2015 (9) TMI 1705 - HC - Companies Law

Arbitrator Rules on Various Claims and Counterclaims in Construction Dispute

The Arbitrator dismissed the preliminary objections regarding the undertaking and No Claim Certificate. Various claims were allowed, including for ... Validity of Award of the Arbitrator - award passed with respect to disputes which had arisen between the petitioner/DSIDC/owner and the respondent/contractor with respect to contract dated 21.4.1995 for construction of Co-Ed. Polytechnic at Rohini, Delhi for the petitioner - HELD THAT:- The net position which will emerge is that the amount of ₹ 1,09,08,393/- will be reduced on account of reduction of the amount of ₹ 1,05,402/- (sub-claim no.3 of Claim no.10), and an amount of ₹ 1,35,223/- on account of rejection of Claim no.12 for this amount which was allowed by the Arbitrator and is rejected by this Court, the amount under Claim no.16 as awarded will stand reduced from a sum of ₹ 1,22,808/- to ₹ 72,000/-, ₹ 2 lacs on account of rejection of Claim no.20 as allowed by the Arbitrator, and proportionate reduction of Claim no.27, and ₹ 6,00,000/- awarded under Claim no.26. All these amounts are to be reduced from the amount of ₹ 1,09,08,393/- as awarded by the Arbitrator as this Court has accepted the objections of the petitioner herein by rejecting the said claims awarded by the Arbitrator. Also the amount under Claim no.11 as awarded will stand reduced from a sum of ₹ 7,48,871/- to ₹ 683,428. Claim no.27 being the claim of interest on the awarded amount will also now get proportionately reduced. Thus, on account of acceptance of some of the objections of the petitioner, the figure of the awarded amount of ₹ 1,09,08,393/- will stand reduced by ₹ 11,56,876/- and hence the net awarded amount to the respondent will come to ₹ 97,51,517/-. On this amount respondent will be entitled to interest at 12% per annum from the date of the Award till the date of actual payment by the petitioner - the objection petition is allowed to the limited extent by reducing the net awarded amount to the respondent herein and against the petitioner to a sum of ₹ 97,51,517/- alongwith interest at 12% per annum simple from the date of the Award viz. 21.3.2006 till the date of payment of this amount by the petitioner to the respondent herein. Issues Involved:1. Preliminary objections regarding undertaking and No Claim Certificate.2. Claims allowed by the Arbitrator.3. Counterclaims dismissed by the Arbitrator.Detailed Analysis:Preliminary Objections:1. Undertaking Not to Claim Damages:- The petitioner argued that the respondent had given an undertaking on 14.8.2001 not to claim any damages. The Arbitrator rejected this, noting that the extension of time without compensation indicated that the petitioner accepted no delay by the respondent up to 30.4.1998. The undertaking was considered to be given under coercion.2. No Claim Certificate:- The petitioner contended that the respondent issued a No Claim Certificate on 8.12.2003, accepting Rs. 4,78,710/- in full settlement. The Arbitrator found that the respondent was coerced into issuing this certificate to release blocked payments and withdrew it on 12.12.2003. The Arbitrator ruled that the No Claim Certificate did not bar the respondent from claiming legitimate payments.Claims Allowed by the Arbitrator:1. Claim No.1 - Security Deposit:- The Arbitrator awarded Rs. 2,18,327/- for the security deposit retained by the petitioner, as the work was completed and the final bill was paid.2. Claim No.2 - Interest on Retention Money:- The Arbitrator awarded Rs. 4,97,713/- as interest on the retention money/security deposit, noting that the petitioner could only retain the amount for six months after contract completion.3. Claim No.3 - Illegal Withholding for Insurance Policy:- Rs. 2,97,200/- was awarded for amounts withheld for insurance policies, as the respondent had provided the necessary insurance covers.4. Claim No.4 - Interest on Claim No.3:- Interest was awarded on the amount under Claim No.3, starting from 11.6.1999.5. Claim No.5 - Consumables for DG Set:- Rs. 6,38,145/- was awarded for diesel and lubricants used in the DG set, as the petitioner prematurely took over the premises.6. Claim No.6 - Interest on Claim No.5:- Interest at 12% per annum was awarded from 1.11.1998.7. Claim No.8 - Balance Payment for Civil and Electrical Works:- Rs. 28,98,278/- was awarded for actual work done, including earth filling, spraying emulsion, and double stage centering.8. Claim No.9 - Interest on Claim No.8:- Interest was awarded from 1.11.1998.9. Claim No.10 - Escalation Charges:- Rs. 6,38,145/- was awarded for civil work escalation and Rs. 4,69,346/- for electrical work escalation. An additional Rs. 1,05,402/- was awarded but later set aside by the court.10. Claim No.11 - Interest on Claim No.10:- Interest was awarded but reduced due to the duplication of claims.11. Claims No.12 and 13 - Interest on 19th and 20th R/A Bills:- Rs. 2,90,045/- was awarded for interest from 1.11.1998 to 8.12.2003.12. Claim No.16 - Renewal Charges for Bank Guarantees:- Rs. 72,000/- was awarded for renewal charges from 28.4.1997 to 30.4.1998.13. Claim No.20 - Loss Due to Roof Collapse:- Rs. 2 lacs awarded but set aside by the court as no fault was found with the petitioner.14. Claim No.25 - Penal Recovery for Cement:- Rs. 20,000/- was awarded for penal recovery for excess cement used.15. Claim No.26 - Infructuous Expenditure and Damages:- Rs. 6 lacs awarded but set aside by the court as it would amount to double liability.16. Claim No.27 - Interest on Awarded Claims:- Interest awarded but subject to reduction based on set-aside claims.Counterclaims Dismissed by the Arbitrator:1. Counter Claim No.1 - Defective Execution of Works:- Rs. 40,00,000/- claimed but rejected due to lack of evidence of rectification costs.2. Counter Claim No.2 - Costs and Damages Due to Roof Collapse:- Rs. 25,00,000/- claimed but rejected due to lack of evidence of expenditure.3. Counter Claim No.3 - Delay in Completion:- Rs. 10,00,000/- claimed but rejected as extension was granted without compensation.4. Counter Claim No.4 - Loss Due to Non-commissioning of Sub-station:- Rs. 15,00,000/- claimed but rejected as the completion date was 30.4.1998.5. Counter Claim No.5 - Damage to DG Set:- Rs. 2,00,000/- claimed but rejected due to lack of proof of damage.6. Counter Claim No.7 - Defamation:- Rs. 10,00,000/- claimed but rejected due to lack of evidence.7. Counter Claim No.8 - Legal Expenses:- Rs. 50,000/- claimed but rejected as some claims of the respondent were justified.8. Counter Claim No.9 - Interest:- Interest awarded only on Counter Claim No.6.Final Judgment:- The awarded amount was reduced from Rs. 1,09,08,393/- to Rs. 97,51,517/-, with interest at 12% per annum from the date of the Award till payment. Each party bears its own costs.