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High Court of Judicature at Madras
VINOD K. SHARMA, J.
M. Rajkumar
Versus
Southern Railway
OA. 198 of 2011
Decided on: 22-04-2013
Vitiation Clause - Arbitration and Conciliation - Section 9 of the Arbitration and Conciliation Act, 1996 - Clause 43, Clause 44, Clause 42 of the General Conditions of Contract - Summary of Acts and Sections
Fact of the Case:
The applicant filed an application under Section 9 of the Arbitration and Conciliation Act, seeking an injunction to restrain the respondents from effecting any recovery on/from bills by applying the vitiation clause under a specific contract. The applicant claimed that the vitiation clause was not valid and should not be enforced against them.
Finding of the Court:
The court found that the applicant had approached the court before any action was taken on the recovery notice issued by the respondents. The court also noted that the vitiation clause was a part of the contract and would be binding on the Arbitrator. The court dismissed the application for injunction, stating that the recovery of money did not constitute irreparable injury and that the applicant had not shown a prima facie case for the injunction.
Issues: The main issue was the validity and enforceability of the vitiation clause in the contract, and whether the applicant was entitled to an injunction to restrain the respondents from applying the clause.
Ratio Decidendi: The court held that the vitiation clause, being a part of the contract, would be binding on the Arbitrator, and the recovery of money did not constitute irreparable injury to the applicant. The court also noted that the applicant had approached the court before any cause of action arose.
Final Decision: The court dismissed the application for injunction, finding no merit in the applicant's claims.
Vinod K. Sharma, J.,
1. This application under Section 9 of the Arbitration and Conciliation Act, 1996, has been filed for grant of ad-interim injunction, restraining the respondents from effecting any recovery on / from bills of the applicant by applying vitiation clause under Contract No.13/CN/2011 dated 02.02.2011, pending adjudication of the dispute / issue of applicability of vitiation clause in the arbitration.
2. In support of the prayer made, affidavit filed by the applicant reads as under
“I, Rajkumar, son of K.R. Muthusamy, aged about 35 years and having office at No.2, L.I.C. Colony, R.M. Colony Road, Nehruji Nagar, Dindugul-624 001, Tamilnadu now temporarily come down to Chennai do hereby solemnly affirm and sincerely state of follows:
1. I am the Applicant and as I am well acquainted with the facts of the case.
2. I respectfully submit that tenders were called for, for the work of Gauge Conversion between POLLACHI-PODANUR Section: Proposed construction of Major Bridge Nos.246, 260, 266 & 273 and other related works between POLLACHI & PODANUR Section. The Applicant had quoted for the above work and as the rates were lowest and viable, the work was awarded to the Applicant for a value Rs.10,24,33,668/- and a Letter of Acceptance was issued on 15.09.2010 by the respondents. The contract Agreement No.13/CN/2011 was entered into on 02.02.2011 between both the parties.
3. I respectfully submit that there are 5 annexures to this project, Annexure-A caters scheduled items for which the rate accepted was plus 16% over Southern Railway schedule of rates covered by BSR 2008 as applicable to zone-A of Palghat division. Annexure-B caters for Bored Piles 1000 mm Dia and other related works for foundation. Annexure-C caters for Non-Scheduled items and mainly the work was for construction of PSC Girders and launching etc., Annexure-D caters for Non-Scheduled items and mainly the work was for supply of reinforcement Steel and Cement and Annexure-E caters for list of Plants. As per the Letter of Acceptance Annexure-A is for Rs.2,76,50,607/-, Annexure-B is for Rs.10,66,861/-, Annexure-C is for Rs.2,97,76,200/-, Annexure-D is for Rs.4,39,40,000/-.
4. I respectfully submit that the time limit stipulated for the said contract was ten months, i.e. up to 14.07.2011. It is stipulated in the contract that the contractor should submit a program of work in suitable proforma within ten days of receipt of the LOA, in consultation with the 3rd Respondent/Executive Engineer-in-charge. In accordance with directives as per Item No.5 of LOA and in commensurate with the magnitude and nature of work, special reference to the time factor, the arrangements to start the work was made/required men, machineries were mobilized investing a huge outlay by the Applicant. The unprecedented rains caused by South-East monsoon followed by North-East monsoon and also heavy rains caused by “JAL” cyclone defeated the program of work.
5. I submit that the Applicant has mobilized all the men and machinery for the project at site and has commenced work. The Applicant reliably given to understand that the Respondent's initiating steps to recover amounts from the on-account bill of the Applicant, which is due now by applying vitiation clause arbitrarily and without any prior notice to the Applicant.
6. I respectfully submit the relevant clauses of the contract dated 2.2.2011 between the parties are extracted as follows:
CLAUSE-43
VARIATION IN QUANTITIES:
43.1. The Drawings referred to in the list of plans, if any, are intended only to give a rough and general idea of the location and rough details of work to be done. No claim whatsoever will be admissible in respect of any alternation/addition/deletion/change in the type of works.
43. 2. The quantities of various item given in the Schedules for the works to be executed are only approximate and are for the guidance of the contractor. As far as possible, they have been assessed correctly but are likely to vary duri
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