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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, J.
Engineers India Limited, Through Its Authorized Signatory – Petitioner
Versus
Kimiya Engineers Private Limited, Through Its Director – Respondent
O.M.P. (Comm) 458 of 2017
Decided On : 18-04-2022
Arbitration - Engineers India Limited - Arbitration and Conciliation Act, 1996 - 34 - Agreement
Fact of the Case:
EIL filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, impugning an Arbitral Award delivered by the Arbitral Tribunal in respect of disputes that had arisen between the parties in relation to a construction agreement.
Finding of the Court:
The court found that the termination of the Agreement was illegal as it was not in conformity with the terms of the Agreement. The court also found that the decision of the Arbitral Tribunal to reject EIL’s counter-claims was not erroneous. The court upheld the Arbitral Tribunal's decision to award a sum for excavation of earthwork and service tax.
Issues: The issues included delay in execution of the project, termination of the Agreement, and the award of sums for excavation of earthwork and service tax.
Ratio Decidendi: The court upheld the Arbitral Tribunal's decision on the termination of the Agreement and the award of sums for excavation of earthwork and service tax.
Final Decision: The petition was dismissed.
JUDGMENT :
Vibhu Bakhru, J.
1. Engineers India Limited (hereinafter ‘EIL’) has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the A&C Act’) impugning an Arbitral Award dated 01.09.2017 (hereinafter ‘the impugned award’) delivered by the Arbitral Tribunal comprising of a Sole Arbitrator (hereinafter ‘the Arbitral Tribunal’).
2. The impugned award was delivered by the Arbitral Tribunal in respect of disputes that had arisen between the parties in relation with an agreement dated 04.09.2013 (hereinafter ‘the Agreement’).
Factual Context
3. EIL entered into a Lease Deed dated 23.05.2011 with City and Urban Development Corporation, Maharashtra (CIDCO) for the construction of a multi-storied building for housing offices at Plot No. 85, Sector 11, Khargar, Navi Mumbai (hereinafter the ‘Project’), which was to be constructed within a period of four years.
4. EIL floated the first tender on 24.12.2012, which was later annulled. Thereafter, EIL issued a notice dated 22.05.2013, inviting bids for the construction of the aforementioned building. The respondent (hereinafter ‘KEPL’) emerged as the successful bidder and was awarded the Project.
5. On 16.08.2013, the Fax of Acceptance (FOA) was issued by EIL to KEPL. The FOA provided that the Project was to be completed within a period of eighteen months from the date of issuance of the FOA, that is, by 15.02.2015. Thereafter, the Letter of Acceptance (LOA) was issued on 02.09.2013; and on 04.09.2013, the Agreement was executed between the parties.
6. The Project site was handed over to KEPL on 26.08.2013. KEPL claims that it faced various issues such as delayed handing over of the site, unprecedented rain etc. that led to the delay in completion of the Project. KEPL claims that the delay was attributable to EIL and thus, a provisional extension of time (EOT) was granted by EIL up to 30.10.2015. EIL, on the other hand, claims that the delay of the Project was attributable to KEPL.
7. In view of the disputes between the parties, KEPL issued a notice dated 22.03.2014, under Clause 35.2 of the General Conditions of Contract (hereinafter the ‘GCC’), seeking resolution of the disputes.
8. Thereafter, KEPL issued a notice invoking arbitration on 24.11.2014 and on 16.12.2014, it filed an application under Section 11 of the A&C Act before the Bombay High Court, seeking appointment of an arbitrator.
9. By an order dated 23.02.2016, the Bombay High Court proceeded to appoint Mr. Sanjay Kothari as the sole arbitrator. However, Mr. Kothari expressed his inability to act as the arbitrator and excused himself from the proceedings. Thereafter, by an order dated 03.03.2016, Mr. Minoo Siodia was appointed as the Sole Arbitrator.
10. EIL claims that since the Project was completely abandoned by KEPL, on 26.02.2016, it invoked the Bank Guarantees furnished by KEPL (both the Performance Bank Guarantee and the Mobilization Advance Guarantee).
11. Further, on 03.03.2016, EIL issued a Termination Notice to KEPL and the Agreement was terminated with effect from 22.03.2016.
Arbitral Proceedings
12. KEPL, filed its Statement of Claims, before the Arbitral tribunal raising a total of twenty-four claims. The Arbitral Tribunal partly allowed Claim no.1, Claim no.2, Claim no.9, Claim no.10, Claim no.11, Claim no.12, Claim no. 14, Claim no.15, Claim no.23 and Claim no.24 of KEPL and rejected all the other claims. A tabular statement of the claims along with the amount awarded by the Arbitral Tribunal, is set out below:
Claim No. Particulars Claimed amount Awarded amount
Claim No.1 Missing soil excavation item in Schedule of Rates Rs. 17,68,688/- Rs. 14,51,743.65/-
Claim No.2 and Claim No.9 (i) Non-payment of AHR item nos. 1.1.3 and 1.2.2 and non-payment of RA Bill 17 Rs. 3,57,882/- + Rs. 28,38,849/- Rs. 28,38,849/-
Claim No.10 Refund of Bank Guarantees Rs. 1,93,87,461/- Rs. 1,40,09,510/-
Claim No.9 (ii), Claim No.11 and Claim No.15 Non-payment of RA Bill no.18, Unbilled
AI
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