TaxTMI 
TaxTMI 
TaxTMI 
2020 (11) TMI 77
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....ad with Section 13 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 against the impugned final order and judgment dated 16th March, 2020 passed by the learned Single Judge of this Court, whereby the objections filed by the Appellant under Section 34 of the A&C Act against the arbitral award dated 15th October 2019, passed by the learned Sole Arbitrator have been dismissed. By way of the award, the claims of the Respondent have been allowed. Facts in brief 6. The facts have been noted and discussed at length both in the impugned judgment as well as the arbitral award. Therefore, for the disposal of the present appeal, we are noting only the bare essential facts, which are as follows: The Appellant, a Government of India undertaking, engaged in the business of inter alia manufacturing steel, awarded a contract for the setting up of a Coupled Pickling Line and Tandem Cold Mill at Bokaro Steel Plant to a consortium of M/s Siemens VAI Metals Technologies Pvt. Ltd. (now Primetals Technologies India Pvt. Ltd. and Respondent herein), M/s Siemens VAI Metal Technologies GmbH & Co, Austria and M/s McNally Bharat Engineering Co. Ltd. Th....
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....reon @ 14% per annum, from the date on which it had fallen due in terms of Clause 12.1.6 of the GCC, till the date of actual payment. The counter claim of the Respondent for Rs. 92,16,537.03/- is rejected. (b) the Claimant's claim of the principal amount Rs. 6,66,13,750/- against its RA Bill No.34 dated 04.09.2015 is allowed, together with interest thereon @ 14% per annum from 23.10.2015 till 12.04.2019. Further, the Claimant is also entitled to interest @ 14% per annum on the balance principal amount of Rs. 5,93,64,168/- from 12.04.2019 till the date of actual payment. The counter claim of the Respondent for Rs. 5,01,47,637/- is rejected. (c) the Claimant's claim of the principal amount of Rs. 1,07,75,482.06/- against its RA Bill No.43 dated 20.03.2017 is allowed together with interest @ 14% per annum thereon from 04.05.2017 till 05.12.2018. Further, the Claimant is also entitled to interest @ 14% per annum on the balance principal amount of Rs. 2.93,293.29/- from 05.12.2018 till the date of actual payment. (d) costs as above." 8. The award was assailed by filing objections under Section 34 of A&C Act. However, after considering the contractual terms between the par....
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.... Employer is Rs. 1 crore and the minimum guaranteed CENVAT credit as declared by the Contractor is Rs. 50 lakhs, and there is no shortfall in that amount, the Employer would avail the benefit of the CENVAT credit and reimburse the Contractor to this extent. However, the Employer would still be required to pay the balance Rs. 50 lakhs to the Govt. in discharge of its overall tax liability in the project. In case, there is a shortfall of Rs. 20 lakhs, the Employer would avail CENVAT credit of that amount and would reimburse the Contractor to that extent. In such a case, in discharge of its total tax liability, the Employer would be required to pay balance Rs. 70 lakhs to the Govt. In the event of the CENVAT credit availed is higher than Rs. 50 lakhs, say Rs. 70 lakhs, the Employer would have to pay the balance amount of Rs. 30 lakhs to the Govt., reimburse Rs. 50 lakhs to the Contractor and share the excess of Rs. 20 lakhs in the ratio of 50:50 with the Contractor. In any case, therefore, by the shortfall in the declared minimum guaranteed CENVAT credit, the Employer does not suffer any loss or prejudice vis-a-vis its tax liability. This assumes significance in the facts of this case....
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....same has been nullified by the learned Arbitrator. 12. Per contra, Mr. P.C. Markanda, learned Senior Counsel appearing on advance notice on behalf of the Respondent, supported the award passed by the learned Arbitrator and impugned judgment of the learned Single Judge and argued that the scope of the jurisdiction of this Court under Section 37 is extremely limited and none of the grounds urged by the Appellant are worthy of consideration. He submitted that accepting the contentions of the Appellant would amount to the Court enforcing its opinion on the interpretation of the terms of the contract which is not permissible in view of the settled law that it is the Arbitrator alone who has the jurisdiction to decide questions relating to interpretation of terms of the contract. Mr. Markanda further argued that terms of the contract are crystal clear. The clauses unequivocally provide that the shortfall of CENVAT credit must be adjusted from the gross contract price at serial No.12 and not from the net contract price at serial No.15. The Appellant could not arbitrarily and unilaterally elect to deduct the same from the net contract price and, therefore, the view taken by the learned Ar....
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....es Limited v. Rajasthan Rajya Vidyut Utpadan Nigam Limited AIR 2019 SC 2908. Thus, applying the law as laid down by the Supreme Court, while exercising jurisdiction as an appellate court, we have to, therefore, examine if the learned Single Judge has exceeded its jurisdiction while deciding the objections under Section 34 of the A&C Act. 14. On a reading of the impugned judgment, we find that the only contentions urged by the Appellant were with respect to the interpretation and giving effect to the terms of the contract. As per Clause 14.5.6 of the GCC, the Respondent was liable to provide the Appellant the 'Minimum Guaranteed CENVAT Credit' as mentioned in the contract. The Appellant was entitled to deduct the shortfall in the credit, if any, from the Total Contract Price charged from it. There is undisputedly a shortfall in minimum guaranteed credit of approximately Rs. 5 crores. Appellant deducted this amount against the running bills. Respondent contended that this was contrary to the terms of the contract and deductions could only be made against the gross contract price which according to them had indeed been done and therefore, deductions against the running bills ....
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.... the findings and decision of the arbitrator, which is what the High Court has practically done in this matter. The umpire is legitimately entitled to take the view which he holds to be the correct one after considering the material before him and after interpreting the provisions of the agreement. If he does so, the decision of the umpire has to be accepted as final and binding." (Emphasis supplied) 15. The learned Arbitrator after analysing the entire terms of the contract and the evidence on record categorically concluded that the deduction could be made only from the gross contract price referred to at serial No.12. The learned Single Judge has carefully examined the observations of the learned Arbitrator in this regard and did not find any infirmity with the same. The Court concluded that the only logical interpretation of the phrase 'contract price' for the purpose of Clause 14.5.6 is that any deduction on account of shortfall viz. the minimum guaranteed CENVAT credit had to be made from the gross contract price at serial No.12 and not from the net contract price at serial No.15. The findings of the learned Single Judge on this point are reproduced hereinbelow: "1....
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....th respect to reimbursement of the CST paid by the Respondent's subcontractors/vendors to the Respondent is equally meritless. I find that the learned Arbitrator has, after examining Clause 14.1 of the contract, concluded that the price agreed upon between the parties clearly includes all taxes to be reimbursed to the Respondent. Therefore, merely because some input taxes were not paid directly by the Respondent but by its subcontractors/vendors in respect of goods used in the execution of the contract, the same could not be a ground for the petitioner to refuse reimbursement thereof to the Respondent. 21. It is thus evident that the learned Arbitrator has, after interpreting the various clauses of the contracts, including clause 14.1 of the GCC, arrived at a categorical conclusion that the Respondent was entitled to reimbursement of the CST paid by its sub-contractors/vendors, with which conclusion I find no reason to interfere. Even otherwise, when the findings of an award rest on an interpretation of the provisions of the contract between the parties, the Court, while examining the award under Section 34 of the Act, cannot interfere with the same, even if another interpret....
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.... case of Respondent herein has always been that the shortfall amount of Rs. 5.03 crores has already been deducted from the total contract price and, therefore, it cannot be withheld from its bills as it would amount to double enrichment. 18. Further, when we put it to Mr. Lakshmikumaran to point out if it had been pleaded anywhere that an adjustment on shortfall of CENVAT credit has not been permitted at all, he was unable to draw our attention to any particular pleading to that effect. On the other hand, Mr. Markanda categorically stated that it was the admitted position of the Appellant that adjustment on shortfall of CENVAT credit had been permitted and our attention was drawn to para 73 of the Award which reads as under:- "73. A brief reference to the∙ evidence on record would be additionally advantageous. The Claimant's witness, CW-1, in his cross-examination, reaffirmed that the Respondent had paid/ reimbursed the Claimant Rs,19,70,32,185/- on account of CENVAT and not Rs. 28,05,22,621/-. He also deposed, that the guaranteed amount of CENVAT credit may vary, depending upon the prevailing rate of tax/duty and procurement price and that the amount of CENVAT credit ....