TaxTMI 
TaxTMI 
2014 (3) TMI 1143
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....tracts also provided that the rates payable shall be based on certain standard rates of principal raw materials, such as cement, High Tensile Steel (HTS) wires, molded steel, etc. The contracts further provided that whenever the cost of the principal raw materials increased or decreased, the contract price for sleepers shall also correspondingly be increased or decreased with effect from the date of such increase or decrease. The agreements/contracts also provided for escalation, subject to certain conditions prescribed under Clause 11 of the Contract. The contracts/agreements further provided that the Respondents must exercise utmost economy in the purchase of raw materials and that the escalation will be admitted on the basis of actual price paid for the respective raw material. This was subject to the ceiling on the price. As per Clause 12.2(c), ceiling was fixed "in the case of raw materials not covered by either of the above, the lowest price (for destination) arrived at on the basis of at least three quotations obtained by the Contractor for each supply from various established sources of supply of the respective raw materials". 3. The Respondents/contractors purchased HTS w....
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....d, the learned Single Judge, instead of referring matter to arbitration in terms of the contract between the parties allowed the writ petitions filed by the Respondents herein and directed the railway authorities to refund the sum of Rs. 1,69,78,883/- and Rs. 1,78,09,789/- to the Respondent firms, respectively with interest thereon from the date of withholding till the date the same is refunded. The order was directed to be complied within a period of 4 week from the date of the receipt of the order. This order was again challenged by the railway administration by filing, first of all, Writ Appeal Nos. 2822 and 2823 of 2001. Subsequently, writ appeal miscellaneous petition No. 21103 and 21104 of 2001 were also filed in the aforesaid two writ appeals, seeking stay of the judgments under appeal. On 30th April, 2004, the Division Bench dismissed the writ appeals as well as the miscellaneous petitions. 6. The railway administration challenged the aforesaid order of the Division Bench, before this Court by filing SLP No. 18244 and 18245 of 2004. Special leave was granted in both the special leave petitions and the same were converted to Civil Appeal Nos. 2999 and 3000 of 2005. By a sho....
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.... The High Court directed that the awarded amount deposited by the railways in the Court for satisfying the outcome of the original petitions which was subsequently converted into fixed deposit receipts, be dispersed to the Respondent contractors. 7. Again the railway administration filed intra court appeals challenging the order of the learned Single Judge principally on the ground that the railway administration was not liable to pay any interest for the period subsequent to the deposit of the principal amount into Court. The appeals filed by the railway administration were dismissed by the High Court by the impugned order dated 21st March, 2012. The High Court held that railway administration had not questioned the power of the sole arbitrator to award interest. The issue with regard to the award of interest was also not raised before the learned Single Judge. For the first time before the Division Bench, a plea was raised that the award of interest was contrary to Clause No. 2401 of the Indian Railways Standard Conditions of Contract. The Division Bench of the High Court came to the conclusion that the aforesaid clause has no application at all as it applies only to amounts, wh....
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.... or any other legal proceeding subsequently holds that the amount was withheld illegally. Mr. Jain submits that the learned Single Judge erred in holding that the award did not suffer from an error apparent on this short ground. In support of the submission, he relies on judgment of this Court in the case of Himachal Pradesh Housing and Urban Development Authority and Anr. v. Ranjit Singh Rana MANU/SC/0207/2012 : (2012) 4 SCC 505. 11. Mr. Jain further submitted that the principal amount awarded was deposited in Court in 2007. This amount was released to the contractors on 24th April, 2011 alongwith the interest, but 30 per cent of the amount was duly withheld. This was in agreement with the Respondents. He also pointed out that in fact the recovery of the amount was deferred after discussions with the Respondents. In view of the agreements, the Respondents had no justification for claiming any interest and the award granting such relief suffer from an error apparent as it was contrary to the contract. In support of this submission, he relies on judgment of this Court in Sree Kamatchi Amman Construction v. Divisional Railway Manager (Works), Palghat and Ors. (2010) 8 SCC 767. He al....
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.... Mr. Vaidyanathan, in the case of Sree Kamatchi Amman Construction (supra). Mr. Vaidyanathan submitted that the railway administration had no authority either under Clause 2401 or 2403 of the contract to recover the amounts allegedly overpaid for the work done prior to 1991 from the amounts due to the contractors for the works done subsequently. 13. We have considered the submissions made by the learned Counsel for the parties. 14. Clause Nos. 2401 and 2403 are as under: 2401. Whenever any claim or claims for payment of a sum of money arises out of or under the contract against the Contractor, the Purchaser shall be entitled to withhold and also have a lien to retain such sum or sums in whole or in part from the security, if any, deposited by the Contractor and for the purpose aforesaid, the Purchaser shall be entitled to withhold the said cash security deposit or the security, if any, furnished as the case may be and also have a lien over the same pending finalization or adjudication of any such claim. In the event of the security being insufficient to cover the claimed amount or amounts or if no security has been taken from the Contractor, the Purchaser shall be entitled to wi....
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....ways can withhold the amount deposited by the contractors as security and also have lien over the same pending finalization or adjudication of the claim. In case, the security deposit is insufficient to cover the claim of the railways, it is entitled to withhold and have lien to the extent of the amount claimed from any sum payable for any works done by the contractor thereafter under the same contract or any other contract. This withholding of the money and the exercise of the lien is pending finalization or adjudication of any claim. This clause further provided that the amount withheld by the railways over which it is exercising lien will not entitle the contractor to claim any interest or damages for such withholding or retention under lien by the railways. 16. Clause 2403 again provides that any sum of money due and payable to the contractor under the contract may be withheld or retained by way of lien by the railway authorities or the Government in respect of payment of a sum of money arising out of or under any other contract made by the contractor with the railway authority or the Government. 17. Clause 2403(b) further provides that it is an agreed term of the contract th....