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2020 DIGILAW 143 (GAU)

PCM Cement Concrete Pvt. Ltd. v. Union of India

2020-02-05

ACHINTYA MALLA BUJOR BARUA

body2020
JUDGMENT : Achintya Malla Bujor Barua, J. 1. Heard Mr. SJ Sarma, learned counsel for the appellant and Ms. G. Sarma, learned counsel for the respondents. 2. The appellant was issued a letter of acceptance dated 02.03.2010 pursuant to tender No. CE/CON/NMX-JPZ/Welding/2009/01 in respect of certain welding works in the railway tracks. Clause-7.0 of the agreement between the parties provides for a maintenance period of six months from the date of completion of the work with a further provision that to cover up the monsoon period, the maintenance period may be extended in a required case. Clause-7.0 provides that the contractor shall make good and remedy at his own expense as any defect which may develop before the expiry of a period of twelve months and intimation of which has been sent to the contractor, within seven days from the receipt of the intimation. In case the contractor fails to make adequate arrangement to rectify the defect within seven days of the receipt of such notice, the Engineer without further notice, may make his own arrangement to rectify such defect and the cost of such rectification shall be recovered from the security deposit of the contractor or from any other money due to the contractor under the contract at hand or any other contract. 3. A reading of Clause-7.0 clearly provides for a condition precedent that in the event of any defect occurring during the maintenance period, a notice is required to be sent by the respondent authorities and in the event, the contractor fails to make the necessary rectification of the defect within seven days of receipt of the notice, the authorities may recover the cost of such rectification. In the circumstance, the letter dated 13.01.2018 was issued by the Executive Engineer/CON-I of the respondent railway authorities informing the appellant that an amount of Rs. 29,40,052.57 paisa would be deducted from his outstanding bills. 4. Being aggrieved by the said letter of 13.01.2018, the appellant had insisted an arbitration proceeding and it is stated that for the purpose, an arbitrator had been appointed. In the meantime, the appellant instituted Misc. (Arbitration) Case No. 02/219 in the Court of the learned District Judge, Kamrup (M) under Section 9 of the Arbitration and Conciliation Act, 1996 praying for a temporary injunction restraining the respondents from giving effect to the recovery as per the letter dated 13.01.2018. In the meantime, the appellant instituted Misc. (Arbitration) Case No. 02/219 in the Court of the learned District Judge, Kamrup (M) under Section 9 of the Arbitration and Conciliation Act, 1996 praying for a temporary injunction restraining the respondents from giving effect to the recovery as per the letter dated 13.01.2018. Later on, the said petition was transferred to the Court of the learned Additional District Judge, No. 2, Kamrup (M). In paragraph 10 of the Section 9 petition, a stand was taken that as per the contract between the parties, the period of maintenance of one year was already over and further no intimation was given to the appellant of any such checking being made by the respondent authorities, although, it was obligatory on their part to do so. In paragraph 11 of their Section 9 petition, the appellant had taken the stand that under Clause-7.0 of the contract agreement there is a requirement of giving a prior notice before any such amount can be deducted by the respondent authorities. 5. In their written statement before the learned Additional District Judge No. 2, Kamrup (M), the respondents with regard to the stand of the appellant in paragraph 10 and 11 of their Section 9 petition, merely states that they had intimated the appellant about the re-measurement of the welding joints of new Kochbihar-New Sangrabandha Section and requested the contractor for rectification. No stand had been taken as to by which notice, the respondents had intimated the contractor. In the aforesaid circumstance, the learned Additional District Judge No. 2, Kamrup (M), while giving consideration to the Section 9 petition, by his order dated 09.01.2019 arrived at a conclusion that there is no denial that the contract work could not be completed and also that there is no dispute that some of the flash butt joints were found defective. Accordingly, a view was formed that as the question of recovery of the cost of remedying the defect is a matter of adjudication on the basis of evidence to be adduced by the party, therefore, pending such adjudication, no prima-facie case for grant of injunction against realization of the amount to be deducted, exists in favour of the appellant. Accordingly, a view was formed that as the question of recovery of the cost of remedying the defect is a matter of adjudication on the basis of evidence to be adduced by the party, therefore, pending such adjudication, no prima-facie case for grant of injunction against realization of the amount to be deducted, exists in favour of the appellant. A further conclusion was arrived that if an injunction is granted prohibiting the respondents from giving effect to the letter dated 13.01.2018, it would interfere with the right of the respondent authorities accrued to them under the terms and conditions of the contract agreement, which again cannot be compensated in terms of money. 6. Mr. S.J. Sarma, learned counsel for the appellant has raised the contention that firstly, the learned Additional District Judge No. 2, Kamrup (M) had not gone into the question as to whether the notice provided under Clause-7.0 of the agreement between the parties, which is a condition precedent before any amount can be deducted, was duly issued by the respondent authorities and secondly, the conclusion arrived at by the learned Additional District Judge No. 2, Kamrup (M) that injunction cannot be granted without the matter being adjudicated on the basis of evidence to be adduced by the parties is also erroneous. 7. Ms. G. Sarma, learned counsel for the respondents on the other hand states that as it is an admitted position of the parties as arrived at by the learned Additional District Judge No. 2, Kamrup (M) that the work of the flash butt joints performed by the appellant was found to be defective, therefore, the respondents had rightly deducted the amount of Rs. 29,40,052.57/- as per the letter dated 13.01.2018. 8. We have given a consideration to the contention raised by Ms. G. Sarma, learned counsel for the respondents. The question involved for a consideration in the Section 9 petition preferred by the appellant was not whether there were some defects in the work performed by the appellant and therefore, that by itself would entail the respondents to deduct the amount so deducted. A specific legal stand had been taken by the appellant that before any such amount can be deducted, it has to be preceded by a notice contemplated under Clause-7.0 of the agreement between the parties and issuance of such notice is a condition precedent. 9. A specific legal stand had been taken by the appellant that before any such amount can be deducted, it has to be preceded by a notice contemplated under Clause-7.0 of the agreement between the parties and issuance of such notice is a condition precedent. 9. A prima-facie reading of Clause-7.0 of the agreement between the parties stipulates a condition that in the event of any defect being found in the work performed by the contractor during the maintenance period, the authorities are required to issue a notice to the contractor pointing out the defects and require the defect to be removed at their own cost. If such defect is not removed within a period of seven days of the receipt of such notice, only thereafter the cost of the removal of the defect can be deducted by the authorities. In other words, the terms of Clause-7.0 of the agreement between the parties clearly provides for a condition precedent of a notice being required to be issued and thereafter a period of seven days be given to the contractor to remove the defect and only when the defect is not removed within the period of seven days, then the cost of removal of the defect can be recovered. In our view, the aforesaid implication of Clause-7.0 was clearly an issue raised by the party which ought to have been decided by the learned Additional District Judge No. 2, Kamrup (M) while adjudicating the petition of the appellant under Section 9 of the Arbitration and Conciliation Act, 1996. 10. Further, we also take note of that the learned Additional District Judge No. 2, Kamrup (M) had refrained from issuing any injunction order by arriving at a conclusion that the question whether the defects was within the maintenance period or not, would be subject to the evidence that the parties may adduce in course of the arbitration proceeding and therefore, it cannot, be a matter for arriving at a prima-facie satisfaction in a petition under Section 9 of the Arbitration and Conciliation Act, 1996. To this aspect, a conclusion had already been arrived at that Clause-7.0 of the agreement between the parties required the issuance of a notice to the contractor pointing out the defects by requiring the defects to be removed and if such defects are not removed within a period of 07(seven) days of the receipt of such notice, only thereafter the cost of removal of the defect can be deducted by the authorities. It being so, the prima facie satisfaction required for the purpose of the Section 9 petition before the learned District Judge No. 2, Kamrup (M) was whether any such notice was issued by the respondent authorities before the deduction made by the letter dated 13.01.2018 was issued. Such prima facie satisfaction would not require any detail evidence of the parties and the fact as to whether any such notice was issued can be obtained by means of an affidavit under Order-XIX Rule 1 and 2 of the CPC. 11. For both the reasons above, we are inclined to interfere with the order dated 09.01.2019 of the learned Additional District Judge No. 2, Kamrup (M) in Misc. (Arbitration) Case No. 02/2018 and remand the matter back for a fresh consideration. 12. Accordingly, the order dated 09.01.2019 of the learned Additional District Judge No. 2, Kamrup (M) in Misc. (Arbitration) Case No. 02/2018 is set aside and the matter is remanded back. The parties to appear before the learned Additional District Judge No. 2, Kamrup (M) on 06.03.2020. 13. At the time of admitting the appeal, an interim order dated 03.06.2019 was passed providing for a status-quo as regards the recovery process. The said interim order shall continue up to the date on which the parties shall appear and upon their appearance, the learned Additional District Judge No. 2, Kamrup (M) would pass fresh orders upon due consideration as regards any interim order, if required to be passed. The appeal stands allowed as indicated above.