IN THE HIGH COURT OF DELHI AT NEW DELHI

SUBJECT : ARBITRATION AND CONCILIATION ACT

Date of Reserve: 19.1.2009

Date of Order: January 28, 2009

CS(OS) No. 1033A/1996

Puran Chand Nangia

(represented by M/s Nangia Constructions (India) Pvt. Ltd.) ... Petitioner
Through: Mr. Raman Kapur, Advocate

Versus

DDA ... Respondents

Through: Mr. Deepak Khadaria, Advocate with
Ms. Sangeeta Chandra, Advocate

1. The petitioner, earlier a proprietary firm but later converted into a company, was
awarded the work of construction of houses under SFS category II in Paschimi Puri in
pursuance of contract no. 6/EE/DD-VI/DDA/84-85. The date of commencement of work,
as per the contract, was 17.8.1984 and the date of completion was 16.8.1985. The
respondent granted extension of time for completion of work under the terms of the
contract up to 9.5.1988, without imposing any penalty. The work was completed on
30.6.1988. The extension of time from 9.5.1988 to 30.6.1988 was granted with
imposition of a penalty of Rs.5,000/-. The final bill of the work was made by DDA on
30.5.1995. The petitioner raised certain disputes in respect of the amounts disallowed in
the final bill and in terms of clause 25 of the contract; the matter was referred to
arbitration. The learned Arbitrator entered upon reference and made and published its
award on 12.4.1996. The respondent, aggrieved by the award filed objections under
Sections 30 and 33 of the Arbitration Act, 1940. These objections were disposed of by
this Court vide order dated 22.2. 2006. However, after disposal of these objections, an
application was made by the petitioner/claimant for substituting the name of the
petitioner as M/s Nangia Constructions (India) Pvt. Ltd. in place of Shri Puran Chand
Nangia, in whose favour the award was passed. A notice of this application was served
upon the respondent and vide order dated 12.11.2008, the application was allowed and in
place of Shri Puran Chand Nangia name of M/s Nangia Construction (India) Pvt. Ltd.
was allowed to be substituted. However, while allowing this application and substitution
of name, this Court observed that the order dated 22.2.2006 passed by this Court in
favour of Shri Puran Chand Nangia will have to be recalled and DDA/respondent shall
have right to take objections afresh against the substituted petitioner.

2. The arguments of the parties on objections have been heard afresh and this order
shall now dispose of the objections raised by the defendant under Section 30 and 33 of
the Arbitration and Conciliation Act against the award afresh.

3. The Counsel for the respondent/DDA raised objections against only some of the
claims allowed by the learned Arbitrator in favour of the claimant; these are claim no. 5,
claim no. 6, claim no. 14 and claim no. 15.
4. Vide claim no. 5 the learned Arbitrator awarded Rs.5,000/- to the claimant
stating that he did not agree with the decision of the Executive Engineer/Superintending
Engineer of levying the penalty of Rs.5,000/- for extension of the time from 9.5.1988 to
30.6.1988. It is apparent that the learned Arbitrator went wrong in awarding this amount
of Rs.5,000/- to the claimant. It is settled law that an Arbitrator is bound by the contract
between the parties and he cannot re-write the contract, neither can create a new contract
between the parties. In terms of contract between the parties, the Superintending Engineer
was the competent authority to levy the penalty under clause 2 of the Contract for
extension of time and the decision of the Superintending Engineer was final. The learned
Arbitrator could not have sat upon the decision of the Superintending Engineer and
expressed his disagreement with the decision of the Superintending Engineer of levying
penalty. The award of claim no. 5 is, therefore, set aside as Superintending Engineer was
the final authority, both in respect of attributability of delay as well as quantum of
damages.

5. The next objection of the respondent is to claim no. 6 on account of clause

10(cc) for escalation of material and labour rate. The Counsel for respondent contended
that amount under the said clause had already been paid to the petitioner calculated up to
9.5.1988 and the petitioner was not entitled to any further amount for the period beyond
the said date i.e. till 30.6.1988. It is further submitted that no unconditional extension was
given to the claimant after 9.5.1988 and extension after 9.5.1988 till 30.6.1988 was given
only subject to penalty. The petitioner was not entitled to any escalation in costs and
labour after 9.5.1988 and upto 30.6.1988. The learned Counsel submitted that in fact
excess amount of Rs.4 lac had been paid to the petitioner/claimant. On the other hand,
learned Counsel for the claimant submitted that the claimant had not claimed any
escalation after 9.5.1988 and what has been awarded by the Arbitrator to the claimant
was escalation for the period up to 9.5.1988 only. A perusal of the documents produced
by the parties before the learned Arbitrator shows that the petitioner had taken a stand
before the learned Arbitrator that the payment had been made under clause 10(cc) taking
into account index of April, 1988 instead of taking into account the index of May, 1988.
The difference of Rs.1,46,192/- was claimed by the claimant by applying the index of
May 1988 instead of April 1988. It is not disputed between the parties that the work had
completed upto 9.5.1988 and practically no work was done from 9.5.1988 to 30.6.1988
except some minor work. It is petitioners own case that he had calculated escalation only
up to 9.5.1988. In order to apply index of May, 1988 it was necessary that the claimant
had done work on project during entire month of May, 1988 and extension upto
31.5.1988 had been granted without penalty. Since the extension of time was granted to
the petitioner/claimant beyond 9.5.1988 subject to penalty of Rs.5,000/-, the petitioner
was not entitled for any escalation in labour or material after 9.5.1988. Since only 9 days
of May, 1988 were involved, the petitioner would have been entitled to claim escalation
for the labour and material only on the basis of index of April 1988 and not at the index
of May, 1988. The learned Arbitrator had not given any reason in claim no. 6 as to why
an amount of Rs.1,46,912/- had been allowed by the learned Arbitrator as difference in
escalation calculated on the basis of index of April, 1988 and May, 1988. It looks as the
learned Arbitrator had allowed claim no. 5 and held that imposition of penalty of
Rs.5,000/- was wrong, the learned Arbitrator seemed to be laboring under an impression
that the claimant was entitled for escalation right up to 30.6.1988 and he agreed to the
claim of the claimant of the difference between the escalation awarded by the
respondent/objector on the index of April, 1988. There is no dispute that the claimant had
received escalation in respect of labour and material in terms of the contract on the basis
of index of April, 1988, I consider that the learned Arbitrator was bound by the terms of
the agreement. Since, the respondent was entitled for escalation only for the period when
extension was allowed without penalty and this extension was allowed only up to
9.5.1988, the petitioner/claimant was entitled to claim escalation only on the basis of
average index of April, 1988 and not on the basis of average index of May, 1988 wherein
the petitioner had worked only for 9 days. I therefore consider that the claim of
Rs.1,46,192/- was wrongly and unjustly allowed by the Arbitrator and I hold accordingly.

6. The third claim assailed by the respondent is the one awarded under claim no.
14. The learned Arbitrator had awarded an amount of Rs.5,21,400/- to the claimant on
account of loss sustained due to prolongation of contract upto 30.6.1988. There is no
dispute about the fact that the work which was to be completed by 16.8.1985 got
prolonged upto 30.6.1988. The extension upto 9.5.1988 was granted to the claimant
without any penalty meaning thereby that the delay was not attributable to the claimant.
The penalty was imposed only for period from 9.5.1988 to 30.6.1988, which is about one
month 20 days delay. The learned Arbitrator had gone into this claim in detail and had
taken into account the proportion of work done during the period provided under the
contract and the proportion of work done during the extended period and in the light of
this had considered the claim of the claimant and came to the conclusion that the claimant
was not entitled to Rs.9,60,000, as claimed, but was entitled to Rs.5,21,400/-. He had not
given the detailed calculations for this. It is settled law that where a technical man is
appointed as an Arbitrator because of his familiarity with the nature of trait, he is not
expected to write a judgment in the form which is written by the judges and the Court
should not interfere into the award on the ground that detailed reasons have not been
given. I find that the learned Arbitrator in this case had given his calculation as to how he
had arrived at the amount and I find no reason to interfere with the broad calculations
given by the Arbitrator for arriving at this amount. It is not the case that the
contractor/claimant was not entitled to any amount in terms of the contract, even if the
contract got prolonged apart from escalation etc. I, therefore, consider that the objection
of the respondent on this count is liable to be rejected.

7. The respondent has raised next objection against claim no. 15 viz. on account of
losses suffered by petitioner for late handing over of the quarters of department to the
allottees. The petitioner/claimant had claimed this amount because the claimant was
thrusted upon a responsibility of keeping a watch and ward staff and necessary
supervisory/technical staff to keep on handing over possession of quarters to the allottees
from time to time at the instance of DDA. DDA had given completion certificate to the
petitioner/claimant on 30.6.1988 wherein it was written that the work had been completed
without any ostensible defects. Some of the left out items were of fixing of glasses, fixing
of sanitary-ware in bathroom, fixing of handles, brass items chinaware etc. It is apparent
that DDA had asked the contractor to withhold these fittings and fixtures because of fear
of theft etc. If DDA wanted to take possession of these quarters, DDA was free to take
possession of these quarters from the claimant on 30.6.1988 itself, asking the contractor
to fix all these items or DDA was free not to give completion certificate to the contractor
till the contractor first completed the flats in all respects and handed over the possession
of the flats and to deploy its own watch and ward staff and handover possession to the
allottees itself. It is admitted case that DDA had not handed over possession of the flats to
the allottees itself and it was staff of claimant, who used to handover the possession of
the flats from time to time to allottees, at the instance of DDA. The claimant was
burdened with the responsibility of keeping watch and ward staff and maintaining store
and supervisory staff in the quarters so that the possession of the quarters was handed
over to the allottees from time to time. This allotment of quarters continued from 1988 till
1995 i.e. for about 07 years and the learned Arbitrator had considered the claim of the
petitioner in the light of a spread over of the allotment and awarded claim after taking
into account all these factors. I find that there is no infirmity in this award on account of
this claim.

8. As a result of my above discussion except claim no. 5 and 6 the claimant is

entitled to rest of the amount awarded by the Arbitrator. The award in respect of claim
no. 5 and claim no. 6 is set aside, rest of the award is made rule of the Court.
 Sd./-
January 28, 2009 SHIV NARAYAN DHINGRA, J.