Full Text
JUDGMENT
CS(OS) No. 1152A/2009
M/S BUMBRAII ELECTRIC CO. Plaintiff
Advocates wlppcarcdjnthLscc:
For the Plaintiff- Mr Vivekanand. Advocate.
For the Defendants: Mr Sangrarn Patnaik & Mr Umesh Yadav. Advocates for defendant no. I
RAJ1V SHAKDHER,J
C SQS ) No. 1152A/2009 & IA No. 57 (Objections b y DD
1. In the captioned suit relief is sought b y the plaintiff in terms ol Sections 14 & 17 of the Arbitration Act 1940 (in short the Act). It is Irl briefly prayed that a direction he issued to defendant no.2, who is the arbitrator appointed in the matter, to file the original award dated 15.05.2009, along with the record, in this court. and to thereafter, make the said award a rule of the court. A decree is thus sought in terms of the award. Interest at the rate of 12% per annum is sought from the date of the decree till the date of payment. Additionally, cost of - proceedings are also sought by the plaintiff.
2. In the suit defendant no.1 has filed its objcctons under Sections 30 ('5(05)1 152\/2009 Pa ge 1 of 12 2013:DHC:6678 AT and 33 of the Act qua the aard dated 1.0.2009 h of the captioned interlocutory application.
2. 1 It Must be stated at the ver\ outset that C\ en thouith the award impugned by the delndant no.] relates to eleven (II) claims, the defendant no.] h \\ ay of the present objections has confined its challenge only to claim no. 6. Claim no. 6 relates to compensation lr salar paid by the plaintiftto the engineer and the superusor emplo\ed b it. during the period the contract "as undul extended. Ihe period spans from 01.10-198 3 ) to 24.10.1991. 2.[2] I am informed by the counsel lör the plaintift: a lact \hich is confirmed h\ the counsel f'or the de1ndant no. 1. that pa yments against other claims aarded in favour of' the plaintiff' has been made h the deIindant. r1ef1\. claim nos. 1. 3. - and 10 were partiall\ al1o\ ed: Claim lbS. 2. 5. 6 and 8 crc I'LlIk allow ed. while claim no. 7 vas rejected. Claim no. 9 was not adjudicated upon as the plaintiff chose not to press the same.
3. In these circumstances. I propose to dispose oil in the first instance. the objections filed by the defndant. In order to do so. the !öllo ing broad lcts. need to he noticed. 3.! Ihe present case is a second round of litigation as between the parties herein. Iii the first round, defendant had appointed an arbitrator x1dc communication dated 05.12.1995. The said arbitrator had published his award on 18.09.1997. Based on a petition filed by the plaintiff, this Court. ide order dated 11.09. 2008. set aside the award and directed the defendant no.]. to once again, appoint an arbitrator in the matter for a fresh decision qua the disputes raised h the plaintiffl [he arbitrator was granted six (6) months time to adjudicate upon the disputes (505) I\ UU) I>ue 2 12.[1] 3.[2] Accordingly. a fresh appointment was made by the defndant vide communication dated 06.11.2008. ['he arbitrator entered upon reference on 17.11.2008. After affording lull opportunity to the parties herein, which entailed tiling of pleadings. evidence and consideration of submissions. the learned arbitrator passed the award. which is assailed. h the de1ndant no. I.
4. The disputes. which are more than a decade old. arose in the background of the 1ö110 ing circumstances. 4.[1] The plaintiff was awarded a contract br carr y ing Out electrical work in relation to 256 flats \\hich were to he constructed b y the dctndant no.1 through the instrumentalit y of a civil contractor. It is pertinent to note that. the number of flats in respect of which the plaintili. calTicd out electrical \ (Wk stood increased to 320 flats. The aforementioned work was awarded to the plaintiff vidc communication dated 22M[9]. 1982. The said communication pegged the date of commencement as 02.10.1982. The plaintiff was accorded twelve (12) months br completion of ork. which expired on 01. 10. 1983. however, as a matter of' aict. the execution ol the work was dc1aed h 108 months. i.e.. nearly nine (9) \ears. The electrical ork could he completed h the plaintiff. onlx on. 24.10.199 1 4.[2] According to the plaintifl the dela\ in the execution of the \vork as solck attributable to the defendant no. 1. (he dcla\. as per the stand of the plaintiff, before the learned arbitrator. hroadl kll under the following heads:
(i) abandonment of the work b\ the ci ii contractor. engaged by the defindant no. 1:
(ii) the dela\. of nearl two (2) years in the delndant no.! awarding a fresh contract to another ci il contractor: ('5OS I I[5] I \ ')() Page 3 o112 I 1
(iii) dela\ in suppl of cement: and
(i\ ) dela\ in the pro\ ision of niches and or their rectification by the civil contractor. 4.[3] Principally. on account of these dela\ s and rectilication work. the plaintiff raised disputes and tiled its claims he1re the arbitrator. As indicated above. leen (11) claims were tiled h the plaintiff. 4.[4] Alter considering record and hearing parties, the learned arbitrator passed the impugned award as noted hereinabove.. l'he learned arbitrator. in the impugned award, has returned the lollowinu lindinus of lct:
(i) l'he de1ndant no. I was solel\ responsible br the delay in the execution ol the contract.
(ii) The plaintiff had requested lbr closure of' contract: a request which was not accepted h\ the defendant no. 1. the detndant no. I had engaged a ness ci II contractor onl\ in March.
1985. Which was adrnittedl, two ears alter the civil contractor originall\ engaged h\ the defindant no. 1. had abandoned w ork.
(iv) Me plaintiff had demanded a 30% increase in the rates over and above the tendered rates fr completion of work during the extended period. ( ) the plaintiff could not ha c coordinated the work in accordance with condition no. 4 of the additional conditions of the work applicable to the agreement obtaining between the parties, with the civil contractor. as there as no civil contractor available during the original tenure of the contract obtaining between the parties. Sirnilarl\. the detndant no.1's defence. based on condition no. S of the additional conditions of' the contract. and clause 10 ol the agreement. was rejected. ( 'OS 'l'' \ ()- Pa,-,c 4 12 I ^^. (\ t) Ihe plaintiff sufThrcd losses and damages due to prolongation of the contractual period, which was required to he compensated. 5.[1] It is in this context, that, apart From an thing else. the learned arbitrator in the impugned award against claims lodged h the plaintiff. directly relatable to the prolongation of the contract. awarded sums in favour of the plaintiff. These claims being: claim no. 4. which related to increase in the tendered rates. Ihe increase in rates sought was 3O° over and above the tendered rates: an aspect which I have rcfrrcd to above, while noticing the t'indings returned by the learned arbitrator. hider this head the plaintiff claimed Rs. 2.45.423-. whereas the arbitrator aarded a sum of Rs.I.28.795-. The arbitrator adjusted a sum of Rs. 1.16.628- as the said sum had been awarded under claim no. 10. 5.[2] Similarl\. in respect of'claim no.5. \ hereunder a sum of Rs.l.l 5.200- \ as claimed qua watch and ward expenses for the period 01 1 0. 1983 to 14.10.199 1. the learned arbitrator arded the entire amount. I I o he noted. the claim was awarded qua watch and ard expenses at the rate o f Ks. 600 per month for the period in issue. which as eight \ears..[3] !. nder claim no. 6. the plaintiff demanded a sum of Ks. 2.68.800towards salar\ of engineer and super-visor for the period 01. 10. 1983 to -'4.10.199 1 lhis claim as allo ed by the learned arbitrator in entirety.
54 Claim no. 7. with respect to oerhcad expenses. like maintenance of site of lice etc. was rejected. as it was not hacked with cogent evidence. 5.[5] I. 'rider claim no. S. the plaintiff demanded Ks. 15.000, - toards wages paid to idle labour between March. 1983 to Max. 1983. Ibis claim was alloed in full by the learned arbitrator. 5.[6] Claim no. 10. as allowed to the extent of Rs. 11.16.627.56. in respect (() I \ l'ae 5 ot 12 of' increase in labour rates in terms of clause 10(' of' the contract obtaining hcteen the parties. The plaintiff had sought in the first instance a sum of Ks.[2] lacs. in respect of' this claim, which v as scaled down to Rs. 1.45.321.78 -.
6. Ihe reason that I have given a brie!' description of claims 4 to 8 and claim no. 10 is to demonstrate that these claims arose principall y out of the charge levied h\ the plaintiftthat the delndani no.1 as solely responsible fr the delay in the execution of' the work. As indicated aho\ c. the learned arbitrator agreed ith this assertion of'the plaintiff. A CIOSC examination of the reasoning given h the learned arbitrator ould sho\\ that each of these claims arc in the nature of' compensation for loss caused to the plaintiff due to the prolongation of the contract. for reasons soleI attributable to the det'endant no. I.
7. Mr Patnaik. learned counsel for the objector, dclndant no.1. raised t\\o submissions in support of the objections tiled. 7.[1] First. that there was an o erlap in respect of' claim no. 6 and claim
1105. 4 and 10. It was Mr Patnaiks contention that amountsLmarded under claim flOS 4 and 10 would co er the claim lod ged under claim no. 6 by the S plaint if'!'. 7.[2] lhc second contention advanced was that claim no. 6 could not have been arded in la our of' the plaintiff as there was no provision ill the contract obtaining between the parties, which accorded a right in lhvour of the plaintiff' to payment of salaries qua the engineer and the supervisor. for the period in issue. In support of his submissions Mr Patnaik placed reliance oil tv%o judgments of a single.ludge of this court dated 23.07.2009. passed in C'S(OS) 4405A 1992. in the matter of: Verma Co,istruelion Co. i's DDA, "\ 'age 6 12 Lit and dated 13.07.2009. passed in CS(OS) No. 14 1994. in the case titled: Republic Construction Co. vs DD/1.
8. on the other hand. Mr Vivekanand. learned counsel for the plaintiff. refuted the submissions advanced on behalf of the delimdant no. 1. It was submitted h Mr Viekanand that there was no oerlap. as between the amounts claimed under claim no. 6, and those, in respect of which, demand had been made under claim nos. 4 and 10. lie also submitted that the amount a\\arded under claim no. 6 was essentially a recompense made in lhvour of the plaintiff under a specific head due to injur\ caused to it on 4 account of undue prolongation of the contract h the deftndant no. I. It as Mr VIN ekanand's submission that grant of compensation for damages to an aggrieved party by an adjudicating authorit y was a necessaryconsequence olhreach of contractual obligations h\ the opposite part\. Once breach was established, the adjudicating authorit. in this case the learned arbitrator. was empoered to aard compensation in terms of Section 73 of the Indian Contract Act, 1 872 (in short the Contract Act). 8.[1] It was Mr Viekanands submission that in avNardln g damages under claim no. 6. the learned arbitrator. had not stra ed heond the terms of the contract. as as contended h\ the delndant no.1. In support of his submissions Mr Vivekanand relied upon the I1lo ing MO judgments of two different Division Benches of* this court: Delhi Development Aiitlzorilj' vs S.S. Jetley 2000 MAD (Delhi) 743, and the judgment dated 20.01.2009. passed in FAO(OS) No. 122'200. in the matter of: Delhi Development A uthority vs M/s Prem Churn! Shurma & CO.
REASONS
9. 1 la ing heard the learned counsels Ibr the parties and perused the (5(05) l[2] ? \ UU) 7 t I ^ record. in rn's view. the objections pre1irred by the defi.ndant no.1 have to he rejected for the lllo\\ ing reasons. the learned arbitrator having returned a finding of fact that the delay in the execution of' the contract was solel\ attributable to the delndant no. 1. the plaintiff' was entitled to damages. As noted hereinabove, the damages were awarded under various heads. which ere hroadl\ demanded h\ the plaintili under claim Nos.[4] to 8 and claim no. tO. l'ach of' the said claims, in iiiv opinion. constituted a separate head. As a matter of' fact. while allo irig claim no. 4. the learned arbitrator adlusted the amount awarded towards increase in labour rates under claim no. 10. 9.[1] A perusal of' the finding of' the learned arbitrator is-a-\ is claim no. 4 ould sho that he accepted the contention of the plaintiff that though there was an overall increase h\ more than 60% in rates of electrical items between 1982 and 199 1. the increase of 30% in tendered rates. as demanded. \\5 reasonable. ['he learned arbitrator also noted that as per l)SR 1984. the rates of electrical items had increased between 30-40 1)0. [he arbitrator also recorded that the de!iidant no.] had not disputed the fhctLlm of' increase in rates and the cost of execution of electrical work. aarded to the plaintiff. 9.[2] Similarly. in respect of' claim no. 10. the learned arbitrator. noticed the tiict that labour rates had increased, and that, the dclndant no. I having satisfied itsel I'xN ith respect to the increase in the labour rates. had promised to make the pa ment in respect of the same at the meeting held in October.
1990. Keeping in mind these I iicts. the learned arbitrator aarded a sum of Rs. 1.[1] 6.627.56-: the calculation with respect to hich had been yen lied h the defndant no. I. 9.[3] None of' the t o claims referred to aho e. i.e.. claim nos. 4 or 10. had ( I !:': \ 7((() 8 iI[2] PEI incorporated within it a demand lbr the salar\ paid to the engineer and the super\ isor for the period in issue. i.e.. 01.10.1983 till 4. 10.1991: hich was subject matter of claim no. 6. There was. therefore. no o erlap of claims as contended h\ Mr Patnaik. ftc learned arbitrator. in respect of. claim no. 6. returned a finding of fact that in the running hills and final hills, a reference had been made to the engagement of the technical staff i.e.. the engineer and the supervisor, which had received the imprimatur of the de!ndant no.1 h virtue ol the fact that the said hills had been certified. h\ it. Mere is no dispute raised before me that the engineer and the supervisor ere not engaged during the period in issue b y the plaintiff As a matter of fact. the plaintiff in terms of clause 36 of' the agreement. as noticed by the learned arbitrator as \ell, was required to make the technical staff available. at site. whenever required by the engineer-incharge. to take instructions. A perusal of' clause 36 would show that in the event the contractor (i.e.. the plaintiff) failed to ernplo\ a graduate engineer or a diploma holder. he could he mulcted \ ith a liahilit\ of' Ks.2000 and Rs. 1000- for each month, the default continued: depending whether the engineer or superisor was not made a\ailahle. Iherefore, having regard to the terms of the contract obtaining hetcen the parties. the plaintiff was necessarik required to make available the services of both the engineer and the super isor during the extended period of the contract. E1a ing done so. iii respect of which a finding of fact has been returned by the arbitrator. the plaintili 'as entitled to claim reimbursement o!the expenses incurred in the lorm oldarnages. I U. l'he two judgments relied upon h the delndant no.1 are cicarl distinguishable.
10. 1 In the case of Verma Construction Co. vs DDA, the contractor sought ( ( )5 I 'i \ 1'(Y Ic 9 üt 12 ^ q for extension of time. I he extension of time \ as uranted h\ the ernplo er l'he employer. though. did not state that the extension of time would he without levy of compensation. It is in these circumstances. that the court came to the conclusion that no damages could he accorded in f.avour of the contractor. unless the contract provided ftr pa ment of' additional amount for the extended period. 10.[2] In the ease of Republic construction Co. vs DIM, the learned single Judge did not allow the claim made bx the contractor in that case on account of 'inlructuous expenditure and damages". sustained h\ him, due to prolongation of the contract based on the broad reasoning that if. the continuation of' the contract was not economical then, the contractor had the liberty, not to continue with the execution of the contract. after the initial tenure of the contract had come to an end. the court vent on to observe that the contractor in that case, had not indicated that he would execute the work during the extended period of' the contract onl\ if. new rates were fixed. 10.[3] the facts of' the present case are completeR distinguishable. l'he learned arbitrator. in the instant case, has as a matter of' fact. noted that the plaintiff side letter dated 23.04.1985 (l'Ix. (-10) had demanded in clear terms that market rates would have to be paid to it. fr material and labour. ]'he learned arbitrator had also returned a fndin of' f.ict that. it was the plaintiff. who x\ a,, desirous of' closing the contract. and that. the defindant no.] persuaded the plaintiff. to continue with the contract As observed in the impugned award, one of'the reasons cited h\ the plaintif'f was that it was engaged in executing other contracts awarded by the defndant no. I: which could perhaps run into rough times. 10.[4] In mY opinion. vs hat clearls distinguishes the facts of' the present case ( 5i05 I I \ 1() 'c 10 l 12 I ^ From those obtaining in the two cases cited on behalf of defndant N(-),I. is the finding of the learned arbitrator that the report of the defndant no I that the internal proceedings of the defendant no. I qua the request made 'v the plaintiff for extension of time revealed that the defendant no. I was of the view that the plaintiff ought to he accorded final extension of time between 02.10.1983 till 24.10.1991, without lev y of damages. as there was neither any delay on the part of the contractor nor did the de!ndant no.1 suffer an losses on that behalf, the internal proceedings of the defendant no.1. as culled out in the award. are extracted hereinheIo l'or the sake of efl enience: "...Final extension of time li'crn 2-10-198 3) to 24-10-1991 is recommended without levy of compensation as there was no dela\ on the part of the contractor and moreover the department has not suffered any financial loss on account of this delay sd'- dated 21-7-1992 Id' F[1])-8i[1])l)A: Final extension of time upto 24-10-1991 is appro\ cci sd - dated 30-7-1992 Sl'!Elect. Circle-' l)I)A..."
11 Having regard to the aho e. in my opinion, the contention made on behalf' of the defendant no.1 that the learned arbitrator could not have b allowed claim no. 6 in the form otdamagcs, in iev of. absence of a specific provision in the contract. is misconceived for t o reasons. lirstl. as the !cts culled out above would show that the plaintif'f was obliged to keep an engineer and a supervisor engaged for execution of the ork at site, till the completion of the work. Secondly. as right[1] contended. on behalf of the plaintiff, an aggrieved party is entitled to claim damages in the event of breach of obligations by the opposite part\ qua injury suffered h\ it. Compensation for osses suffered is an implied term of the contract. The po\er to award such claims would flow from the provisions of Section 73 of,\ UU) ilape II ut 12 A I the Contract Act.
12. For the foregoing reasons. I find no merit in the objections filed by the defendant no. 1. The objections. which are contained in IA No.15274/2009 are. accordingly. dismissed.
13. In view of the dismissal of the objections, the logical consequences would he that the award would have to he made a rule of the court and a decree would have to be passed in terms of' the said award. it is ordered accordingly.
14. The relief sought in the suit for payment of interest at the rate of 12% per annum from the date of the decree till the date of pa yment is declined. The plaintiff would he entitled to interest at the rate of 10% per annum from the date of decree till the date of payment.
15. In these circumstances, costs shall follow the result. Consequently. the suit and the objections are disposed of in the terms set out above. ?11^ IV fuj L/ RAJJV SHAKJ)I1ER, J NOVEMBER 07, 2013 k k "I r - ('S(()S) I 52A/2009 PaLre 12 ol 12 a