Power to withhold amounts due to contractor in other contracts is permissible.

S. Rajeswaran, J.

Application No.495/2005 has been filed under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter called "the Act") to stay the implementation of the order passed by the 2nd respondent under Ref. No. W.148/SM1533/CN dated 25.1.2005, dated 18.4.2000, 81/CN/2000, 89/CN/2000, 115/CN/2001 dated 16.4.2001, 145/CN/2001 dated 14/05/2001, 398/CN/96, 376/CN/99 dated 4.10.1999 and No.41 dated 31.1.2003 and No.89 dated 4.5.2000 and 144/CN/2002 dated 12.4.2002 for the security deposits and amounts of the petitioner.

2. A.No. 3372/2005 has been filed to direct the respondents to release the running bills, security deposits and other amounts which are entitled for the applicant in lieu of other agreements to the completed contracts and running bills relating to the running contracts, the sum of Rs.47,89,592/-.

3. The applicant partnership firm entered into an agreement dated 11.4.2000 with the 1st respondent and the 'nature of contract is doubling the track between Calicut and Cannore, construction of road over-bridge No. 1088 near Dharmdom. The general conditions of contract (GCC) provides for arbitration in Clause 63. The applicant firm has completed number of contracts but unfortunately the respondents have taken unreasonable stand in making the payments due to the applicant. In this contract alone the applicant is entitled to more than Rs. 40 lakhs. Apart from this contract, the applicant is entitled for payment of various other contracts from the respondents. The contracts are totally 16 in number. The security deposit in these contracts would itself come to a sum of Rs. 90 lakhs. As the respondents delayed the matter, the applicant was earlier forced to file a writ petition before the Kerala High Court. Even then, payments were not made necessitating the applicant to seek for arbitration. But the respondents forwarded the letters relating to other agreements directing them to withhold security deposit and also amounts for which the applicant is entitled to. A.No.495/2005 has been filed for the limited purpose of staying the implementation of order dated 25.1.2005 in relation to the various agreements mentioned therein.

4. This Court on 19.3.2005 granted interim stay until further orders. But at the intervention of the respondents informing this Court that a sum of Rs. 33,16,177/- had already been withheld from and out of the amount payable by the respondents to the applicant, this Court on 24.3.2005 modified the order by granting interim stay for other amounts only by clearly stating that the interim order already granted would become inoperative to the extent of Rs. 33,16,177/-.

5. A counter affidavit has been filed on behalf of the respondents wherein it was stated that Clauses 52 and 52-A of the GCC enable the Railway administration to withhold amounts due to the applicant under the subject contract or any other contract between the applicant and any other department of the Railways or the Central Government pending adjudication in arbitration. The communication in respect of which stay has been sought for has been issued by the Railway administration on the basis of the Clauses 52 and 52-A of GCC which has been accepted by the applicant and they are binding on them. The validity of the said clauses has been upheld by this Court and the Hon'ble Supreme Court held that an application of this nature which in effect amounts to seeking a direction to pay the amounts due under other contracts is not maintainable.

6. The applicant has been awarded more than a dozen works under the jurisdiction of the 4th respondent and most of the works being high value contracts of Rs.1 crore and above. There was no wilful delay on the part of Railways in settling the final bills of the applicant and the final amount and the security deposits were not released and paid as the applicant has to pay Railways an amount of Rs. 33,16,177/- towards hiring charges and cost of materials not returned. As the available mone