Public Works Department GNCTD v. Continental Engineering Corporation

1. The presentorder disposes ofthe appeal under Section 37(2)(b) ofthe Arbitration and Conciliation Act,1996('the Act')preferred by the Public Works Department ofthe GNCTD and the petition under Section9ofthe Actfiled bythe Continental Engineering Corporation (CEC).

2. For the sake ofconvenience,the parties are referred to by the nomenclature assigned to them in the appeal.

3. The appeal under Section 37(2)(b)ofthe Act assails the order dated 27.12.2019 passed by the learned Arbitrator in the arbitration presently pending between the parties (the impugned order). The petition under Section 9 seeks an order primarily restraining the respondentfrom invoking the ten bank guarantees/FDRs as set out in Document[5] annexed by the Respondentin its petition.

4. The learned Arbitrator, vide the impugned order, has allowed the respondent s application under Section 17 of the Act with the following directions:- "V.Order underSection 17ofA &CAct.1996(Amended) Arbitration Tribunal, under provision ofSection 17 ofA & C Act 1996(amended) by this order, directs that the Respondentshall not make recovery or adjust amount of Rs.42.29 Cr as liquidated Damagefrom any amount due and payable to the Claimant under this contract or any other contract asstated in their letter dated 26"" Oct. 2019to the Claimant, tillthepresentArbitrationproceedings is concluded andAT's award is delivered."

5. On 06.02.2020, after the matter was heard at some length, it was put to the parties as to whether they would be agreeable for modification of the impugned order by incorporating an additional condition that till the conclusion of the arbitration, the respondent would remain restrained from recovering its outstanding dues from the appellant. The matter was subsequently adjourned to 11.02.2020 to enable the counselto obtain instructions on this aspect.

6. On the next date,learned Senior counsel for the respondent had submitted that the respondent was agreeable to the disposal of the appeal in those terms provided the respondent's claim with respect to the unpaid dues accruing from the petitioner qua its final bill also be permitted to be raised in the ongoing arbitration proceedings itselfby dispensing with the requirement of first approaching the Superintending Engineer and Chief Engineer in terms of the agreement between the parties. Learned counsel for the appellant had thereafter prayed for time to obtain instructions on whether the appellant had any objections on this count.

7. Today, learned counsel for the appellant submits that the appellant has no objection to the aforesaid claim being raised in the ongoing arbitration or the waiver ofthe requirement to approach the Superintending Engineer and ChiefEngineer, but the same would be subject to the respondent first approaching the Dispute Redressal Committee (DRC). Further, he submits that depending on the outcome ofthe proceedings before the DRC,the respondent would be free to raise its additional claim in the ongoing arbitration proceedings. The respondents have no objection to this proposition.

8. In view ofthe aforesaid stand taken by the parties, the appeal and the petition are accordingly disposed of by modifying the impugned order to the extent that till conclusion of the arbitration proceedings, the respondent would be restrained from recovering its outstanding dues iBrom the appellant, the same would however be subject to the respondent keeping its bank guarantee/FDR for the amount of Rs.24,24,24,213/- alive during the pendency of the arbitration proceedings. It further made clear that the appellant will not encash the said bank guarantee/FDR till the conclusion of the arbitration. The respondent is also granted liberty to raise its additional claim regarding the non-payment of its final bill directly before the DRC and depending upon its outcome,thereafter raise an additional claim,ifnecessary,in the ongoing arbitration proceedings.

9. The appeal and the petition are accordingly disposed ofin the aforesaid terms. The parties will be governed by the terms of this order. No further orders are called for. REKH^PAyLI,J MARCH 04,2020 gm