Delhi High Court Upholds Arbitration Award in Favour of M/s Harjinder Brothers Against DDA

Court affirms arbitrator's findings on bank guarantee encashment and watch and ward charges, dismissing DDA's appeal

In a significant ruling, the Delhi High Court has dismissed the appeal filed by the Delhi Development Authority (DDA) challenging the arbitral award favoring M/s Harjinder Brothers. The case revolved around disputes concerning bank guarantee encashment and unpaid charges for watch and ward services related to a construction project in Dwarka, New Delhi.

Presiding over the matter, Justice Chandrasekharan Sudha reaffirmed the limited scope of appellate jurisdiction under Section 37 of the Arbitration and Conciliation Act, 1996. The court emphasized that interference with arbitral awards is restricted to instances where the Section 34 court has overstepped its jurisdiction or failed to exercise it appropriately.

The dispute originated from a contract awarded to M/s Harjinder Brothers for the construction of 103 dwelling units. Upon completion, disputes arose over supplementary agreements for additional work and security services. The arbitrator had earlier ruled in favor of M/s Harjinder Brothers, directing the DDA to compensate for watch and ward charges and deemed the encashment of the bank guarantee as unjustified.

In its appeal, the DDA argued that the arbitrator's conclusions were erroneous and contrary to the terms of the agreements and circulars issued by the DDA. However, the High Court found no perversity or illegality in the arbitrator's findings. The court noted that the encashment of the bank guarantee by the DDA was conducted without an audit, as required by Clause 29 of the original agreement.

The judgment reiterated that the DDA failed to take possession of the completed flats, necessitating continued security services by the contractor, for which the contractor was entitled to compensation. The court also highlighted the importance of adhering to contractual terms and guidelines in resolving such disputes.

This ruling underscores the judiciary's stance on respecting arbitral awards and the boundaries of appellate intervention, reinforcing the principles of arbitration as an effective dispute resolution mechanism.

Bottom Line:

Scope of appellate jurisdiction under Section 37 of Arbitration and Conciliation Act, 1996, is limited to examining whether the Section 34 court has acted within its jurisdiction or exceeded it.

Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 34, 37

DDA v. M/s Harjinder Brothers, (Delhi) : Law Finder Doc Id # 2820867