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IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
Sew Infrasturcture Limited - Petitioner
Versus
Steel Authority of India Limited (Sail) - Respondent
O.M.P. (COMM) 136 of 2018 & IA No. 4264 of 2018
Decided On : 03-04-2018
Arbitration - SEWIL - Arbitration and Conciliation Act, 1996 (Section 34) - 1, 2, 3, 4, 5, 6
Fact of the Case:
The petitioner, SEWIL, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, impugning an arbitral award related to disputes arising from a contract for the expansion of a Cold Rolling Mill Complex. The controversy involved SEWIL's claim for entitlements with respect to three invoices raised on SAIL.
Finding of the Court:
The court found that the Arbitral Tribunal did not err in holding that the contract had come to an end by accord and satisfaction on account of the No Claim Certificate issued by SEWIL.
Issues: The principal question addressed was whether the Arbitral Tribunal had the jurisdiction to adjudicate the dispute relating to the termination of the contract on account of the No Claim Certificate issued by SEWIL.
Ratio Decidendi: The court held that SEWIL failed to establish that the No Claim Certificate was issued under coercion, duress, or undue influence, and thus, the Arbitral Tribunal's decision was upheld.
Final Decision: The petition was dismissed, and the pending application was disposed of.
Vibhu Bakhru, J.
1. The petitioner (hereafter ‘SEWIL’) has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter ‘the Act’), inter alia, impugning the arbitral award dated 22.11.2017 (hereafter ‘the impugned award’) delivered by the Arbitral Tribunal comprising of three members, namely, Dr Vishwapati Trivedi, Sh M.M. Sharma and Sh K.K. Singal (hereafter ‘the Arbitral Tribunal’). The impugned award was rendered by the majority with Sh K.K. Singal passing a separate order dated 30.11.2017 in the matter.
2. The impugned award was rendered in the context of disputes that had arisen between the parties in relation to a contract dated 28.09.2007 (hereafter ‘the Agreement’), in terms of which SEWIL had agreed to carry out the civil work for the expansion of a Cold Rolling Mill Complex in Zone-2A of the respondent (SAIL).
3. The dispute between the parties related to the price payable by SAIL for the work of expansion of a Cold Rolling Mill Complex of SAIL’s Salem Steel Plant to SEWIL.
4. The controversy involved in the present petition relates to SEWIL’s claim for the entitlements with respect to three invoices raised on SAIL. The first invoice dated 02.04.2013 for an amount of Rs.12,54,36,396.80/- towards price adjustments and the other two invoices both dated 21.10.2013 on account of service tax for an amount of Rs.42,758/- (that is, Service Tax at the rate of 12.35% on 40% of the pre-final bill released in May 2012 of Rs.51,89,098/-) and Rs.5,01,787/- (that is, Service Tax at the rate of 12.36% on 40% of the retention money released in January 2013 of Rs.60,561,489/-).
5. The principal question to be addressed is whether the Arbitral Tribunal had the jurisdiction to adjudicate the dispute relating to the termination of the contract on account of the No Claim Certificate issued by SEWIL.
6. Briefly stated, the controversy between the parties arise in the following context:-
5.1 On 03.03.2007, SAIL issued a Notice Inviting Tender (NIT) for “Civil Work for Expansion of a Cold Rolling Mill Complex (Zone-2A) at its Salem Steel Plant” (hereafter ‘the Work’). SEWIL submitted its bid pursuant to the said NIT, which was accepted. Consequently, SAIL issued a Letter of Acceptance (LoA) dated 13.09.2007 awarding the subject works for a contract value of Rs.85,18,51,773/- (that is, Rs.83,46,61,396/- other than Service Tax and Education Cess on Service Tax amounting to ?Rs.1,71,93,951/-).
5.2 On 31.12.2010, a Virtual Completion Certificate was issued by SAIL’s Consultant (M/s M.N Dastur & Co).
5.3 On 16.08.2012, SEWIL submitted its final bill towards the work done for Rs.6,29,86,871.77/- along with Price Adjustment Bill dated 01.08.2012 for Rs.12,29,54,654.80/-. On 17.10.2012, SEWIL submitted a ‘No Claim Certificate’ as per Clause 57.1 & 57.2 of the Agreement stating that ‘except the payments to be received by them from SSP against their Final Bill and Price Adjustment Bill’. On 17.01.2013, SAIL released payment against the Price Adjustment Bill dated 01.08.2012.
5.4 On 02.04.2013, SEWIL submitted another bill for an amount of Rs.12,54,36,396.80/- including Service Tax and Education Cess at the rate of 4.12% on account of price variation/escalation.
5.5 On 15.04.2013, SAIL issued a letter to SEWIL in response to the invoice dated 02.04.2013 along with the letter dated 09.04.2013 by M/s M.N. Dastur & Co informing SEWIL that their bills could not be certified and was accordingly returned.
5.6 SEWIL issued a letter dated 18.04.2013 to SAIL notifying SAIL that the price adjustment bills were returned thereby denying the genuine payment due to SEWIL.
5.7 On 15.07.2013, SEWIL informed SAIL that they are facing financial hardship and requested SAIL to release the amount of Rs.8,26,00,742.45/- towards Price Variation/Escalation.
5.8 On 04.11.2013, SAIL responded to SEWIL stating that the amount payable towards price variation comes out to be Rs.6,00,38,669.78/- and requested SEWIL to submit a No Claim Certificate
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