Associate Builders vs Delhi Development Authority

2. The appellant herein was awarded a certain construction work contract by the DDA vide a letter of award dated 14th May, 1992. DDA was building a colony consisting of 7,000 houses in Trilok Puri in the trans-Yamuna area. 168 Middle Income Group houses and 56 Lower Income Group houses, Grade-A Pocket- B (balance work) was awarded for the tendered amount of Rs.87,66,678/-. The contract was to be completed in 9 months. Admittedly, it was ultimately completed only in 34 months, the contractor completing 166 Middle Income Group houses and 36 Lower Income Group houses. The total value of work that was done amounted to Rs.62,84,845/-. As many as 15 claims were made by the contractor and the High Court of Delhi appointed one Shri K.D. Bali to arbitrate the present dispute.

d) That the detail of this claim has been outlined and appended separately and the same shall from part of the statement of facts.

Claim No. 11: Rs.2,00,000/- payable as damages on account of hire charges of tools & plants and scaffolding.

b) That the said articles remained at site beyond the stipulated period and the claimants suffered loss due to the said prolongation.

b) That the detailed break-up of this claim is appended with the statement of facts."

5. Though the challenge to claims 2, 3 and 4 were given up before the Division Bench, they are also relevant and read as follows:

d) That however, a consolidated bill was furnished the respondents for a sum of Rs. l,62,287/-. Even the said payment has not been liquidated so far.

Claim No. 4: Claimants claim Rs.12,922/- payable by virtue of clause 10-C of the agreement and up to the stipulated period

The said hindrance was removed lastly on 28.3.95.

VIII) That the Respondents also abnormally delayed the supply of door shutters which were to be supplied by the Respondents. The same were supplied as late as 8.11.94.

3. We are concerned here with claims 9, 10, 11 and 15, for these claims have been allowed by the Arbitrator and the DDA's objections have been dismissed by the learned Single Judge of the High Court of Delhi. The Division Bench in an appeal under Section 37 of the Arbitration Act, 1996 has stepped in to set aside the judgment of the Single Judge and negative these claims. We are also concerned with claims 12 and 13 which have been scaled down by the Division Bench.

16. Obviously, the Division Bench has exceeded its jurisdiction in interfering with a possible view of the Arbitrator on facts.

18. Thus, the award pertaining to Claim Nos. 9, 10, 11 and 15 is liable to be sent aside and it is so set aside. We need not therefore take corrective action on the apparent error i.e. the learned Arbitrator has worked out the claim on the original contract value of Rs. 87,66,678/-, of course by reducing it by 15%, but ignoring that final work executed was only in sum of Rs.62,84,845/-."

22. Here again, the Division Bench has interfered wrongly with the arbitral award on several counts. It had no business to enter into a pure question of fact to set aside the Arbitrator for having applied a formula of 20 months instead of 25 months. Though this would inure in favour of the appellant, it is clear that the appellant did not file any cross objection on this score. Also, it is extremely curious that the Division Bench found that an adjustment would have to be made with claims awarded under claims 2, 3 and 4 which are entirely separate and independent claims and have nothing to do with claims 12 and 13. The formula then applied by the Division Bench was that it would itself do "rough and ready justice". We are at a complete loss to understand how this can be done by any court under the jurisdiction exercised under Section 34 of the Arbitration Act. As has been held above, the expression "justice" when it comes to setting aside an award under the public policy ground can only mean that an award shocks the conscience of the court. It cannot possibly include what the court thinks is unjust on the facts of a case for which it then seeks to substitute its view for the Arbitrator's view and does what it considers to be "justice". With great respect to the Division Bench, the whole approach to setting aside arbitral awards is incorrect. The Division Bench has lost sight of the fact that it is not a first appellate court and cannot interfere with errors of fact.

The contractor shall, within a reasonable time of his becoming aware of any alteration in the prices of any such materials and/ or wages of labour give notice thereof to the Engineer-in- Charge stating that the same is given in pursuance to the condition together with all information relating thereto which he may be in a position to supply."

If part of site is not available for any reasons or there is some unavoidable delay in supply of materials stipulated by the Departments, the programme of construction shall be modified accordingly and the contractor shall have no claim for any extras or compensation on this account."

28. The Single Judge is clearly right. We have gone through all the 15 claims supplied to us and we find that none of these claims are in fact overlapping. They are all contained under separate heads. This argument, therefore, must also fail.

29. The appeal is, therefore, allowed and the judgment of the Division Bench is set aside. The judgment of the Single Judge is upheld and consequently, the Arbitral award dated 23rd May, 2005 is as a whole upheld. There will be no order as to costs.

It is very important to bear this in mind when awards of lay arbitrators are challenged.