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2014 DIGILAW 1112 (MP)

Newcon Engineers Private Limited v. Anuraj Real Estate Private Limited

2014-09-04

ANIL SHARMA, RAJENDRA MENON

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JUDGMENT 1. Calling in question tenability of an order dated 16.7.2014 passed by the 6th Additional District Judge, Rewa, rejecting an application under section 9 of the Arbitration and Conciliation Act, 1996, this appeal has been filed by the appellant under section 37 (1) (a) of the Arbitration and Conciliation Act, 1996. 2. The appellant claims to be a Private Limited Company duly registered under the Companies Act and engaged in construction activities. It is said that the appellant Company was awarded a contract for construction and development of Royal Estate situated in Birla ITI, Chorhatta Police Station, National Highway No.7, Rewa by the respondent Company through an agreement entered into between the parties vide Annexure-A/3 dated 30.3.2013. It is seen that before the agreement was executed, a work order was issued on 8.3.2012, work in pursuant to the agreement and the order issued commenced and running bill of account upto 6th running bill was paid, dispute started between the parties at the time when 7th running bill was to be paid. It was allegation of the respondent that the appellant is causing delay in execution of the work entrusted to them and the appellant denied the same. Resultantly, record indicates that show cause notices were issued and finally, on 14.2.2014 the respondent Company terminated the contract and directed the appellant to vacate the site. 3. It is the grievance of the appellant that termination of contract was illegal and they have raised various contentions in support thereof. However, the fact remains that when the dispute was not being settled, the matter came to the Court in a proceeding under section 11 (a) and an Arbitrator has been appointed who is seized of matter and the dispute with regard to termination of the contract is pending consideration before the Arbitrator. In the meanwhile, it is seen that on account of grant of work to another contractor, a dispute has risen with regard to measurement of the work already done by the appellant contractor. 4. Clause 13 of the agreement entered into between the parties reads as under :- “That, if for any reason the owner terminates this Agreement as provided in clause 6 hereinabove, the owner shall be entitled to either carry out the remaining work itself or have the same carried out through any other person/Contractor without any objection/interference from the Contractor. 4. Clause 13 of the agreement entered into between the parties reads as under :- “That, if for any reason the owner terminates this Agreement as provided in clause 6 hereinabove, the owner shall be entitled to either carry out the remaining work itself or have the same carried out through any other person/Contractor without any objection/interference from the Contractor. The owner shall however prior to having remaining work carried out as aforesaid take out measurement of the work done by the Contractor till then and such measurement accepted by the Contractor and paid for and take necessary no due certificate from the Contractor.” 5. It was the case of the appellant that without conducting measurement as required under the aforesaid provisions, the work is being given to some other contractor and therefore, application under section 9 was filed before the trial Court and following reliefs were claimed in the said application. “a) restraining the respondent company, its agents, successor, legal heirs, representatives or anyone else claiming any right on its behalf, to have the remaining or any work carried out at its site situated at Royal Estate, Near Birla ITI, Chorhatta Police Station, NH-7, at Rewa, M.P.-486001 through any other contractor or through themselves till the clearance of dues / payments of the petitioner company on the basis of 7th R/A Bill dated 9.2.2014 as well as work carried out post 7th R/A Bill at said site at Rewa M.P.; and b) appoint a competent local commissioner for doing complete measurement of the work carried out by the petitioner company so far of all scheduled and non scheduled items at the site situated at Royal Estate, near Birla ITI, Chorhatta Police Station, NH-7, at Rewa, M.P.-486001; Pass any other or further order (s), which this Hon’ble Court may deem fit and proper in the facts and circumstances of the case.” 6. The trial Court having rejected the application, finding no prima facie case or balance of convenience or irreparable loss made out, this appeal has been filed. 7. The trial Court having rejected the application, finding no prima facie case or balance of convenience or irreparable loss made out, this appeal has been filed. 7. Shri V.R. Rao, learned senior counsel took us through the documents available on record, Clause 13 of the agreement as indicated hereinabove and argued that without giving proper opportunity to conduct joint inspection and without conducting the joint inspection as per law, in an arbitrary manner some inspection behind the back of the appellant has been undertaken by the respondent in the night of 7.3.2014 through the authorities of Government Engineering College, Rewa and based on the same, work is being executed through another contractor. Challenging the measurement of the work made in the manner done and calling in question the same, this appeal has been filed and it was tried to be argued that the measurement of the work performed by the appellant before termination of contract in accordance with requirement of the agreement has not been done and the measurement done by the authority of the Government Engineering College is illegal. This appeal has been filed to say that the learned Court below in the proceedings held under section 9 of the Act did not consider all these aspects properly. Shri V.R. Rao, learned senior counsel took us to various material available on record in detail to canvass his contention as indicated hererinabove. 8. Per contra, Shri Jain, referred to facts as are unfolded hereinabove, the process initiated by the respondent by issuing notices on 23.2.2014, 6.3.2014 and another document to say that in spite of opportunities being granted as the appellant did not participate in the joint measurement, the respondents have conducted measurement through the officials of Government Engineering College and now, as the matter is pending before the Arbitrator it is said that no indulgence into the matter is called for. Various grounds have been canvassed to show that the appeal against proceedings should now be dismissed as a detailed enquiry into the matter is not possible in these proceedings once the authorities of the Government Engineering college has conducted measurement. Various grounds have been canvassed to show that the appeal against proceedings should now be dismissed as a detailed enquiry into the matter is not possible in these proceedings once the authorities of the Government Engineering college has conducted measurement. He submitted in detail the facts to show that the learned trial Court having decided the application under section 9 of the Act based on prima facie case available, the balance of convenience and irreparable loss between the parties concerned and as a reasoned order evaluating all these principles have been passed. He argues that the appeal at this stage is not maintainable. 9. We have heard learned counsel for the parties and considered the rival contentions. Contract in question has been terminated and as to whether the termination is proper or not and based on the action taken, damages and other monetary benefits to be granted to the appellant is now to be decided by the Arbitrator before whom the proceedings are pending. In the application filed by the appellant under section 9 of the Act before the trial Court, the relief as reflected hereinabove indicates that it is there case and objection that pending clearance of their payment on the basis of 7th running bill, work to the new contractor should not be awarded. The second relief claimed is that a local commissioner be appointed to complete measurement of work carried out by the appellant so far i.e. till termination of contract. 10. Once the contract is terminated, power under the agreement is available to the respondents to get the work done through another contractor. The only restriction is with regard to measurement of the work done as provided in Clause 13 reproduced hereinabove. There is nothing in the agreement which prohibits the respondents from awarding contract to another contractor for completing the work after the agreement is terminated nor is there any provision which contemplate joint measurement. That being so, we cannot read something into the agreement by way of proving for a joint measurement when there is no such provision. However, the question as to whether joint measurement is required and what is the correct interpretation of clause 13 of the agreement has to be decided by the Arbitrator where the matter is pending. That being so, we cannot read something into the agreement by way of proving for a joint measurement when there is no such provision. However, the question as to whether joint measurement is required and what is the correct interpretation of clause 13 of the agreement has to be decided by the Arbitrator where the matter is pending. The appellant’s grievance before us seems to be that without conducting joint measurement, the work is being given to a third party, now as the joint measurement is not undertaken they have sought relief from this Court in this appeal. 11. However, from the counter affidavit and documents filed by the respondents, it is seen that for the purpose of a joint measurement, certain notices and E-mail were sent and on account of absence of appellant in spite of notices it seems that the measurement was made done by the officials of Government Engineering College. The question is as to whether this ex-parte measurement said to have been done is in accordance with law or after following due process of law, this is the disputed question of fact which has to be determined by the Arbitrator where the matter is pending. For the purpose of granting relief in a proceeding under section 9 of the Act, existence of prima facie case, balance of convenience and irreparable loss are the paramount consideration. As far as the prima facie is concerned, the respondents have terminated the contract on the basis of the allegation levelled and the justification or otherwise of the same is not to be adjudicated at this interlocutory stage when the matter is pending before the Arbitrator. In the matter of granting opportunity for joint measurement, prima facie case in favour of the appellant is not available for the simple reason that notices and E-mail seem to have been sent to them for participating in a joint measurement and it seems that because they did not participate, measurement was conducted through the officials of Government Engineering College and a complete Videography coverage and other aspect of the measurement undertaken by the respondents is available. Justification and tenability of the measurement is now to be considered by the Arbitrator and we cannot go the same question at this stage under the circumstances we find no prima facie case is made out in favour of the appellant. Justification and tenability of the measurement is now to be considered by the Arbitrator and we cannot go the same question at this stage under the circumstances we find no prima facie case is made out in favour of the appellant. As far as the irreparable loss is concerned, even if, it is assumed that joint measurement done is without following due process of law and without giving proper opportunity to the appellant, they can still adduce evidence with regard to loss caused to them, the quantum of work done till termination and based on the evidence and material that may be adduced by the appellant, quantification of the amount payable for the work done or damages, interest and cost can be assessed by the Arbitrator in the pending proceeding and therefore, there is no irreparable loss. 12. As far as balance of convenience is concerned, if for the purpose of joint measurement, the entire work is stalled it would cause irreparable harm and would adversely affect the interest of the respondents and therefore in the absence of prima facie case, irreparable loss being available in favour of the appellant, balance of convenience is established in favour of the respondents inasmuch as the work which is pending since 2012 should be completed at an early date else it will cause harm to the respondents. 13. That being so, as a three ingredients necessary for grant of injunction are not available in favour of the respondents, we see no reason to interfere particularly when all these aspects have already been considered by the trial Court in the proceedings under section 9 of the Act and after consideration, the same is rejected. Accordingly, finding no ground, the appeal is dismissed. .......................