North Delhi Municipal Corporation v. Ravi Builders

NAVIN CHAWLA, J JULY19, 2018/rv

O.M.P. (COMM.) 207/2016 Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + O.M.P. (COMM) 207/2016 Reserved on: 9th July, 2018 Date of decision : 19th July, 2018 NORTH DELHI MUNICIPAL CORPORATION ..... Petitioner Through: Mr.Sunil Goel, Standing Counsel for MCD with Ms.Supreet Bimbra & Mr.Mayank Goel, Advs. versus RAVI BUILDERS ..... Respondent Through: Mr.Moni Cinmoy & Mr.Arvind Kr. Pandey, Advs. CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA 1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') has been filed by the petitioner challenging the Arbitral Award dated 16.03.2015 passed by the Sole Arbitrator adjudicating the disputes that have arisen between the parties in relation to Work Order No.EE (Br.)/II/TC/99 dated 19.01.2007 relating to construction of Storm Water Drainage System and Footpath as per work of improvement and strengthening of Sarai Phoose Road starting from Burf Khana Chowk to Daffrin Bridge Crossing in Civil Line Zone. 2. The Work Order mentioned the contractual amount of the work as ₹1,40,00,050/-. The stipulated time for completion of work was fifteen O.M.P. (COMM.) 207/2016 Page 2 months starting from 28.01.2007. The work was finally completed by 30.09.2009. 3. The Arbitrator in his Impugned Award has awarded the following claims in favour of the respondent and against the petitioner:- "(i) Claim no. 1 : Payment of alleged Final Bill : Rs.26,96,636/- (ii) Claim no. 4 : Escalation under Clause 10CC : Rs.16,83,902/- (iii) Claim No.5 : Refund of Earnest Money / Security Deposit : Rs.10,29,884/- (iv) Claim No.6 : Interest on Rs.54,10,422/- (aggregate of claim no.l, claim no.4 and claim no.5) @ 10% p.a. from 1.4.2010 till the date of filing of claims dt 4.5.2013 (37 months): Rs.l6,68,213/- (v) Claim no.7 : Interest on Rs.70,78,635/- (aggregate of claim no.1, claim no.4, claim no.5 and claim no.6) @ 10% p.a. from 4.5.2013 till 16.3.2015 (23 months) : Rs.13,56,738/- (vi) Claim no.8: Arbitration cost: Rs.2,00,000/-." 4. The objection of the petitioner against the Impugned Award is that there was no Arbitration Agreement in existence between the parties and therefore, the award has been passed without jurisdiction. In this regard it has placed reliance on a Circular dated 11.12.2006 issued by the MCD, Engineering Department, communicating the decision of deletion of arbitration clause in all future Notice Inviting Tenders (NIT)issued by the MCD. 5. In the present case the NIT was issued by the petitioner on 20.05.2006, that is prior to the date of issuance of the said Circular and admittedly the NIT was published making reference to the Terms and Conditions, which included the arbitration clause. The Work Order issued to the respondent made the Terms and Conditions of the NIT applicable O.M.P. (COMM.) 207/2016 Page 3 to the contract and therefore, the Arbitration Agreement equally applied. The petitioner cannot unilaterally amend the terms and conditions of this contract by way of the Circular dated 11.12.2006. In Bharat Sanchar Nigam Ltd. & Anr. v. BPL Mobile Cellular Ltd. & Ors. (2008) 13 SCC 597, Supreme Court held that: "If the parties were ad idem as regards terms of the contract, any change in the tariff could not have been made unilaterally. Any novation in the contract was required to be done on the same terms as are required for entering into a valid and concluded contract. Such an exercise having not been resorted to, we are of the opinion, that no interference with the impugned judgment is called for." 6. In any case, a reading of the Circular does not suggest that it will apply retrospectively to concluded contracts. 7. I therefore, do not find any merit in the objection raised by the petitioner. 8. On the merits of the Award, the petitioner challenges the award of ₹26,96,636/- on Claim no. 1 by contending that while the Work Order stipulated the contractual amount as ₹1,40,00,50/-, admittedly an amount of ₹1,39,97,156/- had been paid by the pet