IN THE HIGH COURT OF DELHI AT NEW DELHI SUBJECT : ARBITRATION MATTER OMP No.358 of 2005 Date of decision : 02.11.2007 OIL and NATURAL GAS CORPORATION LIMITED...PETITIONER Through: Mr.R.G.Shrivastava, Advocate - VERSUS - M/s MITRA GUHA BUILDER (INDIA) COMPANY...RESPONDENT Through: Mr. S.K.Taneja, Sr. Adv with Mr. S.S.Sastry, Advocate AND OMP No.359 of 2005 OIL and NATURAL GAS CORPORATION LIMITED...PETITIONER Through: Mr.R.G.Shrivastava, Advocate - VERSUS - M/s MITRA GUHA BUILDER (INDIA) COMPANY...RESPONDENT Through: Mr. S.K.Taneja, Sr. Adv with Mr. S.S.Sastry, Advocate
SANJAY KISHAN KAUL, J. (ORAL) (1)The petitioner assigned the work to the respondent of construction of multi- storied residential flats in Sector 39, NOIDA under two separate contracts. (2)Disputes arose between the parties about the liability to pay the amount to the respondent resulting in two separate similar arbitrations before Justice P.K.Bahri, (Retd.). There are two separate similar Awards made by the arbitrator dated 01.07.2005 which are now sought to be challenged by the petitioner under Section 34 (2) of the Arbitration Act, 1996 ('the said Act' for short). It has to be noticed that in both the Awards, the arbitrator has taken note of the fact that there are delays attributable to both the petitioner and the respondent. There are, in fact, substantive delays attributable to the petitioner. It is in these circumstances that the arbitrator had granted to the respondent only the balance amount payable under the contract as per the running bills, the amount withheld by the petitioner and the escalation on account of delay along with interest and costs. The claim for damages of both the petitioner and the respondent attributing fault to the other party for delays has been rejected. (3)Learned counsel contends that the Awards given by the arbitrator are against the law declared by the Apex Court and are against the terms of the contract inasmuch as the petitioner sought to impose, as stated to be, preestimated damages and reasonable compensation rather than penalty. (4)Learned counsel next contends that in terms of Clause 10C escalation was payable only where the contractor had to pay for the increased price and it was not as if there was an automatic payment as per a prescribed formula to be made in case of delay. (5)Lastly, it is contended that in terms of Clause 25 a restriction was provided that the contractor had to make a demand for arbitration within 90 days of receiving of intimation from the Corporation of the bill being ready for payment failing which it would be deemed to have been waived. (6)Insofar as the first aspect is concerned, it would be relevant to consider some of the dates. It is the case of the petitioner that the contract was entered into on 05.02.1996 with the stipulated date of commencement of work as
21/22.02.1996 and stipulated date of completion was 21/22.08.1997. The work actually commenced only on 13.03.1996 and was completed on 24.05.1999. The total delay was of 640 days, out of which the petitioner found that 273 days were attributable to the contractor and 367 days were attributable to the petitioner. The arbitrator has taken note of the fact that the petitioner extended the time period for completion of the contract on account of there being primary delays on the part of the petitioner which continued to be extended. Damages were sought to be imposed by the letter dated 15.05.2001. The imposition of the damages/penalty was thus held to be highly belated and an afterthought only to adjust the claims due to the respondent. (7)I find no infirmity with the aforesaid finding of the arbitrator. (8)The arbitrator has found that under the garb of liquidited damages, what was sought to be imposed was the penalty. Be that as it may, it is an undisputed position that almost 60 per cent of the delay was attributable to the petitioner while the remaining 40 per cent of the delay was attributable to the respondent. Where the petitioner himself is responsible for a substantive part of the delay, it can hardly be said that the petitioner is entitled to recovery of liquidated damages or penalty. (9)Learned counsel for the petitioner did seek to contend that the delay on the part of the respondent was not in pursuance to the delay of the petitioner but was independent of it. (10)In my considered view this is purely a matter of appreciation of evidence. Even otherwise, if there is a certain delay on the part of the petitioner, it is not necessary that there has to be corresponding fixed delay by the respondent. In the present case, the delay on the part of the petitioner is much more than the delay on the part of the respondent. (11)The arbitrator, conscious of the delay on the part of both the parties, has not just disallowed the damages/penalty imposed by the petitioner, but has rejected even the claim of the respondent in this behalf on various accounts. The arbitrator has only awarded the amount as per the running bills and the amount detained by the petitioner which was sought to be adjusted against the claim for damages for such adjustment would in any case have been payable. These are really in the nature of undisputed amounts.
(12)Apart from the aforesaid amount, the only amount directed to be paid is under Clause 10C for delays attributable to the petitioner. It is true that the Clause 10C talks about the loss caused by the delay and such loss has been found by the arbitrator. This Court cannot be expected to sit as a court of appeal over the adjudication of the said amount. (13)The last contention of learned counsel for the petitioner arises from Clause 25 of the Agreement which has been held to be violative of Section 28 of the Contract Act, 1872. This aspect, in fact, is no more res integra in view of the judgment of this Court in M/s Pandit Construction Company v. DDA; 143 (2007) Delhi Law Times 270 wherein it was held that in view of the provisions of Section 28(b) of the Contract Act, as amended, an agreement in restraint of legal proceedings contrary to the mandate of Article 137 of the Limitation Act, 1963 would be void and any clause extinguishing right of a party or discharging any party from liability in respect of any contract on expiry of specific period so as to restrict the time period would be void. This is also the view taken by the arbitrator, which cannot be faulted. (14)Learned counsel for the petitioner did seek to rely upon the judgment of the Supreme Court in Food Corporation of India v. Surendra, Devendra and Mahendra Transport Company; AIR 2003 Supreme Court 1495. In my considered view, the said judgment would have no application in the present case as the same relates to the jurisdiction of the arbitrator in respect of a claim regarding transit loss, demurrage and wharfage charges, which are specifically barred and thus are not part of contemplated disputes under the arbitration clause. (15)It may be noted in the end that the judgment of the Apex Court in Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd., AIR 2003 SC 2629 only expanded the scope of scrutiny by the Court under the phrase?public policy of India? as appearing in Section 34(2)(b)(ii) of the said Act. Instead of a narrow meaning it was held that the Court can set aside an award if it is contrary to the fundamental policy of Indian law, interest of India, justice or morality, is patently illegal or is so unfair and unreasonable that it shocks the conscience of the Court. However, illegality of a trivial nature was held liable to be ignored. 16)I find that no part of the objections of the petitioner fall within the ambit of the aforesaid description as given in Oil and Natural Gas Corporation Ltd.
v. Saw Pipes Ltd (Supra). The Award is in accordance with the settled legal position. The petitioner cannot deny the liability to make payment by adjusting admitted amounts against the alleged damages/penalty when a substantive part of the delay is found attributable to the petitioner and there is a smaller part of the delay attributable to the respondent. In fact, if a calculation had been made of damages on a daily basis for delay, amount payable to the respondent would have been more than that payable by the respondent as the delay on the part of the petitioner is of 367 days and on the part of the respondent is of 273 days. (17)The arbitrator applied general equitable principles and deemed it appropriate not to direct any payments for delay to be made to either of the two parties except as provided for in the contract in respect of Clause 10C for delays on the part of the petitioner and such a course has been more beneficial to the petitioner than to the respondent. (18)There is no merit in the two petitions and both of them are dismissed with costs quantified at Rs 7,500/-. (19)At this stage, learned counsel for the petitioner states that in OMP No.358/2005 there is a clerical mistake inasmuch as in specifying the amount in para 50 under claim 3, the amount has been mentioned as Rs 32,56,110/- while the amount is Rs 29,56,110/- in para 38 of the Award dealing with claim no.3 as a result of which the total is also incorrectly mentioned as Rs 3 lakh more at Rs 69,36,252/- which should read as Rs 66,36,252/-. This position is not disputed by learned counsel for the respondent though he states that same being a typographical error could have been got corrected before the arbitrator. Be that as it may, it is directed that in view of the aforesaid being a typographical error, principal amount under the said Award should read as Rs 66,36,252/-. Sd/- SANJAY KISHAN KAUL, J.