TaxTMI 
TaxTMI 
2018 (4) TMI 2019
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.... (MOU), dated 4th December, 2003, with the respondent herein, M/s Harvinder Singh & Company, for a "pre-tender tie up" for execution of the aforementioned work of construction of the pavement for development of the DCT, Okhla, New Delhi. Clauses 1 to 5, 8, 9, 12, 18 and 21 of the said MOU, which are self-speaking, may be reproduced as under: "1. NPCC, Limited has decided to participate in the tender for the work of construction of Pavement for development of DCT Okhla, New Delhi on CONCOR. 2. M/ HSC's offer has been accepted for pre-tender tie up for the execution of above said work at rates quoted in their offer dated 2.12.03 and on the terms and conditions as contained in the N.I.T of "Client" issued to NPCC Limited and subsequently issued by "NPCC Limited to M/s HSC". M/s. HSC further confirmed that rates quoted by them are inclusive of taxes, duties, levies, and royalities including WCT/TOT etc. Total TOT/WCT payable on NPCC's contract value with client shall be responsible of M/s. HSC. In case NPCC pays any WCT/TOT on the above project, the same shall be recovered from M/s. HSC by deduction from bills. 3. In the event of NPCC Limited being successful....
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.... M/s. CONCOR. The rates for extra items and claims shall be as per MOU. The work shall be completed in all respect by 01.03.2005. You are requested to immediately submit CPM/PERT chart indicating clearly the manner in which all the activities will be carried out by you to ensure completion of work by the scheduled date. You are further requested to mobilize at site and to start work immediately and contact unit office- NPCC Limited, CONCOR Unit New Delhi for taking further instructions in this regard. The detail work order / agreement shall be issued to you in due course. The LOI is being issued to you in duplicate, you are requested to return one copy of the same duly signed and stamped as token of your acceptance. Thanking you, Yours faithfully, (N.K.S. Gahlowt) Dy. General Manager (CO)" 4. As required by the MOU, dated 4th December, 2003 (supra), the appellant and the respondent entered into a formal agreement dated 1st September, 2004. The said agreement may be reproduced, in extenso, thus: "NATIONAL PROJECTS CONSTRUCTION CORPORATION LIMITED AGREEMENT FOR WORK This agreement No. 7....
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.... 3. Tender No. CON/EP/OKH/132C/PAV 2003 4. MOU signed on 4.12.2003 between NPCC Limited and M/s. HSC. 5. M/s. HSC's letter dated 13.01.04. 6. M/s HSC's letter dated 15.01.04. 7. M/s HSC's letter dated 19.02.04. 8. M/s HSC's letter dated 22.03.04. 9. M/s HSC's IInd letter dated 22.03.04. 10. M/s HSC's letter dated 05.04.04. 11. NPCC agreement with M/s. CONCOR for this work terms, conditions, specification etc., as applicable to NPCC Limited. 12. Additional terms and conditions of NPCC Limited. 13. Schedule "A" - Schedule of Items, Raters and Quantities based on NRSOR - 96 14. Schedule "B" - Schedule of Items, Rates and Quantities (non schedule items). AND THE NPCC LIMITED do hereby agree that if M/s. HSC shall duly perform the same work in the manner aforesaid and observe to keep the said terms and conditions NPCC Limited will pay cause to be paid to M/s HSC for the said work, due in that respect, the rates payable to NPCC by the M/s. CONCOR minus the percentage as agreed to foregoing para. It is hereby agreed that all the provision of the said conditions, spe....
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.... to ensure that the site, free of all hindrances, was made available on time; there were various problems which they had to face with the Municipal Corporation of Delhi (MCD); mandatory permission to utilise fly ash was delayed; the batching plant was installed, as per the instructions of the appellant, on one side of the site, whereas the work was to be executed on the other side; the site had several live railway tracks, which were being used by the Railways, resulting in inability, on the part of the respondent, to use the short passage for reaching the work site and resulting in consequential delay; change of drawings from time to time; and that the termination of the contract, by the appellant, on 31st March, 2005, was illegal. 7. On the said grievances remaining unresolved between the appellant and the respondent, the matter was referred, in accordance with the arbitral clause, contained in the agreement dated, 1st September, 2004 (supra), to a learned Sole Arbitrator, for arbitration and decision on the claims of the respondent. Counter-claims were also filed, by the appellant, before the learned Sole Arbitrator. 8. It is also relevant to note that, in the interregnum,....
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....ing that there was no privity of contract between the respondent and CONCOR, and that, so far as the respondent was concerned, he was executing work for the appellant, and the liability, to make payment therefor, was of the appellant and not of CONCOR. Holding that the clauses of the agreement between the appellant and the respondent had to be reasonably interpreted, the learned Sole Arbitrator, in his Award, dated 10th November, 2008, rejected the submission of the appellant that it was entitled to withhold payments due to the respondent, merely because CONCOR had defaulted in making payments to it. Resultantly, Claim No. 1, of the respondent, was allowed for Rs. 16,08,789/-. 14. Claim No. 10 of the respondent related to refund of security deposit. The only ground, urged by the appellant, before the learned Sole Arbitrator, for failing to refund the security deposit to the respondent, was that it was payable by CONCOR at the end of the defect liability period. The learned Sole Arbitrator rejected this submission, as well, holding that, as the contract between the appellant and the respondent was terminated by the appellant, the appellant could not withhold the securit....
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.... realization of the amount, the Contractor cannot be without any remedy as he cannot approach CONCOR directly by filing appropriate judicial proceedings. It cannot be said that in such a situation the Contractor would be deprived of his amount which is admittedly due as per the contract and he would be remediless. The Award notes that interpretation of various clauses of the contract has to be a reasonable one. The Award further concludes that it would be the obligation of NPCC to pay the amount to the contractor and later, seek remedy against CONCOR. 16. Even otherwise a perusal of the terms shows that there is no provision which specifically states that in case of failure of CONCOR to release payments to NPCC which are legitimately due and payable, the liability of NPCC to release payments to the contractor gets extinguished. The above noted provisions, namely, clauses 22,29 and 35 merely stress that the terms and conditions of the contract between NPC and CONCOR will apply back to back to the contractor. Specifically clause 29 which was stressed upon by the learned senior counsel for the NPCC merely states that payment when received by NPCC shall be released to the cont....
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....nt, were on back-to-back basis, and contemplated payment, by the appellant, to the respondent, only on receipt of payment by the appellant, from CONCOR, and after deduction, therefrom, of the profit and commission available to the appellant. As such, he would submit that requiring the appellant to make payment to the respondent even without receipt of payment from CONCOR would amount to doing credence to the agreements between the appellant and the respondent. 23. We are unable to agree with Mr. Bhambhani, and find no reason to interfere with the impugned judgment of the learned Single Judge, or for that matter, the decision of the learned Sole Arbitrator on this aspect of the matter. 24. We are in entire agreement with learned Sole Arbitrator, as well as with the learned Single Judge, that there was no privity of contract between the respondent and CONCOR. The various clauses, on which Mr. Bhambhani relies, merely stipulate that, out of the payment received by the appellant from CONCOR, the appellant was entitled to deduct its profit and commission, before making payment to the respondent. These clauses cannot be interpreted in such a way, as to disentitle the respondent to ....
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....s no ambiguity or anomaly. Nonetheless, in view of the proliferation of litigation, challenging arbitral awards, in recent times, we have, in a recent decision, dated 10th August 2017, in Shiam Cooperative Group v. Kamal Construction Co. Ltd., extracted, in extenso, the relevant paragraphs from the said decision, and respectfully culled, therefrom, the following clear principles: (i) The four reasons motivating the legislation of the Act, in 1996, were (a) to provide for a fair and efficient arbitral procedure, (b) to provide for the passing of reasoned awards, (c) to ensure that the arbitrator does not transgress his jurisdiction, and (d) to minimize supervision, by courts, in the arbitral process. (ii) The merits of the award are required to be examined only in certain specified circumstances, for examining whether the award is in conflict with the public policy of India. (iii) An award would be regarded as conflicting with the public policy of India if (a) it is contrary to the fundamental policy of Indian law, or (b) it is contrary to the interests of India, (c) it is contrary to justice o....
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.... the Arbitral Tribunal ignores vital evidence in arriving at its decision. (viii) At the same time, (a) a decision which is founded on some evidence, which could be relied upon, howsoever compendious, cannot be treated as "perverse", (b) if the view adopted by the arbitrator is a possible view, it has to pass muster, (c) neither quantity, nor quality, of evidence is open to re-assessment in judicial review over the award. (ix) "Morality" would imply enforceability, of the agreement, given the prevailing mores of the day. "Immorality", however, can constitute a ground for interfering with an arbitral award only if it shocks the judicial conscience. (x) For examining the above aspects, the pleadings of the parties and materials brought on record would be relevant. (x) The court cannot sit in appeal over an arbitration award. Errors of fact cannot be corrected under Section 34. The arbitrator is the last word on facts." 46. It is apparent, therefore, that, while interference by court, with arbitral awards, is limited and circumscribed, an award which is patently illegal, on account of it being injudicious....