INTRODUCTION TO THE CASE

• The respondent/claimant was awarded construction work of 356 SFS

houses.
• The stipulated date for commencement of work was 17th of March, 1989.
• The estimated cost of the work was Rs. 1,23,06,150/- and the tendered
amount was Rs. 1,48,25,910/-.
• The work was to be completed within 15 months, on or before 16th of
June, 1990. The respondent/claimant, however, failed to commence the
work.
• The contract was eventually rescinded by the appellant-Authority on 21st
of August, 1989.
• The reason for non-commencement of work, as stated by the
respondent/claimant, is that the site was not handed over to it on 7th of
March.
• In spite of such defects being brought to the notice of the appellant by way
of sketches and photographs, the same were not got rectified.
The respondent/claimant claimed to have been keen to start the work and
for that purpose constructed a godown at the site.

It also paid a sum of Rs. 1,810/- to DESU on 11th of April, 1989 to secure an
electric connection, and collected building materials, including cement,
bricks, iron bars, etc.

However, due to non-availability of site and defective piling work, it could

not proceed with the work

The plea of the appellant, on the other hand, was that the
respondent/claimant had no intention from the very beginning to execute
the work as is manifest

It is, accordingly, claimed that substantial portion of the site was made
available to the respondent/claimant to proceed with the work.

According to the appellant, the piling foundation work did not suffer from
any major defect and only minor rectifications were required to be carried
out
 CLAIMS
• Claim No. 1:- Rs. 50,920/- being refund of security deposit.
• Claim No. 2:- Interest of Rs. 50,920/- @ 18% per annum being amount
illegally recovered by getting the fixed deposit receipt encashed with
interest.
• Claim No. 3:- Rs. 26,290/- on account of infructuous expenditure and
damages sustained by the claimant due to various breaches committed
by the appellant-Authority.
• Claim No. 4:- Rs. 1,93,000/- as cost of material collected at site.
• Claim No. 5:- Rs. 14,39,972/- being loss of profit to the extent of 10% of
the contract value.
• Claim No. 6:- Rs. 1 lakh on account of infructuous expenditure and
damages on maintenance of site establishment and T&P for a period of
five months.
• Claim No. 7:- Interest @ 18% per annum from 20.4.1991 to the date of
first bearing, from the date of first hearing to the date of making of award
and from the date of award until payment.
• Claim No. 8:- Costs of the arbitration proceedings."
 ARBITRATION ON CLAIMS
• The arbitrator awarded a sum of Rs. 24,368/- in favor of
respondent/claimant on account of claim No. 1

• Simple interest @ 18% per annum from 28th of August, 1991, the date of
entering upon reference, to 26th December, 1992, the date of making and
publishing the award under claim Nos. 2.

• Claim No. 3 was partly allowed to the extent of Rs. 5,000/- in lumpsum. A
sum of Rs. 10,000/- was awarded against claim No. 4 on account of cost of
material at site.

• Against claim No. 5, a sum of Rs. 13,48,083/- was awarded as

compensation for loss of profit while

• Claim No. 6 was disallowed.

• In relation to claim No. 8, the parties were directed to bear their own
costs.
 COUNTER CLAIMS
The appellant-Authority had also made counter-claims as under:-

• Counter-claim No. 1: Rs. 20 lacs (Approx.) on account of higher cost of balance

work got done at the risk and cost of the claimant.

• Counter-claim No. 2:- Rs. 4,35,000/- (Approx.) on account of interest paid by

the appellant-Authority to the allottees of SFS houses.

• Counter-claim No. 3:- Rs. 10 lacs (Approx.) on account of defamation.

All these counter-claims were, however, disallowed by the arbitrator.