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r b $-22 HIGH COURT OF DELHI
FAO(OS) 593/2012
ARVIND KUMAR SHANGLE Appellant , Through: Mr. Gaurav Gupta, Advocate.
FAO(OS) 593/2012
ARVIND KUMAR SHANGLE Appellant , Through: Mr. Gaurav Gupta, Advocate.
VERSUS
UNION OF INDIA Respondent
Through; Mr. Tarannum Raeni for Mr. J.K.
Sharma, Advocate.
Through; Mr. Tarannum Raeni for Mr. J.K.
Sharma, Advocate.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE NAJMIWAZIRI
ORDER o/o 14.08.2013 The present appeal is directed against a
HON'BLE MR. JUSTICE NAJMIWAZIRI
ORDER o/o 14.08.2013 The present appeal is directed against a
JUDGMENT
and order of the learned Single Judge dated 08.10.2012 dismissing the appellant's objections to an award under Section 34 ofthe Arbitration and Conciliation Act, 1996.
The petitioner (hereinafter called 'Contractor') was awarded the work, ofcovering adrain on 10.10.2009. The contract period was for six months, the agreement was eventually cancelled and rescinded by the respondent after it suffered an adverse order on 10.5.2010 by the Supreme Court directing it not to cover the drain. The appellant claimed Rs. 1,18,75,492/- for loss ofprofit on the basis of 15% being areasonable expectation towards margin of profit of the agreement amount of Rs. 7,91,69,945/-. The respondent had relied upon Clause 3A of the agreement to oppose such claim to loss of profits. J
The Arbitral Tribunal by the award dated 05.7.2012 substantially rejected the appellant's claim holding that the necessary material to support the allegation ofhaving performed any work at all or supporting material in respect of other claims i.e. deployment of material and recruitment had not
2013:DHC:6931-DB J. \ been led. The Arbitrator granted award of only nominal sum to the tune of
Rs.1,00,000/-with some interest.
The appellant's objections under Section 34 of the Arbitration and
Conciliation Act, 1996—as noticed previously—were rejected.
Learned counsel relied upon the decision reported as Dwaraka Das v.
State ofMadhya Pradesh andAm., (1993) 3SCC 500, A.T. Brij Paul Singh and Ors. v. State ofGujarat, (1984) 4SCC 59 as well as Delhi Development'
Authority v. Polo Singh &Co., 2002 (101) DLT 401, to say that proof of actual work was not essential. It was contended that mere fact that the respondent had awarded the work even while knowing that alitigation was pending before the Supreme Court, had misled the Contractor to enter into the agreement thereby inducing the latter to commit itself to a certain position, therefore, the contractor is entitled to the award ofloss ofprofit.
The relevant discussion with regard to the claim for loss ofprofit and on account ofdamages for idle establishment in the award reads as follows;
(b) Claimant has also not submitted any document to , establish that it was deprived of any profit earning opportunity on account ofits being tied to the subject work. It is also not the case of the claimant that its participation in the tenders during the relevant period was adversely affected because the work in hand restricted the bidding capacity. Thus all along the claimant hadfull opportunity to earnprofit.
(c) In a construction work, contractor (claimant) has to be mobilize financial resources, deploy men & machinery andprovide other inputs which graduallyfructify till the completion ofwork and generate profit. In the case at hand, the work was not commenced and as such no investment was required to be made to mobilize the resources. Thus under the given circumstances, it is held that award of expected loss ofprofit will tantamount to
'unjust enrichment'which is notpermitted under the law.
1.7 Thus, on account of the reasons stated in paras above, the claim ofloss ofprofit is held as untenable. However, the fact ofthe matter is that the claimant submitted the tenderfor this work on 17.07.2009 and the contract was closed on 05.07.2010. For submission of tender and follow up action thereafter, till the closure ofcontract, the claimant must have incurred some incidental expenditure. Ends ofjustice will be adequately met ifthe claimant gets compensation ofRs. 1 lakh. I, therefore, award a sum ofRs.l,00,000.00.
This Court has gone through the impugned order which noticed that the appellant made no attempt to show/prove that it had committed its man power, equipment or capital or deployment ofmaterial also for carrying of the work at any stage. The mere fact that the Court under Section 34 ofthe
Arbitration and Conciliation Act, 1996 or even the Appellate Court might be inclined to take a different view as regards the quantum is by itself no consideration for interference under Section 34 of the Arbitration and
Conciliation Act, 1996 which imposes stringent standards for entertaining objections and interfering with awards.
In view of the above discussion and having regard to the materials,, the Court is satisfied that the impugned order does not suffer from any infirmity warranting appellate interference. The appeal is accordingly dismissed. I . n
S.RAVINDRABHAT,J NAJMIWAZIRI, J AUGUST 14,2013/mv
The petitioner (hereinafter called 'Contractor') was awarded the work, ofcovering adrain on 10.10.2009. The contract period was for six months, the agreement was eventually cancelled and rescinded by the respondent after it suffered an adverse order on 10.5.2010 by the Supreme Court directing it not to cover the drain. The appellant claimed Rs. 1,18,75,492/- for loss ofprofit on the basis of 15% being areasonable expectation towards margin of profit of the agreement amount of Rs. 7,91,69,945/-. The respondent had relied upon Clause 3A of the agreement to oppose such claim to loss of profits. J
The Arbitral Tribunal by the award dated 05.7.2012 substantially rejected the appellant's claim holding that the necessary material to support the allegation ofhaving performed any work at all or supporting material in respect of other claims i.e. deployment of material and recruitment had not
2013:DHC:6931-DB J. \ been led. The Arbitrator granted award of only nominal sum to the tune of
Rs.1,00,000/-with some interest.
The appellant's objections under Section 34 of the Arbitration and
Conciliation Act, 1996—as noticed previously—were rejected.
Learned counsel relied upon the decision reported as Dwaraka Das v.
State ofMadhya Pradesh andAm., (1993) 3SCC 500, A.T. Brij Paul Singh and Ors. v. State ofGujarat, (1984) 4SCC 59 as well as Delhi Development'
Authority v. Polo Singh &Co., 2002 (101) DLT 401, to say that proof of actual work was not essential. It was contended that mere fact that the respondent had awarded the work even while knowing that alitigation was pending before the Supreme Court, had misled the Contractor to enter into the agreement thereby inducing the latter to commit itself to a certain position, therefore, the contractor is entitled to the award ofloss ofprofit.
The relevant discussion with regard to the claim for loss ofprofit and on account ofdamages for idle establishment in the award reads as follows;
(b) Claimant has also not submitted any document to , establish that it was deprived of any profit earning opportunity on account ofits being tied to the subject work. It is also not the case of the claimant that its participation in the tenders during the relevant period was adversely affected because the work in hand restricted the bidding capacity. Thus all along the claimant hadfull opportunity to earnprofit.
(c) In a construction work, contractor (claimant) has to be mobilize financial resources, deploy men & machinery andprovide other inputs which graduallyfructify till the completion ofwork and generate profit. In the case at hand, the work was not commenced and as such no investment was required to be made to mobilize the resources. Thus under the given circumstances, it is held that award of expected loss ofprofit will tantamount to
'unjust enrichment'which is notpermitted under the law.
1.7 Thus, on account of the reasons stated in paras above, the claim ofloss ofprofit is held as untenable. However, the fact ofthe matter is that the claimant submitted the tenderfor this work on 17.07.2009 and the contract was closed on 05.07.2010. For submission of tender and follow up action thereafter, till the closure ofcontract, the claimant must have incurred some incidental expenditure. Ends ofjustice will be adequately met ifthe claimant gets compensation ofRs. 1 lakh. I, therefore, award a sum ofRs.l,00,000.00.
This Court has gone through the impugned order which noticed that the appellant made no attempt to show/prove that it had committed its man power, equipment or capital or deployment ofmaterial also for carrying of the work at any stage. The mere fact that the Court under Section 34 ofthe
Arbitration and Conciliation Act, 1996 or even the Appellate Court might be inclined to take a different view as regards the quantum is by itself no consideration for interference under Section 34 of the Arbitration and
Conciliation Act, 1996 which imposes stringent standards for entertaining objections and interfering with awards.
In view of the above discussion and having regard to the materials,, the Court is satisfied that the impugned order does not suffer from any infirmity warranting appellate interference. The appeal is accordingly dismissed. I . n
S.RAVINDRABHAT,J NAJMIWAZIRI, J AUGUST 14,2013/mv