Full Text
HIGH COURT OF DELHI
Date of Decision: 22.08.2022
ARUN JAIN PROP. M/S VISHESH BUILDERS ..... Appellant
Through: Mr Sanjay Bansal, Advocate.
Through: Ms Kanika Agnihotri with Mr Rohan Anand, Advocates.
HON'BLE MS. JUSTICE TARA VITASTA GANJU [Physical Hearing/Hybrid Hearing (as per request)]
RAJIV SHAKDHER, J.: (ORAL)
JUDGMENT
1. This is an application filed on behalf of the appellant seeking condonation of delay in re-filing the appeal.
2. According to the appellant/applicant the period of delay involved is 162 days.
3. Mr Sanjay Bansal, who appears on behalf of the appellant/applicant, says that the appeal was filed on 11.03.2019 impugning the judgment dated 22.01.2019 passed by the learned Single Judge.
3.1. According to the Mr Bansal, the application for obtaining a copy of the impugned judgment was preferred on 31.01.2019.
3.2. It is averred that the certified copy of the impugned judgment was received on 15.02.2019, which led to the filing of appeal, as indicated above, on 11.03.2019. 2022:DHC:3281-DB FAO(OS) (COMM) 243/2019 Pg.[2] of 7
4. Insofar as the delay in re-filing is concerned, apart from the averments made in the application, the Advocate for the appellant/applicant i.e., Mr Sanjay Bansal, has also filed his personal affidavit. 4.[1] The reasons, broadly, given are marriage, death in the counsel’s family and the fact that the appellant was suffering from depression.
5. Although the events cited in the affidavit do indicate that sufficient alacrity was not shown in filing the appeal, given the fact that the delay is in re-filing, we are inclined to condone the same.
5.1. It is ordered accordingly.
6. The application is accordingly disposed of. FAO(OS) (COMM) 243/2019
7. This appeal is directed against the judgment of the Learned Single Judge dated 22.01.2019.
7.1. The appellant had filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 [in short, ‘the Act’] to assail the Sole- Arbitrator’s award dated 23.08.2012 and the corrigendum issued under Section 33 of the Act dated 21.09.2012.
7.2. Though the appellant via the Section 34 petition had assailed the aforementioned award, insofar as claim numbers 1, 4 and 7 are concerned, Mr Bansal has confined the challenge in the appeal to claim no.4.
7.3. Claim no.4 concerns the fixed deposit receipt (FDR) submitted by the appellant towards performance guarantee.
8. Mr Bansal says that since there was no determination and/or termination qua the subject contract, the FDR ought to have been returned to the appellant. 8.1. To be noted, we are told that the FDR bears a face value of Rs. 6,96,368/-. FAO(OS) (COMM) 243/2019 Pg.[3] of 7
8.2. Mr Bansal says that the FDR was made out in favour of the respondent/ New Delhi Municipal Council (NDMC) and over a period of time i.e., while the work was in progress, it earned interest and while the learned Arbitrator has directed, via the aforementioned award, that the accrued interest be made over to the appellant, the direction qua the principal amount is to the contrary.
8.3. In other words, the respondent/NDMC’s counter-claim with regard to forfeiture/retention of the performance guarantee [counter-claim no.4] has been sustained.
8.4. Therefore, as indicated at the very outset, the entire controversy centers around one issue i.e., whether or not the learned Arbitrator was right in concluding that the respondent/NDMC could retain the FDR.
9. A perusal of the record shows that learned Arbitrator has returned a finding of fact that a major component of the contract i.e., installation of “MS Railing” was not completed.
9.1. The learned Arbitrator has concluded, after appreciating the evidence and the material on record, that although the contract was extended till 11.12.2020, the subject work was not completed by the appellant.
10. The learned Arbitrator has also noted that the respondent/NDMC had not issued a completion certificate.
10.1. This fact is not disputed by Mr Bansal.
11. Therefore, whether or not the learned Arbitrator was right in concluding that because the completion certificate was not issued, the respondent/NDMC had the right to retain the FDR, is the aspect, as noticed above, which needs to be examined in the appeal.
12. Towards this end, one would need to discern the scope and import of FAO(OS) (COMM) 243/2019 Pg.[4] of 7 the clause in the contract under which performance guarantee was furnished: “Clause 1 Performance Guarantee
(i) The contractor shall submit an irrevocable
PERFORMANCE GURANTEE of 5% (Five Percent) of the tendered amount in addition to other deposit mentioned elsewhere in the contract for his proper performance of the contract agreement, (not withstanding and/or without prejudice to any other provision in the contract) within 15 days of issue of letter of acceptance. This period can be further extended by the Engineer-in- Charge up to a maximum period of 7 days on written request of the contractor stating the reason for delays in procuring the Bank Guarantee, to the satisfaction of the Engineer-in-Charge. This guarantee shall be in the form of Cash/Deposit-at-Call receipt. Banker's Cheque/Demand Draft pay order of any scheduled bank or Fixed Deposit Receipts or guarantee Bonds, of any scheduled Bank or the State Bank of India in accordance with the form annexed hereto. In case a fixed deposit receipt of any Bank is furnished by the contractor to the NDMC as part of the performance guarantee and the Bank is unable to make payment against the said fixed deposit receipt, the loss caused thereby shall fall on the contractor and the contractor shall forthwith on demand furnish additional security to the NDMC to make good the deficit.
(ii) The performance guarantee shall be initially valid upto the stipulated date of completion plus 60 days beyond that. In case the time for completion of work gets enlarged, the contractor shall get. the validity of performance guarantee extended to cover such enlarged time for completion of work. After recording of the completion certificate for the work by the competent authority, the performance guarantee shall be returned to the contractor, without any interest. FAO(OS) (COMM) 243/2019 Pg.[5] of 7
(iii) The Engineer-in-Charge shall not make a claim under the performance guarantee except for amounts to which the NDMC is entitled under the contract (notwithstanding and/or without prejudice to any other provisions in the contract agreement) in the event of (a) Failure by the contractor to extend the validity of the. performance Guarantee as described therein above, in that event the Engineer-in-Charge may claim the full amount of the performance guarantee. (b) Failure by the contractor to pay the NDMC any amount due, either as agreed by the contractor or determined under any of the clauses/Conditions of the agreement, within 30 days of the service of notice to this effect by Engineer-in-Charge.
(iv) In the event of the contract being determined or rescinded under provision of any of the clause/condition of the agreement, the performance guarantee shall stand forfeited in full and shall be absolutely at the disposal of the NDMC.” [Emphasis is ours]
12.1. A perusal of the clause shows that it envisages several circumstances in which the respondent/NDMC may either take a decision not to return the performance guarantee or adjust the same against a money claim or even forfeit the performance guarantee in case the subject contract is determined/rescinded.
12.2. These circumstances are envisaged in sub-clauses (ii), (iii) and (iv) of Clause 1 of the subject contract.
13. A perusal of the award shows that learned Arbitrator has reached a conclusion that Clause 1, sub-clause (ii) is triggered in the present circumstances. In other words, since completion certificate was not issued, the respondent/NDMC was well within its right not to return the FAO(OS) (COMM) 243/2019 Pg.[6] of 7 performance guarantee.
13.1. This has been noted in paragraph 11 of the award. For the sake of convenience, the same is extracted hereafter: “11.0 Claim no. 4 to restrain the respondent from invoking the performance guarantee and to discharge the claimant from performance guarantee of Rs. 7 lac submitted to respondent at the time of award of work and to refund the same. Admittedly, the claimant, in response to respondent's letter dated 02.03.2010 directing the claimant to submit an irrevocable performance guarantee for Rs. 6,96,368/- had deposited an FDR bearing no. SBF993472 dated 04.03.2010 of Syndicate Bank for Rs. 7 lac (C-21) as performance guarantee vide letter dated 05.03.2010 (C- 3/page 23 of SOC) which the respondent has admittedly not released. The claimant has sought release of the performance guarantee on the ground that the contract has been performed to full extent, as per its scope and hence, as per clause-1 of the agreement, it is due for release. The contention of the respondent is that performance guarantee is released after completion of work and after completion certificate is recorded by the Engineer-in- Charge and approved by the competent authority. As the contract was not performed completely, the performance guarantee cannot be released at this stage nor the claimant can be discharged from performance guarantee. My finding:-
(i) As per clause. 1 of the agreement, the performance guarantee is submitted by the contractor for his proper performance of the contract agreement and the same is refunded to the contractor after recording of completion certificate for the work by the competent authority.
(ii) As I have already decided under claim no.1 in para 8.0 above, the claimant did not perform the, contact in full and accordingly the completion certificate for the work was not issued by the respondent. FAO(OS) (COMM) 243/2019 Pg.[7] of 7 Given the contact provisions and fact situation of the case, as recorded in my finding above, I have no hesitation to decide that the claimant is not entitled to refund of the performance guarantee nor it can be discharged from the liability of performance guarantee as claimed and that the respondent would be fully within its right to forfeit Rs. 6,96,368/- being the requisite amount of performance guarantee. However, as the respondent has admittedly already encashed the said FDR on, 10.07.2012 and received Rs. 8,14,586/- including interest, whereas it is entitled to forfeiture of Rs. 6,96,368/- only, the claimant is, held as entitled to receive the balance amount of Rs. 1,18,218/-. I, therefore, award a sum of Rs. 1,18,218/-in favour of the claimant. It is also held that since the awarded amount is on account of interest, this shall not qualify for future interest.” [Emphasis is ours]
14. We find no illegality (patent or otherwise) in the conclusion reached by the learned Arbitrator.
14.1. Therefore, we are not inclined to interfere with the impugned judgment rendered by the learned Single Judge.
15. The appeal is, accordingly, dismissed.
RAJIV SHAKDHER, J TARA VITASTA GANJU, J AUGUST 22, 2022 /tr Click here to check corrigendum, if any