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Judgment
317 paragraphs · 6,058 words,
Sanjeev Narula, J",
The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “Actâ€) challenges the award",
dated 1st October 2018 (hereinafter referred to as the “impugned orderâ€) passed by the learned Sole Arbitrator.,
Facts,
The brief facts as stated in the petition are that, Petitioner/Delhi Development Authority (DDA) held a national competition for registered architects",
inviting layout plans for development of a tract of land measuring 25.16 hectares in Vasant Kunj. Respondent participated in the aforesaid competition,
and submitted the basic presentation and drawing plans for overall development of the said land. After selection, on 5th October 1999, Petitioner",
issued an offer letter defining the scope of work. This was followed by execution of the agreement dated 10th November 2000, which prescribed a",
period of six years from the date of signing of the agreement for completion of the contract. The fee of the Respondent was fixed at 2 percent of the,
total cost of construction i.e Rs. 2,70,67,86/- which was to be paid as per Clause 13 of the agreement.",
Later, the total site area was reduced from 25.16 Ha to 23.65 Ha. This resulted in change in the site area and configuration of the site perimeters.",
For the above reason and due to the upcoming Common Wealth Games, Petitioner vide letter dated 15th January 2008, extended the time for",
completion of the work upto November 2010. Subsequently, the completion date was extended till October 2012 and further till December 2014.",
Respondent vide letter dated 23rd July 2014, raised certain claims pertaining to non payment of professional fees. Disputes arose between the",
parties. Petitioner vide letter dated 8th October 2014 invoked arbitration and proposed the name of the learned Arbitrator. Respondent consented to,
the same and the arbitration proceedings commenced. Respondent filed its Statement of Claim inter alia raising 7 claims and the Petitioner contested,
the same by raising counter claims.,
Learned Arbitrator passed the impugned award allowing certain claims of the Respondent. Petitioner assails the award in respect of claim Nos. 1, 2",
and 6. The objections raised are dealt separately as under:,
Claim No. 1 for Rs. 76,94,639/- in respect of 12th and final bill dated 23rd July 2014",
The learned Arbitrator has partly allowed the claim for Rs. 41,92,530/-and by way of declaratory award it has been held that the service tax shall",
also be paid by the Petitioner to the Respondent at the prevailing rate when the aforenoted payment is made to the Respondent. The awarded amount,
has two components:,
a. Balance fee awarded applying the factor of 95 % being Rs. 32,91,587/-",
b. Rs. 9,00,943/- awarded towards service tax reimbursementA. Whether the Respondent is entitled to the balance fees at the factor of 95 %.",
The objection of DDA is that the learned Arbitrator has wrongly held that the Respondent had completed the work as stipulated under Clause 13.7,
of the agreement. It is urged that the learned Arbitrator should have awarded only 90% of the balance fees as the Respondent had failed to carry out,
all its obligations under the agreement and had not reached the stage as contemplated under Clauses 13.7 and 13.8 of the agreement.,
Learned counsel for the Petitioner further submitted that by end of the year 2002, the Respondent had completed only 55% of the total work",
whereas as per the agreement, 70% of the total work was required to be completed by 20th August 2001. Thus, there was an obvious delay in",
execution and submissions of drawings and designs. Despite repeated reminders, Respondent failed to submit the drawings and seek Petitioner's",
approval. Respondent also failed to complete the project and obtain the completion certificate. Due to incomplete and wrong drawings provided by the,
Respondent, Petitioner incurred a substantial loss.",
The counsel for the Petitioner also urged that as per the agreement, the Respondent was required to ensure that all the designs and plans are",
approved from the civic and government authorities and that the same are in conformity with the latest Indian or British/American Standard Codes,
and sound engineering practice. The Arbitrator failed to take into consideration delay caused by the Respondent and that it had defaulted in the,
execution of the work by not adhering to the height restrictions as per the norms of Airport Authority of India and submitting faulty design of basement,
due to which the Petitioner was burdened with costs. The Respondent was required to make necessary modifications in the plans and designs to bring,
the same in conformity with the updated and latest rules and laws. It was required to provide the revised drawings after making all necessary,
modifications without any extra costs. Learned Arbitrator has also failed to consider the letters wherein Petitioner had categorically requested the,
Respondent to provide the specific drawings. The award against Claim No. 1 be set aside as the Respondent had completed only 90 % of the work as,
per the agreement and is entitled to payment only to that extent of the total fees [Rs. 18,25,195/-] and not 95 %, as awarded by the learned arbitrator.",
Learned counsel for the Respondent on the other hand argued that as per Clause 12.3 of the agreement, the fee should have been paid at the",
stages as laid down in Clause 13.1 to 13.8 of which the last stage is provided for under clause 13.8. Respondent had completed the work as per the,
scope of the agreement. Petitioner has failed to bring on record any document to show that it had incurred expenses for any of the services that were,
not provided by the Respondent despite being contractually bound to do so. Petitioner has also not shown that it had to engage another agency/third,
party to provide the services that were not provided by the Respondent. The objections are misconceived. The learned Arbitrator has correctly held,
that the Respondent is entitled to payment of 95 % of the total fee payable.,
B. Whether the Respondent is entitled to reimbursement of service tax.,
The second component of claim No.1 relates to service tax. The learned Arbitrator has held that though the agreement is silent on liability to pay,
service tax, however it cannot be ignored that the condition of service tax was stipulated by the Respondent in its letter dated 20th February 2008",
which was duly accepted by the Petitioner in its letter of extension.,
Learned counsel for the Petitioner argued that the learned Arbitrator could not have passed an order in variance of the terms of the agreement,
between the parties. The agreement did not envisage reimbursement of service tax and the Petitioner was to pay only the stipulated fee as provided in,
the agreement. Learned Arbitrator erroneously relied on the letter dated 20 th February 2008 as the same was not an acceptance of the condition put,
forth in the said letter with regard to the levy of service tax. Petitionerâ€s letter of extension dated 30th April 2008 did not refer to the Respondentsâ€,
letter dated 20th February 2008 and merely observed that as per Clause 17 of the agreement, the Vice Chairman has approved the extension of the",
agreement up to November 2010. There could not be any deemed acceptance of new term in the absence of any specific communication or overt,
positive act of the Petitioner. In this regard the learned counsel for the Petitioner placed reliance on the judgment of the Supreme Court in Bharat,
Stage Work,Fees to be Paid
13.1 On submission and approval of the scheme of
total Housing. Complex including preliminary
estimated from the Authority as per 6.1.",10% of the total fees.
13.2 On submission and approval of the scheme from
DUAC at conceptual stage as per 6.2.",20% of the total fees. Less Already paid.
13.3 On submission and approval from various
departments and local bodies like - D.J.B, D.V.B.
Fire Deptt., Civil Aviation, etc. as per 6- .3.","30% of the total fees. Less Already paid.
,
13.4 On submission and approval of architectural
controls and detailed designs (2nd stage from
DUAC) as per 6.4",35% of the total fees. Less Already paid
13.5 On submission of drawings as required for
inviting tenders including detailed estimates and
tender document as per 6.5.",50% of the total fees. Less Already paid.
1 3 . 6 Submission of detailed architectural
development, landscape, services, drawings and other
relevant details as per 6.6.",70% of the total fees. Less Already paid.
13.7 During course of construction for supervision
and issue of further drawings and details required for
satisfactory progress of the work as per 6.7.",95% of the total fees. Less Already paid.
13.8 On completion of work and submission of as
built drawings dispatching completion certificate as
per 6.8.",100% of the total fees.
13.9 Progressive payments may be made to the
Claimant (consultant) in any of the above stage based
on the quantum of work in that stage as may be
mutually agreed to be decided by the SA with Chief
Architect of the Respondent.",
“Mr. S.P. Satsangi,
Addl. Chief Architect-II,
Delhi Development Authority,
Housing & Urban Projects Wing,
8th Floor, Vikas Minar",
New Delhi - 110001,
Subject: Extension of agreement of DDA Mega Housing Behind D-6, Vasant Kunj, New Delhi.",
Dear Mr. Satsangi,",
This has reference to your letter no. ACA-II/HUPW/DDA/06 dated 15.01.08 the contents of which are generally acceptable. All other issues and,
considerations not mentioned in the letter shall be as per the original contract.,
The service tax shall be as per the prevailing norms stipulated be government.,
With regards,",
Sincerely yours,",
Sumit Ghosh 20.02.08â€,
In the aforesaid letter, there is a categorical mention regarding service tax. The said letter was accepted by the Petitioner vide letter dated 30th",
April 2008 whereby it agreed to grant extension of time for completion of the work. Though, the Petitioner has denied the receipt of the letter dated",
20th February 2008, however, such denial is inconsequential as in the subsequent communication dated 30th April 2008 Petitioner has not denied the",
same. The Arbitrator has also relied upon the conditions stipulated in the letter dated 20th February 2008 wherein it has been categorically mentioned,
that the service tax shall be as per the prevailing norms. This letter was issued in the context of extension of the time for fulfilling the work under the,
Agreement. While granting the extension and accepting the proposal, the Petitioner did not refute the liability to pay the service tax. The Respondent",
has shown proof of depositing service tax and is only seeking reimbursement thereof. The claim of reimbursement of service tax is from the stage,
when the extension of time was granted by the Petitioner. The Respondent was the service provider and the Petitioner was the recipient. The,
Respondent is thus entitled to recover the amount of service tax, even though the contract between the parties was held to be silent with respect to the",
entity that was to ultimately meet this statutory liability. The Division Bench of this Court in a similar situation in the case of Satya Developers Pvt.,
Ltd. and Ors v. Pearey Lal Bhawan Association and Ors 225(2015) DLT 377 has decided as under:,
“22. Section 83 of the Finance Act 2007 though a legislation by incorporation also takes care of non-applicability of future amendments as it,
provides for applicability of the relevant sections of the Central Excise Act 1944 as in force from time to time i.e. the future amendments in the,
provisions of the Central Excise Act would also be applicable mutatis Mutandis to Service Tax. As noted above, Section 12B of the Central Excise",
Act which applies to the Service Tax raises a presumption that the incidence of duty has been passed to the buyer unless the contrary is proved. Thus,
in the absence of a contract for the liability of a service tax, it will be presumed that the same has been passed over to the service recipient.",
From the legal position as noted it is evident whether the service tax liability has been agreed not to be passed on to the recipient of the service,
would depend on the interpretation of clauses entered into between the parties....,
Thus a contract has to be construed by looking at the document as a whole and the meaning of the document has to be what the parties intended,
to give to the document keeping the background in mind and conclusion that flouts business commonsense must yield unless expressly stated. In the,
present case it will also have to borne in mind whether the parties intend to include taxes which were not contemplated at the time of the agreement,
as indubitably the agreements between the parties in the three suits were entered into prior to the Finance Act, 2007 coming into force w.e.f. June 01,",
2007.,
In the agreement between HDFC Bank and Meattles Clause 4(v) imposes liability of municipal taxes, rates, charges and other outgoings in respect",
of the demised premises that would be determined/fixed/varied from time to time by the Municipal Corporation/Municipality/Gram Panchayat or any,
other local authority only. It is well settled that the Municipal Corporation, Municipality, Gram Panchayat or local authority is distinct from the",
government and thus the clause inter se the parties cannot be said to cover the exemption of HDFC Bank to pay to Meattles service tax paid by it to,
the government pursuant to the Finance Act, 2007.",
As regards the lease deed and the agreement of maintenance of common services and facilities between Satya and PLBA Clause 5 of the lease,
deed as noted above provides that the lessor shall continue to pay all or any taxes, levies or charges imposed by the MCD, DDA, L&DO and or",
Government, Local Authority etc. By use of the words ""Lessor shall continue to pay"" it is evident that the parties contemplated the existing taxes,",
levies or charges and not future. Even as per the agreement of maintenance of common service facilities though the same has no application to the,
service tax however, still the said clause II(1) cannot be said to exclude HDFC Bank from paying future service tax.",
In view of the discussion aforesaid the judgments and the decrees passed by the learned Single Judge in the three suits are upheld. Appeals are,
dismissed. Parties will bear their own costs.†(emphasis supplied),
In All-India Federation of Tax Practitioners & Ors. v. Union of India & Ors. (2007)7 SCC 52,7 the Supreme Court inter-alia held that service tax",
is a VAT which in turn is 'destination based consumption tax' in the sense that it is not a charge on business but on the consumer.,
The High Court of Madras in Hardy Exploration & Production (India) Inc. v. Samson Maritime Limited and Ors (2017)1MLJ334 had the occasion,
to consider a similar question of law . In the said case, the Petitioner filed a petition under Section 34 of the Act, challenging the finding of the Arbitral",
Tribunal that held that the Petitioner is liable to reimburse the component of service tax levied on the first Respondent. The Court upheld the decision,
of the Arbitral Tribunal and said that the Petitioner would have to bear the burden of service tax. The relevant paragraphs of the judgement read as,
under:,
Continuing with my discussion, the facts, which have emerged in the present case, clearly show that, when, the Jade Charter was executed on",
26.07.2007, the service tax on the kind of services rendered by the first respondent, had not kicked-in. Service tax was imposed, on the kind of",
services rendered by the first respondent, only on, 16.05.2008. Therefore, quite clearly, the service tax was not a ""tax"", which was in contemplation of",
the parties on the date of execution of the contract. This was, therefore, not a tax, qua which the first respondent was assessed or, could have been",
assessed on the date when the Jade Charter was executed.,
31.1 Therefore, on a plain reading of the language of Clause 34.1, it cannot be held that qua service tax, the first respondent was required to hold the",
petitioner, safe and harmless and/or even indemnify the petitioner. At best, what could be said in favour of the petitioner is that the contract was silent",
on who would bear the burden of service tax. Since, service tax is an indirect tax, quite clearly, the ultimate burden qua such tax, like other indirect",
taxes, i.e., excise duty and sales tax, would have to be borne by the party using the services, as in the case of service tax and similarly, by the",
consumer of goods, as in the case of excise duty and sales tax.",
31.2 One could also take a clue from the provisions of Section 64A of the Sale of Goods Act, 1930 to gain statutory wisdom, so to say, to deal with a",
situation of the kind, one is confronted with, in the instant case. Section 64A of the Sale of Goods Act, if paraphrased, broadly, provides, that if, during",
the course of the execution of the contract, a new tax is imposed or, rates of tax are increased, the buyer; will bear the burden, and if, per chance the",
tax is abolished or the rate is reduced, the buyer would get the benefit. The Section, though, gives a leeway to the parties to provide otherwise.",
31.3 Therefore, usually, unless, parties clearly provide in the contract as to who is to bear the burden if such a situation arises, as is the circumstance,",
in the instant case, the ultimate burden will have to be borne by the consumer, i.e., the petitioner.",
31.4 Thus, in my view, the Arbitral Tribunal has correctly held against the petitioner that it would have to bear the burden of service tax.""",
(emphasis supplied),
The learned counsel for Petitioner has placed reliance on paragraph 19 of the decision of the Supreme Court in the case of Bharat Petroleum,
Corporation Ltd. (supra). A perusal of the afore-noted judgement makes it amply clear that the said case is distinguishable on facts and is not,
applicable to the facts of the present case. Moreover, in para 19, the Court in the following words has held that offereeâ€s silence coupled with his",
conduct, may constitute an acceptance. The relevant paragraph has been reproduced herein below:",
“19. It is, no doubt, true that the general rule is that an offer is not accepted by mere silence on the part of the offeree, yet it does not mean that an",
acceptance always has to be given in so many words. Under certain circumstances, offeree's silence, coupled with his conduct, which takes the form",
of a positive act, may constitute an acceptance - an agreement sub silentio. Therefore, the terms of a contract between the parties can be proved not",
only by their words but also by their conduct.â€,
In the present case, the Petitioner does not dispute that the service tax was leviable. It also does not deny that the amount sought to be reimbursed",
was paid by the Respondent to the tax department. Moreover, the letter dated 20th February 2008 is also not denied by the Petitioner and constitutes",
acceptance by conduct. There is no error in the findings given by the Arbitrator and the challenge of the Petitioner on this ground cannot sustain.,
Claim No. 2: Towards Rs. 1,65,94,445/- on the 13th Bill dated 23rd July 2014.",
The learned Arbitrator has partly allowed Claim No. 2 and has awarded a sum of Rs. 1,06,26,347/-, for the reason that due to the revision of the",
earthquake code in late 2002 , Respondent had to revise the drawings already issued. The awarded said sum has four components:-",
a) Fee on account of increase in covered area Rs. 15,99,489/-",
b) Extra on account of re-working on drawing Rs. 43,65,677/-.",
c) Enhancement/Escalation in the form of cost index R. 46,61,181/-.",
d) Declaratory award for service tax which shall be payable by the Petitioner to the Respondent at the prevailing rate when payment of Rs.,
1,06,26,347/- is made to the Respondent.",
So far as Sub head (a) is concerned, the same is impugned only to the extent that the learned Arbitrator had calculated the said fee applying the",
factor of 95% instead of 90%. Sub head (b) relates to extra payment for reworking of drawings. Petitioner argues that firstly no extra payment is,
payable in view of Clause 3.1 and 3.2 of the Agreement which stipulates modification and revision of drawings without any extra cost. Secondly, the",
learned Arbitrator has arrived at the figure of 15% without any justification and has wrongly placed reliance on the letter dated 15th January 2008.,
Extra fee of 10% was proposed on account of reworking/revision of designs and drawings and the same was duly accepted by the Respondent in its,
letter dated 20th February 2008. Therefore, the learned Arbitrator ought to have awarded the said fee at the rate of 10% and not 15%. The Counsel",
for the Petitioner further submitted that the award under Sub Claim (c) of Claim 2 is on account of enhancement /escalation in the form of cost index.,
In this regard, he relied on Clause 17 of the agreement and urged that a perusal of the Clause makes it evident that in case of preparations and designs",
and drawings after five years from date of start of work, the fees shall be calculated on the basis of revised average rates as may be mutually decided",
between the parties on the basis of rise of building cost index approved by CPWD during these five years. The cost index must be taken for these five,
years only as specifically contemplated in the said Clause. Relying upon the same, she also referred to Respondentâ€s letter dated 15th January 2018,",
where while proposing extension of time it was specifically stipulated as under:-,
“In reference to the above-mentioned subject and the various meetings held with your goodself, for extension of the original agreement to Nov",
2010 (which was signed on 10.11.2000) for next five years so that the works in question are got completed.â€,
She argued that the aforesaid offer was accepted by the Respondent vide it's letter dated 20th February 2008 and thus the Respondent is entitled,
to payment at the cost index of 20.82 % and not 78.14 %. It was also argued that the learned Arbitrator failed to appreciate that the project was,
delayed on account of Respondent's own deliberate default in suspending the issuance of any drawing during the pendency of the writ petition bearing,
No. 4978/2002. There was no stay on issuance of any drawing by the Court and there was also no order or direction issued by the Petitioner,
suspending issuance of drawings. Furthermore, if the above factor has to be taken into account then it should be construed to be beyond the control of",
both the parties and the Petitioner cannot be held liable to pay enhanced rates. The structural drawings were not as per the BIS norms and no,
construction could be carried out on the basis thereof. Delay was occasioned purely on account of the Respondent's failure to maintain the height of,
the buildings and poor design of basements and it cannot take advantage of its own delay and raise a false claim. The alleged cost index claimed in bill,
No. 13 dated 23rd July 2014 on account of increased cost for increased area and revision was raised belatedly. If the Respondent had raised the bill,
for increase in area in 7th bill itself, no cost index would have been payable on the amount. Respondent cannot claim cost index placing a premium on",
his own inaction.,
With regard to the above noted objections, the contention of the learned counsel for the Respondent is as follows:",
a. As per earthquake code IS: 1893 in 2002, Respondent submitted the structural, architectural and service drawings in accordance with the",
communication dated 21st June 2013. However, since the earthquake code was revised due to the Common Wealth Games, Respondent was directed",
to revise the designs and drawing, which is evident from Petitioner's letter dated 15th January 2008. The revision in the earthquake code resulted in",
considerable increase in the area and also involved extensive re-working.,
b. Based on the modified project, the cost calculation due to the increased area and reworking of the drawing and designs is Rs. 75,04,576. On the",
said amount, CPWD cost index has been added @ 96.8 % and on the total amount, service tax has been claimed @ 12.36 %. Accordingly the net",
amount payable is Rs. 1,65,94,455/- as claimed in the 13th bill.",
c. In order to compute the percentage increase in CPWD building cost index from 2006 to 2014 as 96.65 %, reliance has been placed on Clause 17 of",
the agreement.,
It was urged that the Petitioner has wrongly placed reliance on the letter dated 15th January 2008 as the said letter was not binding on the parties,
and also the increase of 10% as stated in the said letter was not final since the said extra fees on the enhanced cost index was provided in the,
agreement. The aforesaid 10% of the extra fees was in respect of the extended period and not in respect of the extra work executed by the,
Respondent during the extra period.,
With regard to the finding of the learned Arbitrator to arrive at the price index of 78.4%, the learned counsel for the Respondent submitted that",
since the price indices as mentioned in the letter dated 15th January 2008 were for past five years it could not have been taken into account for extra,
work and the learned Arbitrator has rightly arrived at the figure of 78.4%.,
Analysis,
In so far as the challenge to the findings qua Claim No. 2 under the head (a) enumerated above is concerned, the reasoning given in this order",
while rejecting the objections with respect to Claim No. 1 would apply. Therefore, the contest to sub-head (a) is rejected for the same reasons. The",
opposition to award under sub-head (b) and (c) is on account of extra payment for reworking of drawings. The findings of the Arbitrator on this point,
are as under:-,
“17. Whether the claimant is entitled to extra payment on account of revision of the designs and drawings already issued to conform to revised,
earthquake (seismic) IS Code which was revised in late 2002.,
17.1 Claimant's contention is that as per clause 8 of the agreement it prepared designs and drawing in conformity with the latest earthquake code,
(IS:1893) as was in force at the time. But subsequently this code was revised in late 2002 with the result, the claimant had to revise these designs and",
drawing to conform to the revised code (IS: 1893-2002). The claimant is therefore entitled to extra payment on this account. Claimant relies on para 1,
of its letter dated 21.06.2013 (C-96/Page-118/CD-2) which gives an account of the designs and drawings originally issued on 10.07.2001 to 01.11.2002,
which were revised as per revised IS code.,
17.2 Respondent's contention is that clause 3 of the agreement is very clear that the claimant was obligated to prepare design and drawings in,
conformity with the latest seismic code (earthquake code) and hence it is not entitled to extra payment on account of having to revise the design and,
drawings subsequently per revised IS code which was revised in late 2002.,
17.3 I have perused the relevant submissions of the parties and material on record. It is a matter of record that as per clause 8 of the agreement (page,
121) the claimant was mandated to ensure that all the designs and drawings are made in conformity with the latest IS code, the relevant code here",
being IS:1893 which lays down the requirements to be fulfilled from earthquake consideration.,
17.4 In my view, the term 'latest', in the given context only means the latest IS code in force at the time the designs and drawings are prepared. It",
cannot be attributed an extended meaning to cover revision of the designs and drawings as per subsequent revision of code within the same fees. The,
contention of the respondent can therefore be accepted only to the extent that if the claimant had not prepared any designs and drawings upto the date,
of revision of code it was mandated to prepare the same as per the latest/revised IS code at no extra cost. But here the case is different.,
17.5 Admittedly the claimant first prepared designs and drawing from 10.07.2001 upto 01.11.2002 (C-96) in conformity with the latest IS code in force,
during this period, thus fully satisfying the condition as per clause 8 of the agreement. But it had to revise the same when the said code was revised in",
late 2002.,
17.6 I am therefore of the view that the claimant is entitled to extra payment for reworking/revision of designs and drawings already issued to bring,
the same in conformity with the IS: 1893 which was revised in late 2002.â€,
The aforesaid reasoning shows that the Arbitrator took into consideration facts and the evidence brought on record by the parties and arrived at a,
finding of fact that the completion of the work under the Contract was delayed due to fault / breaches attributable to the Petitioner . This finding of,
fact cannot be assailed or scrutinized under Section 34 of the Act. Respondent's claim for extra payment for revision of the designs and drawings,
arose due to change in the requirements and circumstances in the wake of Commonwealth Games. The Arbitrator has held that the Respondent had,
to revise drawings due to revision in earthquake code in 2002. It has also been held that there is no documentary evidence produced by the Petitioner,
to show that Common Wealth Games Committee had issued such directions or regulations prior to the execution of the Agreement. Respondent had to,
assimilate the revised code and carry out the necessary modifications as required by the Petitioner. In the letter dated 25th March 2009, Petitioner",
agreed to pay extra amount for the change in the drawings. Upto that stage, Respondent had already issued drawings and thus had to rework the",
same. Respondent also had to suspend issuance of the drawings on account of an ongoing litigation which had directed the stay of construction,
activities which continued upto 2007. Vide letter dated 15th March 2008, Petitioner proposed to extend the agreement for five years and pay extra",
amount at the rate of 10% together with enhancement in the cost index, as the Respondent had to revise its drawings due to change in earthquake",
code. Thus, Respondent is entitled to payment on account of reworking of drawings and enhancement/escalation in the form of cost index. The",
Petitionerâ€s contention that the price indices mentioned in the letter dated 15th January 2008 as 20.8 % should prevail and the Arbitrator was not,
justified in awarding the same at the rate of 78.4% is misconceived. The letter dated 15th January 2008 is reproduced herein below:,
“DELHI DEVELOPMENT AUTHORITY,
Housing & Urban Projects Wing,
Office of the Addl Chief Chief Architect_II,
8th Floor, Vikas Minar, New Delhi.",
No.ACA-II/HUPW/DDA/06,
(Copy in: SA/SZ/HUPW/F-51/2000),
Dated: 15.01.08,
To,
M/s. Sumit Ghosh & Associates,
R-4 Hauz Khas,
New Delhi-110016,
Sub.: Extension of agreement of DDA Mega Housing Behind D-6, Vasant Kunj",
In reference to the above-mentioned subject and the various meetings held with your goodself, for extension of the original agreement to Nov 2010",
(which was signed on 10.11.2000) for next five years so that the works in question are got completed. Further, as discussed during the meetings and",
as per the CDO observations the revised Seismic Code 1893-2002 needs to be adopted for the entire Housing Complex which shall involve,
modifications in the structural and architectural drawings as discussed with you earlier also.,
As per Clause 17 of the agreement the enhancement of the fees on the basis of the rise in the building cost index approved by CPWD during the past,
5years works to 20.82% on the principle amount to be paid to the Consultant for the works yet to be carried out by the Consultant.,
As per the discussions with CE (SEZ) and ACA-II , the quantum of the work has been categorized in two different categories:",
i. Revision of the structural designs as per ISI893-2002 and preparation of modified architectural working drawings including the approval whenever,
required. For incorporation of the revised structural designs in the architectural working drawings, the Architectural Consultant shall be paid 10% extra",
fees, on the enhanced cost index under Clause 13.5 fees for which total fees has already been released to the consultant as per the original agreement",
for the works already done.,
ii. Balance works pending as per the original agreement after the court orders for which enhancement shall be given as per the average cost index of,
20.82 which shall cover Clauses 13.6 to Clause 13.8 (for which fees is partly due),
If the above conditions are suitable to you then the acceptance may be conveyed to the office by 21st Jan, 2008. This may kindly be treated as urgent.",
(S.P.Satsangi),
Addl Chief Architect-IIâ€,
A perusal of the letter dated 15th January 2008 makes it clear that the price indices mentioned in the aforesaid letter was for the past 5 years and,
the same could not have been considered for the extra work.,
During the Arbitration proceedings, the Respondent filed computation for percentage increase in CPWD Building Cost Index from 2006 to 2014",
which reflected a factor of 96.6%. On the strength of the above, Respondent claimed enhancement in the form of cost index, relying on Clause 17 of",
the Agreement, which reads as under:",
“The agreement will be in force for a period of 6 years from the date of signing. In case, the implementation of the project extends beyond 5 years",
from the date of agreement and the consultant is called upon to carry out any additional work of planning, designing and preparation of drawings of",
any portions of the portions of the work, and for which the consultant has not been responsible for delay, and such designs and drawings are actually",
prepared after five years, the fees payable shall be calculated on the basis revised average rate as may be mutually decided between the parties to",
this contract, on the basis of the rise of building, cost index approved by the CPWD during these five years. Regarding the quantum of planning and",
designing work actually carried out after the expiry of five years, the decision of the chief Architect shall be final and binding in all respect.â€",
The Petitioner did not file a response to the said calculations. The Arbitrator averaged the figures and awarded a factor 78.4%. Since the delay in,
completion of the work has been held to be attributable to the Petitioner, the escalation awarded by the Arbitrator is reasonable. The price indices",
mentioned in the letter, could not have been considered by the Arbitrator, for the extra work done by the Respondent. Petitioner's contention that the",
price indices mentioned in the letter dated 15th January 2008 should have prevailed is without any merit and the same is rejected.,
The findings of the Tribunal for sub head (d)-regarding the reimbursement of service tax are upheld for the reasons and analysis given qua Claim,
No. 1.,
The learned Arbitrator has awarded pendente lite interest at the rate of 9% and future interest at the rate of 12%. The legal position regarding,
award of interest is well settled. Interest is granted by way of compensation to a party as a consequence of default or a breach by the other. The,
contract was delayed due to breaches on the part of the Petitioner and therefore the Arbitrator has rightly awarded the reasonable interest on the,
amounts held to be due and payable to the Respondent. The sum awarded by the learned Arbitrator has been upheld and thus there is no justification,
to deny the Respondent the interest thereon which is reasonable and does not call for any interference.,
For the foregoing reasons, the petition is dismissed with no order as to costs and the pending application is disposed of.",