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2012 DIGILAW 1279 (BOM)

Mahanagar Telephone Nigam Ltd. v. Dolchand Kallaji

2012-07-16

ANOOP V.MOHTA

body2012
Judgment : 1. The Petitioner has challenged Award dated 6 January 2009 passed by the sole Arbitrator appointed as per the provisions of the Contract between the parties as there arose dispute with regard to the due payment for the work done by the Respondent. 2. The Petitioner is a Central Government Corporation and Public Sector Undertaking. The Respondent is a contractor carrying on the construction work of reinstatement of trenches. The Petitioner appointed the Respondent for carrying out the work of reinstatement of cable trenches and allied works in view of the tender for the year 19971999. An agreement was accordingly entered into on 12.11.1997. The various work orders were issued during this period for the same, for the different area offices of the Petitioner. The Respondent carried out the work under the supervision and instructions from time to time and accordingly submitted the bills and received part payment also. 3. The Petitioner withheld certain bills/last final bills, because of alleged noncompliance of terms and conditions; and for submission of documentary evidence in respect of the completion of work; and mainly on the ground of pendency of Vigilance (CBI) investigations. The Petitioner's case was that by letter dated 2.8.1999 the Vigilance Department informed the Petitioner's office that 41 bills of RI work carried out by various contractors, including bills of the Respondent in Mumbai were held up for investigation. It is alleged that the works have not been carried out by the Respondent as well as by other contractors. The Respondent replied and resisted the same by letter dated 4.2.2000 stating that they have already completed the work long back. They objected to the order to reenter private party to dig the trenches all over. Admittedly, the Petitioner did not pay the bills raised by the Respondent in view of this. The criminal cases are still pending. 4. The Petitioner objected to the jurisdiction in view of the pendency of the criminal matter as registered by the CBI against the officers of the MTNL and some contractors. The Petitioner also submitted that, they were unable to file counter claim and/or defend the case properly and thereby submitted to stay the arbitration proceedings till outcome of CBI cases. 5. As Respondent invoked arbitration clause in view of the dispute, the Petitioner appointed one Mr. The Petitioner also submitted that, they were unable to file counter claim and/or defend the case properly and thereby submitted to stay the arbitration proceedings till outcome of CBI cases. 5. As Respondent invoked arbitration clause in view of the dispute, the Petitioner appointed one Mr. M. K. Jain in view of the terms of clause 25 of the Agreement dated 12 November 2007. 6. The Petitioner's officers were never arrested and suspended except some of them were transferred. The pendency of those criminal matters, in no way, sufficient to halt the arbitration proceedings being civil matter and specifically when the High Court appointed the Arbitrator inspite of the objection so raised. The Arbitrator, therefore, has no choice but to consider and deal with the matter in accordance with law and therefore rejected the preliminary objection rightly. 7. The Arbitrator, considering the evidence so led by the parties including the Respondents/claimants in support of their cases and specially the no objection certificates, orders of release and security of deposit for the relevant year, accepted the case of the claimants/Respondent as the Petitioner unable to destroy the same in cross-examination. 8. The Arbitrator is also right by observing that the conditions of the contract do not give right to the Petitioner after the work to reopen during maintenance period. The direction so given to dig out or trench in a private property was also rightly rejected. The contract, as noted above, came to an end except the arbitration clauses. 9. The Arbitrator has also held that all the FMR are need to be considered along with conditions of contract (Clause 12) of right of Engineerincharge to change specification, but it was subject to clause 16 which provides for prior notice be given before covering the work. The entire work as carried out was under the supervision of MTNL staff of Engineering gathered and it was duly certified also. Some payment of bills are not in dispute. The Arbitrator has also dealt with action of Petitioner to withhold the excess amount. After taking note of the material and calculation, the specific finding is given that the MTNL has withheld the amount in excess than required. 10. So far as Clause No.29 is concerned, it is nowhere permit the Petitioner to withhold the due and payable amount except as provided. After taking note of the material and calculation, the specific finding is given that the MTNL has withheld the amount in excess than required. 10. So far as Clause No.29 is concerned, it is nowhere permit the Petitioner to withhold the due and payable amount except as provided. Admittedly, withholding was without any due notice and the same was based upon the investigation as recorded above. The said clause nowhere permits and/or provide such withholding on such ground. The amount due and payable was neither retention money or performance guarantee amount. No notice was given for lien. The withholding of such amount at such stage, therefore, has been rightly held to be impermissible. Admittedly, though Clause 29 was invoked without qualifying and notifying to the contractor the reasons and intention of invoking the same, there is nothing on record to point out that they have specifically invoked clause 29 prior to the invocation of arbitration. 11. There was nothing on record to show that any complaint from the owner in whose property the work of reinstatement was received or made. The Arbitrator therefore ultimately held that the Petitioner has no right for trial trenches after allowing the contractor to cover it. There is nothing to show that there was any defects or complaint. There was no right remain to reopen once the bills were passed and sent to Account Section and the period of maintenance was also over. The doubt/suspicion, even if any, should have been properly dealt with after giving notice to the contractor at the relevant earliest time. The Arbitrator, therefore, right in coming to the conclusion that the Respondent/claimant would be entitled to full payment and interest thereon as no case falls within the ambit of Clause 29 as contended. 12. The Arbitrator has also observed inaction on the part of Petitioner's officer not to provide and give certificate for refund of security deposit basically when the work was measured, passed and paid earlier. The Arbitrator has arrived at the conclusion after recording and dealing with the respective bills and the interest, at the rate of 12% p.a. The respective claims so discussed and awarded and as there was no counter challenge, including grant of interest needs no interference in the present facts and circumstances of the case. 13. The Arbitrator has arrived at the conclusion after recording and dealing with the respective bills and the interest, at the rate of 12% p.a. The respective claims so discussed and awarded and as there was no counter challenge, including grant of interest needs no interference in the present facts and circumstances of the case. 13. Admittedly, all the relevant and concerned officers were acquitted and/or were never suspended at the relevant time and/or till this date. The certificate and the documents signed and supported by them and as the work was done under their supervision just cannot be reopened at the instance of MTNL/Petitioner with an intention only to deny the due amount payable to the Respondent for the work done. 14. It is made clear that the confirmation of the Award in no way takes away and/or deny the right of the Petitioner to take appropriate steps and/or action in case the pendency of criminal enquiry/investigation support their case and/or cases against the Respondent. This is just a stage of confirmation of the award already passed. The vague allegations of pendency of investigation in similarly situated matter/contract/bills cannot be the reason to deny the legitimate right of the Respondent. 15. The withholding of the amount beyond the terms and conditions and basically in view of the CBI enquiry, which was never part of terms and conditions of the contract. Before withholding such amount, a prior notice should have been given. The withholding of payment because of CBI enquiry in no way falls within the ambit of Clause 29. The withholding itself is beyond the scope of terms and conditions and clauses so referred. The whole action is unjust and illegal and, therefore, the amount so awarded with interest need no interference. The reliance on Union of India v. Saraswat Trading Agency and others, (2009) 16 SCC 504 , in no way, sufficient to interfere with the Award so passed. 16. No specific ground was raised to challenge the right of interest and grant of interest at any stage as awarded. The power to award the interest cannot be in dispute in view of the specific provisions of the Arbitration Act. There is no contra agreement referred and/or pointed out. [Mc.Dermott International Inc. v. Burn Standard Co. Ltd. And ors. (2006) 11 SCC 181 ] 17. The power to award the interest cannot be in dispute in view of the specific provisions of the Arbitration Act. There is no contra agreement referred and/or pointed out. [Mc.Dermott International Inc. v. Burn Standard Co. Ltd. And ors. (2006) 11 SCC 181 ] 17. The learned Arbitrator has considered the respective claims in detail referring to the bills by recording that the panchanama was made on 11.02.2000 basically when the work was done prior to two years. It was beyond the maintenance period of 12 months. The Respondent was not party to the alleged panchanama and they were not even informed about the same. All the bills were forwarded to the Accounts Department, based upon the actual measurement and certificate given by the officers. The non-digging of trial pits for the verifications of FMR after the expiry of maintenance period just cannot be the reason to withhold the amounts which are otherwise due and payable on the date of completion of the work itself and subject to maintenance of 12 months only. There is nothing pointed out the Clauses except 10B of tender documents which permits them to ask for trial pits or for denying trial pits even after expiry of the maintenance period. The plain reading of the clauses no where permits the Petitioner to take such action. 18. The learned Arbitrator considering the total claim based upon 14 bills has dealt individually every bills and granted the amount in some cases fully and in some cases partly by giving sufficient and detailed reasons. Those bills are Bill Nos. 18,19,23,24,25,35,40 and 41. The learned Arbitrator has granted bills partly and those are bill Nos. 37, 38 and 39. The claim based upon the other bills even has been rejected. There is no counterclaim from the claimant side on those grounds. The learned Arbitrator, thereafter, individually considered the other claims and by giving separate reasons again granted partly and some claims were rejected fully also. There is no serious challege raised by the Petitioner on the merits of these bills including its justification. The main argument and submission and action was only about their right and action of withholding of these due and payable bills. There is no serious challege raised by the Petitioner on the merits of these bills including its justification. The main argument and submission and action was only about their right and action of withholding of these due and payable bills. I have already dealt with the same as referred above in this matter and also other connected matter, where the claim and action of the bill was similar based upon the same allegations of investigation. Therefore, as referred, there is no perversity and as the award is made within the framework of law and the record, I see there is no reason to interfere with the same except as modified so far as the grant of interest is concerned. 19. The grant of interest, therefore, in the present facts and circumstances at the rate of 12% (simple interest) also need no interference as it cannot be stated to be exorbitant and/or unreasonable. 20. So far as future interest is concerned, in the present facts and circumstances, I am inclined to restrict the same at the rate of 12% per annum (simple interest) till the date of realisation. The Award is modified to the extent of future interest restricting it to 12% instead of 18%. 21. Therefore, taking overall view of the matter and as the Award so passed is well within the frame work of law and the record and based upon the rival submissions and case made out by the parties and as in the interest of the Petitioner, I see there is no reason to interfere with the it. The Award cannot be stated to be perverse. There is no illegality. The view so taken is possible and plausible view even on the interpretation of Clauses so referred and dealt with, read with the terms and conditions of the contract. No case to interfere with the impugned award. 22. In the result, the Award is modified only to the extent of grant of future interest restricting it to 12% instead of 18% per annum (simple interest). The rest of the Award is maintained. The Petition is disposed of in the above terms. There shall be no order as to costs.