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TMI Blog2015 (9) TMI 1705X X X X Extracts X X X X X X X X Extracts X X X X ..... lated date of completion : 28.4.1997 Actual date of completion : 30.4.1998 Extension of time (EOT) was granted upto actual date of completion without levy of compensation. Final bill paid on : 8.12.2003" 3. Respondent before the Arbitrator filed a total of 28 claims. Some of the claims have been allowed and some of the claims have been dismissed. It is with respect to the claims which have been allowed and the counter claims of the petitioner which have been dismissed that the petitioner has filed the present petition. Petitioner had filed 9 counter claims in the arbitration proceedings and which were dismissed and against which part of the Award also the petitioner has filed objections challenging the dismissal of the counter claims. In terms of the impugned Award, the respondent has been awarded a sum of Rs. 1,09,08,393/- alongwith the interest at the rate of 12% per annum from the date of the Award till the date of actual payment. If the petitioner was to make the payment of the awarded amount within 90 days then no future interest was to be paid. 4. Let me take up each of the claims as allowed by the Arbitrator and objected to by the petitioner, but before doing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t levy of compensation only because the claimant had issued undertaking on 14.8.2001 stating that no liquidated damages have been suffered by them. Copy of this undertaking was marked as Annexure R-1. The claimant submitted that the said undertaking was given under pressure and the language of the said undertaking starts with "As requested by you......" itself clarifies that the said undertaking was given by the claimant under pressure from the respondents as their payments were blocked and they had no other option but to give that undertaking. I see no reason in the submissions put forward by the respondents as the extension of time without levy of compensation clearly proves that the work was not delayed due to claimants. I find it hard to believe that the officers of DSIDC grant levy of compensation because the claimant gave an undertaking as mentioned above. The granting of EOT (extension of time) is a process wherein the officer in charge evaluates all factual events and a complete EOT case is filed, reviewed and then decision is taken whether to grant EOT or not and whether compensation is to be levied or not. I believe the same procedure was followed by the officers of DSI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Accordingly, the preliminary objections of the petitioner were rightly rejected by the Arbitrator. 9. Now let us take each of the claims and counter claims decided by the Arbitrator and with respect to which objections have been filed by the petitioner before this Court. 10. The first objection of the petitioner is with respect to the Arbitrator under Claim no.1 awarding an amount of Rs. 2,18,327/-. Claim no.1 was for payment of the security deposit which was retained by the petitioner. Once the work is completed by the respondent, and in fact a final bill has also been released by the petitioner to the respondent of the amount of Rs. 4,78,710/- as discussed while deciding the preliminary objections, surely, the retention money which is retained by the petitioner has necessarily to be refunded to the respondent. The petitioner could have retained this amount only if it was entitled to deduct the same for any defective work which is discussed below, petitioner is not entitled to retention of this amount for defective work and therefore this Claim no.1 has been rightly allowed by the Arbitrator. 11(i). So far as Claim no.2 is concerned, this is a claim for interest payable with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 2,18,327.00 was found justified to be paid to the claimants. Also in my view the interest period should be from 19.4.2002 i.e. (the date this amount was left withheld by respondents) to 23.12.2003 (invocation of arbitration) rather than the period asked by the claimant. I award an interest @ 12% on Rs. 2,18,327.00 from 19.4.2002 to 23.12.2003 i.e. 416 days which amounts to Rs. 44,072/- only. I award a sum of sum of Rs. 4,97,713.00 (Rs. 4,53,641.00+ Rs. 44,072.00) in favour of claimants against claim No.2." 12. I agree with the reasoning given by the Arbitrator because admittedly the petitioner could have retained the retention money only for a period of six months after completion of work on 30.4.1998 i.e up to six months defect liability/maintenance period. This defect liability/maintenance period ended on 30.10.1998 and consequently after 30.10.1998 retention by the petitioner of the amount which was payable to the respondent would be illegal and therefore respondent has been rightly entitled to interest for this period beyond 30.10.1998 more so because even the final bill for an amount was released and which final bill would not have been released if payment under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim no.4 with respect to interest to be awarded on the Claim no.3 which has been allowed, and since Claim no.3 has been allowed holding that there is illegal retention of money by the petitioner belonging to the respondent for the work done by the respondent, petitioner has rightly been burdened with interest for the pre-reference period but which pre-reference period is after 30.10.1998 i.e after the six months' defect liability period. I may note that respondent has only been paid interest by the Arbitrator from 11.6.1999, and not from 1.11.1998 when it was due to the respondent, but since the respondent has not objected to the Award, I need not consider grant of interest to the respondent from 1.11.1998 instead of 11.6.1999 as has been done by the Arbitrator. I also note that there may be a minor issue with respect to interest on Rs. 20,000/- from 21.3.1997 but since with respect to two other sub-claims interest has been awarded only from 11.6.1999 and not from 1.11.1998, I am not interfering with the Award for a minuscule amount of possibly around of Rs. 2,000/- with respect to interest of Rs. 20,000/- under sub claim (c) of this Claim no.4. 15. The next issue which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents were not able to submit any purchase vouchers, payment details, level books or any other record to show what quantity of earth was procured by them. The respondents contention that it being an old record is not available with them does not seem justified as they being a government department should have all details of payments and records of work. Letter dated 1.3.1996 (exhibit RH-2) was submitted by respondents during hearing held on 6.6.2005. This letter for supply of 10,000M3 was written to 1&FC Deptt. On 1.3.1996 when 8167M3 of earth had already been paid for and used for filling at site. The respondents were not able to provide any further proof of actual earth purchased by them and thus were not able to counter the claimant's contention convincingly. I, therefore, award this item in favour of the claimant and award Rs. 103260/- against this to the claimant. b) Diluting injecting emulsion with chlorophyrifos: After carefully studying the contract agreement item no. 12.74, submissions and documents of both the parties I decide this claim in favour of the claimants. I find that the claim in this item is for spraying of chlorophyrifos emulsifiable concentrate 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have been procured by the respondent herein. Once the material for earth filling was procured by the respondent, then the respondent was entitled to payment of the amounts towards earth filling. (ii) With respect to spraying of emulsion etc on the wood work by the respondent, Arbitrator rightly notes that item no. 12.74 of the contract cannot be incorporated in item no. 12.75 of the contract especially because concentrate of item no. 12.74 was 1% and concentrate of chlorophyrifos was 20% in item no. 12.75. Arbitrator therefore rightly held that the respondent is entitled to the quantity and which he arrived at by multiplying the quantity admitted by the petitioner by 20 times and which quantity of the respondent was wrongly taken by the petitioner with concentrate at 1% instead of 20% as was found under item no.12.75 of the contract. (iii) With respect to double stage centering and shuttering, the Arbitrator has rightly awarded this claim by noting that actual double stage centering and shuttering was done and there was no objection as to the nature of work done by the respondent and hence the respondent was entitled to the payment. 19. I may at this stage note that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n balance payment of work done yet not made. As claim No.8 has been found to be justified to an amount of Rs. 28,98, 278 for civil work I decide that the claimant is entitled for an amount under clause 27 on this amount. The calculation as per formla given in contract document is as under: VM=2898278x0.85x 0.75x(338.2-273.33) =4,38,507/- 273.33 VL=2898278x0.85x025 (416.67-314.67) =1,99,638/- 314.67 Total: VM+VL=Rs. 6,38,145/- ii) For electrical work. As no payment has been found to be justified for electrical work under Claim No.8, I decide that for payment under clause 27 for electrical work nothing is payable for final quarter to the claimant. Remaining calculation being as they have been shown in S.O.F. as per formula given in contract and verified by me, I deduct Rs. 97,419/-from the claimed amount of Rs. 5,66,765/- by claimant. Therefore, payment of Rs. 4,69,346/- (5,66,765-97,419/-) is justified against this claim." 22. However, I note that the Arbitrator even after allowing the escalation charge for civil and electrical works as above, seems to have duplicated awarding of the claim by awarding the third claim under the joint head of civil and electrical works, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,808/- at Rs. 3,000/- per lakh/per year for 15 months from 30.10.1997 upto 31.1.1999 and at the same rate for 15 months from 30.10.1997 to 31.1.1999. It may be noted that the bank guarantees were extended upto 31.1.1999 as per the case of the respondent. In my opinion, Arbitrator has allowed the claim rightly to one extent and wrongly to another extent and the reasons for saying so are as under:- In my opinion, the bank guarantee charges cannot be to the account of the respondent during the period of extension of time which was granted without levying of compensation and which aspect has been otherwise dealt with in the earlier part of the judgment. Once the respondent is not guilty of any delay and extension of time is granted without levy of compensation upon the respondent, and it is already held that the petitioner had taken the undertaking on 14.8.2001 by means of coercion, the respondent was therefore entitled to the claim of renewal charges of the bank guarantee from the original date of completion of the contract on 28.4.1997 and upto the actual date of completion on 30.4.1998 i.e the period of roughly one year and which period of one year of delay was not on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondent by using extra cement, and therefore once it is not as if the cement was misappropriated by the respondent, hence in my opinion the Arbitrator has rightly awarded a sum of Rs. 20,000/- to the respondent by directing that this amount was wrongly recovered by the petitioner from the respondent under the contract as a penal recovery for cement allegedly not accounted for. 28. The next claim is Claim no.26 and which was a claim for a sum of Rs. 10 lacs on account of claim of the respondent towards infructuous expenditure and damages sustained because of various lapses attributed to the petitioner herein. The Arbitrator under this head has awarded a sum of Rs. 6 lacs to the respondent and against the petitioner. In my opinion, the Award under Claim no.26 against the petitioner of Rs. 6 lacs is clearly perverse because with respect to the extended period, the respondent has been paid actual amount for the actual work done alongwith escalation charges which have been awarded under Claim no.10 as discussed above. Once the contractor is paid actual charges for the work done including escalation charges for the work done, there remains no other claim of the respondent/cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unter Claim no.1 is the claim for defective execution of the works, and under this claim an amount of Rs. 40,000,00/- was claimed by the petitioner. The Arbitrator has rejected this counter claim by giving the main reason that the petitioner failed to produce any evidence to show that the amount claimed was in fact expended by the petitioner for rectification of defective works. In my opinion, though reasoning is not correct, however, the conclusion of rejecting the Counter Claim no.1 is correct, and this is for the reason that evidence had to be produced not with respect to actual rectification but of the value of the defective works. This value of the defective works has not been proved by leading evidence and therefore this counter claim has rightly been rejected by the Arbitrator. One additional reason for rejecting the Counter Claim no.1 with respect to the defective works is also that admittedly the petitioner cleared the final bill of Rs. 4,78,710/- on 8.12.2003, and before the release of the final bill, petitioner would have ensured that whatever are its claims towards defective works would have been deducted from the payment to be made under the final bill. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of non-commissioning of a sub- station prior to 30.4.1998 was without any merit and rightly rejected by the Arbitrator. 35. Counter Claim no.5 of the petitioner herein was on account of a sum of Rs. 2,00,000/- for damage caused to the Diesel Generator (DG) set by the respondent. Arbitrator has in my opinion rightly rejected this counter claim by observing that petitioner did not show any vouchers for payments made by the petitioner for getting the DG set repaired. Putting it in other words, no proof was filed as to what was the amount of damage to the DG set and in the absence of any proof of quantification of damage to the DG set, Arbitrator has rightly rejected this claim of Rs. 2,00,000/-. 36. Counter Claim no.7 was a claim for defamation and a sum of Rs. 10,00,000/- was claimed under this head. It was alleged by the petitioner that petitioner is a reputed government undertaking and its image was tarnished by making defamatory statements in industrial circles. Arbitrator has rejected this claim by observing that internal correspondence between the petitioner and the respondent did not fall under the head of defamation. Also, the Arbitrator notes that approaching a com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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