the practice in Delhi Development Authority is that bills are invariably prepared by the departmental staff as covered in latter part of Clause 8, since for work done on an average only one payment has been made in two months' time, the condition of monthly payment for availing rebate has been violated and hence availing of rebate is not admissible.
thereforee, the Arbitrator has awarded a sum of Rs. 21,986/- against Claim No. 1. I confirm this part of the award.
3. In Claim No. 2 the claimant has claimed a sum of Rs. 21,986/- on account of refund of rebate deducted without fulfillling the contingent condition for payment of final bill within 6 months of the completion of work.
4. The Arbitrator had awarded a sum of Rs. 21,986/-. In the objection filed by the Delhi Development Authority it is stated that the Arbitrator had rendered findings quite contrary to the conditions of the agreement and in particular had ignored Clauses 7 and 8 of the agreement. I have perused the award of the Arbitrator and the reasoning given by him for awarding an amount on Claims 1 and 2. I do not find any merit in the objections filed by the Delhi Development Authority against Claims 1 and 2. thereforee, I confirm the award of the Arbitrator on Claims 1 and 2.
5. On Claim No. 3, the claimant had claimed a sum of Rs. 21,986/- on account of rebate as the respondents did not fulfill the condition of release of Security Deposit within one month of the expiry of maintenance period. The Arbitrator had awarded of sum of Rs. 21,986/- to the claimant. The Arbitrator had stated thus :
Claimants had offered rebate of 0.25% on the estimated cost for release of security deposit within a period of one month after the expiry of maintenance period. To avail of his rebate, the respondents were required to release the amount of security deposit by 29-4-1990, but the same is still lying with the respondents in the shape of Bank Guarantee. Due to non-fulfilment of their obligation as per condition incorporated in the agreement, respondents are non-entitled to avail of this rebate. The claim is justified and it is awarded that a sum of Rs. 21,986/- be refunded to the claimants by respondents.
The Delhi Development Authority has not given any reason as to how the Arbitrator had committed any mistake which would warrant interference by this court. Accordingly, the award on Claim No. 3 is upheld.
6. On Claim No. 4, the claimant has claimed a sum of Rs. 12,493/- on account of refund of illegal deduction made at penal rates for alleged excess use of departmental material. The objection filed by the Delhi Development Authority stating thus :
The findings of the Arbitrator with respect to Claim No. 4 are contrary to the conditions of the agreement entered into between the parties and deserves to be set aside. The learned Arbitrator has completely ignored Clause 42 of the agreement under which the petitioner was required to return the unused materials back to the respondents after completion of the work and in case the same was not returned the same could be recovered at double the issue rate. That after calculating the amount of material used the agreement provides for giving a variation of 5%. The learned Arbitrator has misconducted himself and the proceedings by going beyond the specific provisions of the agreement and by making hypothetical calculations as the agreement itself provided specific method of measurements and wastage etc. to be given. That mild steel is a separate item, but however the same has been clubbed with steel by the learned Arbitrator.
The Arbitrator has awarded as thus :
Respondents in their counter statement of facts have clarified that for 0.433 MT of mild steel, 0.22 MT of for steel, 79 metres of 20 mm. G.I. Pipe and 25 metres of 100 mm. diam. S.C.I. pipe, recovery had been made at double the issue rate as per provisions of Clause 42 of the contract. Respondents have also pleaded that steel was not overwight, and that use of 20 mm. G.I. Pipe was not stipulated for issue in item No. 11.1 of the agreement.
The mild steel issued in work is 12.17 MT. Unaccounted variation in mild steel as projected by respondents is 433 kg. Mild steel issued is of 6 mm. diam. This diameter steel being produced in the country is generally over-weight and the possibility of excess consumption beyond permissible variation and wastage due to steel being overweight cannot be ruled out. The overall variation in total quantity of torn steel is within permissible variation and wastage. Clause 42 does not state that variation and wastage in steel has to be calculated diameter-wise. So far as 20 mm. G.I. pipe is concerned, claimants have pleaded that pipe was used in item No. 11.1 of the agreement also which had not been accounted for by the respondents. Respondents have not denied this; they have only pleaded that the pipe had not been supplied for ruse in item No. 11.1. This leads to the conclusion that excess 79 m. of 20 mm. G.I. pipe issued by respondents was incorporated in work only. 100 mm. diameter S.C.I. pipes have been issued by respondents measuring length of each pipe from socket end to plain end. Part of the pipe at non-socket end goes in the socketed end of the other pipe when two pipes are joined. While measuring the item of work of S.C.I. pipes for payment purposes, length of erected and jointed pipes is measured in running ignoring the length of pipe which goes into the socketed end. This difference in the mode of issue of pipes and consumption accounts for a difference of nearly 2.5%. Nearly 1200 metres 100 mm. dia pipe have been consumed in work 25 metres pipe for which double rate recovery has been made by respondents is 2.1% beyond the permissible wastage which almost corresponds to the pipe length going inside the socket. The wastage is thus considered to be within reasonable limits.
Respondents have not produced any correspondence indicating that they asked for the return of excess material. Clause 42(i) requires Engineer-in-Charge to issue a notice for the return of the unused material at a place he desired. If no material remained unused and all excess material got used in work, recovery at double the issue rate will amount to a penal action which in the absence of any loss suffered by respondents is not warranted. The respondents have not complained of any misuse of material issued by them or of its misappropriation. Under the circumstances and facts of the case, the recovery at double the issue rates is not justified. Claimants are awarded a sum of Rs. 10,481 only which is the amount of penal rate recovery shown by respondents in their final bill.
I do not find any error on the fact of the award. thereforee, the award on this claim confirmed.
7. In Claim No. 5 a sum of Rs. 15,462/- on account of final bill in respect of undisputed items, in Claim No. 7, a sum of Rs. 73,519/- on account of illegal deduction made for alleged defects/deficiencies in works styling them as deduction items and in Claim No. 12 a sum of Rs. 31,250/- on account of cost of work done but not paid in respect of item No. 8.11 of the agreement pertaining to AC rain water pipes. The Arbitrator had considered all the above three claims together. The objection of the Delhi Development Authority is that the claimant had not used the materials with I.S.I. mark and the Arbitrator was not justified in disallowing other recoveries made by the Delhi Development Authority. The Arbitrator had considered the above three claims in the following terms :
All the three above mentioned claims relate to the work executed by claimants, payments for which had either not been made or had been made at rates lesser than the agreement rates. The respondents had not finalised their accounts at the time the claimants made their claims. A copy of the final bill as adjusted by respondents was submitted by them during course of the arbitration as Exhibit R-12. Since all the above claims are related to final bill, they are considered together for purposes of award.
In their final bill (Exhibit R-12), the respondents have shown the value of work done for agreement items as Rs. 1,35,64,950.98 and for extra/substituted items as Rs. 5,77,652/-. Deductions/reductions amounting to Rs. 1,59,574/- have also been incorporated in the bill. Rebates on various counts amounting to Rs. 71,774/- are also being availed of in the bill.
Claim No. 12 relates to payment for A.C. rain water pipes as per agreement item No. 8.11 of the agreement. This item was paid by respondents in a running bill but the payment was later on withdrawn for the reason that the claimants had not used I.S.I. marked rain water pipes. The payment has again been restored in the final bill but simultaneously reduction in rate has been effected for not using I.S.I. marked pipes. The pipes used in the work were got tested by respondents during the period work was in progress and were found to satisfy all the I.S.I. requirements and confirmed fully to I.S.I. specifications. The correspondence filed by parties concerning availability of I.S.I. marked pipes indicates that such pipes were not available in the local market when work was in progress. In view of these facts and considering that pipes used conformed fully to I.S.I. specifications, the agreement item No. 8.11 is to be paid at full rates and not at reduced rates. Reduction item for this is not tenable.
Respondents are effecting deductions/reductions in 18 items including that of A.C. pipe. These have been incorporated by respondents as negative items either as reduced rate items or as deduction items. Deduction item No. 1 is for not doing brick work from outside the building. The brick work would have been in progress for months together in early stages of work but no communication has been filed by respondents indicating that the mode of doing brick work from inside the building was not acceptable to them. Similarly, defects for which deductions have been made in item Nos. 4, 7, 8, 9, 12, 13 and 16 were not pointed out during currency of work. The reasons for making recoveries as mentioned in the nomenclature of such items are vague. No notices for getting the defects rectified under Clause 14 of the agreement were served by respondents on claimants. The claimants were thus deprived of the opportunity to rectify the defects for which the respondents have now made recoveries in their final bill. At no stage, concurrence of the claimant was taken for rate reduction. In the absence of defects having been pointed out and in the absence of notices for rectification under Clause 14 of the agreement, the recoveries for these items are not tenable.
Recoveries for item Nos. 2, 3, 5, 6, 10, 11, 6.2 and R. 1 S. 2 relate deficiencies resulting on account of certain fittings/fixtures not provided or fittings/fixtures of different specifications provided. Since materials, fittings etc. have not been provided as per nomenclatures of the items/specifications, the recoveries, in principle, arising on this account are considered just and correct. I, however, find that the rates of reduction for item No. 3, recoveries @ Rs. 14.50 per sq.m. and for item No. 5 @ Rs. 32.50 (as recovered by respondent in running bills) are considered reasonable and just. Reasonable reduction for all these items would work out to Rs. 44,967.34 and this recovery is allowed to the respondents.
Recovery for non-submission of labour reports is not admissible as no order levying such fine has been passed by the Engineer-in-Charge. After taking into consideration the factors as mentioned above, the bill figure will work out as below :
(i) Work done as per agreement Rs. 1,35,64,950.98 items.
(ii) Work done as per extra Rs. 5,77,652.11 items.
(iii) Total of (i) and (ii) Rs. 1,41,42,603.90.
(iv) Recoveries :
(a) Rebates 71,774.19(separate claim for refunds made) (b) For reduced rates 44,967.34 (c) For materials issued by respondents 1,762.40-----------1,18,503.93 (v) Net payment after recoveries Rs. 1,40,24,099.16.
(vi) Less payment already released
till last bill (-) Rs. 1,39,26,589.00
(vii) Payment due to contractor Rs. 97,510.16 Say Rs. 97,510.
A sum of Rs. 97,510/- is awarded to claimants for all the three claims put together.
thereforee, I do not find any reason warranting interference, accordingly the award of Rs. 97,510/- is confirmed on Claims 5, 7 and 12 together.
8. On Claim No. 6, the claimant has claimed a sum of Rs. 33,000/- on account of refund of illegal withholdings from various bills. The objection by the Delhi Development Authority is that the Arbitrator had ignored Clause 42 of the agreement under which the claimant was required to return the unused material after the completion of the work and as the materials were not returned, the Delhi Development Authority could charge double the issue rates for those materials. The Arbitrator had indulged in hypothecated calculations.
9. The Arbitrator had considered all the materials and the reasoning given by the Arbitrator has not be adverted to by the Delhi Development Authority in its objection petition and the Arbitrator expressed his reasoning in the following terms :
The ad hoc recoveries/withholding of amounts from various running bills as projected by claimants in their statement of facts except for a sum of Rs. 22,000/- were accepted by respondents. The respondents pleaded that the sums had been withheld by them for purposes of defects rectification. More than 4 year's time has passed since the work got completed. No defect rectification work was carried out by respondents in this period chargeable to claimants. Respondents' final bill at Exhibit R-12 indicates deductions/reductions for defects/deficiencies and thus any further withholding is not justified. Since no action has been taken by the respondents so far to utilise the amounts withheld, these sums have become refundable. The houses have also been occupied by the allottees. The claimants are entitled to get the refund of with held amount. The claim is partly justified and a sum of Rs. 11,000/- is awarded to claimants.
I confirm the award of the Arbitrator of this claim in which the Arbitrator had directed the D.D.A. to pay a sum of Rs. 11,000/- to the claimant.
10. Claim No. 8 has been rejected by the Arbitrator.
11. On Claim No. 9, the claimant has claimed a sum of Rs. 2,420/- on account of short payment because of wrong measurements in respect of item No. 6.1 pertaining to T-iron frames. The Delhi Development Authority has not filed any objection thereforee, this part of the award is confirmed.
12. On Claim No. 10, the claimant had claimed a sum of Rs. 5,203/- on account of illegal deductions made for alleged non-furnishing of exposed surface of RCC under item Nos. 3 and 10. The Delhi Development Authority here again has not focussed the attention of the Court to the materials aspect of the case and had contended and made general allegation. In my view, the reasoning given by the Arbitrator is correct and is in accordance with law. The Arbitrator has said :
Claimants have stated that the operation of item 3.10 of the agreement was not attracted as in the RCC work done by them, there was no permanently exposed unplastered surface or if any such space was there, area of the same was less than 0.5 sq.m. and as per applicable CPWD specifications, no deduction for rendering was to be done. Respondents pleaded that the area less than 0.5 sq.m. in each location had not been accounted for in the measurements recorded for agreement item No. 3.10. Respondents have filed measurements recorded by them for this item vide Exhibit R-13. It is seen that at most of the locations the area measured is less than 0.5 sq.m. Area exceeding 0.5 sq.m. is occurring only at a few locations and this area works out to nearly 171.35 sq.m. Respondents have measured a total area of 701.26 sq.m. for this item. Claimants are thus entitled for refund of deductions made for 529.91 sq.m. approx, at agreement rate of items No. 3.10. A sum of Rs. 3,938/- is awarded to claimants for this claim.
13. On Claim No. 11, the claimant has claimed a sum of Rs. 4561/- on account of plastering exposed surface of the shelves (item No. 3.3 of the agreement). The Delhi Development Authority has stated in the objection petition the reasoning given by the Arbitrator is contrary to the terms of the agreement and, thereforee, it is liable to be set aside. The Arbitrator had pointed out that the Delhi Development Authority did not state any difficulty in the work made by the claimant and, thereforee, the Delhi Development Authority was liable to pay for the work done. When the Arbitrator has given such a reasoning, this Court cannot exercise jurisdiction under Section 20 of the Arbitration Act, 1940.
14. On Claim No. 13, the claimant has claimed a sum of Rs. 3,00,000/- on account of balance payment under Clause 10(cc) of agreement for following wrong procedure in determining the compensation already paid and, thereforee, if proper method is adopted the compensation payable would be higher.
15. The Delhi Development Authority in its objection has stated that the Arbitrator had adopted a different method which is not permissible in law. About this aspect of the matter, I have considered the arguments of the learned Counsel for the Delhi Development Authority Ms. Anusuya Salwan in Suit No. 1/27/94 and I do not want to repeat the same. I do not find any error committed by the Arbitrator in awarding a sum of Rs. 2,87,866/- for this claim and I confirm the award.
16. On Claim No. 14, the claimant has claimed a sum of Rs. 1,30,000/- on account of payment under Clause 10(cc) of the agreement on the amount of final bill and their claims which are subject matter of this arbitration. In the objection petition it is stated that the findings of the Arbitrator with respect of Claim No. 14 are erroneous as the Arbitrator has not given any reason or basis for the said award. The Arbitrator has given his reasoning in the following terms :
Escalation is considered admissible on amounts awarded against Claim Nos. 5, 7, 9, 10, 11, 12, 15, 16, 19 and 23 i.e., on Rs. 1,38,043/-. As per statement No. 18 of Exhibit C-65, the escalation is working out to 32.31% of the value of work done. Applying the same percentage over Rs. 1,38,043/-, the escalation is assessed to be Rs. 44,602/- and this sum is awarded to claimants.
It is not stated in the objection petition giving specific details as to how the Arbitrator had gone wrong. In the absence of any specific objections the court cannot consider the objection raised by the Delhi Development Authority as being valid. thereforee, this part of the award is confirmed.
17. In Claim No. 15, the claimant has claimed a sum of Rs. 15,241/- on account of refund of excess recovery on account of wrong mode of measurements adopted in respect of issue of S.C.I. pipes and higher rate of recovery than stipulated. The Delhi Development Authority has filed its objection in the following terms :
The findings of the Arbitrator with respect to Claim No. 15 are erroneous on the fact of it and errors of judgment are apparent. The Arbitrator has awarded a sum of Rs. 9,954/- on account of higher rate of recovery @ 80.40 per mtr. instead of Rs. 72.50. Though it was admitted during the oral hearings that the lower rate of Rs. 72.50 has also been mentioned for 100 mm. dia SCI pipe, the Arbitrator has ignored the fact that the higher rate of Rs. 80.40 per mtr. has also been mentioned against the said 100 mm. dia SCI pipe in the agreement and the Arbitrator awarding Rs. 9,945/- has committed misconduct for which the award deserve to be set aside.
18. The Arbitrator had awarded the amount of Rs. 9,954/- in the following terms :
Respondents had stipulated issue of S.C.I. pipes and fittings at fixed rates in the agreement. The rates at which various sizes of S.C.I. pipes were to be issued were specified per metre length in the tender documents. The actual recovery made by the respondents conforms to the unit rate mentioned in the agreement and is correctly made. Part (i) of the claim is thus not justified and is rejected. So far as part (ii) of the claim is concerned, same had been accepted by the respondents during oral hearings and hence refund for extra rate recovered has to be allowed. A sum of Rs. 9,954/- is refundable to the claimants for 1260 m. length of 100 mm. pipe @ Rs. 7.90 per metre.
19. I do not find any error apparent on the face of the record and I confirm the award passed by the Arbitrator.
20. In Claim No. 16, the Claimant has claimed a sum of Rs. 4,410/- as short payment received on account of wrong deviation of rates of extra and substituted items under Clause 12 of the agreement. The Delhi Development Authority has stated that the Arbitrator has committed misconduct in awarding the said amount as the extra and substituted items has already been sectioned and the same were duly accepted by the claimant. The Arbitrator has passed the award in the following manner :
The tender was accepted by respondents at 50.75% above D.S.R. 1981. Extra/substituted items have thereforee to be sanctioned at 50.75% above D.S.R. 1981 when rates are derives from D.S.R. Respondents have however sanctioned rates of extra/substituted items after accounting for rebates offered and accepted for various conditions. Since the rebates are related to estimated cost put to tender the maximum amount of rebate that can be availed of is fixed. Deductions more than this cannot be made. Since retrenchment in rates of extra/substituted items due to rebates offered result in deductions over and above the maximum amount of admissible rebate, respondents' action avail rebates while sanctioning rates for extra/substituted items is not correct. Respondents had also pleaded that sectioned rates were accepted by claimants in running bills and hence the claim was not tenable. Since running bills are only on account payment, the claim cannot be rejected on this ground.
I do not find any error apparent on the face of the award and, thereforee, the award on this part is confirmed.
21. In Claim No. 17 the claimant has claimed a sum of Rs. 1,20,000/- on account of release of Bank guarantees furnished towards security deposit and incidental expenses on unnecessary and illegal revalidation of Bank guarantee from time-to-time. The Delhi Development Authority has filed no objection. The Arbitrator had directed the release of the Bank guarantee rejecting the claim of incidental expenses.
22. In Claim No. 19 the claimant has claimed a sum of Rs. 6,782/- on account of refund of over-charge in respect of overweight of steel issued by the respondents. The Arbitrator has rejected this claim.
23. In Claim No. 19 the claimant has claimed a sum of Rs. 6,250/- on account of providing groove in plaster to meet the architectural requirements. The Delhi Development Authority has filed its objection stating that the Arbitrator has given the award without any reason or basis and thereforee, it deserves to be set aside. The Arbitrator has passed the award in the following terms :
Providing grooves in plastering work involves extra effort which is not covered by ordinary plastering item, CPWD specifications do not say that grooves provided in plastering are included in the rate of doing plastering work. If respondents did not want grooves to be provided, they should have asked the claimants to do works strictly as per the nomenclature of the time and not to provide groove. Providing grooves in plastering which is extra work is required to be paid extra. Claim is justified and a sum of Rs. 6,250/- is awarded to claimant.
I affirm the reasoning and confirm this part of the award.
24. In Claim No. 20 the claimant has claimed a sum of Rs. 10,318/- on account of refund of rebate deducted on payment made towards escalation under Clause 10(cc) of the contract. The Delhi Development Authority has filed the objection stating thus :
The finding of the Arbitrator with respect to Claim No. 20 are erroneous on the face of it as the Arbitrator has ignored that the 11th Running Bill which was for payment on account of Clause 10cc. It has been seen that the amount of work have been considered for computing the 10cc was the net amount of the corresponding bill after deduction of the rate. thereforee, the enhanced work on percentage basis automatically accounts for rebates and thereforee, the reduction of rebate was not required.
The Arbitrator has passed the award in the following manner :
Respondents have pleaded that payment under Clause 10(cc) forms part of work done and hence rebates offered for monthly payments etc. are to be availed on escalation payments also. Rebates offered by claimants and accepted by respondents are related to estimated costs of the word done. The maximum amount of deduction that can be effected offer of rebate is fixed depending on estimated cost put to tender. This amount has already been deducted by the respondents in their final bill. Since deduction of rebates made from 10(cc) bills over and above the maximum amount of rebate admissible, this action of respondents is not correct. Moreover, payments under Clause 10(cc) are made to partly compensate the contractor for the increase in price of materials and labour involved in the work and are in no way related with rebates. Even otherwise, rebates have not been found admissible to respondents as adjudicated in Claim Nos. 1, 2, 3 and 22. Rebate deducted by respondent on 10(cc) payments is thereforee required to be refunded. The claim is justified and a sum of Rs. 10,318/- is awarded to claimants.
I am not able to see any error in the reasoning given by the Arbitrator, thereforee, this part of the award is confirmed.
25. In Claim No. 21, the claimant has claimed a sum of Rs. 2,169/- on account of cost of kerosene oil used to convert bitumen 80/100 to S/90. The Delhi Development Authority has filed its objection stated that the 'Arbitrator has completely ignored that the petitioner did not use kerosene oil and did not submit any documentary proof for using kerosene oil. The Arbitrator by ignoring this has committed misconduct for which the award deserves to be set aside.' The Arbitrator has passed the award in the following manner :
Respondents were required to supply Section 90 bitumen for executing agreement Item No. 15.7 of 2 cm. thick premix carpet and Item No. 1508 of seal coat. The bitumen actually supplied was 80/100 grade and not Section 90 grade 80/100 grade bitumen is different than Section 90 grade. It, thereforee, became necessary for claimants to mix kerosene to 80/100 grade bitumen to get required workability. Since the work has been done as per CPWD specifications which require use of kerosene oil, the claimants are entitled for the reimbursement of this extra cost which would not have been necessary had the respondents issued bitumen of grade Section 90. The claim is justified and sum of Rs. 2,159/- is awarded to claimant.
I accept the reasoning given by the Arbitrator and confirm this part of the award.
26. In Claim No. 22 the claimant has claimed a sum of Rs. 5,685/- on account of refund of rebate deducted at the rate of 1% of the gross value of E.ls and S.ls without fulfillling the precedent condition of timely sanctioning them. The Delhi Development Authority has filed its objection stating that the Arbitrator had committed misconduct and, thereforee, the award deserves to be set aside. The Arbitrator has passed the award in the following terms :
Respondents have not denied the contention of claimants that extra/substituted items were not sectioned within 3 months' time of their being first incorporated in running bill. Since 1% rebate offered in this regard by claimants and accepted by respondents is specifically related to timely sanction of extra/substituted items and since obligation in this regard is not fulfillled by respondents, they cannot avail this rebate. Respondents plea that such deductions made in running bills were accepted by claimants without protest is not tenable as running payments are only on account of payments. The claimants are entitled to refund of Rs. 5,685/- and this sum is awarded to them.
The reasoning given by the Arbitrator cannot be faulted on any ground, thereforee, this part of the award is confirmed.
27. The Claim No. 24 is rejected by the Arbitrator.
28. In Claim No. 25 the claimant has claimed a sum of Rs. 9,00,000/- on account of salary of engineers and staff and other overheads at site and head office for prolongation of contract due to acts omission and commission by the Delhi Development Authority. The Arbitrator had passed the award in the following manner :
The stipulated date of start and stipulated dated of completion for the work were 21-12-1984 and 20-12-1985 respectively. The actual date of completion as recorded by respondents is 30-9-1989. The contract thus prolonged for a period of 3 years and 9 months approximately over the stipulated contract period of one year. The respondents have sanctioned extension of time up to 30-9-1989 without levy of any liquidated damages which implies that the delays that occurred in the work were not found attributable to claimants.
The prolongation of contract definitely results in extra expenditure on staff, T&P;, machinery etc., which have to be necessarily kept and maintained at site for a period longer than catered for at the time of submission of tender. The claimants are entitled to be compensated for these losses keeping in view the principles of mitigation of losses.
A graduate engineer is required to be provided on the work as per agreement Clause No. 36. One head mistry, one accountant, one store clerk and one office clerk are also essentially required at site. Claimants have projected 10 No. supervisors employed on work which are on higher side. Quantum of work did not warrant employing more than 4 supervisors. Salaries as claimed for various categories of staff are also on higher side. It is assessed that claimants' loss on this account would have been of the order of Rs. 6,000/- average per month for 45 months keeping mitigation in view. A sum of Rs. 2,70,000/- is awarded to claimants.
29. In Claim No. 26, the claimant claim a sum of Rs. 14,80,399/- on account of loss of profitability for prolongation of contract due to acts omission and commission by the Delhi Development Authority. The Arbitrator had awarded a sum of Rs. 1,08,350/- with interest 15% p.a. The Arbitrator had passed the award in the following manner :
Claimants have pleaded that they had the capacity and will to execute the work in 12 months' time. This has not been contested by respondents. The delays in work have not been attributed to the claimants as extension of time has been sanctioned without levy of compensation. Under the circumstances, it is reasonable to consider that the claimants would have earned their anticipated profit in 12 months' time had the hindrances in the work been not there. It has been projected by claimants in their statement of facts that their anticipated profit was 4% of the contract value. This is considered reasonable. Thus, claimants would have earned a profit of Rs. 5,30,291/- on contract value in 12 month's time. However, work worth approx. Rs. 34 lakhs only could be done in the stipulated 12 months' period and as per claimants' own assessment, they could earn profit of nearly Rs. 1.36. They thus lost opportunity to earn their profits of nearly Rs. 3.94 lakhs by the end of stipulated contract period. This profit was, however, gradually earned by them in the extended period. The loss that claimants suffered on account of loss of profitability can thus be considered to be the loss of interest on Rs. 3.94 lakhs for a period of nearly half the extended period i.e., for 22 months. This works out to Rs. 1,08,350/- @ 15% p.a. interest and this sum is awarded to claimants.
I have heard the learned Counsel for the parties and I do not find any reason to interfere with the award passed the Arbitrator in Claim Nos. 25 and 26, thereforee, the award passed by the Arbitrator on Claims 25 and 26 is confirmed.
30. Under Claim No. 27 the interest part of it is divided into three parts in the following terms :
(a) Pre-suit from date of invocation of Clause 25 of the date of 1st fruitful hearing.
(b) Pendente lite from the date of decree or date of actual payment whichever is earlier. Claim of interest is claimed @ 20% per annum. The Arbitrator had awarded interest @ 15% per annum on the amounts from the date given by him in the award. Objections filed by the Delhi Development Authority is that no notice as required under Section 3(i)(b) of the interest Act, 1978 was given and, thereforee, the claimant is not entitled for pre-suit interest. I do not find any reason to interfere with the pre-suit interest passed by the Arbitrator. The Arbitrator has passed the pre-suit interest in accordance with law. The Arbitrator has said :
Claimants are considered entitled to receive interest as below :
(a) Pre-suit interest on amounts awarded against Claim Nos. 6, 10, 12, 15, 16 and 20. In addition, they are also entitled to receive pre-suit interest on the item of AC rainwater pipes. The total amount on which pre-suit interest is payable works out to Rs. 70,870/-. Simple interest @ 12% per annum is awarded on Rs. 70,870/- from 28-11-1991 to 23-5-1993.
(b) Pendente lite interest on amounts awarded against Claims Nos. 5, 6, 7, 9, 10, 11, 12, 15, 16, 19, 20 and 23. The amount on which pendente lite interest is admissible works out to Rs. 1,59,371/-. Simple interest @ 15% p.a. on this amount of Rs. 1,59,371/- is awarded from 24-5-1993 up to the date of publication of award.
(c) No further interest will be payable if the respondents make payment of awarded amounts against various claims within two months of the date of publication of this award. If the payment is not made in the above specified period, simple interest @ 15% p.a. on total awarded amount of Rs. 9,54,479/- will be payable from one day after the date of publication of the award up to the date of decree or actual payment whichever is earlier.
31. Accordingly, the award is made rule of the Court. The objection filed by the Delhi Development Authority in is No. 9835/95 is dismissed.
There shall be decree directing the Delhi Development Authority to pay to the claimant :
(a) the sum Rs. 9,54,479/-.
(b) directing the Delhi Development Authority to return the Bank guarantee of Rs. 1,00,000/-.
(c) directing the Delhi Development Authority to pay interest to the claimant a sum of Rs. 70,870/- from 28-11-1991 to 23-5-1993 @ 12% p.a.
(d) directing the Delhi Development Authority to pay interest to the claimant a sum of Rs. 1,59,371/- from 24-5-1993 to 19-5-1994 @ 15% p.a.
(e) directing the Delhi Development Authority to pay to the claimant interest @ 15% p.a. from 20-5-1994 till the date of payment on the sum of Rs. 9,54,479/-.
The suit and is stand disposed of.
32. Award made rule of the court.