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2012 Supreme(Del) 1900
High Court of Delhi
THE HONOURABLE MR. JUSTICE S. MURALIDHAR
Modern Co-Operative Group Housing Society Ltd.
Versus
Bharat Bijlee Ltd.
CS (OS) No. 317A of 2000 & I.A. No. 2292 of 2000
Decided on : 14-09-2012
For the Plaintiff:Rakesh Tiku, Sr. Advocate, with Abhinav Bajaj, Advocate.
For the Defendant:Vinay Bhasin, Sr. Advocate, with Ankur Bansal, Advocate.
The main legal point established in the judgment is that contractual obligations, including completion of civil works and adherence to payment terms, are crucial in determining liability for delays in fulfilling contractual obligations.
Headnote:
Arbitration Act - Disputes between Modern Co-operative Group Housing Society Ltd. and Bharat Bijlee Ltd. - Sections 30 and 33 of the Arbitration Act, 1940 - 30, 33 - The court discussed the disputes arising from the supply of lifts by BBL to the Society, the payment terms, and the completion of civil works. The key legal provisions discussed include the terms of the contract, waiver of payment conditions, and the completion of contractual obligations.
Fact of the Case:
The Society placed an order with BBL for the supply of six lifts. Disputes arose regarding payment terms, completion of civil works, and delays in installation. The court analyzed the evidence and contractual obligations to determine the liability of the parties.
Finding of the Court:
The court found that the Society failed to fulfill its contractual obligations, leading to delays in the installation of lifts. It rejected certain claims of the Society and affirmed BBL's counter-claim. The court set aside the award in favor of the Society for Rs. 18.77 lakhs but affirmed the dismissal of BBL's counter-claim.
Issues: The issues revolved around the completion of civil works, payment terms, and contractual obligations. The court analyzed the evidence to determine the responsibility for delays in the installation of lifts.
Ratio Decidendi: The court held that the Society's failure to complete civil works and adhere to payment terms contributed to the delays in lift installation. It set aside the award in favor of the Society but affirmed the dismissal of BBL's counter-claim.
Final Decision: The court set aside the award in favor of the Society for Rs. 18.77 lakhs but affirmed the dismissal of BBL's counter-claim.
1. I.A. 2292 of 2000 is an application by the Defendant Bharat Bijlee Ltd. (‘BBL’) under Sections 30 and 33 of the Arbitration Act, 1940 (‘1940 Act’) raising objections to the impugned Award dated 1st January 2000 of the sole Arbitrator in the disputes between the Plaintiff Modern Co-operative Group Housing Society Ltd. (hereinafter ‘the Society’) and BBL arising out of an order placed by the Society on BBL for supply of six lifts for the Society.
2. The offer made by BBL for supply of the six lifts was accepted by the Society on 30th December 1987 for the value of Rs. 20,88,450. It was subject to a price variation claim (‘PVC’). Payment was to be made prorate per lift as follows:
30% of contract value with the acceptance of the proposal.
60% of contract value plus PVC on material portion on receipt of advice from BBL that the materials are ready for dispatch.
10% of contract value plus balance PVC plus taxes and levies as applicable on completion of the installation work with the further provisions that BBL is delayed by any cause beyond its control, the final 10% plus taxes and levies as specified will be paid to BBL within 180 days from the date of its advice that the materials are ready for dispatch. Partial supplies when required shall be payable pro-rata as above. Any payment not made at due date would bear interest at the maximum rate of interest paid by BBL to its bankers.
3. In terms of the contract the Society was to provide within 50 weeks from the starting date the following items:
.(i) lift pit,
.(ii) lift shaft,
(iii) Machine Room with permanent power supply and,
(iv) preparatory work/Builder’s work complete in all respects as per approved layout drawings, to enable BBL to undertake and carry out the erection work in the remaining period.
1. 4. In terms of the agreed sequence of activities, the Society was to provide scaffolding and template in support of the lift shaft by 31st August 1989. However, the Society wrote to BBL only on 16th March 1990 stating that the site was ready for installation of lifts. According to BBL, it accepted the above statement of the Society and immediately took steps to despatch the materials from its factory site at Thane and raised proforma invoices for the six lifts for a net amount of Rs. 19,96,599. When BBL sent its team at the site for commencing the work, it found that the preparatory civil work was not yet complete. According to BBL, the civil work was not complete even up to September 1993 when BBL was forced to abandon the site. The case of BBL is that in terms of the contract the Society was to pay an advance of approximately Rs. 6,20,000 by 30th December 1987. The Society however paid only Rs. 20,000 by 30th December 1987. The balance amount of Rs. 6,00,000 was paid only on 11th July 1988.
2. 5. As regards the balance payment of 60% which was for the materials required to be
paid “on receipt of the advice that material is ready for dispatch”, it is stated by the Society in its affidavit dated 30th March 2001 filed in these proceedings that it made payments of the said 60% amount as under:
completed on 16th March 1990. It was further stated that a total amount of Rs. 15,22,102 was paid to BBL and yet not even a single lift was installed. On the other hand, the case of BBL was that the 60% payment was certainly not made on receipt of the advice from BBL that the material was ready for despatch. Even on the Society’s own showing the entire 60% payment was made only by 25th May 1993. This necessarily involved PVC but the Society insisted that BBL should either agree to waive the PVC or pay interest on the advance payment of Rs. 6,20,000 paid by the Society which demand was outside the scope of the contract. Further the Society made payment only against one invoice in the sum of Rs. 3,00,700.67 towards one passenger lift.
1. 7. It is stated by BBL that on receipt of the aforementioned payment on 29th May 1990 it immediately despatched the material. The receipt of the
