M/S S.R. Ashok & Associates vs Delhi Development Authority & Anr.

The present suits have been filed under Sections 14 and 17 of the Arbitration Act, 1940 (“the Act”) on behalf of the plaintiff, seeking to make two Arbitral Awards dated 31.01.2008 and 28.01.2008 (“Impugned Awards”) passed by the Ld. Sole Arbitrator/defendant No. 2 (“Arbitrator”) in the matters of arbitration between M/s. S.R. Ashok & Associates v. Executive Engineer, D.D.A., as Rule of the Court.

It is clarified that even though the plaints in the two suits in their respective prayer clauses have interchanged the dates of the Impugned Awards, the awards are substantially the same in both except for one claim and therefore, my reasoning will remain the same.

The defendant No. 1/DDA has filed objections under Sections 30 & 33 of the Act, against the Impugned Awards vide applications bearing IA No. 4749 of 2008 in CS (OS) 361/2008 in respect of Claim No. 1(4) and Additional Claim Nos. 1, 2, 3 & 4 and IA No. 4753 of 2008 in CS (OS) 362/2008 in respect of Claim No. 1(4) and Additional Claim Nos. 1, 2, 3, 4 & 6.

The plaintiff namely M/s. S.R. Ashok & Associates, a partnership firm, duly registered under the Partnership Act, was the claimant in both the arbitral proceedings and defendant No. 1 namely Delhi Development Authority (“DDA”) was the respondent in both the proceedings. The defendant No. 2 is the Arbitrator in both the arbitration proceedings.

The defendant No. 1/DDA had issued a notice inviting tenders for execution of work for construction of Lower MIG Houses at Kondli Gharoli Complex, SH: 256 Lower MIG Houses, Group III. In response to the said notice inviting tender, the plaintiff/claimant submitted its tender, which was accepted by the concerned division of the defendant No. 1. The said tender was on the basis of Delhi Schedule of Rates, 1981.

An agreement bearing No. 29/EE/HD-23/1/85-86 dated 21.10.1985 was executed with regard to the said work between the plaintiff and the defendant No. 1. As per the said Agreement, the date of commencing the work was 24.10.1985, and the scheduled date for completion of the said work was to be 23.10.1986.

The case of the plaintiff is that the plaintiff had made all arrangements with respect to the required labour and machinery. However, due to consequent amendments to the specifics of the construction work, lapses and delays on the part of the defendant No. 1, the date for completion of work was subsequently extended up to 20.10.1990, without levy of any compensation.

Thereafter, disputes and differences arose between the parties with regard to the final account due and payable to the plaintiff by the defendant No. 1, which led to the plaintiff invoking arbitration vide its letter dated 22.08.1995, under Clause 25 of the Agreement, for settlement of disputes.

Thereafter, the Engineer Member, DDA, vide letter bearing No. CE 28(72)EZ/JLO/Arbn./98/62 dated 24.02.2000 appointed Sh. N. K. Sharma, Superintending Engineer (Arbitration)-I as Sole Arbitrator to decide the disputes and make his award regarding the claims/disputes.

However, the arbitration proceedings were adjourned sine die by the said arbitrator vide letter dated 10.07.2000, as both the plaintiff and defendant No.1 did not seek enlargement of time.

The defendant No. 1/DDA had issued another notice inviting tenders for execution of work of construction of Lower MIG Houses at Kondli Gharoli Complex, SH: 256 Lower MIG Houses, Group IV, for which the bid of the plaintiff was accepted by the concerned division of the defendant No. 1.

An Agreement bearing No. 30/EE/HD-23/1/85-86 dated 21.10.1985 was executed with regard to the said work between the plaintiff and the defendant No. 1. As per the said Agreement, the date of commencing the work was 24.10.1985, and the date scheduled for completion of the said work was to be 23.10.1986. Similarly, the date for completion of this work was subsequently extended up to 19.10.1990, without levy of compensation.

Thereafter, disputes and differences arose between the parties with regard to the final account due and payable to the plaintiff by the defendant No. 1, which led to the plaintiff invoking arbitration vide their letter dated 26.07.1995, under Clause 25 of the Agreement, for settlement of disputes.

Thereafter, the Engineer Member, DDA, vide letter bearing No. CE 28(72)EZ/JLO/Arbn./98/909 dated 01.11.1999 appointed Sh. N. K. Sharma, Superintending Engineer (Arbitration)-I as Sole Arbitrator to decide the disputes and make his award regarding the claims/disputes.

However, the arbitration proceedings were adjourned sine die by the earlier arbitrator vide letter dated 31.03.2000 stating that both the plaintiff and defendant No. 1 did not seek enlargement of time.

The plaintiff/claimant requested the Engineer Member, DDA, vide letter dated 07.02.2007, to appoint an arbitrator in terms of Clause 25 of the aforesaid Agreements.

Pursuant thereto, the Engineer Member, DDA, vide his letters bearing Nos. CE 28(72)EZ/JLO/Arbn./98/58 and CE28(72)EZ/JLO/Arbn./98/59 dated 26.02.2007 appointed Mr. S. S. Jain, Superintending Engineer, (Arbitration)-I/ defendant No. 2 as Arbitrator to determine the claims referred to the earlier arbitrator and to continue the proceedings from the stage at which it was left off.

The plaintiff, vide letter dated 18.04.2007, had taken exception to the continuance of arbitration proceedings from the stage where it was left off by the earlier Arbitrator. The Engineer Member, DDA, then issued another letter dated 23.05.2007, referring the claims as per the statement dated 18.04.2007 with the direction that these additional claims may also be arbitrated upon, if they were within the purview of Clause 25 of the Agreement.

The Arbitrator entered reference on 27.06.2007. The plaintiff/claimant had already filed their statement of facts/claims on 22.06.2007. Counter statement of facts was filed by the defendant No. 1/respondent on 25.09.2007 and thereafter, rejoinder was filed on 28.09.2007.

The Arbitrator passed the said Impugned Award, awarding claims of the plaintiff/claimant to the extent of Rs. 30,91,140/-. He also awarded simple interest at 18% per annum on the amount awarded under claim Nos. 1, 2, 3 and additional Claim No. 1 with effect from 20.04.1991 and 22.08.1995, i.e. the date of invocation of Clause 25 of the Agreement. Thereafter, the said awarded amount carried simple interest at 10% per annum till the date of the award. Furthermore, simple interest at the rate of 10% per annum was awarded upon the amount awarded against additional claim No. 2 with effect from 22.08.1995 till the date of the award. The amount awarded against additional claim No. 3 carried simple interest at 10% with effect from 01.01.1999 till the date of award and further, the entire awarded amount carried simple interest at 8% till the date of realisation.

The Arbitrator passed the said Impugned Award, awarding claims of the plaintiff/claimant to the extent of Rs. 31,99,664.80/-. He also awarded simple interest at 18% per annum on the amount awarded under claim Nos. 1, 2, 3 and additional Claim No. 1 with effect from 19.04.1991 till 26.07.1995, i.e. to the date of invocation of Clause 25 of the Agreement. Thereafter, the said awarded amount carried simple interest at 10% till the date of award. Furthermore, simple interest at the rate of 10% per annum upon the amount awarded under additional claim No. 2 with effect from 27.07.1995 till the date of the award. The amount awarded against additional claim No. 3 carried simple interest at 10% with effect from 01.01.1999 till the date of award and the amount awarded against additional claim No. 6 carried interest at the rate of 10% with effect from 02.09.2004 till date of the award. Also, the entire awarded amount carried simple interest at 8% till the date of realisation.

Learned counsel on behalf of the defendant No. 1 submits that the Impugned Awards are liable to be set aside in respect of claims due to error apparent on the face of the award, legal misconduct on the part of the Arbitrator, having passed Impugned Awards which are unreasoned, beyond the pleadings of the parties and against the public policy of India.

As the objections raised in both suits are, except as to Additional Claim No. 6 in CS (OS) 362/2008, substantially identical, I shall deal with them together by this common judgment.

For the sake of convenience, I shall set out the facts and record my findings with reference to CS (OS) 361/2008, it being clarified that the same findings and reasoning shall apply mutatis mutandis to CS (OS) 362/2008, save as to Additional Claim No. 6, which is dealt with separately below.

Ms. Kritika Gupta, learned counsel for defendant No. 1, states that the Arbitrator failed to appreciate the fact that the invocation of arbitration on 22.08.1995, more than three years after actual completion of the work on 20.10.1990, by the plaintiff/claimant and subsequent invocation of additional claims vide letter dated 18.04.2007 were hopelessly time-barred in terms of the Agreements. Reliance for the same is placed on M/s Attar Singh & Brothers v. DDA 2018 SCC OnLine Del 13032 and Bindra Builders v. DDA & Anr. 2012 SCC OnLine Del 3975.

It has been contended that the Engineer Member had no authority to re-open the proceedings after a period of more than 7 years. This power to enlarge the time for making and publishing the award under Section 28 of the Act lies exclusively with the Court.

It has been submitted on behalf of the defendant No. 1 that the plaintiff has waived off its claims, if any, with respect to the subject contract since the plaintiff had failed to raise such claims/invoke dispute within 30 days of payment of the final bill on 31.05.1995, in view of Clause 7 of the Agreements.

The plaintiff also did not dispute the payments made on 31.05.1995.

Learned counsel for the defendant No. 1 vehemently argues that the Impugned Awards are liable to be set aside under Section 30 of the Act as the Arbitrator had allegedly committed legal misconduct, by ignoring crucial documents and contractual stipulations. Reliance was placed on Seth Mohanlal Hiralal v. State of MP, (2003) 12 SCC 144.

Learned counsel for defendant No. 1 vociferously opposes the Impugned Award dated 31.01.2008 to the extent of disallowing Claim No. 1(4) and Additional Claim Nos. 1, 2, 3 & 4 and opposes the Impugned Award dated 28.01.2008 to the extent of disallowing Claim No. 1(4) and Additional Claim Nos. 1, 2, 3, 4 & 6.

It has been contended that the Arbitrator erroneously awarded a sum of Rs. 1,52,532/- in the Impugned Award for straightening and cutting of steel to the required sizes, without considering the Agreement item 3.7 which already included complete operation of cutting, straightening, bending, binding and placing in position, Central Public Works Department/CPWD specifications Volume I 1977 for this work under paras 5.3.1, 5.3.2 and 5.3.4 and also Clause 42 of the Agreement.

Furthermore, it was submitted that similar claims have been set aside by the Court in Anant Raj Agencies v. DDA, 2005 SCC OnLine Del 425 and Wee Aar Constructive Builders v. DDA, 2001 SCC OnLine Del 273.

It is further contended that Clause 42(i) and (ii) of the Agreement specifically provide for and allow 3% wastage on account of cutting into pieces, which demonstrates that cutting and straightening of bars to the required sizes is a process already contemplated within the scope of the Agreement, and not a separate or extra item. The present claim is accordingly not maintainable.

At the outset, it is submitted by the learned counsel for the defendant No. 1 that the Engineer Member, DDA had exceeded his/her jurisdiction by issuing letter dated 23.05.2007 by referring additional claims that were barred by limitation.

The learned counsel for the defendant No. 1 argues that a sum of Rs. 20,26,935/- was wrongly awarded to the plaintiff under this head by the Arbitrator since the plaintiff/claimant was responsible for slow progress of work by taking several extensions of time (“EOTs”) during the pendency of the contract, having also given express undertakings not to seek damages for extended period of the contract.

Clauses 10, 10CC, 22 and Condition No. 1 of “Specifications and conditions” are relied on by the learned counsel in support.

The learned counsel for the defendant No. 1 places further reliance on M.L. Mahajan v. DDA, 1998 SCC OnLine Del 700 and Ramnath International Construction (P) Ltd. v. Union of India, (2007) 2 SCC 453.

It has been contended that no financial loss has been suffered by the plaintiff and the Arbitrator had arbitrarily awarded 50% of the claim amount sought under this head, travelling beyond the terms of the agreement, based on alleged letter dated 08.11.1990, exhibited as Exhibit C-17, that was never served upon the defendant No. 1.

It is contended that as per Section 74 of the Indian Contract Act, 1872, actual loss and evidence of mitigation of losses also, needs to be proven which was not done satisfactorily by the plaintiff.

No. 1/DDA

It has been contended by the learned counsel for the defendant No. 1 that the Arbitrator has wrongly awarded Rs. 7,57,423/-.

The plaintiff failed to show that the defendant No. 1 had at any time asked the plaintiff to engage any staff/labour, and nowhere had the Engineer-in-Charge directed the plaintiff to engage staff or do the work of allotment or handover possession of the flats to the allottees. Payment was made to the plaintiff on a monthly basis based on work actually executed.

The letters relied on by the plaintiff were never served upon the defendant No. 1 due to the fact that they had an incomplete address. Even account books, register of wages and salaries etc. were not produced on behalf of the plaintiff in order to corroborate the claim so made.

It is submitted that no person of ordinary prudence would engage staff to the extent claimed i.e. 8 chowkidars per shift in both projects (Groups III and IV) within the same complex, amounting to 48 chowkidars in a day, and that the identical strength of staff is alleged to have been engaged across both groups, exposing the claim as fabricated and intended to defraud the defendant No. 1.

It is further contended that the rate of Rs. 7,700/- per month awarded for the period 21.10.1990 to 31.12.1998 was never part of the Agreement, that the circulars relied upon did not exist before 1997, and that the judgment relied upon by the plaintiff is distinguishable since the work in that case was completed after 1998, whereas the work in the present case was completed seven years prior.

The Arbitrator under the above-mentioned claim wrongly awarded interest at the rate of 18% per annum on the amount awarded under Claim Nos. 1, 2 and 3 and Additional Claim No. 1 w.e.f. 20.04.1991 to 22.08.1995. Thereafter, the said awarded amount carried interest of 10% per annum till the date of the award. The 10% per annum simple interest was carried upon the awarded amount against additional claim No. 2 with effect from 22.08.1995 till the date of the award. The 10% simple interest was carried upon the awarded amount against additional claim No. 3 with effect from 01.01.1999 till the date of the award. Subsequently, the awarded amount carried future interest at the rate of 8% per annum till the date of its realisation.

The learned counsel for the defendant No. 1 places reliance on State of Rajasthan and Anr. v. Nav Bharat Construction Co. AIR 2002 SC 258, wherein in similar circumstances the Hon‟ble Supreme Court had reduced the rate of interest from 18% per annum to 6% per annum. Furthermore, it was also contended that there is no clause in the Agreement for the payment of interest.

The objections raised by defendant No. 1 qua Claim No. 1(4) and Additional Claim Nos. 1, 2, 3 and 4 are identical to those raised in CS(OS) 361/2008 and therefore, are not being reproduced separately.

Learned counsel on behalf of the defendant No. 1 objects that the said claim was never referred by the Engineer Member, so the Arbitrator lacked jurisdiction to adjudicate and award the same. Simply because the defendant No. 1 chose to reply to the claim on merits, under protest, does not cure the defect.

It is further argued that the plaintiff deposited Rs. 1,41,151/- on 31.08.2004 to the defendant No. 1 without any protest, pursuant to agreeing with the same vide its own letter dated 07.07.2004. Therefore, the said claim is nothing but an afterthought, which is beyond the scope of reference of the Arbitrator.

At the outset, Mr. Akshu Jain, the learned counsel on behalf of the plaintiff, submits that the objections raised on behalf of the defendant No. 1/DDA are not maintainable since the requirements of Sections 30 and 33 of the Act are not met. The defences sought to be raised by the defendant No. 1 against the Impugned Awards have already been adjudicated by the Arbitrator, and accordingly, the scope of interference by this Court is extremely limited.

It is submitted that the Arbitrator, having examined the material and evidence on record, being the best judge of its quality and sufficiency, this Court cannot reappraise such evidence or substitute its own view for that of the Arbitrator while exercising jurisdiction under Sections 30 and 33 of the Act.

Furthermore, it is contended that the decision of the Arbitrator on the issue of limitation is binding and cannot be re-agitated by this Court, considering the same was specifically referred to the Arbitrator. Even otherwise on merits, the claims adjudicated by the Arbitrator were within the period of limitation.

It is submitted on behalf of the plaintiff that the work was not completed in time due to various breaches of the Agreement committed by the defendant No. 1/DDA. The defendant No. 1 had also granted the EOT without levy of any compensation, vide letter dated 13.11.1990, for the same reason.

Subsequently, even though the work was completed by the plaintiff on 20.10.1990, only a provisional completion certificate was issued by the defendant No. 1 and no final completion certificate was issued at any point. In fact, 20.10.1990 cannot be taken as the starting point of limitation since the defendant No. 1 had thereafter granted EOT, approved various works executed by the plaintiff under extra items from 1991 to 1994 and subsequently prepared the so-called final bill only on 31.05.1995.

The 28th Running Account bill/R.A. bill was issued by the defendant No. 1 on 31.05.1995 as the so-called final bill. However, from the said final bill, the DDA made a recovery of Rs. 96,563/- on account of reduction items and also withheld a sum of Rs. 20,000/- without assigning any reason.

Thereafter, being aggrieved by the said bill, the plaintiff/claimant had invoked arbitration under the Agreement vide letter dated 22.08.1995 (within 90 days from the date and payment of bill i.e. 31.05.1995).

Even after invocation of the arbitration clause, the defendant No. 1, in June 1997, released an amount of Rs. 80,000/-, which had been retained under Clause 42 of the Agreement towards supply of material and the same was only released after verification of steel. In August 1998, the defendant No. 1 again recovered a sum of Rs. 8,071.35/- against Extra Item No. 16, which had already been paid to the plaintiff/Contractor on 31.05.1995.

It is submitted on behalf of the plaintiff that it invoked arbitration by letter dated 22.08.1995, pursuant to which the Engineer Member, DDA appointed the earlier Arbitrator by letter dated 24.02.2000, and the proceedings were adjourned sine die on 10.07.2000. Upon Sh. S.S. Jain taking charge as Superintending Engineer (Arbitration-I), both parties were duly informed and directed to appear on 25.07.2006, when both parties appeared and jointly agreed to an enlargement of time for making and publishing the award.

The plaintiff, thereafter requested, by letter dated 07.02.2007, that the arbitrator be appointed by name rather than by office, pursuant to which the Engineer Member, DDA appointed Sh. S.S. Jain by name on 26.02.2007. The defendant No. 1 subsequently filed an application dated 26.11.2007 seeking applicability of the Act and prayed that proceedings be kept in abeyance pending a mutual extension of time, and on the same date both parties jointly agreed to such enlargement.

It is submitted that although settled law requires a fresh notice to be issued where a matter has been adjourned sine die, such fresh notice was duly served on both parties upon Sh. S.S. Jain assuming charge. Reliance was placed on Chandrakant Khaire v. Dr. Shantaram Kale, (1988) 4 SCC 577.

On the plaintiff‟s request to appoint an arbitrator as per Clause 25 of the Agreement, Engineer Member, DDA, vide letter dated 26.02.2007, had done the same. The issue of limitation was specifically decided by the Arbitrator holding that the claims of the plaintiff were within limitation.

It is submitted that the defendant No. 1 itself took the position before the Arbitrator that the work executed by the plaintiff could not be treated as complete on 20.10.1990, since it remained the plaintiff's contractual obligation to hand over the houses to the allottees, and that obligation continued to subsist thereafter. It is submitted that this position is borne out by the allotment register produced by the defendant No. 1 itself, which shows that only 239 out of 256 flats had been handed over as of 31.12.1998.

It is submitted that the defendant No. 1, having itself taken the stand that completion of the contract was tied to handover of possession to allottees, and that process having continued well beyond 20.10.1990, cannot now be permitted to contend that limitation is to be reckoned from 20.10.1990 for the purpose of Clause 7 of the Agreement. Therefore, the invocation of arbitration by the plaintiff on 22.08.1995 was well within the limitation period prescribed under Clause 25.

It has been brought to my attention by the learned counsel for the plaintiff that Claim Nos. 2 and 3 awarding a sum of Rs. 1,00,000/- and Rs. 54,250.41/- in the Impugned Awards have not been disputed by the defendant No. 1 in its objections, exposing the inconsistency of the defendant No. 1 considering the allegation of the defendant No. 1 that the claims of the plaintiff herein are time-barred.

The learned counsel also refers to letters dated 13.11.1990, 17.02.1991, 15.07.1991, 15.02.1993, 22.05.1993, 15.07.1993, 15.02.1994 wherein work under certain extra items executed by the plaintiff were expressly approved by the defendant No. 1. Reliance has been placed on P.C. Sharma & Co. v. Delhi Development Authority; 2011 SCC OnLine Del 5149 to state that wherein the plaintiff/contractor has duly notified the defendant No. 1 regarding the extra items of work and sought payment for the same, the claim is maintainable.

The plaintiff from time to time duly informed the defendant No. 1 that the plaintiff would be charging overhead expenses for the work executed beyond the stipulated date of completion. It is pertinent to mention here that these letters were never denied or disputed by the defendant No. 1 either contemporaneously or at any stage of the arbitral proceedings.

It has been pointed out that on multiple dates including 05.05.1990, 14.09.1990, 18.11.1990, 10.01.1991, 21.10.1992, 16.11.1992, 08.01.1993, 23.04.1993, 18.12.1993 and 31.05.1995, exhibited as Exhibits C-16, C-5, C-17, C-6, C-18 to C-22 & C-4, the plaintiff had requested the defendant No. 1 to take over possession of the site and release the payment. The said letters had clearly informed the defendant No. 1 that the watch and ward expenses incurred by the plaintiff would have to be borne by the defendant No. 1/DDA.

Learned counsel for the plaintiff also placed reliance on DDA Circular Nos. 509, 510 and 520 governing watch and ward charges to corroborate their claim.

It is further submitted on behalf of the plaintiff that the contention by the defendant No. 1 that the plaintiff had given an undertaking on 08.11.1990 is devoid of any force since no such defence was put forth by the defendant No. 1 in its counter statement of facts in the arbitral proceedings. Even assuming 08.11.1990 was written by the plaintiff, the plaintiff on the same day, i.e. 08.11.1990, protested and informed the defendant No. 1 that the undertaking was obtained under coercion and the said undertaking was withdrawn. Therefore, the arbitrator had correctly adjudicated the same.

I have heard the learned counsel for both the parties.

Before I proceed with the merits of the matter, it is pertinent to note that vide order dated 30.11.2007, it was recorded by the Arbitrator that the matter must proceed as per the Act.

Before dealing with the merits of the case, it is apposite to highlight the scope of interference under Sections 30 and 33 of the Act.

The Court can only set aside an Arbitral Award on the grounds mentioned in Section 30 of the Act and not otherwise. The scope of interference under Section 30 of the Act is limited, and the Court does not sit as a Court of appeal while adjudicating the objections against the Impugned Award. The Hon‟ble Supreme Court in NTPC Ltd. v. Deconar Services (P) Ltd., (2021) 19 SCC 694 summarized the scope of Sections 30 and 33 of the Act as under:

With this scope in mind, I shall now deal with rival contentions with respect to preliminary objections and claims.

The defendant No. 1 has contended that the claims by the plaintiff were time-barred as initial invocation of the arbitration was more than three years after actual completion of work and further that the subsequent letter dated 18.04.2007 seeking reference of the claims was also hopelessly barred by limitation. It was further stated that the plaintiff has waived off its claims with respect to the subject contract since it failed to raise them within 30 days of payment of the final bill i.e. on 31.05.1995, as required under Clause 7 of the Agreement.

The Arbitrator held that the plaintiff's claims were within limitation, finding that arbitration had first been invoked by letter dated 22.08.1995. It was further noted by the Arbitrator that the said invocation, being within 90 days of the final bill dated 31.05.1995 as required under Clause 25 of the Agreement, was itself within limitation. The defendant No. 1's contention that the claims were barred by the 30-day timeline for raising disputes under Clause 7 was rejected, since even after the final bill was paid on 31.05.1995, certain amounts remained withheld, and payments for extra items continued to be made till as late as 1998. The Arbitrator further noted that it was only due to inaction on the part of the Engineer Member, DDA, that the earlier arbitrator came to be appointed vide letter dated 24.02.2000. The letter dated 07.02.2007 was not a fresh invocation but merely a continuation of the reference dated 24.02.2000. The same was pursuant to the original invocation of 22.08.1995. The defendant No. 1's contention that additional claims had been raised for the first time in 2007 was also rejected by the Arbitrator observing that all the claims eventually referred to him formed part and parcel of the invocation made on 22.08.1995.

The relevant portions of the Impugned Award dated 31.01.2008 read as under:-

The defendant No. 1/DDA prepared the final bill only on 31.05.1995. Furthermore, no final completion certificate was issued even then by the defendant No. 1 for the work executed by the plaintiff.

In fact, the final bill was prepared and paid by the defendant No. 1 on 31.05.1995. The same admittedly withheld amounts to the tune of Rs. 91,928.65/-. The same as stated by the defendant No. 1 has been recorded in the order dated 22.10.2007 of the Arbitrator.

The relevant order dated 22.10.2007 reads as under:

Even otherwise, Clause 25 of the Agreement requires claims to be raised in writing within 90 days from intimation that the bill is ready. The relevant Clause 25 of the Agreement reads as under:

The plaintiff raised its claims on 22.08.1995 seeking reference to arbitration and therefore, the same were within a period of 90 days from 31.05.1995. Therefore, the contention of the defendant No. 1 that the disputes/claims were not raised well within the time as specified in the Agreement has been rightly rejected by the Arbitrator.

Furthermore, pursuant to the initial invocation letter dated 22.08.1995, the receipt for which is not disputed by the defendant No. 1, no action was taken by Engineer Member, DDA, and the Arbitrator was only appointed in 2000. Subsequently, only vide letter 24.02.2000, the Engineer Member, DDA, referred the disputes raised by the plaintiff to the appointed Arbitrator.

It has been rightly observed by the Arbitrator that the proceedings under the reference dated 24.02.2000 were in continuance when the letter dated 07.02.2007 was written by the plaintiff/claimant. The defendant No. 1 did not challenge the reference dated 24.02.2000, which was pursuant to invocation dated 22.08.1995. Thereafter, on 10.07.2000, the Arbitrator adjourned the proceedings sine die.

The proceedings were restarted on 25.07.2006 by the successor Superintending Engineer, (Arbitration)-I, Shri S.S. Jain. Vide letter dated 07.02.2007, the plaintiff objected that the appointment was not in terms of Clause 25 and asked for an arbitrator to be appointed by name, which reads as under:-

The aforesaid letter expressly refers to the invocation of 22.08.1995 and the appointment of 24.02.2000, and was written while that reference was subsisting. On 26.02.2007, the Engineer Member, D.D.A. appointed Shri S.S. Jain by name to continue from the stage left off. The plaintiff objected again on 18.04.2007 and raised additional claims. The same were referred by the Engineer Member, D.D.A. to the Arbitrator by letter dated 23.05.2007, without prejudice to the defendant No. 1‟s contention, including limitation. The said letter dated 23.05.2007 reads as under:-

On a perusal of these letters, the Arbitrator held that the letter dated 23.05.2007 was in continuity with those of 24.02.2000 and 26.02.2007 and was the final reference. The letter dated 07.02.2007 was not a fresh invocation, and Clause 25 was invoked only once, on 22.08.1995. Although the plaintiff raised these objections initially, both parties thereafter participated. Pleadings were completed between June and September 2007, and the matter was concluded with the consent of the parties on 30.11.2007.

On the preliminary objections, the Arbitrator held that the claims were within limitation. He held that Clause 7 of the Agreement did not bar the claims, as the 30-day period runs from receipt or disallowance of payment and not from 31.05.1995, the defendant No. 1 itself having effected a recovery in August 1998 and no full and final settlement receipt was on record. He also held that the right to seek arbitration under Clause 25 is paramount and cannot be curtailed by any other provision.

A conjoint reading of the letters of 22.08.1995, 24.02.2000, 07.02.2007, 26.02.2007, 18.04.2007 and 23.05.2007 supports the Arbitrator‟s view. The letter dated 07.02.2007 was addressed while the reference of 24.02.2000 was still subsisting, and it relied on the original invocation of 22.08.1995. Its only object was to have the arbitrator appointed by name in terms of Clause 25, and it raised no fresh dispute. The Engineer Member‟s letters dated 26.02.2007 and 23.05.2007 were issued in response to that request and not as a fresh reference. The defendant No. 1 never challenged the reference of 24.02.2000, and the later letters expressly preserved its defences, including limitation. The discussion above also shows that Clause 7 of the Agreement does not bar the claims, and that the invocation of 22.08.1995 was within the time prescribed by Clause 25 of the Agreement. The Arbitrator‟s findings on limitation are thus based on the correspondence and the terms of the Agreement.

Hence, no fresh reference to arbitration was invoked by the plaintiff and the reference of disputes made to the subsequent arbitrator in 2007 was simply a continuation of the initial invocation of arbitration by the plaintiff in 1995.

The judgement of M/s Attar Singh & Brothers (supra) relied on by the defendant No. 1 to contend that the claims are barred by limitation is misplaced. In that case, the work was completed by the contractor in 1985, the release of payment by the contractor was first raised in 1987, while the arbitration clause was invoked only in 1992, and the final bill was prepared only after invocation of arbitration; the Court accordingly upheld the finding of the Arbitrator that the Contractor having failed to submit the final bill within six months of completion, had no option but to raise his claims within three years of the expiry of that six-month period, and could not wait endlessly for DDA to finalise the final bill before raising them.

However, in the present case, the defendant No. 1 was the one that initially extended the completion date up to 20.10.1990 without levy of compensation, issued only a provisional completion certificate, even approved extra work items till 1994, and only prepared the final bill on 31.05.1995, while still admittedly withholding money from it. The rule that a contractor cannot wait endlessly for the final bill to be prepared therefore has no application where it is the defendant No. 1 itself continued to give extra works to the plaintiff and did not issue a final completion certificate. In the present case, the work was continuing and had not come to an end.

The judgment in Bindra Builders (supra), relied on by the defendant No. 1, is equally misplaced. In that case, the work was completed on 27.12.1982 and the flats were handed over by 1984. The contractor first sought payment on 06.11.1984 but never submitted a final bill. It kept writing letters in 1985, 1986 and 1990, and invoked arbitration only on 30.09.1994, making its claims for the first time in May 1996. No completion certificate, provisional or final, was ever issued, and the final bill was prepared by the DDA only during the arbitral proceedings. The Court held that Clause 7 places the duty to submit the final bill on the contractor, and that in the absence of the words “whichever is later”, time for submitting runs from the date fixed for completion even where no certificate is issued. It held that Clause 25 only determines whether the demand for arbitration is in time and does not decide whether the claims themselves are barred. As the contractor had not submitted a final bill or invoked arbitration for over ten years after completion, the Court upheld the Arbitrator‟s finding that the claims were time-barred.

The facts of the present case are distinguishable from Bindra Builders (supra). In the present case, the defendant No. 1 only issued a provisional completion certificate and no final completion certificate was ever issued. Additionally, in the present case, the defendant No. 1 itself prepared the final bill on 31.05.1995, withheld amounts from it and also awarded and approved extra items of work subsequently.

Reliance placed by the defendant No. 1 on Naresh Kumar Gupta v. MCD, 2013 SCC OnLine Del 574, is also misplaced. In that case, the contractor never submitted a final bill, and none was ever prepared. The contractor‟s letters were disputed and were not found in the employer‟s records. Arbitration was invoked more than four years after completion, and the last payment itself fell beyond three years from the date the cause of action arose. In the present case, the defendant No. 1 itself prepared and paid the final bill on 31.05.1995 while withholding amounts from it, and the receipt of the plaintiff‟s letters dated 31.05.1995 and 22.08.1995 are admitted. Arbitration was invoked within 90 days of the final bill, as required by Clause 25. Further, the Division Bench in Naresh Kumar Gupta (supra) upheld the Arbitrator‟s finding on limitation, holding that the interpretation of the clauses of the contract lies wholly within the domain of the Arbitrator. That principle applies equally here, where the Arbitrator has taken a plausible view that the claims are within limitation.

The reference subsequently made vide letter dated 26.02.2007 to the Arbitrator included the adjudication on limitation.

The relevant portion of the letter dated 26.02.2007 reads as under:

Therefore, the reference made to the Arbitrator included the question of limitation. The Arbitrator's view on this issue is a plausible and reasonable view and this Court is therefore not required to interfere in the same.

Reliance is also placed on Tarapore & Co. v. Cochin Shipyard Ltd., (1984) 2 SCC 680 wherein it has been held that when a question of law has been specifically referred to the arbitrator, then the award of the arbitrator would be binding on the parties and the courts should not interfere with the same. The relevant paragraph reads as under:-

Keeping in view the limited scope of judicial interference with an Arbitral Award under Section 30 of the Act and that there is no error apparent on record or any perversity with respect to the Arbitrator‟s findings on the claims of the plaintiff being within limitation, the claims of the plaintiff were within limitation. Hence, I am not inclined to interfere with the same.

The objection qua limitation raised by the defendant No. 1 also extends to the re-opening of the arbitral proceedings after a period of more than 7 years and it is urged that the same is in conflict with Section 28 of the Act.

For reference, Section 28 of the Act reads as under:

The above provision clearly notes that the arbitrator cannot on his own enlarge the time. However, it is clear by reading the provision that sub-section (2) indicates one exception to the above rule that the arbitrator can enlarge the time, and that is when the parties agree to such an enlargement. This principle is discussed by the Hon‟ble Supreme Court in Hari Krishna Wattal v. Vaikunth Nath Pandya, (1973) 2 SCC 510 which reads as under:

It is relevant to note that, in consonance with the aforesaid, Clause 25A of the Agreement states that the Arbitrator may from time to time with the consent of the parties enlarge the time for making and publishing the award.

In this context, the relevant order of the Arbitrator dated 26.11.2007 and the application of the parties read as under:-

Furthermore, the defendant No. 1 having participated in the arbitration proceedings without objection after the appointment of a new arbitrator in 2007, even to the extent of agreeing to the enlargement of time for publishing of the arbitral award, is squarely covered by the principle of acquiescence. The Hon‟ble Supreme Court in Prasun Roy v. Calcutta Metropolitan Development Authority, (1987) 4 SCC 217 elaborated on the same, the relevant paragraph reads as under:

(emphasis supplied)

For the aforesaid reasons, it is clear that the defendant No. 1 consented, jointly with the plaintiff, to the extension of time for making and publishing the award, and acquiesced in the proceedings before the Arbitrator. Having done so, it cannot now contend that the proceedings are void for want of enlargement under Section 28 of the Act.

The defendant No. 1 has raised the objection of misconduct on part of the Arbitrator, relying on the judgment Seth Mohanlal Hiralal v. State of MP, (2003) 12 SCC 144, which states that the interference under Section 30 of the Act is not simply limited to a moral lapse but can also include a situation wherein the Arbitrator may arrive at certain finding by ignoring relevant material on record. The relevant paragraph reads as under:

Courts have repeatedly held that, where the Arbitrator has passed a reasoned award, interference is warranted only in cases of total perversity or a wrong proposition of law. This has been elaborated in Arosan Enterprises Ltd. v. Union of India, (1999) 9 SCC 449, which states as under:

(emphasis supplied)

A perusal of Arosan Enterprises (supra) shows that the Court does not sit in appeal over the award and cannot reappraise the evidence. Interference under Sections 30 and 33 of the Act is permissible in circumstances where the Arbitrator ignores material documents, reaches a conclusion inconsistent on the face of the award, is totally perverse, or proceeds on a wrong proposition of law. Where the award is reasoned, and two views are possible on facts or the law, the Court should not interfere merely because it could have taken a different view.

The defendant No. 1 does not allege bias, unfairness or denial of hearing. On the contrary, the defendant No. 1 has actively participated in the arbitral proceedings at every stage. A perusal of the arbitral records, especially the Impugned Award, makes it clear to me that contentions of both the parties have been properly considered and adjudicated upon by the Arbitrator, considering the express provisions of the Agreement between the parties, and the findings qua every claim have been arrived at with detailed reasonings.

I am of the view that the Arbitrator has considered all the material documents and averments of the parties at length and arrived at a conclusion which depicts no misconduct. A bare assertion that material documents were ignored, without providing proper details, cannot be regarded as misconduct.

The aforesaid was reaffirmed by the Hon‟ble Supreme Court in Goa, Daman and Diu Housing Board v. Ramakant V.P. Darvotkar, (1991) 4 SCC 293, while adjudicating under Sections 30 and 16 of the Act. The relevant paragraphs read as under:

Accordingly, the Impugned Award does not suffer from any infirmity amounting to misconduct, nor can it be said to have been improperly procured or to be otherwise invalid under Section 30 of the Act. The objections raised by the defendant No. 1 have been considered and found to be without merit to that extent, without prejudice to the findings on each claim below. With this principle in mind, I now proceed to deal with the merits of the claims.

A total sum of Rs. 1,52,532/-, as against the claim amount of Rs. 2,03,376/-, was awarded by the Arbitrator on account of straightening and cutting steel to the required sizes, being an extra item of work.

It is contended on behalf of the defendant No. 1 that the Impugned Award wrongly grants the said amount because Agreement item 3.7 already covers the complete operation of cutting, straightening, bending, binding and placing in position of the steel, in line with CPWD Specifications Vol. I (1977), paras 5.3.1, 5.3.2 and 5.3.4. It is also stated that Clause 42 (i) and (ii) allows 3% wastage for cutting into pieces, which shows that cutting and straightening are part of the contracted work and not an extra item.

The Arbitrator took the view that the agreement item No. 3.7(a) and 3.7(b) provided only for the reinforcement for R.C.C. work including bending, binding and placing the position complete and the same cannot be read to include cutting and straightening of steel. He held that the cost towards the same must be treated as an extra item. The view of the Arbitrator is reproduced hereinbelow:-

Objection has been raised to the awarded amount under the said claim by the defendant No. 1 by placing reliance on Anant Raj (supra) where a claim for straightening bent-up steel was set aside by following the judgement in Wee Aar Constructive Builders (supra). The relevant paragraphs read as under:-

The judgment of Wee Aar Constructive Builders (supra), however, distinguished another judgement of K.C. Chhibar v. Delhi Development Authority on the ground that there the contractor had notified the DDA about straightening as an extra item and DDA did not object to the same. However, in Anant Raj (supra), the contractor showed no such communication. The relevant paragraph reads as under:-

In the present case, there were clear communications by the plaintiff to the defendant No. 1 about the said extra item of cutting and straightening of steel. The records of these communications are available, and the same are reproduced hereinbelow:-

In view of these communications, the judgments in Wee Aar Constructive Builders (supra) and Anant Raj (supra) relied upon by the defendant No. 1 are clearly distinguishable on facts. The principle in K.C. Chhibar (supra) squarely applies, as such communications are the decisive factor in such cases, and the Arbitrator‟s view is consistent with it. The same view has been reaffirmed by this Court also in P.C. Sharma & Co. v. DDA, 2011 SCC OnLine Del 5149, which states as under:-

While the aforesaid letters have not been adverted to in the Impugned Award, they are available on the record before the Arbitrator. The Arbitrator awarded the sum of Rs. 1,52,532/- in the Impugned Award under Claim No. 1(4), on the footing that agreement items 3.7(a) and 3.7(b) do not cover cutting and straightening of steel.

Furthermore, the objections of the defendant No. 1 based on Clause 42 (i) and (ii) were not raised before the Arbitrator. A party cannot be permitted to raise a new plea for the first time before the Court in proceedings under Sections 30 and 33 of the Act, as the Arbitrator had no occasion to consider it. Reliance has been placed on Harish Chandra & Co. v. State of U.P., (2016) 9 SCC 478 for the same, the relevant paragraphs for which read as under:-

Therefore, the view taken by the Arbitrator is plausible and reasonable and based on the material placed before the Arbitrator. I find no infirmity in the findings of the Arbitrator with respect to Claim No. 1(4). The objection of the defendant No. 1 to the same is accordingly rejected.

A total sum of Rs. 20,26,935/-, as against the claim amount of Rs. 47,85,000/-, was awarded by the Arbitrator under Additional Claim No. 1, on account of compensation and damages for the prolongation of the contract period by 1453 days.

The learned counsel for defendant No. 1 contends that the sum of Rs. 20,26,935/- was wrongly awarded under this head, since the plaintiff itself caused the slow progress of work by taking several extensions of time and had given express undertakings not to claim damages for the extended period, relying on Clauses 10, 10CC and 22 and Condition No. 1 of the “Specifications and Conditions”. It is also contended that the plaintiff suffered no financial loss and that the Arbitrator arbitrarily awarded 50% of the claim, going beyond the terms of the agreement and relying on a letter dated 08.11.1990 that was never served on defendant No. 1. It is further stated that, under Section 74 of the Indian Contract Act, 1872, the plaintiff had to prove actual loss and mitigation of losses, which it failed to do satisfactorily.

The Arbitrator noted that the work was admittedly delayed by 1453 days, and that during this period the work was being carried out by the plaintiff in full swing. He held that the undertaking recorded on the application for extension of time, if voluntary, would at most bar a claim for damages and not the recovery of actual expenses incurred, and that the salary of the site staff is not “damages”. He also found force in the plaintiff‟s case that the undertaking was recorded under coercion, since the plaintiff had withdrawn it on 08.11.1990, the same day, by a letter dated 08.11.1990 to which the defendant No. 1 gave no reply. The Arbitrator further observed that nothing but vague averments had been placed on record to show that the plaintiff was liable for the delay, and that the absence of any penalty for the delay supported this. Since the plaintiff was bound to employ minimum staff and pay their salary during the extended period, the Arbitrator allowed 50% of the claimed salaries of Rs. 2,790/- per day for 1453 days, and awarded Rs. 20,26,935/-.

The objection raised by the defendant No. 1 that the plaintiff gave an express undertaking dated 08.11.1990 not to seek damages for the extended period of contract has already been dealt with by the Arbitrator. The plaintiff had immediately withdrawn such undertaking on the same day as it was given, vide letter dated 08.11.1990. The relevant observation of the Arbitrator reads as under:-

A perusal of the documents on record shows that the plaintiff/contractor had addressed multiple letters dated 17.10.1986, 15.11.1986, 17.3.1987, 31.1.1987, 9.10.1987, 19.1.1988, 12.3.1988, 27.2.1989, 04.5.1989, 3.9.1989, 5.5.1990, 14.9.1990, 8.11.1990, 10.1.1991, 20.10.1992, 16.11.1992, 8.1.1993, 23.4.1993, 18.12.1993 and 31.5.1995, exhibited as Exhibits C-9, C-10, C-11, C-2, C-12, C-13, C-8, C-3, C-14, C-15, C-16, C-5, C-17, C-6, C-18, C-19. C-20, C-21, C-22 & C-4, informing the defendant No. 1 about the overhead expenses of the work that was being executed beyond the stipulated date of contract completion. Details of salaries paid to staff and other relevant expenses were submitted by the plaintiff from a period lasting 1453 days w.e.f. 24.10.1986 to 20.10.1990. The findings of the Arbitrator with regard to the same are as under:-

On the other hand, the reliance placed by the defendant No. 1 on ML Mahajan (supra) and Ram Nath International (supra) is misplaced. Both the judgements concern the principle that an arbitrator cannot award compensation that the contract bars in express terms. The relevant paragraph in ML Mahajan (supra) reads as under:-

However, unlike ML Mahajan (supra) and Ram Nath International (supra), Clause 10 of the present Agreement is confined to delay due to non-supply of materials and stores. In the present case, the plaintiff is seeking compensation and damages due to prolongation of the contract period, i.e. salaries of employees, and the same is not covered under Clause 10 of the Agreement.

Furthermore, Clause 10CC of the Agreement is essentially an escalation clause that compensates for increases in the prices of the material and wages, on the condition that the same was either within the contract period or during a period validly extended under the contract, also subject to the condition that no such compensation shall be payable if the stipulated period of completion is 6 months or less. Therefore, it is clear that the Additional Claim No. 1 is not a claim for escalation. In fact, what has actually been awarded in the present case is the actual cost of salaries paid to the site staff during the extended period. Therefore, the amount awarded does not result in duplication under Clause 10CC of the Agreement.

The reliance placed by the defendant No. 1 on Condition No. 1 of the „Specifications and Conditions‟ is also misplaced. The Condition bars a claim for extra payment or compensation where part of the site is unavailable, or there is an unavoidable delay in the supply of material. It does not bar the cost of keeping staff at the site during a prolongation that is not shown to be the plaintiff‟s fault. The Arbitrator found nothing on record to suggest that the plaintiff was liable for the delay, and the defendant No. 1 itself extended the time for completion without levying compensation

The Hon‟ble Supreme Court in Northern Railway v. Sarvesh Chopra, (2002) 4 SCC 45 highlighted the circumstances wherein even if the contractor has undertaken not to make any claim for delay in performance of the contract occasioned by an act of the employer, still a claim for compensation due to prolongation of the contract period would be entertainable. It was observed as follows:

Further, the plaintiff put the defendant No. 1 on notice of its claim for the prolongation. By letters dated 17.10.1986 to 31.05.1995 (exhibited as Exhibits C-9, C-10, C-11, C-2, C-12, C-13, C-8, C-3, C-14, C-15, C-16, C-5, C-17, C-6, C-18, C-19, C-20, C-21. C-22 & C-4), the plaintiff repeatedly informed the defendant No. 1 of the overhead expenses being incurred beyond the stipulated date and furnished details of salaries paid. It also withdrew its undertaking on 08.11.1990, the same day it was given. The defendant No. 1 nonetheless accepted performance without protest, which brings the case within the circumstances recognised in Sarvesh Chopra (supra).

For the said reasons, the view of the Arbitrator is both plausible and reasonable and does not warrant my interference under Sections 30 and 33 of the Act.

A total sum of Rs. 7,57,423/- as against the claim amount of Rs. 33,34,450/- was awarded by the Arbitrator towards watch and ward staff deployed for the security of the completed houses till they were taken over by the defendant No. 1/DDA.

The defendant No. 1 contends that the Arbitrator wrongly awarded the aforesaid amount as the plaintiff never proved it was directed to engage staff, or produced wage records, and that the plaintiff‟s claimed staffing is implausible and fabricated. It also contends that the Rs. 7,700/-monthly rate was never part of the Agreement and the defendant No. 1‟s circulars relied on by the plaintiff postdate the work.

By the Impugned Award, the Arbitrator noted that, although completion of the work was recorded on 20.10.1990, the remaining flats were taken over by the defendant No. 1 only on 31.12.1998. The contention of the defendant No. 1 that the completion certificate was conditional and that the plaintiff was bound to rectify defects was rejected, as the conditions merely obliged the plaintiff to rectify defects as and when they were pointed out, and no notice for rectification was ever issued. The Arbitrator further relied on the plaintiff‟s correspondence requesting the defendant No. 1 to take over possession and cautioning that it would be liable for the salary of the Chowkidars, and recorded that the defendant No. 1 had neither denied receipt of the said correspondence nor disputed the employment of 24 Chowkidars. The Arbitrator also took into account the circulars of the Delhi Development Authority providing for watch and ward charges during the extended period of a contract. Accordingly, the Arbitrator allowed charges at the rate of Rs. 7,700/-per month, amounting to Rs. 4,40,183/- for the period from 21.10.1990 to 25.07.1995 under Additional Claim No. 2, and Rs. 3,17,240/- for the period from 26.07.1995 to 31.12.1998 under Additional Claim No. 3. The relevant findings of the Arbitrator read as under:-

It has been categorically admitted by the defendant No. 1, during the proceedings dated 25.10.2007, stated that possession of 239 out of 256 flats remained in the plaintiff‟s possession until they were handed over to the allottees up to 31.12.1998, which reads as under:-

Furthermore, in the Counter Statement of Facts, the defendant No. 1 stated that possession of the flats was with the plaintiff here till the handing over of the same to the allottees. The relevant paragraphs of the same read as under:

The Arbitrator has rightly pointed out that the defects as referred to in the aforesaid extract have not been disclosed in any way whatsoever by the defendant No. 1. Among the 16 conditions recorded by the defendant No. 1 at the time of completion, not even one was in the form of a defect. Rather, they only created an obligation on the plaintiff to rectify such defects, in case the said defects arose in the future.

A perusal of the documents shows that the plaintiff had made multiple requests asking the defendant No. 1 to take over possession of the site and even put the defendant No. 1 on notice that if the same is not done, defendant No. 1 would be liable to pay salary of the security stationed at the site along with interest. Details of the same were also divulged by the plaintiff vide letter dated 20.10.1992, exhibited as Exhibit C-18, and other subsequent letters addressed to the defendant No. 1.

Reliance has further been placed by the Arbitrator on the defendant No. 1/DDA‟s circulars bearing Nos. 509, 510 and 520, as per which contractors were entitled to watch and ward charges during the operation of the Agreement‟s extended period of an agreement for housing and similar construction projects.

The Arbitrator has also rightly relied on K.R. Builders (P) Ltd. v. DDA, 2007 SCC OnLine Del 1333 wherein in a similar factual matrix, the claim for watch and ward charges was awarded by the Court basing the same on the above referred circulars of defendant No. 1/DDA. The relevant paragraphs read as under:-

Therefore, the view taken by the Arbitrator is plausible and reasonable and based on the material placed before the Arbitrator, and does not warrant my interference under Sections 30 and 33 of the Act.

A simple interest of 18% per annum was awarded on the amount under claim Nos. 1, 2, 3 and additional claim No. 1 with effect from 20.04.1991 to 22.08.1995 (the date of invocation of Clause 25 of the agreement). Thereafter, the awarded amounts carried simple interest of 10% per annum till the date of the award. Simple interest of 10% per annum was also awarded on the amount under additional claim No. 2 from 22.08.1995 till the date of the award, and on the amount under additional claim No. 3 from 01.01.1999 till the date of the award. The awarded amount further carries future simple interest of 8% per annum till the date of realisation, as against a claim of 24% per annum for pre-suit, pendente lite and future interest.

The defendant No. 1 has disputed the said amount awarded as interest on account of same being excessive and in the nature of punitive interest.

The view of the Arbitrator is as under:-

In a catena of judgements, it has been stated that an arbitrator is not prohibited from granting interest under the Act. The Hon‟ble Supreme Court in Ferro Concrete Construction (India) (P) Ltd. v. State of Rajasthan, 2025 SCC OnLine SC 708 held as under:-

A similar view has been taken by a two-judge bench of the Hon‟ble Supreme Court in Pam Developments (P) Ltd. v. State of W.B., (2024) 10 SCC 715, the relevant paragraph for which reads as under:-

A perusal of the aforesaid clearly shows that view of the Arbitrator is reasonable and plausible, and does not warrant this Court‟s interference under Sections 30 and 33 of the Act.

A total sum of Rs. 1,41,151/-, as against the claim amount of Rs. 1,60,151/-, was awarded by the Arbitrator, being the refund of the amount deposited by the plaintiff on 02.09.2004 as per direction of defendant No. 1 vide their letter bearing No. EE/HD.XXIII/A/I(180)2004-05/1131 dated 03.08.2004.

The defendant No. 1 has argued that the said claim was never referred by the Engineer Member, DDA, and therefore, the Arbitrator exceeded his jurisdiction. The defendant No. 1 having responded to the merits of the claim does not give authority to the arbitrator to adjudicate on the same, if it does not already exist.

The Arbitrator noted that the defendant No. 1 sought the recovery for the first time by its letter dated 03.08.2004, about nine years after the final bill and fifteen years after completion of the work, on the threat of blacklisting, and that the plaintiff deposited the amount under protest. The Arbitrator rejected the objection to maintainability. He held that the cause of action arose only in 2004, and the plaintiff sought arbitration of the claim by its letter dated 18.04.2007, and that the claim was duly referred through the letter dated 23.05.2007 of the Engineer Member, DDA. The same was within limitation, and directly related to the Agreement. He further noted that the defendant No. 1, despite raising the objection, filed a reply and argued the claim on merits. The Arbitrator held as under:-

With respect to jurisdiction, the Arbitrator had already held that the letter dated 23.05.2007 is the final reference, and the claim was raised by the plaintiff in its letter dated 18.04.2007, which the reference covered.

On merits, the Arbitrator found that the defendant No. 1 neither pleaded nor placed on record any document to justify the recovery. The deviation statement was never produced, its date of approval was not stated, and no notice was given to the plaintiff after the final bill was paid. There was no justification for a recovery under Clause 12 more than nine years after the final bill, when the extension of time had been granted on 08.11.1990 and any variation in rates could have been accounted for in the final bill itself.

The defendant No. 1, by its letter dated 03.08.2004, directed the plaintiff to deposit a sum of Rs. 1,60,151/- on account of the sanction of a deviation item under Clause 12 of the Agreement, and the plaintiff deposited it on 02.09.2004 under threat and compulsion. The defendant No. 1 admitted the demand and the deposit in its Counter Statement of Facts, the relevant paragraph is reproduced hereinbelow:

The only justification offered was that the deviation statement was approved after the final bill was paid. Once the demand and the deposit are admitted, it was for the defendant No. 1 to justify the recovery but it adduced no material to do so. A deposit made under threat of blacklisting is also not voluntary, and the defendant No. 1 cannot treat it as a settlement. The Arbitrator was therefore entitled to direct a refund.

Therefore, the view of the Arbitrator is both reasonable and plausible, and does not warrant this Court‟s interference under Sections 30 and 33 of the Act.

Therefore, I am of the view that the defendant No. 1 has failed to make out any ground under Sections 30 and 33 of the Act. The claims are held to be within limitation, and Clause 7 of the Agreement creates no bar. Arbitration was invoked once, on 22.08.1995, and the reference of 23.05.2007 was a continuation of that invocation. The defendant No. 1 consented to the enlargement of time for making and publishing the Award and participated in the proceedings, and cannot now invoke Section 28 of the Act. The defendant No. 1 has also not shown any misconduct on the part of the Arbitrator, any error apparent on the face of the Awards, or any perversity. It has failed to demonstrate that the Arbitrator allowed any claim contrary to any clause of the Agreements. The Awards are reasoned, and the findings on each claim are based on the pleadings and documents before the Arbitrator.

In the circumstances, I find no grounds to interfere with the Impugned Awards dated 31.01.2008 and 28.01.2008 passed by the Arbitrator. The objections of the defendant No. 1 are rejected and accordingly, I.A. Nos. 4749 of 2008 and 4753 of 2008 are dismissed.

Accordingly, the Awards dated 31.01.2008 and 28.01.2008 are made Rule of the Court. Decree sheets be drawn up accordingly.

The suits are disposed of in the aforesaid terms with pending applications, if any.