JUDGMENT
Sanjay Kishan Kaul, J.
IA No. 1020/1995 (Under Sections 30 and 33 of the Arbitration Act, 1940)
1. The petitioner was awarded the contract for laying of SW Drains and construction of Culverts at Pitampura in terms of Agreement No. 5/EE/DDII/DDA/85-86. Disputes arose between the parties and in terms of clause 25 of the terms and conditions of the contract, the Engineer-Member, DDA appointed Shri L.R. Gupta as the Sole Arbitrator in terms of the letter dated 01.05.1991. The Arbitrator entered upon reference and made and published his Award dated 18.05.1994. The respondent / DDA aggrieved by the same has filed the present objections.
2. Learned counsel for the respondent / DDA contends that claim No. 2 could not have been awarded for the reason that the decision of the Superintendent Engineer is final on this account in view of clause 25 itself. In order to appreciate this contention, the nature of the claim itself has to be considered which was for providing C.I. Covers. The rates were quoted at Rs. 2,718.30 and were got approved. However, in the final bill, the same was sought to be reduced to Rs. 1,027.43 on the basis that the rate approved was as per the Delhi Schedule of Rates of 1981 while the reduced rates were derived from the market. The Arbitrator has considered the applicability of the provisions of clause 12 in this behalf to come to the conclusion that the rate of extra item if available in the Delhi Schedule of Rates of 1981 have to be given preference over the market rate. Over this, there is no dispute.
3. The question of the Superintendent Engineer exercising his rights under clause 25 would only arise if the question was of a rate to be applied for improper work or where rate was not agreed upon. Where there is an agreed rate, which is in the nature of a contracted rate, the Superintendent Engineer has no power to unilaterally modify the terms of the agreed rate.
4. Learned counsel for the respondent also contends that the petitioner accepted the amount. The mere fact that the payment made by the respondent was accepted by the petitioner can hardly preclude the petitioner from claiming the correct amount.
5. In view of the aforesaid, I find no merit in this objection.
6. The second objection raised by learned counsel for the respondent / DDA is in respect of claim No. 4, which is on account of the escalation as per clause 10C and clause 10CC. Learned counsel contends that clause 10CC would operate in cases where the contract is for a period of more than six months. The contractual period was three and a half months. The relevant portion of clause 10CC has been extracted in the Award and reads as under:
… Compensation for escalation in prices shall be available only for work done during the stipulated period of the contract including such period for which the contract is validly extended under the provisions of clause 5 of the contract without any action under clause 2 and also subject to the condition that no such compensation shall be payable for a work for which the stipulated period of completion is 6 months or less….
7. The Arbitrator has come to the conclusion that though clause 10CC would normally not apply to a contract where the period is less than six months, in the present case, the extension took place for a period of six months and, thus, the escalation on account of labour wages and material cost should be available.
8. Learned counsel for the respondent contends that the Arbitrator is a creation of the contract and is bound by the terms of the contract. Over this, there could be no dispute. There can also be no dispute that if the contract stipulates that clause 10CC is not to apply for the period of contract being less than six months, it is not open to the Arbitrator to award the amount. However, the Arbitrator has applied a particular construction in the given facts of the case. The object of providing no escalation in contracts for small period is that the contractor must take the consequences of any such increase. This in turn envisages the completion of contract within a short period of time. If the contractor is at fault and the time-period is extended, again the contractor cannot claim any extra amount. However, if the fault is attributable to the respondent and the contract period becomes prolonged, then the view taken by the arbitrator that in such case the total period would be taken into account cannot be said to be perverse or absurd. Merely because this Court may come to a different conclusion on appreciation of the particular clause would be no ground to interfere in view of judgment of the Division Bench of this Court in DDA v. Bhagat Constructon Co. Pvt. Ltd. 2004 (3) Arb.LR 481. In fact, the Supreme Court in Food Corporation of India v. Joginderpal Mohinderpal and Anr. has observed that reasonableness is a matter not to be considered by the Court in the absence of the award being absurd.
9. Learned counsel for the respondent sought to contend that there is no finding arrived at by the Arbitrator that the respondent was at fault. However, it is not in dispute that the time-period of the contract was extended by the respondent without any penalties on the petitioner and such an occasion would only arise if the fault was not attributable to the petitioner. In view thereof, I do not find any merit in the submission of learned counsel for the respondent.
10. Learned counsel for the respondent also sought to contend that there is no calculations given as to how the amount awarded under this claim of Rs. 1,06,000/- has been arrived at against the claim of Rs. 6,00,000/-. The Division Bench of this Court in DDA v. Bhagat Construction Co. (P) Ltd. and Anr. 2004 (3) Arb.LR 548 has observed that the arbitrator is not like a court and is not required to give a detailed mathematical calculations as long as the reasoning of the arbitrator can be deciphered from the award. Thus, I again find no merit in this objection.
11. Learned counsel further seeks to contend that the petitioner was liable to raise dispute about the bill within 90 days from the date of the final bill and there is delay in making the claim as per clause 25 of the terms and conditions of the contract, which provides in this behalf as under:
25…
…
It is also a term of the contract that if the contractor(s) does/do not make any demand for arbitration in respect of any claim(s) in writing within 90 days of receiving the intimation from the Engineer-in-Charge that the Bill is ready for payment the claim(s) of the contractor(s) will be deemed to have been waived and absolutely barred and the Delhi Development Authority shall be discharged and released of the liabilities under the contract in respect of those claims.
12. In this behalf, it is no in dispute that the arbitrator has taken note of the plea of the respondent, but has considered appropriate to award the amount. A judgment of Justice Vikramajit Sen in Suit No. 21-A of 1996 titled Shri Anil Garg v. DDA and Ors. decided on 17.12.1999 has come to the notice of this Court where relying upon the earlier judgment of this Court in Hindustan Construction Corporation v. DDA 1977 (99) DLT 165 it has been held that such a stipulation of bar of 90 days was contrary to the general period of limitation and fell within the contemplation of Section 28 of the Contract Act.
13. Further as in the present case, the Arbitrator has taken note of the issue and was, thus, mindful of the contentions raised. This Court would not like to sit in appeal over such a decision of the arbitrator and, thus, this plea of learned counsel for the respondent is also rejected.
14. Learned counsel also seeks to challenge claim No. 6, which is for the rebates availed of by the respondent. Rebates are entitled only if the payment is made within time. Learned counsel states that since the petitioner failed to raise running bills, the rebate was in accordance with the contract. In this behalf, learned counsel referred to clause 8 of the contract, which is as under:
8. A bill shall be submitted by the contractor each month on or before the date fixed by the Engineer-in-Charge for all work executed in the previous month, and the Engineer-in-Chief shall take or cause to be taken the requisite measurements for the purpose of having the same verified, and the claim, as far as admissible, adjusted as far as possible before the expiry of ten days from the presentation of the bill. If the contractor does not submit the bill within the time fixed as aforesaid, the Engineer-in-Charge may depute within seven days of the date fixed as aforesaid, as subordinate to measure up the said work in the presence of the contractor whose counter signature to the measurement list will be sufficient warrant, and the Engineer-in-Charge may prepare a bill from such list.
15. A reading of the aforesaid clause shows that even if the contractor does not raise the bill within the stipulated time, it is the respondent on whom the obligation is put thereafter to raise the bill. In case of failure of the respondent to raise the bill, rebates cannot be availed of. This clause has also been considered in the judgment of this Court in IA No. 9003/1991 and CS (OS) No. 28A/1991 titled Sanyukt Nirmata v. Delhi Development Authority and Anr. decided on 29.11.2005 where a view has been taken against the respondent.
16. The last aspect raised is in respect of the rate of interest. The Arbitrator has granted interest @ 15% p.a. from 04.11.1993 till the date of payment or date of decree, whichever is earlier. Taking into consideration the prevailing rates of interest and the interest as awarded by this Court in numerous matters, I am of the considered view that the rate of interest is liable to be reduced to 12% p.a. from 15% p.a. payable from 04.11.1993 till the date of decree.
17. The application stands disposed of accordingly.
CS (OS) No. 1538A/1994
18. In view of the objections having been disposed of, the Award dated 18.05.1994 made and published by the Sole Arbitrator, Shri L.R. Gupta is made Rule of the Court with the modification that the petitioner is entitled to simple interest @ 12% p.a. from 04.11.1993 till the date of decree instead of 15% p.a. The petitioner shall also be entitled to future interest from the date of decree till the date of realisation @ 9% p.a. In case the respondent makes the payment within 60 days from the date of decree, the respondent shall be exempted from payment of future interest.
19. The parties are left to bear their own costs.
20. Decree-sheet be drawn up accordingly.