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of <h1>Court Upholds Arbitrator's Decision on Delay Responsibility and Award of Compensation</h1> <h3>Delhi State Industrial & Infrastructure Development Corporation Ltd. Versus M/s. H.R. Builders</h3> Delhi State Industrial & Infrastructure Development Corporation Ltd. Versus M/s. H.R. Builders - TMI Issues Involved:1. Arbitrability of delay/prolongation and compensation under Clause 2 of the Agreement.2. Award of labour cess and DVAT.3. Escalation for labour and material components.4. Compensation for overheads due to prolongation.5. Award of interest and costs.6. Dismissal of DSIIDC's counterclaim.Issue-wise Detailed Analysis:1. Arbitrability of Delay/Prolongation and Compensation:The primary contention was whether the delay/prolongation and subsequent compensation were arbitrable under Clause 2 of the Agreement. DSIIDC argued that the decision of the Project Director regarding compensation was final and binding, making it an 'excepted matter' beyond the Arbitrator's jurisdiction. The court referred to the Supreme Court's decision in Vidya Drolia vs. Durga Trading Corporation, which explained non-arbitrability in terms of jurisdiction and the scope of arbitration agreements. The court found that while the computation of compensation was an excepted matter, determining the responsibility for the delay was arbitrable. The Arbitrator's decision that the delay was not attributable to HRB was upheld as it was based on evidence and did not suffer from patent illegality.2. Award of Labour Cess and DVAT:DSIIDC challenged the award of labour cess at 1% and DVAT at 3% on the quantum of work done. The Arbitrator found that these items were not part of the bid and referred to the CPWD Manual, which did not include these in the approved rates. The court upheld the Arbitrator's conclusion, finding it based on the material on record and not calling for interference.3. Escalation for Labour and Material Components:DSIIDC argued that HRB had waived its claim for escalation by not including it in the bills. The Arbitrator, however, found that HRB was entitled to escalation due to the prolonged delay attributable to DSIIDC. The Arbitrator used indices published by the Director General, CPWD, which were deemed more appropriate. The court upheld this decision, finding it reasonable and based on facts.4. Compensation for Overheads Due to Prolongation:The award of Rs. 48,45,700/- for overheads was challenged by DSIIDC. The Arbitrator applied the Hudson formula to compensate HRB for overheads incurred during the extended period. The court found this conclusion reasonable and based on evidence, thus not perverse or patently illegal.5. Award of Interest and Costs:DSIIDC challenged the award of interest at 8.5% as exorbitant. The court found the interest rate reasonable and based on factual determination, which could not be re-agitated in the present proceedings.6. Dismissal of DSIIDC's Counterclaim:DSIIDC's counterclaim of Rs. 20,00,00,000/- for loss of reputation and work was dismissed by the Arbitrator due to lack of evidence. The court upheld this dismissal, finding no arbitrariness or hypothetical conclusions in the Arbitrator's decision.Conclusion:The court found no merit in DSIIDC's appeal under Section 37 of the Arbitration and Conciliation Act, 1996, and dismissed the appeal, upholding the Arbitrator's award and the learned Single Judge's order. The findings were based on evidence, reasonable, and did not suffer from patent illegality or breach of fundamental policy of Indian law.
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