Beenashaw Soni, ASC, DDA along with Ms. Ann Joseph and Ms. Mansi Jain, Advocates v. M/S MALIK CONSTRUCTIONS

Judgment

1. The present petition assails an arbitral award dated 30.12.2013. The said arbitral award was rendered in context of an agreement bearing No.

34/EE/WD-15/DDA/211-12, executed between the parties for the works of “relaying/ rehabilitation of Flat No. 55, 146, 194, 184, 351, 376, 312 & 399 Sector 13, Pocket A Dwarka” (hereinafter referred as “the project”). 2. The contract (for the aforesaid project) was awarded to the respondent/claimant, M/s Malik Constructions, by the petitioner vide Letter No. F15(95)/WD-15/DDA/11-12/1337 dated 20.10.2011. The stipulated date of commencement of work was 30.10.2011, and the scheduled date of completion of the work was 29.02.2012. Subsequently, the agreement bearing No. 34/EE/WD-15/DDA/211-12 was executed between the parties. Signature Not Verified Digitally Signed By:ABHISHEK THAKUR Signing Date:05.09.2025 04:02:48 O.M.P. (COMM) 280/2020 Signature Not Verified Digitally Signed By:SACHIN DATTA Signing Date:05.09.2025 04:03:13

3. It is the case of the petitioner that the respondent executed the work at an extremely slow pace and raised only one Running Account (R/A) bill amounting to Rs. 6,13,984/- against the total awarded tender value of Rs. 25,72,137/-. It is submitted that the aforementioned bill was partly paid on

24.04.2012 and that a sum of Rs. 2,72,214/- was lawfully withheld in accordance with clause 1(a) of the agreement. 4. The petitioner submitted that after the payment of R/A bill, no work was performed by the respondent/claimant. Consequently, the contract was rescinded vide office letter No. F15(95)WD15/DDA/11-12/508 dated

25.05.2012 and the work was ultimately completed through other agencies. 5. Subsequently, the respondent/claimant invoked the arbitration under clause 25 of the agreement by issuing a legal notice dated 10.09.2012. Consequently, a sole arbitrator was appointed by the petitioner. Vide impugned award dated 30.12.2013, the learned Sole Arbitrator partly allowed the claims of the respondent/claimant. THE IMPUGNED ARBITRAL AWARD

6. Before the arbitral tribunal, the respondent/claimant contended that the agreement had already expired on 29.02.2012, and since no formal extension had been granted, the work done thereafter was executed on a quantum merit basis and not under the contractual framework. Therefore, the purported termination and related actions, including the forfeiture of earnest money and performance guarantees, were arbitrary and illegal. In view of the disputes, the respondent/claimant raised ten claims before the learned Sole Arbitrator. 7. The petitioner (respondent in the arbitration proceedings) contended Signature Not Verified Digitally Signed By:ABHISHEK THAKUR Signing Date:05.09.2025 04:02:48 O.M.P. (COMM) 280/2020 Signature Not Verified Digitally Signed By:SACHIN DATTA Signing Date:05.09.2025 04:03:13 that despite the urgent nature of the works awarded under the project, the respondent/claimant after receiving the 1st RA bill, despite repeated reminders, failed to complete the work. Therefore, the decision of rescinding the work was justified and undertaken in accordance with the relevant clause/s of the agreement. 8. The learned Sole Arbitrator rendered a finding of fact that the termination of the agreement by the petitioner was illegal and against the terms of the agreement. It was held that the time was not the essence of the contract. In the aforesaid conspectus, the arbitral tribunal held that the respondent/claimant was entitled to refund of earnest money, performance guarantee and the amount withheld by the petitioner while making the st RA bill (Claim Nos. 1 to 4)1 . payment towards the 1 9. In regard to Claim No. 5 2 , the arbitral tribunal observed that the petitioner had submitted a final bill, vide letter No. 1008 dated 15.07.2013, acknowledging an outstanding amount of ₹11,514/ - for work executed by the respondent/claimant, but yet not paid. However, on account of the respondent/claimant’s failure to produce conclusive evidence for any amount beyond the aforementioned, the learned Sole Arbitrator awarded Rs.11,514/- under this claim against the claimed amount of Rs.9,63,000/-. 10. Further, under Claim No.9 the arbitral tribunal awarded simple 3 interest in favour of respondent/claimant at the rate of 9% per annum – 1 "Claim No.1 – The claimants claim that the determination of the contract by the DDA is illegal and arbitrary.; Claim No.2 - “The claimants claim a sum of Rs.61,398/- on account of refund of earnest money.; Claim No.3 – “The claimants claim a sum of Rs.1,28,670/- on account of refund of performance guarantee; Claim No.4 – “The claimants claim a sum of Rs.2,72,214/- on account of refund of withheld amount” 2 “The claimants claim a sum of Rs.9,63,000/- on account of work executed but not paid by the department.” 3 “The claimants claim interest, pre-suit, pendente lite & future @18% per annum from its due date.” Signature Not Verified Digitally Signed By:ABHISHEK THAKUR Signing Date:05.09.2025 04:02:48 O.M.P. (COMM) 280/2020 Signature Not Verified Digitally Signed By:SACHIN DATTA Signing Date:05.09.2025 04:03:13 a. On the awarded sums under Claims Nos. 4 and 5, from the date of invocation of arbitration i.e., 10.09.2012 until payment or decree, whichever is earlier. b. On the awarded sums under Claims Nos. 2 and 3, from the date of encashment of earnest money/performance guarantee or 10.09.2012 (whichever is later) until payment or decree, whichever is earlier. 11. The learned Sole Arbitrator dismissed Claim Nos. 6, 7 and 84 of the respondent/claimant and no amount was awarded thereunder. It was observed that the respondent/claimant failed to provide any cogent evidence to support the aforementioned claims. Further, Claim No. 105 was also dismissed and both the parties were ordered to bear their own cost/s of arbitration. SUBMISSIONS ON BEHALF OF THE PETITIONER

12. The primary contention on behalf of the petitioner is that as the agreement was duly rescinded by the petitioner in terms of the provisions of the contract, the learned Sole Arbitrator has wrongly awarded certain amounts in respect of Claim nos. 1 to 5 and 9 to the respondent/claimant. 13. It is contended that the forfeiture of earnest money and the performance guarantee and the partial withholding of amount paid towards 1st R/A Bill was justified in view of the breach of the contract on the part of the respondent/claimant. 4 Claim No. 6 – “The claimants claim a sum of Rs.2,18,200 on account of hire charges of plant & machinery; Claim No. 7 – The claimants claim a sum of Rs.2,50,000/- on account of overhead expenses/salary paid to the staff; Claim No. 8 – The claimants claim a sum of Rs.2,50,000/- on account of loss of profit/profitability.” 5 “the claimants claim for cost of proceedings.” Signature Not Verified Digitally Signed By:ABHISHEK THAKUR Signing Date:05.09.2025 04:02:48 O.M.P. (COMM) 280/2020 Signature Not Verified Digitally Signed By:SACHIN DATTA Signing Date:05.09.2025 04:03:13

14. In the circumstances, it is submitted that since the impugned award wrongly awards certain amounts to the respondent/claimant, the same be set aside. ANALYSIS AND CONCLUSION

15. A perusal of the award reveals that the learned Sole Arbitrator has rendered a finding to the effect that the stipulated date of completion of the work was 29.02.2012. It was noticed thereafter that no fresh date of completion of the work was fixed even though the respondent continued to perform/execute the work beyond 29.02.2012. After taking note of the factual conspectus, it was held that the termination of the contract by the petitioner was illegal. 16. As a consequence of the aforesaid finding, the petitioner has been held entitled to:- i. Refund of earnest money to the tune of Rs. 61,398/-. ii. Refund of performance bank guarantee amounting to the tune of Rs. 1,28,670/- iii. Refund of Rs.2,72,214/-, withheld from the payment of first R/A bill.

17. Claim No.5, as mentioned above, was substantially rejected and only a sum of Rs. 11,514/- was awarded to the respondent. Claim Nos. 6, 7 & 8 were wholly rejected by the learned Sole Arbitrator. 18. Further, the learned Sole Arbitrator awarded 9% interest on the awarded sums under Claim Nos. 4 and 5 and on the awarded sums under Claim Nos. 2 and 3. 19. It is evident that the findings/observations in the impugned award are Signature Not Verified Digitally Signed By:ABHISHEK THAKUR Signing Date:05.09.2025 04:02:48 O.M.P. (COMM) 280/2020 Signature Not Verified Digitally Signed By:SACHIN DATTA Signing Date:05.09.2025 04:03:13 based on appreciation of the factual conspectus. Further, the learned Sole Arbitrator judiciously examined claims raised respondent/claimant and most of the claims were rejected except the claims pertaining to refund of earnest money, performance guarantee and the amount withheld by the petitioner. 20. In these circumstances, this Court is unable to find any patent illegality or any other infirmity in the award so as to warrant interference under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter “A&C Act”). 21. The legal position is well settled that the scrutiny in exercise of jurisdiction under Section 34 of the A&C Act is not akin to that of Appellate Court. The scope of interference with the Arbitral Award is extremely circumscribed and unless the view taken by the arbitrator is so perverse that it cannot be characterised as a possible view, it is impermissible to interfere with the arbitral award. 22. The legal position in this regard has been restated and reiterated in catena of decisions6 and recently in the judgment of the Supreme Court in OPG Power Generation Private Limited v. Enexio Power Cooling Solutions India Private Limited and Another 2024 SCC OnLine SC 2600. The relevant observations in OPG Power Generation Private Limited (supra) reads as under – “60. Sub-section (2-A) of Section 34 of the 1996 Act, which was inserted by 2015 Amendment, provides that an arbitral award not arising out of international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is visited by patent illegality