A.M. Bhutani vs Union of India

Usha Mehra, J.—Mr. A. M. Bhutani, entered into an agreement with respondent-Union of India for the work of construction of Govt. Higher Secondary School for 720 students at Railway Colony, Tughlakabad, New Delhi. The said agreement contained an arbitration Clause No. 2 which provided that in case of any dispute and difference between the parties the matter shall be referred to arbitration. The dispute arose between the parties pursuance to which the respondent appointed an arbitrator who after adjudicating the claims and counter claims referred to him, made and published his award on 4-4-1988. The award was filed in the Court. The notice of the filing of the award was inserted to the parties. The petitioner has not filed any objections, however the Union of India has filed the objections to the impugned award made and published by Mr. J. P. Singhal, the sole arbitrator, which are listed as I.A. No. 351/89.

The main objection against the award raised by the Union of India is that the arbitrator could not have rejected the Counter Claim No. 1 and 3 of the respondent. In Counter Claim No. 3 the respondent had claimed the compensation to the tune of Rs. 7,30,953 on account of delay in execution of the work. According to the objector, there was a delay on the part of the contractor in completing the work. The stipulated date of completion was 8-5-1980, but the petitioner did not complete the same in time. Therefore, the claim was lodged with the arbitrator. The arbitrator without assigning any reason rejected this counter claim. In fact as per the agreement the stipulated date of commencement of the work was 7-4-1979, but the actual work never commenced as per schedule.

The Union of India alleges that it led evidence before the Arbitrator to prove that the petitioner did not commence the work on the stipulated date. It is also alleged that petitioner was supplied all the drawings and details of foundation, still he did not commence this work as per agreement. Moreover the reasoning given by the arbitrator regarding the delay and non completion of the work within the stipulated period due to the fault of the respondent is not based on any evidence. It is contrary to the overwhelming evidence produced on the record. It was not correct on the part of the arbitrator to have reached the conclusion that the drawings were supplied late i.e. after the stipulated date of completion. In fact the evidence led in this regard has been completely ignored by the arbitrator. It was pointed out before the Arbitrator that the drawings were supplied much before the date of completion. Therefore, the arbitrator was not right in arriving at the conclusion that the delay was caused in the execution of work by the respondent/objector. Even the remarks by the Arbitrator that delay in execution of the work was also due to bad quality of cement and steel supplied by the objector is without foundation. As a matter of fact the evidence led in this behalf has been completely ignored by the arbitrator. Since the petitioner committed breach of the agreement, and the time was the essence of the contract, Therefore, the arbitrator was not justified is not appreciating that no new date of completion was fixed nor time was extended for completion. Therefore, the observation of the arbitrator that the time ceased to be the essence of the work or time was no more essence of the work on the face of it is wrong.

The above arguments of Ms. Sudha Srivastava, Counsel for the objector have been refuted by Mr. D. P. Sharma, Counsel for the petitioner. According to him the arbitrator took into account all the relevant documents placed before him by way of evidence by the parties. It was only after considering the provisions and the Clauses of the agreement as well as the documentary evidence placed before him that he arrived at the conclusion that there was no delay in execution of the work by the petitioner. He, Therefore, rightly rejected this claim for which he has given sufficient reasons. Mr. Sharma drew my attention to the reasoning given by the arbitrator against Counter Claim No. 3, wherein the arbitrator has mentioned that "as regards the supply of drawings to the petitioner, although it is correct that certain drawings showing details of foundation were issued to the claimant on 27th April, 1979, but as per the respondent''s own showing the architectural drawings were issued on 11-6-1979 only. In this view of the matter the claimant could not be expected to start the actual execution of the work without architectural designs indicating the lay out plan of the building". Mr. Sharma, relying on these observations contended that the arbitrator did take into account various aspects of the matter and then came to the conclusion that there was no delay on the part of the petitioner in the execution of the work. Moreover, this Court is not sitting as a Court of appeal on the award of the arbitrator, nor can substitute its reasoning to the reasoning given by the arbitrator. The arbitrator is the final judge of the facts and law which were referred to him. This Court unless find error apparent on the face of Award cannot set aside the Award given by an arbitrator.

Admittedly, the Arbitrator has given reasons while rejecting the Counter Claim N. 3. He took into account various aspects of the case namely when the drawings were supplied. delay in providing lay out plan, supply of bad quality of cement and steel. He also took into account the documentary evidence placed by the parties to support their respective contentions on these points namely Ex. C-37, C-28, C-4, C-6, C-8 to C-13, C-15, C-16, C-18, C-20, C-23, C-25 and C-30 and Ex. R-1, R-3, R-5, C-26, C-3, C-9, C-12, C-25. After considering these documentary evidence as well as oral submissions made by the respective parties, he concluded that the delay was not on the part of the petitioner. I am in agreement with the contention of Counsel for petitioner that this Court cannot substitute its reasons to the reasons given by the arbitrator. It is not the case of respondent that any of the material document which was produced before the Arbitrator has not been considered by him. On the contrary from the perusal of the Award it is apparent that the arbitrator took into account all the relevant material, documents and evidence placed before him. Similarly, the reasoning given by the arbitrator that the material supplied was of sub-standard quality and in this regard he relied on various documents. This Court cannot impose its own finding nor can substitute the reasons given by the arbitrator. After all he is the final judge of facts. Even if different conclusion is possible, but that itself is no ground to hold the Award bad. Hence, for the reasons stated above I find no infirmity in the reasoning given by the Arbitrator nor find any error in the Award made and published by the arbitrator regarding Counter Claim No. 3.

So far as Counter Claim No. 1 is concerned it was based on the fact that there was a delay on the part of the claimant, Therefore, the Superintending Engineer invoked Clause 2 of the agreement thereby levied the penalty equal to 1% of the admitted cost of the whole work as shown in the tender. However, the arbitrator held that since there was no delay or negligence on the part of the contractor either in commencing the work on in completing the same, Therefore, the Superintending Engineer was not Justified in levying the compensation. Ms. Sudha Srivastava appearing for the objector contended that the decision of the Supdt. Engineer is final and binding so far as the levy of compensation is concerned. This matter cannot be adjudicated by the Arbitrator. The decision of the Arbitrator under Clause 2 falls under excepted matter and hence Arbitrator had no jurisdiction to adjudicate the same. In this regard she placed reliance on the Division Bench judgment of this Court in FAO (OS) 104/94, decided on 15-12-1994 and the decision of a Single Judge in the case of R. S. Rana v. DDA and Anr. 1993 (2) ALR 165.

On the other hand Mr. D. P. Sharma, contended that this objection had not been taken by the objector before the Arbitrator nor in this objection petition. In the absence of any objection, objector cannot be allowed to urge this point nor can she rely on the Division Bench decision in this regard. She ought to have taken specific objection in the petition that would have given the petitioner the right to explain his position. Objector cannot take the petitioner by surprise. If she is allowed to urge this objection then the very purpose of filling the objections within the statutory period of 30 days would become redundant. Objector having submitted to the jurisdiction of the arbitrator and also having not raised this as an objection it cannot now be allowed to be agitated by oral submission. To support his contention he placed reliance on the observation of the Supreme Court in the case of Puri Construction Pvt. Ltd. Vs. Union of India (UOI), , wherein the Supreme Court opined that "even an erroneous award cannot be set aside suo motu under inherent powers, specially when the Union of India did not contest before the Division Bench of the High Court several parts of the award which included interest on many items". Relying on these observation. Mr. Sharma contended that in the present case also the Award has not been challenged on the ground that the decision of the Supdt. Engineer was final and that it being an "excepted matter" the arbitrator had no jurisdiction to deal with the same. Instead the objections through out had been that there was no delay on the part of the DDA in supply of the drawings and materials. This was heard by the arbitrator and by his reasoned award decided against the objector. Similarly in the case of Madan Lal Vs. Sunderlal and Another, , the Supreme Court observed that "assuming that the Court has power to set aside the award suo motu, that power cannot be exercised to set aside an award on grounds which fall u/s 30 of Act". Admittedly, the objection that decision of the Superintending Engineer under Clause 2 of the agreement was final fell u/s 30 of the Arbitration Act and if taken in an objection petition filed more than 30 days after service of notice of filing of the award, for if that were so the limitation provided under Article 158 of the Limitation Act would be completely negatived. Having not taken this as an objection within 30 days, Therefore, relying on the observation of the Supreme Court in Madan Lal''s case (supra) Counsel for the objector cannot be allowed now to urge this as an objection, particularly after the expiry of period of limitation of filing objections. Hence the objector cannot take advantage of the decision of the Division Bench judgment in the case of R. S. Rana (supra).

Having held that there is no error apparent on the face of the award. I find no merits in this objection petition. The same is accordingly rejected. The award dated 6-4-1988 made and published by Sh. J. P. Singhal, the sole Arbitrator is hereby made a rule of the Court with costs. The petitioner will also be entitled to simple interest at the rate of 12% p.a. from the date of decree till realisation. However, if the amount of award is paid within two months from today, then no interest will occur from the date of decree. Otherwise petitioner will be entitled to interest as awarded. Award shall from part of the decree.