Full Text
HIGH COURT OF DELHI
Date of Decision: 16th May, 2023
M/S MI2C SECURITY & FACILITIES PVT LTD..... Appellant
Through: Mr. Rajesh Gogna, Adv.
Through: Mr. Kunal Vajani, Mr. Kunal Mimani, Mr. Kartikey Bhatt, Mr. Rahat Afridi & Ms. Shradha Chirania, Advs.
HON'BLE MR. JUSTICE AMIT MAHAJAN VIBHU BAKHRU, J. (Oral)
JUDGMENT
1. The appellant has filed the present intra-court appeal impugning an order dated 23.10.2018, passed by the learned Single Judge, whereby the petition preferred by the appellant herein, was dismissed.
2. The dispute between the parties arise in relation to a “Contract Agreement for Security Services of Dr. S.P.M. Civic Centre” dated 20.11.2014 (hereafter ‘the Agreement’). The respondent had issued a Notice Inviting Tenders (hereafter ‘NIT’) dated 15.05.2014, under two bid systems from reputed security agencies for providing security services at Civic Centre Complex (Dr. Shama Prasad Mukherjee, Civic Centre).
3. The appellant is engaged in the business of providing security services and submitted its bid pursuant to the aforesaid NIT. The said bid was accepted, and the parties entered into the Agreement.
4. In terms of the Agreement, the appellant had agreed to provide security services at a contract price of ₹7,45,56,041/- (Rupees Seven Crores Forty Five Lakhs Fifty Six Thousand and Forty One Only). The dispute, essentially, is whether the respondent is obliged to pay additional amount if the minimum wages were increased. The controversy is centered around interpretation of Clause 5 of the Agreement. The said clause is set out below:
5. The appellant states that at the material time, the minimum wages per person per shift per day, was ₹367/- for Security Guards and ₹403/- for Armed Security Guards and for Security Supervisors. The said minimum wages were subsequently increased by a Notification dated 31.03.2015 issued by the Government of NCT of Delhi, whereby the minimum wages for Security Guards were enhanced to ₹385/- per day and for Armed Security Guards and Supervisors were enhanced to ₹423/- per day. These wages were enhanced from time to time: to ₹390/- and ₹429/- per day by a Notification dated 16.10.2015; to ₹407/- & ₹447/- per day by a Notification dated 31.03.2016; to ₹414/- & ₹455/- per day by a Notification dated 30.09.2016; to ₹565/- & ₹622/- per day by a Notification dated 03.03.2015; and ₹575 & ₹633/- by a Notification dated 31.05.2017, for Security Guards and Armed Security Guards respectively.
6. According to the appellant, the increase in the wages was required to be paid by the respondent. The appellant sent a letter dated 25.04.2015, requesting the respondent to pay the increased wages. However, the same was denied. Thereafter, there was exchange of communication between the parties, whereby the appellant reiterated its claims, and the respondent denied the same. This led the appellant to file the petition before this Court [W.P.(C) 8197/2017] captioned MI2C Security & Facilities Pvt Ltd v. North Delhi Municipal Corporation.
7. The said petition culminated into the impugned order. The respondent raised a preliminary objection contending that the dispute between the parties was essentially contractual in nature and was liable to be referred to Arbitration as agreed between the parties. However, the said contention was rejected by the learned Single Judge for the reasons that the said objection had not been raised in the first affidavit filed by the respondent.
8. Insofar as the interpretation of the Agreement is concerned, the learned Single Judge proceeded to interpret the same and found that the liability to pay the enhanced wages rested with the appellant and not with the respondent. The appellant’s contention that the Agreement did not make any commercial sense if it was read in the aforesaid manner, was rejected, on the ground that commercial difficulties are not a defence for non-performance of a contract.
9. The respondent had also claimed that there was sufficient headroom in the contract price for the appellant to absorb the increase in notified Minimum Wages. However, the same was disputed by the appellant.
10. It is material to note that the impugned order largely proceeds on the interpretation of the Agreement.
11. Learned counsel appearing for the respondent reiterated the contention that the disputes are contractual in nature and are required to be resolved before a forum as agreed between the parties.
12. After some arguments, Mr. Rajesh Gogna, learned counsel who appears for the appellant, concedes that some of the issues involved in the present dispute are essentially factual in nature and require examination of the relevant evidence and material.
13. It is trite law that the Courts would normally refrain from entertaining any factual dispute in proceedings under Article 226 of the Constitution of India.
14. The learned counsel for the respondent submits that the respondents objection that the parties be relegated to avail of remedies as agreed under the Agreement – Arbitration – was rejected by the Learned single Judge on an erroneous assumption that the said objection was not taken in the first instance. He submits that the respondent had raised that objection in the short affidavit at the initial stage and the parties ought to have been relegated to arbitration.
15. We are of the view that the respondent was not precluded from claiming that the dispute be referred to Arbitration even if the said ground was not mentioned in the ‘first affidavit’. Since the issue involved in the present case largely relates to the interpretation of the Agreement between the parties, the dispute was required to be resolved in a manner as agreed between the parties – that is by referring the parties or disputes to arbitration.
16. In the facts of this case, it is not apposite for the appellant to avoid the contractual forum by taking recourse to the extra ordinary jurisdiction of this Court.
17. Mr. Gogna submits that the appellant be given an opportunity to agitate the dispute in arbitration. This is also the view advanced on behalf of the respondent.
18. In view of the above, we consider it apposite to set aside the impugned order leaving it open for the parties to invoke the Arbitration Agreement in accordance with the law.
19. It will be open for the appellant to seek exclusion of the period as spent by the appellant in pursuing the writ petition and the present appeal.
20. The appeal is disposed of in the aforesaid terms.
VIBHU BAKHRU, J AMIT MAHAJAN, J MAY 16, 2023 ‘‘SK’