TaxTMI 
TaxTMI 
2015 (5) TMI 1194
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..../-. In furtherance of the execution of this contract, the Appellant entered into two subcontracts (hereinafter, "the subcontracts") with the Respondent herein, in respect of two Packages, namely "C1" and "C2", for the laying of roads valued at Rs. 3,20,64,752/- and Rs. 1,67,01,821/- respectively. The cumulative value of both packages amounted to Rs. 4,87,66,573 /-. 3 The Respondent completed approximately 67 per cent of the work under the two subcontracts but thereafter ceased work on both. The Appellant cancelled the subcontracts, and managed the completion of the work by engaging other agencies. The cost of 67 per cent of the contractual work completed by the Respondent was estimated at Rs. 3.23 crores, out of which the Appellant admittedly paid a sum of Rs. 2.62 crores. The Respondent claimed an unpaid balance of Rs. 61 lakhs as arrears due to it by the Appellant, and resorted to arbitration. The Appellant also took recourse to arbitration against the main contracting authority, SIPCOT, in respect of the pending payments pertaining to C1 and C2 packages. The Arbitrator was thus adjudicating the claims made by the Respondent against the Appellant in the First Arbitration, and ....
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...., claiming that the Respondent had unauthorisedly performed additional and increased quantities of works, also challenging the rate claimed by the Respondent for the same; that the Respondent could not claim any amount in excess of what was agreed to be paid by SIPCOT in respect of each item of work covered under C1 and C2 subcontracts. The Appellant also rejected the Respondent's claimed dues under the non-scheduled head (which work the Appellant itself had requested to be performed by the Respondent), stating that SIPCOT had refuted its liability towards non-scheduled expenditures. Indeed, the Arbitrator in his Award detected two "general pleas" as resonating from the Appellant: firstly, that the contracts C1 and C2 were on a "back to back" basis with IRCON's main contract with SIPCOT and unless SIPCOT paid for the amounts claimed by the Respondent, the Appellant was not legally liable for the same; and secondly, that back to back basis applied even to non-scheduled items. 6 The Arbitrator found that the mention of "back-to-back" had been made only in the contract rider agreement for Package C2, and in subsequent epistles exchanged between IRCON and the Respondent from whose a....
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....aised against SIPCOT on the basis of the earlier Award obtained against the Appellant. The Single Judge accepted the Respondent's contention that "the very same claim, which the respondent made against the petitioner has been made by the petitioner against the SIPCOT and on that basis, an award has been passed in favour of the petitioner". It is facially apparent that, on the one hand, the Appellant had obtained a favourable Award in the Arbitration with SIPCOT by substantially relying on (and as compensation for) the adverse Award passed in its arbitration with the Respondent; on the other hand, it appealed before the Single Judge against the adverse Award which had substantially been the premiss and reason for the Appellant's success against SIPCOT. In addition, the Appellant expostulated that the Applications before the Single Judge ought to have been heard along with the Applications filed by SIPCOT for setting aside of the Award in Appellant's favour in the Second Arbitration. To not have done so would be to disjoin the Awards, leaving it open for the High Court to come to two dissonant conclusions in the two interdependent arbitrations; the Appellant's expressed fear being....
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....as been highlighted before us by the Appellants, which would persuade us towards a deviation from the presumption of distinct and sole liability of the Appellant-Contractor as employer viz. a. viz. the Respondent-Sub Contractor. On the contrary, much of the exercise in determining the existence of a "back to back clause" in the contracts C1 and C2 appears to be misplaced. Such an accommodation or transference of liability needs to be pinpointed in the main contract, for it is SIPCOT's acceptance of liability of subcontractor claims which is of the essence; even a clause indicating "back to back" liability in agreements C1 and C2 would not serve to novate the main contract and fasten payment liability on SIPCOT, prevented as it would be by privity, for it would be a matter of SIPCOT's acceptance of subcontractor liability in the main contract, and not a matter of novation by imposition upon SIPCOT by two parties in a separate bilateral contract. Nothing presented before us suggests that SIPCOT's contract with the Appellant provided for "back to back" subcontracts whereby SIPCOT would be directly answerable for the payment claims raised by contractors. That subletting was provided fo....