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HIGH COURT OF DELHI
JUDGMENT
DELHI DEVELOPMENT AUTHORITY ..... Appellant
Through: Mr. Ashim Vachher & Mr. Vaibhav Agnihotri, Advs.
Through: Mr. Vivekanand, Adv.
HON'BLE MR. JUSTICE JASMEET SINGH
1. This is a review application filed by the review applicant/appellant under section 114 read with 151 of CPC seeking review of the judgment and order dated 20.12.2021.
2. The brief background which has led to filing of the review application is that the sole arbitrator on 28.07.2020 awarded claims in favour of the respondent. Against all the claims (except Claim No. 4 and 5 and Additional Claim no. 2 and 3) awarded in favour of the respondent in the award dated 28.07.2020, the review applicant/appellant filed objections under section 34 of the Arbitration & Conciliation Act, 1996 being OMP (COMM.) 17/2021.
3. The learned single judge dismissed the objections of the review applicant/appellant while upholding the award passed on 28.07.2020 vide order dated 01.09.2021.
4. The appeal filed under section 37(1)(c) of the Arbitration and Conciliation Act read with section 13(1A) of the Commercial Courts Act, 2015 to assail the judgment and order dated 01.09.2021 was dismissed by this Court vide order dated 20.12.2021.
5. Being aggrieved by the order dated 20.12.2021, the review applicant/appellant filed a Special Leave Petition being SLP Civil NO. 19116/2022 titled „DDA vs. M/s Swastik Construction Company” and was heard on 02.11.2022. The SLP was dismissed by the Hon‟ble Supreme Court while granting liberty to the review applicant/appellant as under:- “One of the grounds on which she assails the judgment and order impugned is that the point urged before the High Court for exclusion of certain claims on being excepted matters have not been dealt with in the said judgment. The present petition arises out of an arbitral award, which was sustained by the Court in a Section 34 proceeding under the Arbitration and Conciliation Act, 1996. Appeal against the order repelling challenge to the award was also dismissed, against this petition has been filed. In our view if that is the case, proper course for the petitioner would be to apply before the High Court with that plea. We, accordingly, dismiss the present petition for special leave to appeal giving liberty to the petitioner to approach the High Court on the point as we have indicated above.
ARORA Needless to add, in the event, the petitioner‟s argument on that count is not accepted by the High Court, the petitioner may further approach this Court, if so advised. Pending application(s), if any, shall stand disposed of.”
6. It is argued by Mr. Vacchar, learned counsel for the review applicant/appellant that Claim No. 6 and 7 could not have been awarded in favour of the respondent as the issue of compensation and other consequences for the period of delay was an excepted matter.
7. Claim No. 6 was regarding Amount due on account of losses & damage suffered due to prolongation of contract. Against a claim of Rs. 27,85,032/-, the arbitrator awarded Rs. 8,87,716/-. Claim No. 7 was a declaratory decree that levy of compensation is bad in law amounting to Rs. 9,76,488. Against this the review applicant/appellant was directed to release BG submitted by the respondent.
8. Clause 2 and 5 of the agreement between the review applicant/appellant and the respondent reads as under: “CLAUSE 2 Compensation for Delay If the contractor fails to maintain the required progress in terms of clause 5 or to complete the work and clear the site on or before the contract or extended date of completion, he shall, without prejudice to any other right or remedy available under the law to the DDA on account of such breach, pay as agreed compensation the amount calculated at the rates stipulated below as the Authority specified in Schedule F(whose decision in ARORA writing shall he final & binding) may decide on the amount of tendered value of the work for every completed day/month (as applicable) that the progress remains below that specified in Clause 5 or that the work remains incomplete. This will also apply to items or group of items for which a separate period of completion has been specified. i) Compensation for delay or work @1.5% per month of delay to be computed on per day basis. Provided always that the total amount of compensation for delay to be paid under this Condition shall not exceed 10% of the Tendered Value of work or of the Tendered Value of the item or group of items of work for which a separate period of completion is originally given. The amount of compensation may be adjusted or set-off against any sum payable to the Contractor under this or any other contract with the DDA. In case, the contractor does not achieve a particular milestone mentioned in schedule F, or the rescheduled milestone(s) in terms of Clause 5.4, the amount shown against that milestone shall be withheld, to be adjusted against the compensation levied at the final grant of Extension of Time. With holding of amount on failure to achieve a milestone, shall be automatic without any notice to the contractor. However, if the contractor catches up with the progress of work on the subsequent milestone(s), the withheld amount shall be released. In case the contractor fails to make up for the delay in ARORA subsequent milestone(s), amount mentioned against each milestone missed subsequently also shall be withheld. However, no interest, Whatsoever, shall be payable on such withheld amount. …. CLAUSE 5 Time and Extension for Delay The time allowed for execution of the Works as specified in the Schedule 'F' or the extended time in accordance with these conditions shall be the essence of the Contract. The execution of the works shall commence from such time period as mentioned in letter of acceptance or from the date of handing over of the site whichever is later. If the Contractor commits default in commencing the execution of the work as aforesaid, DDA shall without prejudice to any other right or remedy available in law, be at liberty to forfeit the earnest money & performance guarantee absolutely. 5.[1] As soon as possible after the Contract is concluded the Contractor shall submit a Time and Progress Chart for each milestone and get it approved by the Engineer-in-Charge. The Chart shall be prepared in direct relation to the time stated in the Contract documents for completion of items of the works. It shall indicate the forecast of the dates of commencement and completion of various trades of sections of the work and may be amended as necessary by agreement between the Engineer-in- ARORA Charge and the Contractor within the limitations of time imposed in the Contract documents, and further to ensure good progress during the execution of the work, the contractor shall in all cases in which the time allowed for any work, exceeds one month (save for special jobs for which a separate program has been agreed upon) complete the work as per milestones given in Schedule 'F'.
5.2. If work(s) be delayed by: i) force majeure, or ii) abnormally bad weather, or iii) serious loss or damage by fire, or iv) civil commotion, local commotion of workmen, strike or lockout, affecting any of the trades employed on the work, or v) delay on the part of other contractors or tradesmen engaged by Engineer-in-Charge in executing work not forming part of the Contract, or vi) Deleted vii) Deleted viii) any other cause which, in the absolute discretion of the authority mentioned in Schedule 'F' is beyond the Contractor's control then upon the happening of any such event causing delay, the Contractor shall immediately give notice thereof in writing to the Authority as indicated in Schedule „F‟ but shall nevertheless use constantly his best endeavors to prevent or make good the delay ARORA and shall do all that may be reasonably required to the satisfaction of the Engineer-in-Charge to proceed with the works. 5.[3] Request for rescheduling of Milestones and extension of time, to be eligible for consideration, shall be made by the Contractor in writing within fourteen days of the happening of the event causing delay on the prescribed form to the Authority as mentioned in schedule 'F'. The Contractor may also, if practicable, indicate in such a request the period for which extension is desired. 5.[4] In any such case the authority ae indicated in Schedule „F‟ may give a fair and reasonable extension of time and reschedule the milestones for completion of work. Such extension shall be communicated to the Contractor by the authority as indicated in schedule „F‟ in writing, within 3 months of the date of receipt of such request. Non application by the contractor for extension of time shall not be a bar for giving a fair and reasonable extension by the authority as indicated in schedule 'F' and this shall be binding on the contractor.”
9. In support of his argument, Mr. Vacchar has relied on Mitra Guha Builders (India) Company vs. Oil And Natural Gas Corporation Limited (2020) 3 SCC 222 and more particularly para 26 and 29 which read as under: “26. In the present case, the parties themselves have agreed that ARORA the decision of the Superintending Engineer in levying compensation is final and the same is an “excepted matter” and the determination shall be only by the Superintending Engineer and the correctness of his decision cannot be called in question in the arbitration proceedings and the remedy if any, will arise in the ordinary course of law. …
29. In BSNL‟s case, Clause 16 provided for entitlement of the party to recover liquidated damages. In Clause 16(2), the phrases used “value of delayed quantity” and “for each week of delay” clearly show that it is necessary to find out whether there has been delay on the part of the supplier in discharging his obligation. Thus, in BSNL‟s case, in determining whether there is delay or not, a process of adjudication is envisaged. Per contra, in the present case, Clause 2 of the agreement is a complete mechanism for determination of liability. The right to levy damages for delay is exclusively conferred upon the Superintending Engineer and Clause 2 of the present agreement is a complete mechanism for determination of liability and when such compensation is levied by the Superintending Engineer, the same is final and binding. The parties have also consciously agreed that for the delay caused, the Superintending Engineer shall levy the compensation of the amount equal to half per cent and the said amount shall not exceed from 10% of the cost of the work and the determination by the Superintending Engineer is final and cannot be the subject matter of arbitration. In Claim 6, ARORA the prayer sought for by the contractor to declare the compensation levied by the Superintending Engineer as illegal is contradictory to the agreed terms between the parties. So far as the liquidated damages determined and levied, by virtue of Clause 2, is out of the purview of the arbitration especially in view of the fact that under the very same clause, the parties have agreed that the decision of the Superintending Engineer shall be final.”
10. Per contra, Mr. Vivekanand has relied upon the judgment of DSIIDC vs. H.R. Builders 2021 SCC OnLine Del 3997 pronounced by one of us namely, HMJ Vibhu Bakhru which has dealt with the judgment of Mitra Guha (supra) by stating the following:
ARORA ANALYSIS:
11. We have heard learned counsel for the parties.
12. At the outset, it would be relevant to note that the question of excepted matters was not raised by the review applicant/appellant in the objections filed by the review applicant/appellant before the learned Single Judge.
13. Since the issue with regard to Claim No. 6 and 7 being an excepted matter was never raised before the learned Single Judge, there was no finding by the learned Single Judge in this regard.
14. The review application is liable to be dismissed on this ground alone as the issue of Claim No. 6 and 7 falling within the purview of excepted matters was never raised in the pleadings before the learned Single Judge.
15. Without prejudice to the above, we are also dealing on merits with the argument of claim No. 6 and 7 being covered in excepted matters and hence being wrongly awarded.
16. The Hon‟ble Supreme Court in J.G. Engineers Private Limited v Union of India and Anr (2011) 5 SCC 758 has observed as under:
17. The Apex Court in BSNL vs. Motorola India Pvt. Ltd. (2009) 2 SCC 337 observed the following: ARORA
18. In this view of the matter, we are of the opinion that both Clause 2 and 5 only puts a finality to the determination of the consequential issue relating to quantification of compensation on account of delayed progress of the contract.
19. The fact whether there was delayed progress or not, and whether the awarded work has been completed within the scheduled time are not covered within the purview of excepted matters.
20. The decision as to whether the respondent was responsible for delay or not, is not an excepted matter and hence, arbitrable.
21. In State of Karnataka vs. Shree Rameshwara Rice Mills 1987 (2) SCC 160 the Hon‟ble Supreme Court held that one of the parties to an agreement cannot reserve to himself the power to adjudicate whether the other party has committed breach.
22. Once the sole arbitrator, the learned Single Judge and the Division Bench have come to a categorical finding that the respondent was not responsible for the delay, there is no question of any quantification of damages accruing on account of that delay.
23. Hence, to urge that Claim No. 6 and 7 are within the purview of excepted matters does not find favour with us.
24. For the aforesaid reasons, the review application is dismissed.
JASMEET SINGH, J VIBHU BAKHRU, J JANUARY 30th, 2023/ dm ARORA