MAHMOOD ALI KHAN, J. - (1.) M/s. Sanyukt Nirmata, hereinafter to be called "claimant" entered into a contract with Union of India, hereinafter to be called the "objector", for construction of CPWD Training Institution Residential Accommodation at Ghaziabad. The stipulated date for commencement of the work was 11,03.1990 and the date of its completion was 10.12.1990. The work was actually completed on 25.5.1992. In the proceedings under Section 20 of the Arbitration Act, 1940, this Court by order dated 20.10.1997 made a reference of the dispute, which had arisen out of and in relation to the aforesaid work contract, for adjudication by arbitration to the sole Arbitrator, respondent No. 2. The Arbitrator on 22.7.2000 filed the Award in this Court in view of Section 14 of the Arbitration Act, 1940. However, on getting advance of filing of the said Award, the objector on 29.9.2000 filed the objections, purported to be under Sections 30 and 33 of the Arbitration Act, 1940 and deposited the entire awarded amount in the Court. The counsel for the objector on 30.10.2000 also gave no objection to the release of the amount deposited, except the amount involved in claim Nos. 1 and 3, to the claimant. The amount has since been released. The balance amount, however, has been kept in a fixed deposit in the Registry of the Court. The claimant filed LA 1562/02 for treating the Award as having been made and published in accordance with the provisions of Arbitration and Conciliation Act, 1996 (for short, "the Act") and for dismissing the objections filed by the objector under Sections 30 and 33 of the Arbitration Act, 1940. This Court on j 28.8.2002 held that the objections filed by the Union of India are to be decided in accordance with the provisions of the Act, The objections filed by the objector under Sections 30 and 33 of the Arbitration Act, 1940 were accordingly treated to be an application filed under sub-section (2) of Section 34 of the Act for setting aside the Award dated 12.4.2000.
(2.) At the outset, learned counsel for the objector submitted that the objections are filed to challenge the Award in respect of claims Nos. 1 and 3 only. The finding of the Arbitrator rendered in respect of claims Nos. 1 and 3 in the Award dated 17.4.2000 being relevant, is reproduced as below:- Claim No. 1: Claimants claim on account of Items not paid or paid at lower than due rates : Rs. 8,56,106 The handrail has been provided on the parapet as an extra item and the claimants had claimed a rate of Rs. 776.90 per meter for the same. The respondents have however sanctioned a rate of Rs. 124.96 only. The claimants claim is for the payment of the rate claimed by them viz. Rs. 776.90. Both claimants and respondents have submitted their analyses of rates for the item. A perusal of the analysis of rate based on which the respondents have released payment shows that the rate has been derived based on D.S.R. 1985 a per clause 12(iv) of the contract. The claimants have based their analysis of rate on their quoted rate of item no. 10.4 of the agreement for the staircase railing; the rae derivation is thus on the basis of clause 12(ii) of the contract. I find that clause 12(ii) has a priority over clause 12(iv) of the contract and hence the analysis filed by the claimants is the one, which should form the basis for making payment of this item. The rate is to be derived on the basis of the quoted rate for the item of staircase railing. On scrutiny of the analysis submitted by the claimants, I assess that the claimants are entitled to receive a rate of Rs. 700 per m. for this item. The claimants have already been paid @ Rs. 124.96 per meter. The claimants are entitled to receive an extra payment of Rs.682.96 x (700-124.96)=Rs.3,92,729.31. Claimants are awarded an amount of Rs. 3,92,729.00. Claim No. 3 : Claimants claim for Rs. 33,36,806 on account of interest, compensation and damages I have carefully gone through the pleadings and arguments both written and oral made by the parties regarding delay in the execution of the work. It is clear that the work extended beyond the stipulated date of completion due to late issue of drawings. Certain changes were made at the site in the layout of the buildings even after the layout plan was issued. There was delay in giving the decision about the number of type I quarters to be constructed under the contract. Some other decisions concerning manufacture of shutters, W.C. and kitchen details, colour scheme etc. were also issued late. There was delay in getting the electrical conduits laid and this also resulted in dislocating claimants work. All these delays are attributable to respondents only. It is also a fact that the respondents have sanctioned extension of time upto the recorded date of completion without levy of compensation which also goes to establish that the claimants were not responsible for the delays in the execution of the work. The claimants are therefore found to be entitled to receive damages on account of losses that they suffered due to prolongation of the contract. I have examined the respondents pleading about the voluntary undertaking given by the claimants concerning not to claim damages for delays in the execution of the work. Claimants during oral hearings had pleaded that the undertaking as occuring in Exhibit R-22 was given by them under duress. The respondents had been threatening to levy liquidated damages under clause 2 of the contract even though there had been no delay on their part and the entire delay was attributable to the respondents if an undertaking as in . Exhibit R-22 was not given. I find that the claimants had submitted the extension of time application to the respondents on 12.2.1992 and that at the time of submission of this application no undertaking was there on the application. The claimant gave the undertaking at a much later date viz on 20.8.1992, i.e. nearly six months after the application was submitted. The extension of time was thereafter sanctioned by the superintending engineer on 16.10.1992. It is evidently clear from the dates mentioned above that no action was taken by the engineer in charge to process the application for a period of approximately six months after its submission in February, 1992 till the claimants gave them the undertaking as in Exhibit R-22 in August, 1992. There was no need for the engineer to charge to hold the application for granting extension of time if they required no undertaking from the claimants. The delay in processing of the application till the claimants gave an undertaking clearly establishes that the undertaking was given by the claimants at respondents' instance only. It is also seen from Exhibits R-4 to R-15 that the payment of a sum of nearly Rs.6.81 lacs towards escalation charges was pending for want of sanction of extension of time and the claimants would have lost this money if the extension had been sanctioned by the respondents with levy of liquidated damages. Sufficient ground of economic duress thus existed on 20.8.1992 when the claimants gave the undertakings. The undertaking given by the claimants on 20.8.1992 is reproduced below: - "We shall not claim anything extra on account of delayed completion of work if the extension of time is granted without levy of compensation." It is seen from the documents filed by the respondents that none of them puts the blame on the claimants for delay. There exist a couple of letters where the respondents had asked the claimants to expedite the progress of works but these are of routine nature and do not lead to inferring that there was any breach of contract by the claimants. There did not appear any reason for which the respondents could levy any compensation and consequently there was no need for the claimants to give an undertaking as above and that is why the application on the first submission did not contain any undertaking. It cannot therefore be accepted that the claimants gave the undertaking as above of their own free will. The undertaking was being sought for by the respondents just to bar the claimants future claims of damages that might arise. I, therefore, conclude that the undertaking dated 20.8.1992 was given by the claimants under economic duress and coercion and not of free will and hence cannot be given cognizance. The claimants are considered entitled to raise claims that are governed by the laws of the land and as per clause 25 of the contract. All the sub-claims of the claimants are, therefore, adjudicated as below.
(3.) The ground of challenge to the Award in respect of claims Nos. 1 and 3 as mentioned In the objections in paras-7, 8 and 9 are as follows:- "7. That the Award in respect of claim No.1 is liable to be set aside in as much as the learned Arbitrator misconducted the proceedings and has given the Award for a sum of Rs.3,92,729/- on account of the extra claim for the substituted items. It is submitted that the petitioner claimed Rs.4,99,602.00 on account of the extra claim for providing 40 MM dia GI Pipe hand rail with 20 mm square bar placed at 40 mm C/C each long etc. complete. The petitioner claims a sum of Rs.776.90 per meter as against Rs.124.96 sanctioned by the respondent in terms of clause 12(iv) of the agreement. It is submitted that the agreement provides for staircase railing 90 cm high with square bars diameter and with teakwood hand rail at the rate of Rs.870/- per meter. It is also submitted that both the items are different and distinct with each other. There is no similarity between the said items. Thus the rate of such substituted items was to be determined in terms of clause 12(iv) and not clause 12(ii), which is meant for determining the rate of the similar item. It is also submitted that the agreement item requires the petitioner to provide the teakwood hand rail which is costlier than the GI pipe. Thus the rate of the agreement item cannot be compared with the substituted items. It is submitted that the learned Arbitrator has failed to consider this basic difference and wrongly applied the provision of clause 12(ii) of the agreement. The Award on its face is contrary to the agreement between the parties and as such, liable to be set aside. 8. That the Award of the learned Arbitrator in respect of the claim No.1 is also contrary to law and as such liable to be set aside. It is submitted that the claimant/petitioner claimed a sum of Rs.776.90 per meter and filed some analysis of rate in support of the same. The learned Arbitrator has not accepted the same and has awarded the amount at the rate of Rs. 700.00 per meter, ft is not clear as to how the learned Arbitrator arrived at the said figure particularly when the analysis of rate furnished by the petitioner was not accepted by the learned Arbitrator. It is submitted that the Award thus suffers from error and inconsistency, which are apparent on its face. The learned Arbitrator has thus misconducted the proceedings. It is submitted that the Award in question in respect of claim No.l is liable to be set aside being perverse to the record. 9. That the Award in respect of claim No.3 is also liable to be set aside inasmuch as the learned Arbitrator made this Award for a sum of Rs.4,27,900/- on account of interest, compensation and damages allegedly suffered by the petitioner due to prolongation of work. As submitted above, the learned Arbitrator gave the Award in favour of the petitioner contrary to the admission and undertaking of the petitioner. It is submitted that the learned Arbitrator gave the Award in favour of the petitioner on an extraneous consideration even not pleaded by the petitioner in the statement of claim. It is submitted that the learned Arbitrator acted beyond his jurisdiction and rejected the contention of the respondent in this behalf. It is submitted that the petitioner had given the undertaking not to claim any compensation on account of delay in completion of work and the same has been placed on record as Annexure R- 22. It is submitted that the respondent acting on such undertaking and believing the same to be true granted extension of time and did not levy the compensation under clause 2 of the agreement. It is also submitted that once the petitioner took advantage of some documents and the respondent having acted upon the same changed its position, then in that case the petitioner cannot be permitted to allege to the contrary. It is submitted that the petitioner is estopped from raising the plea of duress at a later stage that too at the time of final hearing. There is no evidence on record in support of this contention of the petitioner and the learned Arbitrator has given the Award without any basis. Thus the Award is liable to be set aside being perverse to the record.;