Hon'ble Smt. Justice Rajani Dubey

Hon’ble Shri Justice Radhakishan Agrawal, JJ

CAV Judgment

Per Rajani Dubey, J

Challenge in this appeal is to the legality and validity of the Arbitral Award dated 28.1.2020 passed by the learned Sole Arbitrator and order dated 22.3.2022 passed by the learned Commercial Court (District Level), Nava Raipur, in Case No. Arb.MJC 14 of 2020 under the provisions of Section 34 of the Arbitration and Conciliation Act, 1996.

02. The genesis of the present cause lies with the NIT No.299, dated 10.01.2007 whereby the work was awarded to the respondent herein for "Hiring of HEMM for OB removal at Kusmunda OCM of SECL Kusmunda Area" through work order No: SECL/CGM/KSM/SO(M)/01, dated 16.07.2007 for a sum of Rs. 50,17,19,700/- @ 65.51 Cu. Meter. The work included excavation including drilling in all kind of strata/overburden, loading into tippers, transportation, unloading the excavated material and slit, dumping, dozing, scrapping/removal of bands, preparation/maintenance of Haul Roads, water sprinkling, spreading of material at Kusmunda OCM. The total work period assigned for the completion of work under the contract was three years with the stipulation of quantities to be executed in every year separately. The total quantity of overburden to be removed was 67,02,221 cubic meter and that of slit was 9,52,139 cubic meter.

03. After award of the said work, it was the duty cast upon the respondent herein for completion of the work within the time frame prescribed under the contract. However, owing to various acts of commission and omission of the respondent himself, the same could not be completed and the contract was terminated by the appellant vide order dated 31.8.2009. It was specifically mentioned in the termination order that the unexecuted quantity of work of the respondent will be executed by another agency at the risk and cost of the defaulting contractor. Shortfall penalty will be levied as per clause no. 6.2 of the conditions of contract. Any amount payable to the respondent will be released only after adjustment of shortfall penalty, any other dues to the management including risk and cost recovery on account of quantity to be executed, by another contractor till 26.8.2010 i.e. the date of completion as per original schedule but limited to the executed quantity of the contract. Therefore, the respondent was advised to stop his operations against the work order No.SECL/CGM/KSM/SO(M)01 dated 16.7.2007, forthwith at Kusmunda OC Mines.

04. After termination of the contract, as per the terms of the contract, the remaining work was got done through another contractor by issuing short term notice at the risk and cost basis of the respondent. Consequently, the appellant issued recovery notice to the respondent herein claiming penalty amount and left over work completed through third party. The amount against the risk and cost was Rs.11,70,80,723/-, out of which an amount of Rs.6,94,51,670/- was lying with the appellant in the form of security deposit, unpaid bill of the respondent, over and above the said amount, demand was raised for an amount of Rs. 4,76,29,053/- towards this contract against the respondent.

05. The said action of recovery and termination was challenged by the respondent herein before the CMD of the appellant company, upon which a Committee was constituted by the Director (Technical Operations) consisting of their four officers ie., Chief General Manager (Production), General Manager (CMC), General Manager (Finance) and General Manager, Kusmunda to resolve the dispute by assessing the penalties and dues recoverable from the respondent herein arising out of contract. Before the Committee could give its report, the respondent herein approached this Court in the context of penalties imposed and encashment of bank guarantee of the respondent vide Writ Petition (C) No.7046/2011. The said writ petition was finally disposed of on 05.07.2012 by this Court wherein a new committee was directed to