RANA CASE: SLP FILED IN THE SUPREME COURT

SYNOPSIS & LIST OF DATES

The petition raises the question of law as to whether arbitrator could overlook the provisions of the contract which clearly provided for the payment of liquidated damages in the event of the contractor failing to complete the project within a stipulated period of 24 months. Further, whether the Division Bench of the High Court was justified in refusing to look into the aspect of liquidated damages simply because the Single Judge had not dealt with the issue despite the fact that the written submissions filed before the Single Judge clearly indicate that the issue in regard to the payment of liquidated damages by the contractor in case of delay was actually raised before the Single Judge.

25.02.1996 – An agreement was entered into between the petitioner – Society and the respondent for the construction of 166 dwelling units. Clause 16 of the agreement provided that work shall be completed within 24 months from the date of commencement. It is submitted that the work having commenced on 25.02.1996, the date of completion was 24.02.1998. Further, clause 18 of the agreement stipulates that contractor shall give a written notice of the cause of delay to the Society and the contractor shall be deemed to have waived his right if the written notice is not given within a period of 14 days from the cause of delay. Further, clause 47 clearly provides for compensation in case of delay @ one percent per week of the tendered cost. The relevant clauses are reproduced below –
“16. Commencement and completion
(1) From the date of commencement of work as stated in the appendix, The contractor shall thereupon bring the works and regularly and diligently proceed with the same, and shall complete the same on or before the date for completion stated in the said appendix subject nevertheless to the provisions for extensions of time contained in clause 18 of these conditions.

(2) The time and date for completion stated in the appendix to these conditions shall be calculated from date for start stated in the appendix to these conditions and the period for completion of the works stated in the appendix-I shall be deemed to be inclusive of Sundays and all public holidays. Time shall be essence of this contract.

(3) The society may issue instructions in regard to the postponement of any work or part of work to be executed under the provisions of this contract.”

“18. Extension of time
Upon it becoming reasonably apparent that the progress of the works is delayed, the contractor shall forthwith give written notice of the cause of the delay to the engineer/society, and if in the opinion of the engineer/society the completion of the works is likely to be or has been delayed beyond the date for completion stated in the appendix to these conditions or beyond any extended time previously fixed under this clause-

(A) By force majeure, which means Wars or Revolutions, Fires, Flood Epidemics only. No other event shall be covered under this contract works.
(B) By reason of engineer/society instructions regarding variation to or postponement of the contract works, then the contractor shall inform the engineer within 14 days of such event happening which the contractor considers that he is entitled to extension of time. The engineer shall estimate the length of the delay and make in writing a fair and reasonable extension of time for completion of the works in consultation with the society. Provided always that the contractor shall use constantly his best endeavours to prevent delay and shall do all that may reasonable be required to the satisfaction of the engineer to proceed with the works. The contractor is deemed to have waived his right if such notification is not given to the engineer/society within 14 days of such event happening.”

“47. The time allowed for carrying out the work as entered in the tender shall be strictly observed by the contractor and shall be deemed to be of the essence of the contract on the part of the contractor and shall be reckoned from the tenth day after the date on which the order to commence the work is issued to the contractor. The work shall throughout the stipulated period of the contract be proceeded with all due diligence and the contractor shall pay as compensation an amount equal to one percent of tendered cost per week subject to Rs.1,00,000 (Rupees One Lac Only) per week that the work remains uncommenced or unfinished after the proper dates and further to ensure good progress during the execution of the work the contractor shall be bound to complete one fourth of the whole of the work before one-fourth of the whole time allowed under the contract has elapsed: three-fourth of the work before three –fourth of such time has elapsed. However for special jobs if a time-schedule has been submitted by the contractor and the same has been accepted by the society the contractor shall comply with the said time-schedule. In the event of the contractor failing to comply with this condition he shall be liable to pay as compensation an amount equal to one per cent of tendered cost per week subject to a maximum or Rs.1,00,000/-(Rupees One Lac Only) for every week that the due quantity of work remains incomplete.”

It is submitted that the respondent themselves have taken the stand that the work was completed on 24.12.2002 i.e. 4½ years after the due date for completion. It is pertinent to point out that admittedly the contractor never issued any notice to the Society regarding the cause of delay. In view of the same, Clause 47 of the agreement ought to have full play. In fact, the arbitrator went wrong in disallowing the counter-claim of the petitioner on the ground that the petitioner-society failed to point out the delay to the contractor which finding is clearly contrary to provisions of the contract specifically providing that it was for the contractor to issue necessary notice to the society in case of delay on account of force meajure, deviations or hindrances on the part of the society. A copy of the Agreement dt. 25.02.1996 is annexed as Annexure P-1.

01.11.1999 – The respondent submitted the 18th and pre-final bill to the Society. It was clearly mentioned in the bill that the balance work worth Rs.38.52 Lacs remained to be executed.

22.11.1999 – The architect certifies the work done by the contractor to the tune of Rs.10.95 Crores and indicates that the balance of work of Rs.38.52 Lacs remained to be done. In fact, the Architect certified that total work of Rs.10.95 Crores was executed by the respondent which included escalation of Rs.84,19,938/- upto March 1999. A copy of certificate dt. 22.11.1999 issued by the architect is annexed as Annexure P-2 (p. 164).

17.04.2000 – The Society disputed the certificate issued by the architect and pointed out that escalation should not have been allowed beyond October 1998 as no work was executed since Oct 1998. A copy of the letter dt. 17.04.2000 is annexed as Annexure P-3 (p. 165).

24.12.2002 – The contractor produced a certificate purportedly issued by the architect on 24.12.2002 indicating that the work was completed by the respondent on 24.12.2002. It is interesting to note that the said completion certificate was not produced by the respondent - claimant at the time of filing of the claim before the Arbitrator. It was only after the Society in its reply / counter-statement had raised the issue that work was not completed and that neither the Society nor its architect issued any completion certificate, the claimant filed the aforesaid certificate as additional documents. Significantly, clause 42 requires the contractor to give 10 days notice on completion of work. It is submitted that no such notice was given to the Society and the architect issued the purported completion certificate on 24.12.2002 indicating date of completion as 24.12.2002. Notably, Clause 42 contemplates defect liability period of one year from issuance of completion certificate by the architect and on completion of the defect liability period the society issues the actual completion certificate. Clause 42 is reproduced as under –

“42. Certificate of Completion

Within ten days of the completion of the work the contractor shall give notice of such completion to the society/architect and the works shall not be considered as completed until the society have been satisfied that they have been completed and the defects liability period shall commence from the date of issue of a certificate by them through the architect or otherwise.”

A copy of the Completion Certificate dt. 24.12.2002 is annexed as Annexure P-4.

02.09.2004 – The respondent filed the statement of claim before the arbitrator wherein balance payment of Rs.91.68 Lacs was claimed as the amount due and further prayer was made for release of the security amount. A copy of the statement of claim dt. 02.09.2004 filed by the respondent before the Arbitrator is annexed as Annexure P-5 (p. 173).

19.11.2004 – The Society filed the written statement-cum-counter claim wherein it was denied that any amount was due from the Society and a counter claim was put forward claiming liquidated damages from the respondent - contractor in terms of clause 47 of the Agreement for the delay in completing the project. A copy of the written statement-cum-counter claim dt. 19.11.2004 is annexed as Annexure P-6 (p. 182-210).

14.12.2004 – In rejoinder, the respondent denied before the Arbitrator the counter-claim preferred by the petitioner Society. A copy of rejoinder dt.

14.12.2004 is annexed as Annexure P-7 (p. 211-224).

24.10.2005 – The Arbitrator allowed the following claims of the respondents:
(a) return of security deposit of Rs.10..00 Lacs as it was held by the arbitrator that the work stood completed on 24.12.2002.
(b) award of Rs.75,19,230/- on account of the work done for which payment had not been released by the society.
(c) interest @12% per annum on the sum of Rs.75,19,230/-.
(d) Rs.50,000/- as costs.
The counter-claim of the petitioner – Society was rejected on the ground that time was not essence of the contract, compensations for the delayed period were not payable.
A copy of Award dt. 24.10.2005 made by the Arbitrator is annexed as Annexure P-8 (p. 233-246).

19.01.2006 – The award was challenged by way of a petition under section 34 of the Arbitration & Conciliation Act 1996. A copy of the petition dt. 19.01.2006 is annexed as Annexure P-9 (p.249-278).

06.01.2007 – Written submissions were filed on behalf of the petitioner – Society wherein denial of liquidated damages in favour of the society was challenged specifically on the ground that the award goes against the express provisions of the contract viz. Clause 47, 17 & 18 of the Agreement. A copy of the written submission dt. 06.01.2007 filed before the Ld. Single Judge is annexed as Annexure P-10 (p.331-361).

19.02.2007 – The Ld. Single Judge dismissed the petition without adverting to the submission of the petitioner – society to the effect that the arbitrator had wrongly rejected the counter-claim of the Society for liquidated damages on the basis of clause 47 of the agreement. A copy of order and judgement dt. 19.02.2007 of the Single Judge of the High Court is annexed as Annexure P-11. (p. 363-372).

16.04.2007 – An appeal was preferred by the petitioner – Society before the Division Bench of the High Court. A copy of memo of appeal dt. 16.04.2007 is annexed as Annexure P-12 (p. 1-28). It was specifically pleaded that Ld. Single Judge had ignored the written submissions filed by the Society before the Single Judge. A copy of memo of appeal dt. 16.04.2007 is annexed as Annexure P-12 (p. 1-28).

– The Division Bench refused to go into the question of liquidated damages on the ground that a plea to this effect had not been dealt with by the Ld. Single Judge in his judgement presumably because such a plea was not raised before the Single Judge. The Division Bench declined to take cognizance of the written submissions filed before the Single Judge wherein a specific plea based on clause 47 of the Agreement was raised.

– Hence the SLP.
IN THE SUPREME COURT OF INDIA
(ORDER XVI RULE 4 (1)(A)
CIVIL APPELLATE JURISDICTION
(Under Article 136 of the Constitution of India)
SPECIAL LEAVE PETITION (C ) No OF 2009
(WITH PRAYER FOR INTERIM RELIEF)
Position of the Parties
In High Court In this Court
BETWEEN
1. DIN Coop. Group Housing
Society Ltd. Appellant Petitioner

Versus
Shri A.S. Rana Respondent contesting respondent

To,
The Hon’ble Chief Justice of India and
His Companion Judges of the Supreme
Court of India.

The Humble petition of the petitioner
abovenamed.

MOST RESPECTFULLY SHOWETH.
1. This petition is being filed against the final order and judgment dated 03.11.2009 passed by the Division Bench of the High Court of Delhi at New Delhi in F.A.O. (OS) No.154/2007 whereby the High Court dismissed the appeal.



2. QUESTIONS OF LAW.

(1) Whether Division Bench was justified in not considering the plea based on clause 47 of the agreement in regard to the liquidated damages payable by the contractor in case of delay?

(2) Whether the Division Bench was correct in drawing the inference to the effect that the plea on liquidated damages was not raised before the Single Judge, even though such a plea clearly finds mention in the written submissions filed before the Single Judge?

(3) Whether it was necessary to specifically plead before the Division Bench by way of an affidavit of the counsel to the effect that the plea actually raised by the counsel was not considered by the court especially when written submissions filed before the Single Judge clearly indicate that the said plea had actually been raised before the court below?

(4) Whether the High Court fell in error in overlooking the specific provisions of the agreement stipulating levy of compensation for each week the work got delayed beyond the stipulated date for completion?

(5) Whether High Court failed to appreciate that the Arbitrator had overlooked clause 18 and clause 45 of the agreement which makes it mandatory on the contractor to give notice to the Society in case of delay and that in the absence of any notice from the contractor, it shall be deemed that the contractor has waived his right to have extension in the period of completion, the consequence of which would be that the contractor would become liable to pay compensation under clause 47 of the agreement?

1. DECLARATION IN TERMS OF RULE 4(2)
That the petitioner states that no other petition seeking leave to appeal has been filed by him against the final order and judgment dated 03.11.2009 passed by the Division Bench of the High Court of Delhi at New Delhi in F.A.O. (OS) no.154/2007.

2. DECLARATION IN TERMS OF RULE -6
The Annexures P-1 to P- produced along with the Special Leave Petition are true copies of the proceedings/documents which formed part of the records of the case in the court below against whose order the leave to appeal is sought for in this petition.

5. GROUNDS.

(1) Because the Division Bench was not justified in rejecting the plea based on clause 47 of the agreement in regard to the liquidated damages payable by the contractor in case of delay, simply because the Ld. Single Judge did not deal with the said plea.

(2) Because the Division Bench was not correct in drawing the inference to the effect that the plea on liquidated damages was not raised before the Single Judge,

even though such a plea clearly finds mention in the written submission filed before the Single Judge.

(3) Because it was not necessary to specifically plead before the Division Bench by way of an affidavit of the counsel that the plea actually raised by the counsel was not considered by the court especially when written submission filed before the Single Judge clearly indicate that the said plea had actually been raised before the court below.

(4) Because the High Court fell in error in overlooking the specific provisions of the agreement stipulating levy of compensation for each week the work got delayed beyond the stipulated date for completion.

(5) Because High Court failed to appreciate that the arbitrator had overlooked clause 18 and clause 45 of the agreement which make it mandatory on the contractor to give notice to the Society in case of delay and that in the absence of any notice from the contractor, it shall be deemed that the contractor had waived his right to have the extension in the period of completion, the consequence of which would be that the contractor would become liable to pay compensation under clause 47 of the agreement.

6. GROUNDS FOR INTERIM RELIEF.
In case the impugned order is not stayed, the respondent is likely to initiate execution proceedings against the petitioner – society which will cause irreparable damage to the member of the society who will not be in a position to recover the amount from the contractor even in the event of succeeding in the instant SLP.

MAIN PRAYER.

It is, therefore, prayed that your lordships may graciously be pleased to –

a) grant special leave to appeal against the final order and judgment dated 03.11.2009 passed by the High Court of Delhi at New Delhi in F.A.O. (OS) No. 154/2007.

b) Pass any other order/orders as this Hon’ble Court may deem fit and proper in the facts and the circumstances of the case.

7. PRAYER FOR INTERIM RELIEF.

It is, therefore, prayed that your Lordships may graciously be pleased to –

a) ex-parte stay may kindly be granted against the execution proceedings likely to be initiated by the respondent pursuant to the final order & judgement dt. 03.11.2009 of the Division Bench of the High Court of Delhi at New Delhi passed in F.A.O. (OS) no.154/2007.

b) pass any other order/orders as this Hon’ble Court may deem fit and proper in the facts and circumstances of the case.

AND FOR THIS ACT OF KINDNESS, THE PETITIONER HAS IN DUTY BOUND SHALL EVER PRAY.
Drawn and Filed by
New Delhi (ANIL NAG).
Drawn on ADVOCATE FOR THE PETITIONER
Filed on IN THE SUPREME COURT OF INDIA
(ORDER XVI RULE 4 (1)(A)
CIVIL APPELLATE JURISDICTION
(Under Article 136 of the Constitution of India)
SPECIAL LEAVE PETITION (C ) No OF 2009
In the matter of
Din Coop. Group Housing Society …… Petitioner
Versus
Shri A.S. Rana ………. Respondent

CERTIFICATE

Certified that the Special Leave Petition is confined only to the pleading before the court shoes order is challenged and the other documents relied upon in those proceedings. No additional facts, documents or grounds have been taken therein or relied upon in the Special Leave Petition. It is further certified that the copies of documents/Annexures attached to the special leave petition are necessary to answer the question of law raised in the petition or to make out grounds urged in the Special Leave Petition for consideration of this Hon’ble Court. This certificate is given on the basis of the instructions given by the petitioner/person authorized by the petitioner whose affidavit is filed in support of the Special Leave Petition. Filed by
(ANIL NAG)
New Delhi ADVOCATE FOR THE PETITIONER
Dated; ………


IN THE SUPREME COURT OF INDIA
(ORDER XVI RUL;E 4 (1)(A)
CIVIL APPELLATE JURISDICTION
(Under Article 136 of the Constitution of India)
SPECIAL LEAVE PETITION (C ) No OF 2009
WITH PRAYER FOR INTERIM RELIEF.
(Arising out of the final order and judgment dated 03.11.2009 passed by the High Court of Delhi at New Delhi in F.A.O. (OS) No.154/2007.

IN THE MATTER OF :
Din Coop. Group Housing Society …… Petitioner
Versus
Shri A.S. Rana ………. Respondent

WITH

I.A. No………. of 2009

Application for Exemption






PAPER BOOK
(FOR INDEX KINDLY SEE INSIDE)






ADVOCATE FOR THE PETITIONER : MR. ANIL NAG.
INDEX


1. Office Report on Limitation A

!A. Listing Proforma

2. Check list

3. Synopsis and List of Dates

4. Copy of the final order and judgment
dated
APPEAL AGAINST.

5. Special Leave Petition
6. Annexure P-1 .

7. Annexure P-2.
.