GOVT. OF NCT OF DELHI v. M/S GARG BUILDERS

1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred as to the ‘Act’) has been filed by the petitioner challenging the Arbitral Award dated 9th March, 2015 passed by the Sole Arbitrator adjudicating the disputes that had arisen between the parties in relation to the Work Order dated 25th February, 2003 awarding the work of "Excavation of supplementary Drain up to DBL between RD 22580 to RD 23218m including lining with hydraulically pressed CC titles of size 300 x 300 x 50 mm on both side slopes of the drain.”

2. The disputes having arisen between the parties, the same had been referred for adjudication to the Sole Arbitrator and resulted in an Arbitral Award dated 23rd July, 2010. The said Award was 2018:DHC:4087 OMP 359/2015 Page 2 challenged by the petitioner before this Court by way of a petition under Section 34 of the Act being OMP No.588/2010. This Court by its judgment dated 9th October, 2013 partly allowed the said petition. The final direction issued by this Court is reproduced hereinunder:-

3. As far as claim no.5 raised by the respondent is concerned, this Court in its judgment set aside the Award holding that the Arbitrator has relied upon Ex.C-75 filed by the respondent as gospel truth of the quantities claimed by the respondent of the rubbish and garbage removed by him. Similarly, for claim nos. 6, 7 and 8, this Court found that the Arbitrator had based his award on Ex.C-76, C-77, C-78 filed by the respondent, which were mere charts of calculations of the claimed amount without any supporting documents. The Court also found that the figures taken in these charts were not matching with the documents on record and the Arbitrator had arbitrarily reduced these figures and taken different figures for awarding the claims of the respondent. The relevant findings of the Court are extracted herein below:-

18. MrGupta, in defence of each of these claims, took the stand that there was no dispute raised with regard to these claims by the petitioner. It was thus contended that none of these claims required proof.

19. In my view, what the arbitrator has done is simply recorded his conclusion by adopting the details given in the form of exhibits by the respondent. There are no reasons for awarding amounts under any of these claims. Reasons, as is often stated, are a link between the material on record and the conclusion arrived at by an adjudicating authority. [See Union of India vs Mohan Lal Capoor (1973) 2 SCC 836]. An arbitrator, under the Act, is bound to give reasons unless the parties have agreed that no reasons are required or the award is on which is an arbitral award on agreed terms passed under Section 30 of the Act. This is clear on a bare perusal of sub-Section (3) of Section 31 of the Act. While an arbitrator is not expected to give “elaborate”, “detailed” reasons, in support of his findings, merely noting submissions without reference to any evidence on record, will render the award flawed. As indicated by me in the beginning of the judgment, adequacy of reasons may not be a ground for interference by this court under Section 34 or the manner of appreciation of evidence, but complete lack of evidence, in support of the conclusions, would certainly be a ground for interference. [See observations of the Supreme Court in Som Datt Builder Ltd. vs State of Kerala

20. In so far as the argument of Mr Gupta is concerned, that there is no denial of the claims raised, in my view, is an argument which is completely contrary to the record. I have examined the defence filed. Against each of the claims, i.e., claim nos. 5 to 8, a defence on merits has been set up. The arbitrator has not discussed the defence of the petitioner. As a matter of fact, as indicated above, the details submitted by the respondent in the form of exhibits, has been accepted quite curiously, contrary to all canons of law. The Supreme court has repeatedly indicated that patent illegality can be a ground for interference by the arbitrator. A complete lack of evidence in respect of these claims, which the respondent did not prove, in OMP 359/2015 Page 6 my opinion calls for interference. [See observations of the Supreme Court in Steel Authority of India Ltd. vs Gupta Brother Steel Tubes Ltd. (2009) 10 SCC 63 at page 79 in paragraph 18(iv)]. Therefore, the amounts awarded against claim nos. 5 to 8 are set aside. It will, however, be open to the respondent to seek a decision in respect of these claims based on the material, if any, which is already placed on record.

4. Similarly, this Court found that the Arbitrator had arbitrarly reduced the amount awarded in favour of the petitioner on this claim. The findings of this Court are reproduced herein below:- “COUNTER CLAIM N0.[2]

27. Under this head, the petitioner had sought reimbursement of expenses paid by it to another agency by the name of M/s. Raj Construction for filling up the catch water drain. The petitioner claimed a sum of Rs.7,03,552/-. The arbitrator has awarded a sum of Rs. 1 Lakh. The arbitrator does not disclose the basis for refusing the balance amount. The arbitrator has observed that construction of catch water drain was necessary. He further goes on to hold that the petitioner ought to have given a NIT for refilling work to the respondent, thereby affording opportunity to verify the work being done at site. Lastly, the arbitrator also observed that the excavated earth was dumped on the banks of the catch water drain, therefore, refilling work became easy. In this respect, the arbitrator has accepted the assertion of the respondent. 27.[1] Having regard to the observations made by the arbitrator, it is quite clear that he has accepted the fact that the catch water drain required refilling and that dumped earth lay on the banks of the catch water drain. The only question before him was with regard to the quantification of expenses, if any, incurred by the petitioner in that behalf. As indicated above, the petitioner claimed a sum of Rs.7,03,552/-, it provided the requisite material in the form of particulars of the agency and the amount charged by the said agency. The arbitrator was, therefore, in my opinion required to clearly return a finding as to why the claim had been reduced from Rs.7,03,552/- to Rs.[1] Lakh. The rejection of this OMP 359/2015 Page 7 counter claim by the arbitrator is clearly erroneous. The decision of the arbitrator in that regard is therefore, set aside. The claim is remitted to the learned Arbitrator. The learned Arbitrator shall pass a fresh order vis-a-vis the claim in issue, if approached in accordance with law, based on material already on record.”

5. The present Impugned Award has been passed by the Arbitrator pursuant to the remand on these claims and the counter claim no.2 raised by the petitioner. In the Impugned Award, the Arbitrator, with respect to claim nos.5,6,7,[8] and 10 raised by the respondent, has reiterated his earlier award by stating that as there was no dispute raised by the petitioner with respect to the quantification of the claims, the same are deemed to be accepted by the petitioner.

6. I find the approach adopted by the Arbitrator to be completely perverse. Once this Court in its earlier judgment had set aside a similar exercise done by the Arbitrator and had remanded the matter back for a fresh consideration on the basis of the documents, that is, legal evidence led by the parties before the Arbitral Tribunal, the Arbitrator could not have reiterated his award on the basis of some purported admission made by the petitioner with respect to the quantification. This Court, in paragraph 20 of its Judgment quoted above, had already rejected the plea of purported admissions. The respondent did not challenge this Judgment by filing of an appeal. The said Judgment having become final, was binding on the Arbitrator.

7. The petitioner in its reply had denied the very maintainability of these claims. Even if the said stand of the petitioner was found to be incorrect, it was for the respondent to have proved the quantification OMP 359/2015 Page 8 of such claims by way of evidence before the Arbitrator. The respondent cannot rely upon mere non-denial of the figures given in form of a chart by him to sustain such claim. The chart itself cannot be treated as evidence. The award having been passed on basis of no evidence, cannot be sustained.

8. It is indeed surprising that for counter claim no.2 raised by the petitioner, the Arbitrator has rejected such claim for want of evidence, while the petitioner had pleaded regarding floating tender for the work and award thereof to M/s Raj Construction Company for an amount of Rs. 5,63,967/-. It is also relevant to note that in the earlier award, the Arbitrator had awarded a sum of Rs. 1 lakh in favour of the petitioner towards counter claim no. 2. This Court in its Judgment dated 09.10.2013 had observed that there was no reason given by the Arbitrator for awarding only Rs. 1 lakh in favour of the petitioner. In the Impugned Award, the Arbitrator has completely rejected the counter claim no. 2 of the petitioner. Such finding of the Arbitrator cannot be sustained.