Delhi Development Authority v. M/S S. GHOSH & ASSOCIATES

13. Respondent‟s counsel, on the other hand, argued that the Petitioner vide its letter dated 15th January 2008 communicated the extension of the original agreement up to November 2010 and desired the Respondent to convey its acceptance. The Respondent did so vide letter dated 20th February 2008 wherein it was categorically stated that the service tax shall be paid as per the prevailing norms as stipulated by the government. There was no denial by the Petitioner for payment of service tax in it‟s letter dated 30th April

2008. Learned Arbitrator has allowed the payment of Service Tax only post 20th February 2008 i.e only for the extended period for which the Respondent had produced the challans evidencing the deposit of service tax with the tax authorities. Analysis

14. The scope of interference of the Court under Section 34 of the Act is limited. The Court does not sit in appeal over the adjudication made by the Arbitrator. The findings challenged by the Petitioner are purely within the domain of adjudication by the Arbitrator. The legal position in this behalf has been summarized in paragraph 26 of the judgment of the Supreme Court in Steel Authority of India Ltd vs. Gupta Brother Steel Tubes Ltd [JT 2009 (12) SC 135] as follows:- "26. It is not necessary to multiply the references. Suffice it to say that the legal position that emerges from the decisions of this Court can be summarised thus:

(i) In a case where an arbitrator travels beyond the contract, the award would be without jurisdiction and would amount to legal misconduct and because of which the award would become amenable for being set aside by a Court.

(ii) An error relatable to interpretation of the contract by an arbitrator is an error within his jurisdiction and such error is not amenable to correction by Courts as such error is not an error on the face of the award.

(iii) If a specific question of law is submitted to the arbitrator and he answers it, the fact that the answer involves an erroneous decision in point of law does not make the award bad on its face.

(iv) An award contrary to substantive provision of law or against the terms of contract would be patently illegal.

(v) Where the parties have deliberately specified the amount of compensation in express terms, the party who has suffered by such breach can only claim the sum specified in the contract and not in excess thereof. In other words, no award of compensation in case of breach of contract, if named or specified in the contract, could be awarded in excess thereof.

(vi) If the conclusion of the arbitrator is based on a possible view of the matter, the court should not interfere with the award.

(vii) It is not permissible to a court to examine the correctness of the findings of the arbitrator, as if it were sitting in appeal over his findings"

15. Similar view has been taken later in Sumitomo Heavy Industries Ltd. v. Oil and Natural Gas Commission of India(2010) 11 SCC 296. The observations in paragraph 36 thereof are instructive in this behalf and read as under: "..... The umpire has considered the fact situation and placed a construction on the clauses of the agreement which according to him was the correct one. One may at the highest say that one would have preferred another construction of Clause 17.[3] but that cannot make the award in any way perverse. Nor can one substitute one's own view in such a situation, in place of the one taken by the umpire, which would amount to sitting in appeal. As held by this Court in Kwality Manufacturing Corporation v. Central Warehousing Corporation reported in MANU/SC/0435/2009: (2009) 5 SCC 142 the court while considering challenge to arbitral award does not sit in appeal over the findings and decision of the arbitrator, which is what the High Court has practically done in this matter. The umpire is legitimately entitled to take the view which he holds to be the correct one after considering the material before him and after interpreting the provisions of the agreement. If he does so, the decision of the umpire has to be accepted as final and binding."

16. Taking note of the aforementioned principles, I now proceed to examine whether Petitioner‟s challenge with respect to the findings qua Claim No. 1 is sustainable or not. The payment of fee is interdependent with the progress of work. The agreement stipulates the stages of completion to determine the payment due to the Respondent as per the following tabulation: Stage Work Fees to be Paid 13.[1] On submission and approval of the scheme of total Housing. Complex including preliminary estimated from the Authority as per

6.1. 10% of the total fees. 13.[2] On submission and approval of the scheme from DUAC at conceptual stage as per 6.2. 20% of the total fees. Less Already paid. 13.[3] On submission and approval from various departments and local bodies like - D.J.B, D.V.B., Fire Deptt., Civil Aviation, etc. as per 6-.3. 30% of the total fees. 13.[4] On submission and approval of architectural controls and detailed designs (2nd stage from DUAC) as per 6.4. 35% of the total fees. 13.[5] On submission of drawings as required for inviting tenders including detailed estimates and tender document as per 6.5. 50% of the total fees. 13.[6] Submission of detailed architectural development, landscape, services, drawings and other relevant details as per 6.6. 70% of the total fees. 13.[7] During course of construction 95% of the total fees. for supervision and issue of further drawings and details required for satisfactory progress of the work as per 6.7. 13.[8] On completion of work and submission of as built drawings dispatching completion certificate as per 6.8. 100% of the total fees. 13.[9] Progressive payments may be made to the Claimant (consultant) in any of the above stage based on the quantum of work in that stage as may be mutually agreed to be decided by the SA with Chief Architect of the Respondent.

17. Petitioner contends that Respondent should be paid 90% of the total fees. As can be seen from the above clause, there is no stage prescribed for payment of 90% of the total fee. The Petitioner has arbitrarily concluded the entitlement to be 90% and there is no basis or rationale in this contention. The stage envisaged under Clause 13.[6] entitles the Respondent to only 70% of the total fees. There is no intermediate stage of 90%. The Arbitrator has concluded that there is no material placed on record which could show failure on the part of the Respondent in completing the work so as to be disentitled to 95% of the fee. Petitioner's contention that Respondent had failed to fulfil its obligations up to the stage prescribed in Clause 13.[7] has been discredited. Petitioner's contention that Respondent‟s designs were faulty and certain portion had to be dismantled, has not been accepted. The specific finding on the issue is as follows:- “15 Up to what stage of the payment in terms of clause 13.[1] to 13.[8] of the agreement, the claimant is entitled to be paid for the work done by it. 15.[1] As per clause 12.[3] of the agreement, the fee shall be paid to the claimant at the stages as laid down in para 13.[1] to 13.[8] of which the last stage is 13.[8] "on completion of work and submission of as-built drawings dispatching completion certificate as per clause 6.[8] (obtaining completion certificate from statutory bodies and submission of in-built drawings)". 15.[2] The claimant has contended that but for obtaining the completion certificate which is the last stage of payment and for which fee payable is-5% of the total fee, it has completed all the works as per the scope of agreement and even beyond on which account claim No.2 and additional claim No. 1 have been raised. 15.[3] It is also the contention of the claimant that the construction work had been long completed and commissioned and the flats have been allotted and occupied too, but the respondent has failed to establish if it spent any amount on any of the services which were to be provided by the claimant upto stage 13.[7] but due to the alleged failure of the claimant, the respondent had to engage any other agency to provide the same. The respondent has also not placed on record the drawings or the design it prepared in-house due to the alleged failure of the claimant to provide the same as vaguely mentioned in para 78 of its reply. 15.[4] The claimant has also contended that prior to obtaining the completion certificate, the respondent was/is required to confirm that the work has been completed as per QFC drawings and approved service drawings which the respondent despite repeated requests failed to confirm even till date. 15.[5] The respondent has contended that apart from not obtaining the completion certificate, the claimant failed to fulfill all its obligations upto the stage 13.7. It is also the contention of the respondent that because of failure of the claimant to fulfill all its obligations, the respondent had to spend extra which is subject matter of counter-claim. 15.[6] I find that contrary to the contentions of the respondent, it is not on record that the respondent ever issued any notice to the claimant requiring them to execute and complete the alleged unexecuted items failing which the same would be got executed at claimant's risk and cost. Even otherwise, there is no letter on record demanding payment from the claimant for the alleged expenses incurred by the respondent for getting the services provided by any other agency or in-house. No amount was ever withheld either on account of the alleged deficient services of the claimant. 15.[7] The construction work has been long completed and commissioned and the flats have been allotted and occupied too. But the respondent has failed to establish if it spent any amount on any of the services which were to be provided by the claimant upto stage 13.[7] but due to the alleged failure of the claimant, the respondent had to engage any other agency to provide the same. The respondent has also not placed on record the drawing? Or the design it got prepared from other agency or prepared in-house due to the alleged failure of the claimant to provide the same. 15.[7] Considering the relevant material on record read with claimant‟s letter dated 21.06.2010 (C-96 Page 118-121/CD-2) discussed in para 14 above, I have no hesitation to come to a conclusion that the claimant completed all its job upto the stage 13.[7] and the only stage which it could not complete was the last stage (13.8), i.e. obtaining completion certificate for which the fee payable is 5% of total fees. 15.[8] In view of the above, it is held that the claimant is entitled to payment of only 95% of the total fee payable.”

18. Further, Petitioner's contention that certain letters and Minutes of Meeting have been overlooked is also unmerited, as can be seen from the discussion in Para 12.36 of the award.

19. The Arbitrator has applied the factor of 95% on the balance fee payable. The reasoning and conclusion of the Arbitrator is based on facts. Petitioner failed to corroborate the plea of sustaining loss and it cannot be said that the finding is perverse or illegal to warrant interference by this Court. There is thus no merit in the contention raised by the Petitioner.

20. With respect to the finding of the Arbitrator regarding the reimbursement of service tax, it is to be noted that the Arbitrator has taken into consideration several factors relating to this issue and in particular, the letter dated 20th February 2008, which reads as under:- “Mr. S.P. Satsangi Addl. Chief Architect-II Delhi Development Authority Housing & Urban Projects Wing 8th Floor, Vikas Minar New Delhi - 110001 Subject: Extension of agreement of DDA Mega Housing Behind D-6, Vasant Kunj, New Delhi. Dear Mr. Satsangi, This has reference to your letter no. ACA-II/HUPW/DDA/06 dated 15.01.08 the contents of which are generally acceptable. All other issues and considerations not mentioned in the letter shall be as per the original contract. The service tax shall be as per the prevailing norms stipulated be government. With regards, Sincerely yours, Sumit Ghosh 20.02.08”

21. In the aforesaid letter, there is a categorical mention regarding service tax. The said letter was accepted by the Petitioner vide letter dated 30th April 2008 whereby it agreed to grant extension of time for completion of the work. Though, the Petitioner has denied the receipt of the letter dated 20th February 2008, however, such denial is inconsequential as in the subsequent communication dated 30th April 2008 Petitioner has not denied the same. The Arbitrator has also relied upon the conditions stipulated in the letter dated 20th February 2008 wherein it has been categorically mentioned that the service tax shall be as per the prevailing norms. This letter was issued in the context of extension of the time for fulfilling the work under the Agreement. While granting the extension and accepting the proposal, the Petitioner did not refute the liability to pay the service tax. The Respondent has shown proof of depositing service tax and is only seeking reimbursement thereof. The claim of reimbursement of service tax is from the stage when the extension of time was granted by the Petitioner. The Respondent was the service provider and the Petitioner was the recipient. The Respondent is thus entitled to recover the amount of service tax, even though the contract between the parties was held to be silent with respect to the entity that was to ultimately meet this statutory liability. The Division Bench of this Court in a similar situation in the case of Satya Developers Pvt. Ltd. and Ors v. Pearey Lal Bhawan Association and Ors 225(2015) DLT 377 has decided as under: “22. Section 83 of the Finance Act 2007 though a legislation by incorporation also takes care of non-applicability of future amendments as it provides for applicability of the relevant sections of the Central Excise Act 1944 as in force from time to time i.e. the future amendments in the provisions of the Central Excise Act would also be applicable mutatis Mutandis to Service Tax. As noted above, Section 12B of the Central Excise Act which applies to the Service Tax raises a presumption that the incidence of duty has been passed to the buyer unless the contrary is proved. Thus in the absence of a contract for the liability of a service tax, it will be presumed that the same has been passed over to the service recipient.

27. From the legal position as noted it is evident whether the service tax liability has been agreed not to be passed on to the recipient of the service would depend on the interpretation of clauses entered into between the parties....

31. Thus a contract has to be construed by looking at the document as a whole and the meaning of the document has to be what the parties intended to give to the document keeping the background in mind and conclusion that flouts business commonsense must yield unless expressly stated. In the present case it will also have to borne in mind whether the parties intend to include taxes which were not contemplated at the time of the agreement as indubitably the agreements between the parties in the three suits were entered into prior to the Finance Act, 2007 coming into force w.e.f. June 01, 2007.

32. In the agreement between HDFC Bank and Meattles Clause 4(v) imposes liability of municipal taxes, rates, charges and other outgoings in respect of the demised premises that would be determined/fixed/varied from time to time by the Municipal Corporation/Municipality/Gram Panchayat or any other local authority only. It is well settled that the Municipal Corporation, Municipality, Gram Panchayat or local authority is distinct from the government and thus the clause inter se the parties cannot be said to cover the exemption of HDFC Bank to pay to Meattles service tax paid by it to the government pursuant to the Finance Act, 2007.

33. As regards the lease deed and the agreement of maintenance of common services and facilities between Satya and PLBA Clause 5 of the lease deed as noted above provides that the lessor shall continue to pay all or any taxes, levies or charges imposed by the MCD, DDA, L&DO and or Government, Local Authority etc. By use of the words "Lessor shall continue to pay" it is evident that the parties contemplated the existing taxes, levies or charges and not future. Even as per the agreement of maintenance of common service facilities though the same has no application to the service tax however, still the said clause II(1) cannot be said to exclude HDFC Bank from paying future service tax.

34. In view of the discussion aforesaid the judgments and the decrees passed by the learned Single Judge in the three suits are upheld. Appeals are dismissed. Parties will bear their own costs.” (emphasis supplied)

22. In All-India Federation of Tax Practitioners & Ors. v. Union of India & Ors. (2007)7 SCC 527, the Supreme Court inter-alia held that service tax is a VAT which in turn is 'destination based consumption tax' in the sense that it is not a charge on business but on the consumer.

23. The High Court of Madras in Hardy Exploration & Production (India) Inc. v. Samson Maritime Limited and Ors (2017)1MLJ334 had the occasion to consider a similar question of law. In the said case, the Petitioner filed a petition under Section 34 of the Act, challenging the finding of the Arbitral Tribunal that held that the Petitioner is liable to reimburse the component of service tax levied on the first Respondent. The Court upheld the decision of the Arbitral Tribunal and said that the Petitioner would have to bear the burden of service tax. The relevant paragraphs of the judgement read as under: "31. Continuing with my discussion, the facts, which have emerged in the present case, clearly show that, when, the Jade Charter was executed on 26.07.2007, the service tax on the kind of services rendered by the first respondent, had not kicked-in. Service tax was imposed, on the kind of services rendered by the first respondent, only on, 16.05.2008. Therefore, quite clearly, the service tax was not a "tax", which was in contemplation of the parties on the date of execution of the contract. This was, therefore, not a tax, qua which the first respondent was assessed or, could have been assessed on the date when the Jade Charter was executed. 31.[1] Therefore, on a plain reading of the language of Clause 34.1, it cannot be held that qua service tax, the first respondent was required to hold the petitioner, safe and harmless and/or even indemnify the petitioner. At best, what could be said in favour of the petitioner is that the contract was silent on who would bear the burden of service tax. Since, service tax is an indirect tax, quite clearly, the ultimate burden qua such tax, like other indirect taxes, i.e., excise duty and sales tax, would have to be borne by the party using the services, as in the case of service tax and similarly, by the consumer of goods, as in the case of excise duty and sales tax. 31.[2] One could also take a clue from the provisions of Section 64A of the Sale of Goods Act, 1930 to gain statutory wisdom, so to say, to deal with a situation of the kind, one is confronted with, in the instant case. Section 64A of the Sale of Goods Act, if paraphrased, broadly, provides, that if, during the course of the execution of the contract, a new tax is imposed or, rates of tax are increased, the buyer; will bear the burden, and if, per chance the tax is abolished or the rate is reduced, the buyer would get the benefit. The Section, though, gives a leeway to the parties to provide otherwise. 31.[3] Therefore, usually, unless, parties clearly provide in the contract as to who is to bear the burden if such a situation arises, as is the circumstance, in the instant case, the ultimate burden will have to be borne by the consumer, i.e., the petitioner. 31.[4] Thus, in my view, the Arbitral Tribunal has correctly held against the petitioner that it would have to bear the burden of service tax." (emphasis supplied)

24. The learned counsel for Petitioner has placed reliance on paragraph 19 of the decision of the Supreme Court in the case of Bharat Petroleum Corporation Ltd. (supra). A perusal of the afore-noted judgement makes it amply clear that the said case is distinguishable on facts and is not applicable to the facts of the present case. Moreover, in para 19, the Court in the following words has held that offeree‟s silence coupled with his conduct, may constitute an acceptance. The relevant paragraph has been reproduced herein below: “19. It is, no doubt, true that the general rule is that an offer is not accepted by mere silence on the part of the offeree, yet it does not mean that an acceptance always has to be given in so many words. Under certain circumstances, offeree's silence, coupled with his conduct, which takes the form of a positive act, may constitute an acceptance - an agreement sub silentio. Therefore, the terms of a contract between the parties can be proved not only by their words but also by their conduct.”

25. In the present case, the Petitioner does not dispute that the service tax was leviable. It also does not deny that the amount sought to be reimbursed was paid by the Respondent to the tax department. Moreover, the letter dated 20th February 2008 is also not denied by the Petitioner and constitutes acceptance by conduct. There is no error in the findings given by the Arbitrator and the challenge of the Petitioner on this ground cannot sustain. Claim No. 2: Towards Rs. 1,65,94,445/- on the 13th Bill dated 23rd July

2014.

26. The learned Arbitrator has partly allowed Claim No. 2 and has awarded a sum of Rs. 1,06,26,347/-, for the reason that due to the revision of the earthquake code in late 2002, Respondent had to revise the drawings already issued. The awarded said sum has four components:a) Fee on account of increase in covered area Rs. 15,99,489/b) Extra on account of re-working on drawing Rs. 43,65,677/-. c) Enhancement/Escalation in the form of cost index R. 46,61,181/-. d) Declaratory award for service tax which shall be payable by the Petitioner to the Respondent at the prevailing rate when payment of Rs. 1,06,26,347/- is made to the Respondent.

27. So far as Sub head (a) is concerned, the same is impugned only to the extent that the learned Arbitrator had calculated the said fee applying the factor of 95% instead of 90%. Sub head (b) relates to extra payment for reworking of drawings. Petitioner argues that firstly no extra payment is payable in view of Clause 3.[1] and 3.[2] of the Agreement which stipulates modification and revision of drawings without any extra cost. Secondly, the learned Arbitrator has arrived at the figure of 15% without any justification and has wrongly placed reliance on the letter dated 15th January 2008. Extra fee of 10% was proposed on account of reworking/revision of designs and drawings and the same was duly accepted by the Respondent in its letter dated 20th February 2008. Therefore, the learned Arbitrator ought to have awarded the said fee at the rate of 10% and not 15%. The Counsel for the Petitioner further submitted that the award under Sub Claim (c) of Claim 2 is on account of enhancement /escalation in the form of cost index. In this regard, he relied on Clause 17 of the agreement and urged that a perusal of the Clause makes it evident that in case of preparations and designs and drawings after five years from date of start of work, the fees shall be calculated on the basis of revised average rates as may be mutually decided between the parties on the basis of rise of building cost index approved by CPWD during these five years. The cost index must be taken for these five years only as specifically contemplated in the said Clause. Relying upon the same, she also referred to Respondent‟s letter dated 15th January 2018, where while proposing extension of time it was specifically stipulated as under:- “In reference to the above-mentioned subject and the various meetings held with your goodself, for extension of the original agreement to Nov 2010 (which was signed on 10.11.2000) for next five years so that the works in question are got completed.”

28. She argued that the aforesaid offer was accepted by the Respondent vide it's letter dated 20th February 2008 and thus the Respondent is entitled to payment at the cost index of 20.82 % and not 78.14 %. It was also argued that the learned Arbitrator failed to appreciate that the project was delayed on account of Respondent's own deliberate default in suspending the issuance of any drawing during the pendency of the writ petition bearing NO. 4978/2002. There was no stay on issuance of any drawing by the Court and there was also no order or direction issued by the Petitioner suspending issuance of drawings. Furthermore, if the above factor has to be taken into account then it should be construed to be beyond the control of both the parties and the Petitioner cannot be held liable to pay enhanced rates. The structural drawings were not as per the BIS norms and no construction could be carried out on the basis thereof. Delay was occasioned purely on account of the Respondent's failure to maintain the height of the buildings and poor design of basements and it cannot take advantage of its own delay and raise a false claim. The alleged cost index claimed in bill No. 13 dated 23rd July 2014 on account of increased cost for increased area and revision was raised belatedly. If the Respondent had raised the bill for increase in area in 7th bill itself, no cost index would have been payable on the amount. Respondent cannot claim cost index placing a premium on his own inaction.

29. With regard to the above noted objections, the contention of the learned counsel for the Respondent is as follows: a. As per earthquake code IS: 1893 in 2002, Respondent submitted the structural, architectural and service drawings in accordance with the communication dated 21st June 2013. However, since the earthquake code was revised due to the Common Wealth Games, Respondent was directed to revise the designs and drawing, which is evident from Petitioner's letter dated 15th January 2008. The revision in the earthquake code resulted in considerable increase in the area and also involved extensive re-working. b. Based on the modified project, the cost calculation due to the increased area and reworking of the drawing and designs is Rs. 75,04,576. On the said amount, CPWD cost index has been added @ 96.[8] % and on the total amount, service tax has been claimed @ 12.36 %. Accordingly the net amount payable is Rs. 1,65,94,455/- as claimed in the 13th bill. c. In order to compute the percentage increase in CPWD building cost index from 2006 to 2014 as 96.65 %, reliance has been placed on Clause 17 of the agreement.

30. It was urged that the Petitioner has wrongly placed reliance on the letter dated 15th January 2008 as the said letter was not binding on the parties and also the increase of 10% as stated in the said letter was not final since the said extra fees on the enhanced cost index was provided in the agreement. The aforesaid 10% of the extra fees was in respect of the extended period and not in respect of the extra work executed by the Respondent during the extra period.

31. With regard to the finding of the learned Arbitrator to arrive at the price index of 78.4%, the learned counsel for the Respondent submitted that since the price indices as mentioned in the letter dated 15th January 2008 were for past five years it could not have been taken into account for extra work and the learned Arbitrator has rightly arrived at the figure of 78.4%. Analysis

32. In so far as the challenge to the findings qua Claim No. 2 under the head (a) enumerated above is concerned, the reasoning given in this order while rejecting the objections with respect to Claim No. 1 would apply. Therefore, the contest to sub-head (a) is rejected for the same reasons. The opposition to award under sub-head (b) and (c) is on account of extra payment for reworking of drawings. The findings of the Arbitrator on this point are as under:- “17. Whether the claimant is entitled to extra payment on account of revision of the designs and drawings already issued to conform to revised earthquake (seismic) IS Code which was revised in late 2002. 17.[1] Claimant's contention is that as per clause 8 of the agreement it prepared designs and drawing in conformity with the latest earthquake code (IS:1893) as was in force at the time. But subsequently this code was revised in late 2002 with the result, the claimant had to revise these designs and drawing to conform to the revised code (IS: 1893-2002). The claimant is therefore entitled to extra payment on this account. Claimant relies on para 1 of its letter dated 21.06.2013 (C-96/Page- 118/CD-2) which gives an account of the designs and drawings originally issued on 10.07.2001 to 01.11.2002 which were revised as per revised IS code. 17.[2] Respondent's contention is that clause 3 of the agreement is very clear that the claimant was obligated to prepare design and drawings in conformity with the latest seismic code (earthquake code) and hence it is not entitled to extra payment on account of having to revise the design and drawings subsequently per revised IS code which was revised in late 2002. 17.[3] I have perused the relevant submissions of the parties and material on record. It is a matter of record that as per clause 8 of the agreement (page 121) the claimant was mandated to ensure that all the designs and drawings are made in conformity with the latest IS code, the relevant code here being IS:1893 which lays down the requirements to be fulfilled from earthquake consideration. 17.[4] In my view, the term 'latest', in the given context only means the latest IS code in force at the time the designs and drawings are prepared. It cannot be attributed an extended meaning to cover revision of the designs and drawings as per subsequent revision of code within the same fees. The contention of the respondent can therefore be accepted only to the extent that if the claimant had not prepared any designs and drawings upto the date of revision of code it was mandated to prepare the same as per the latest/revised IS code at no extra cost. But here the case is different. 17.[5] Admittedly the claimant first prepared designs and drawing from 10.07.2001 upto 01.11.2002 (C-96) in conformity with the latest IS code in force during this period, thus fully satisfying the condition as per clause 8 of the agreement. But it had to revise the same when the said code was revised in late 2002. 17.[6] I am therefore of the view that the claimant is entitled to extra payment for reworking/revision of designs and drawings already issued to bring the same in conformity with the IS: 1893 which was revised in late 2002.”

33. The aforesaid reasoning shows that the Arbitrator took into consideration facts and the evidence brought on record by the parties and arrived at a finding of fact that the completion of the work under the Contract was delayed due to fault / breaches attributable to the Petitioner. This finding of fact cannot be assailed or scrutinized under Section 34 of the Act. Respondent's claim for extra payment for revision of the designs and drawings arose due to change in the requirements and circumstances in the wake of Commonwealth Games. The Arbitrator has held that the Respondent had to revise drawings due to revision in earthquake code in

2002. It has also been held that there is no documentary evidence produced by the Petitioner to show that Common Wealth Games Committee had issued such directions or regulations prior to the execution of the Agreement. Respondent had to assimilate the revised code and carry out the necessary modifications as required by the Petitioner. In the letter dated 25th March 2009, Petitioner agreed to pay extra amount for the change in the drawings. Upto that stage, Respondent had already issued drawings and thus had to rework the same. Respondent also had to suspend issuance of the drawings on account of an ongoing litigation which had directed the stay of construction activities which continued upto 2007. Vide letter dated 15th March 2008, Petitioner proposed to extend the agreement for five years and pay extra amount at the rate of 10% together with enhancement in the cost index, as the Respondent had to revise its drawings due to change in earthquake code. Thus, Respondent is entitled to payment on account of reworking of drawings and enhancement/escalation in the form of cost index. The Petitioner‟s contention that the price indices mentioned in the letter dated 15th January 2008 as 20.[8] % should prevail and the Arbitrator was not justified in awarding the same at the rate of 78.4% is misconceived. The letter dated 15th January 2008 is reproduced herein below: “DELHI DEVELOPMENT AUTHORITY Housing & Urban Projects Wing Office of the Addl Chief Chief Architect_II 8th Floor, Vikas Minar, New Delhi. No.ACA-II/HUPW/DDA/06 Dated: 15.01.08 (Copy in: SA/SZ/HUPW/F-51/2000) To M/s. Sumit Ghosh & Associates R-4 Hauz Khas New Delhi-110016 Sub.: Extension of agreement of DDA Mega Housing Behind D-6, Vasant Kunj In reference to the above-mentioned subject and the various meetings held with your goodself, for extension of the original agreement to Nov 2010 (which was signed on 10.11.2000) for next five years so that the works in question are got completed. Further, as discussed during the meetings and as per the CDO observations the revised Seismic Code 1893-2002 needs to be adopted for the entire Housing Complex which shall involve modifications in the structural and architectural drawings as discussed with you earlier also. As per Clause 17 of the agreement the enhancement of the fees on the basis of the rise in the building cost index approved by CPWD during the past 5years works to 20.82% on the principle amount to be paid to the Consultant for the works yet to be carried out by the Consultant. As per the discussions with CE (SEZ) and ACA-II, the quantum of the work has been categorized in two different categories: i. Revision of the structural designs as per ISI893-2002 and preparation of modified architectural working drawings including the approval whenever required. For incorporation of the revised structural designs in the architectural working drawings, the Architectural Consultant shall be paid 10% extra fees, on the enhanced cost index under Clause 13.[5] fees for which total fees has already been released to the consultant as per the original agreement for the works already done. ii. Balance works pending as per the original agreement after the court orders for which enhancement shall be given as per the average cost index of 20.82 which shall cover Clauses 13.[6] to Clause 13.[8] (for which fees is partly due) If the above conditions are suitable to you then the acceptance may be conveyed to the office by 21st Jan, 2008. This may kindly be treated as urgent. (S.P.Satsangi) Addl Chief Architect-II”

34. A perusal of the letter dated 15th January 2008 makes it clear that the price indices mentioned in the aforesaid letter was for the past 5 years and the same could not have been considered for the extra work.

35. During the Arbitration proceedings, the Respondent filed computation for percentage increase in CPWD Building Cost Index from 2006 to 2014 which reflected a factor of 96.6%. On the strength of the above, Respondent claimed enhancement in the form of cost index, relying on Clause 17 of the Agreement, which reads as under: “The agreement will be in force for a period of 6 years from the date of signing. In case, the implementation of the project extends beyond 5 years from the date of agreement and the consultant is called upon to carry out any additional work of planning, designing and preparation of drawings of any portions of the portions of the work, and for which the consultant has not been responsible for delay, and such designs and drawings are actually prepared after five years, the fees payable shall be calculated on the basis revised average rate as may be mutually decided between the parties to this contract, on the basis of the rise of building, cost index approved by the CPWD during these five years. Regarding the quantum of planning and designing work actually carried out after the expiry of five years, the decision of the chief Architect shall be final and binding in all respect.”

36. The Petitioner did not file a response to the said calculations. The Arbitrator averaged the figures and awarded a factor 78.4%. Since the delay in completion of the work has been held to be attributable to the Petitioner, the escalation awarded by the Arbitrator is reasonable. The price indices mentioned in the letter, could not have been considered by the Arbitrator, for the extra work done by the Respondent. Petitioner's contention that the price indices mentioned in the letter dated 15th January 2008 should have prevailed is without any merit and the same is rejected.

37. The findings of the Tribunal for sub head (d)-regarding the reimbursement of service tax are upheld for the reasons and analysis given qua Claim No. 1.

38. The learned Arbitrator has awarded pendente lite interest at the rate of 9% and future interest at the rate of 12%. The legal position regarding award of interest is well settled. Interest is granted by way of compensation to a party as a consequence of default or a breach by the other. The contract was delayed due to breaches on the part of the Petitioner and therefore the Arbitrator has rightly awarded the reasonable interest on the amounts held to be due and payable to the Respondent. The sum awarded by the learned Arbitrator has been upheld and thus there is no justification to deny the Respondent the interest thereon which is reasonable and does not call for any interference.

39. For the foregoing reasons, the petition is dismissed with no order as to costs and the pending application is disposed of.