The Division Bench dismissed an intra-court appeal challenging the Commercial Court's order upholding a partly accepted Single Judge decision. The Single Judge had set aside an arbitrator's award denying compensation for construction delay, finding it perverse. The appeal failed.
Appeal dismissed with no order as to costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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* IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO(OS) (COMM) 138/2018
Date of decision: 10th July, 2018.
K R ANAND ..... Appellant Through Mr. Harish Malhotra, Sr. Advocate with Mr. Rajender Agarwal and Mr. R.K. Modi, Advocates.
versus
DELHI DEVELOPMENT AUTHORITY & ANR. ..... Respondents Through Mr. Pawan Mathur, Standing Counsel for DDA with Mr. P.K. Ex engineer DDA.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE CHANDER SHEKHAR
SANJIV KHANNA J. (ORAL)
C.M. No.26673/2018
There is delay of 5 days in filing of the appeal.
Counsel for the respondents does not oppose the application.
Delay is condoned.
FAO(OS) (COMM) 138/2018
This intra-Court appeal under Section 13 of the Commercial Court, Commercial Division and Commercial Appellate Division of the High Courts Act, 2015 read with Section 37 of the Arbitration and Conciliation Act, 1996 (A and C Act, for short) impugns order dated 10th April, 2018, passed by the single Judge partly accepting objections raised by the Delhi
FAO (OS) (COMM) No.138/2018 Page 1 of 7
Development Authority (respondent before us) in their application/petition under Section 34 of the A and C Act.
“ 28.3.1 The Claimants' certificate for not claiming damages for the delay on the proforma for extension of time and later withdrawal, of the same Is considered as his own prerogative as the contract do not bind him in this matter. The circumstances in which the certificate was given being not known, it is considered that the Claimants claim for the additional cost for on overheads cannot be denied on this score alone. I have no reason to disagree with the submissions made by the Claimants on this issue. It is quite common that officers of the government organization throw hints for levy of compensation for delay in completion and ask for such, certificate. Such certificate for not claiming damages is neither a requirement as per the proforma prescribed for application for extension of time to be submitted by the contractor nor a requirement under any provisions of the contract. In my opinion, even a contractor of average prudence will not give such blanket certificate voluntarily. In view of the above, and also In view of the fact that the Claimants have withdraw the undertaking
FAO (OS) (COMM) No.138/2018 Page 2 of 7
subsequently, I hold that this cannot be a deterrent in considering this claim of the Claimants.
28.3.2 As regards, cost of overheads on account of delay due to execution of the additional work, the overheads include the cost of additional work paid to the Claimants as extra item. The provision exists in the contract for deriving such time for additional work, and the same has also been allowed while granting extension of time. Therefore, nothing is payable to the Claimants for period of delay on account of the additional work carried out.
28.3.3 As seen in the Extension of Time (EOT) application and its approval attached with the final bill, apart from the delay due to additional work, there are three main reasons for delay cited therein. They are:
(a) Rains, 99 days
Delay in the mix design, 87 days (all, of which are concurrent to the period of delay due to rains)
(c) Delay due to extreme weather, 45 days.
All these hindrances have been found valid by the Respondents and extension of time granted without levy of any compensation' as seen in the attachment to the final bill submitted by the Respondents. A period of 55 days have also been allow4d as delay due to additional work.
In the EOT papers, while deriving period for additional work the amount of actual work done Is taken as Rs.35,78,60,106. however, as per the final bill submitted by the
Respondents, the gross amount of work done is Rs, 37,26,23,089. Thus, the justified period of delay on account of the additional work done as per provisions of the contract works out as under:
FAO (OS) (COMM) No.138/2018 Page 3 of 7
No of days allowed for the additional work = 1.25*(Actual amount of work done —Amount as per contract)*Stipulated time as per contract (in days)/ Amount as per contract.
1,25*(372623089 — 287424811)*184/287424811
= 68 days. (A)
28.3.4 This is noted that the work was awarded such that, the date of start Itself falls at the start of the rainy season, though, the tender for the work was received as early as In; Dec, 2012 with the bids to remain valid for 90 days only. Such long period of delay in awarding the work Is abnormal. Therefore, the Respondents cannot absolve themselves of the responsibility of bringing the period of execution of work during rains. Similarly, the contract stipulates, approval of design mix by CRRI or such organization. The Respondents again cannot absolve themselves of the responsibility of delay by CRRI which is a government organization like that of the Respondents and Respondents were in good position to get this expedited. The initial delay in award of work has also resulted into bringing the work running into extreme cold weather of winter season. Since the work is predominantly bituminous work which is not advisable to be executed during extreme cold weather and the period has rightly been allowed by the Respondents as a genuine delay. In view of this, it is considered that the Claimants need to be partly compensated for extra expenditure on overheads for the part of the period other than the period of delay due to extra work.”
(In view of the limited issue, which arises for consideration, we have not quoted the computation made by the Arbitrator).
FAO (OS) (COMM) No.138/2018 Page 4 of 7
was common for the officers in government to throw hints for levy of compensation for delay in completion and ask for no objection certificates when the contractors apply for extension of time. Our attention was also drawn to paragraph 28.3.4 to urge that there was delay in approval of „Design Mix‟ by CRRI for which the appellant was rightly compensated.
FAO (OS) (COMM) No.138/2018 Page 5 of 7
Delay in „Design Mix‟, it was stated, was for 87 days that were concurrent to the period of delay due to rains. Last reason given by the appellant was „extreme weather‟ because of which there was delay of 45 days. Impugned judgment refers to clause 28.5 of the contract, to highlight, the contractor/appellant's obligation under the contract to get the „Design Mix‟ approved from CRRI or any other premier government institution. The appellant was well aware that this could take time. It was not the obligation of the respondent to get the „Design Mix‟ approved. Thus, there was no question of breach of obligation by the respondent. Even assuming there was some delay attributable to CRRI, the respondent would not be liable to pay damages merely because CRRI was a government organization. Completely ignoring the contractual mandate, the award erroneously holds that the respondent had committed breach of contract and was liable to pay damages.
FAO (OS) (COMM) No.138/2018 Page 6 of 7
award is against justice or morality. An award is stated to be against justice when it shocks conscience of the Court. The said parameters, when applied to the facts of the present case, would vindicate and affirm impugned judgment.
SANJIV KHANNA, J.
CHANDER SHEKHAR, J.
JULY 10, 2018 MR/NA
3 issues framed by the court
Whether the commercial court can interfere with the arbitral award which was partly accepted by the single judge under Section 34 of the Arbitration and Conciliation Act.
Whether the award setting aside the contractor's claim for compensation for delay was perverse as it ignored contractual terms and vital evidence.
Whether the claim for overheads compensation was justified given the contract stipulations regarding design mix approval and weather delays.
Colour shows how this judgement treated each authority
Associate Builders v. Delhi Development AuthorityReferred¶45
Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49 · Who else cites this
3 provisions across 2 enactments
K R ANAND
DELHI DEVELOPMENT AUTHORITY
Sanjiv Khanna
Chander Shekhar
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
