JUDGMENT

Navin Chawla, J. (Oral)--This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the `Act') has been filed by the petitioner challenging the Arbitral Award dated 25.06.2015 passed by the majority of the Arbitral Tribunal.

2. The disputes between the parties have arisen in relation to the work of Design, Supply, Erection, Testing & Commissioning of 25 KV, 50 HZ., Single Phase, Traction Over-Head Equipment, Switching Stations, Traction Substation, Feeding Post, Shunt capacitor bank and other associated works for Phase I work between Venkatachalam Road Jn. to Krishnapatnam including works of connecting Venkatachalam Road Jn. to main line at Venkatacha-lam station in connection with laying of New BG Line between Obulavaripalle-Krishnapatnam Section of South Central Railway, which was awarded by the petitioner in favour of the respondent vide Letter of Acceptance dated 12.03.2008. The parties had thereafter executed the Agreement dated 20.06.2008.

3. The first challenge to the Award is on the claim no. 1 of the respondent. This claim of the respondent was for the recovery of Rs.2 crores allegedly wrongly adjusted by the petitioner against the forfeiture of the Bid Security in another tender relating to Railway Electrification works between Gooty-Dharamavaram vide Invitation for Bid No.RVNL/SC/GY-YNK/RE/142.

4. The Arbitral Tribunal in the Impugned Award had allowed the said claim and held as under:

"8.32 AT observes that if RVNL had to forfeit the bid security of Rs.2.0 Crores in terms of Clause 19.6 of ITB, then they could invoke the BGs given by the 'JV' as bid security. It is a matter of common knowledge that such a BG is an unconditional agreement between RVNL and the bank. Invoking of such BGs cannot be refused by the bank.

If, however, the bank refused for encashment, which is the case here, then the right course for RVNL for realization of its right of encashment was to invoke the court and get the appropriate orders issued to the bank for encashment of the BGs. However, without adopting the right course, RVNL issued orders to the 'JV' vide letter dated 21.03.2012 (RD I Annexure R-344), followed by reminder dated 01.05.2012 for depositing Rs.2.0 Crores with CPM/RVNL/SC within one month failing which the amount shall be recovered from their running bills of other projects. Being a State Instrumentality, such orders at the hands of RVNL are unjust and unreasonable because neither there is any law nor any contractual provision brought out by RVNL under which it can recover the amount from the bills of other projects in the face of refusal of encashment of BGs by the Bank.

What action RVNL would have taken if the 'JV' or its lead partner had no contract with RVNL? Certainly for realizing the cash against the BGs, RVNL would have invoked the legal course of approaching the court.

8.33 Finding that the 'JV' was not depositing the ordered amount of Rs.2.0 Crores, RVNL started withholding the payment of M/s. Kobra Instalaciones y. Servicios, S.A relating to another contract of Venkatachalam Road Jn. to Krishnapatnam, which is the contract under which the dispute has arisen. The contractor M/s. Kobra Instalaciones y. Services, S.A continued giving reminders to RVNL for release of their payments but RVNL did not.

In Reminder-III dated 25.05.2012 (CD II Exhibit C-42), the Contractor brought out that the total payment due is almost 25% of the total contract value and RVNL was not initiating the payment process even though the entire project was completed and put under commercial use for the past twelve months.

When the bills of the Contractor had been intentionally and illegally held up by RVNL to such an extent, there appeared to be no other option, under such circumstances, except to agree to the dictates of RVNL so that at least the Contractor gets the amount of bills over and above Rs.2.0 Crores. Therefore, this appears to be a clear case of use of dominating position b