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Delhi Metro Rail Corporation Ltd vs Ms Kone Elevators India Pvt Ltd on 10 April, 2024

Author: Anup Jairam Bhambhani

Bench: Anup Jairam Bhambhani

                                    $~20
                                    *    IN THE HIGH COURT OF DELHI AT NEW DELHI
                                    +    O.M.P. (COMM) 487/2023
                                         DELHI METRO RAIL CORPORATION LTD                   ..... Petitioner
                                                        Through: Mr. Tarun Johri with Mr. Vishwajeet
                                                                   Tyagi and Mr. Ankur Gupta,
                                                                   Advocates.
                                                        versus
                                         MS KONE ELEVATORS INDIA PVT LTD                ..... Respondent
                                                        Through: Mr. E. R. Kumar with Mrs. Swati
                                                                   Bhardwaj, Advocates.
                                         CORAM:
                                         HON'BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI
                                                        ORDER

                                    %                   10.04.2024
                                    O.M.P. (COMM) 487/2023

By way of the present petition filed under section 34 of the Arbitration & Conciliation Act 1996 ('A&C Act'), the petitioner/Delhi Metro Rail Corporation Ltd. impugns arbitral award dated 04.08.2023 rendered by a 03-Member Arbitral Tribunal in relation to the disputes that had arisen between the petitioner and the respondent.

2. Briefly, the respondent had manufactured and installed elevators in the premises of the petitioner under and in accordance with the terms of Contract Agreement dated 23.01.2013, which related to the design, manufacture, supply, installation, testing and commissioning of heavy duty, machine-room less elevators for the Delhi MRTC Project Phase- III.

3. Mr. Tarun Johri, learned counsel appearing for the petitioner submits, that the essential challenge to the arbitral award is in relation to the decision rendered by the learned Arbitral Tribunal on the right of the O.M.P. (COMM) 487/2023 Page 1 of 4 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/04/2024 at 00:12:46 respondent to reimbursement of the GST paid on the transaction. Counsel explains that vide clause 11.1.1.1.(C) of the Special Conditions of Contract that governed the transaction between the parties, the petitioner was liable to reimburse to the respondent inter-alia the excise duty paid on the transaction, subject to the respondent furnishing documentary evidence in support of their claims.

4. Counsel explains that the provision further stipulated that any increase in cost by reason of new taxes or due to change in the existing tax regime, during the contractual period extended due to the respondent's default, would be to the respondent's account.

5. Mr. Johri argues, that it is not disputed that the period of contract in the present case was extended for reasons relating to the respondent. Furthermore, the petitioner contends, that during the currency of the contract, Goods and Services Tax ('GST') came to be imposed with effect from 01.07.2017, which new tax however subsumed within itself excise duty that used to be payable earlier.

6. Mr. Johri contends, that as a matter of law, the respondent was entitled to refund of the excise duty paid by them while computing the GST payable by them by way of Input Tax Credit in relation to the goods and services supplied. However, the respondent did not avail the Input Tax Credit; and went ahead and paid GST, which thereby became an additional/double levy.

7. Mr. Johri submits, that insofar as excise duty originally paid by the respondent is concerned, that was duly reimbursed by the petitioner to the respondent. However, it is contended, that the respondent was not entitled to reimbursement of the GST paid, which amounted to paying O.M.P. (COMM) 487/2023 Page 2 of 4 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/04/2024 at 00:12:46 tax twice-over towards the same head. Counsel argues, that the respondent was entitled to input tax credit under the GST tax regime, which it should have availed. It is clarified that the petitioner is not entitled to seek refund from the GST authorities, since the petitioner is not the 'assessee' in their books.

8. However, it is pointed-out, that the learned Arbitral Tribunal has held against the petitioner on this count; in effect imposing upon the petitioner the liability to reimburse the respondent for the same tax, needlessly paid by the respondent twice over.

9. Upon a prima-facie conspectus of the matter, issue notice.

10. Mr. E. R. Kumar, learned counsel appears on behalf of the respondent on advance copy; accepts notice; and seeks time to file reply.

11. Let reply be filed within 06 weeks; rejoinder thereto, if any, be filed within 04 weeks thereafter; with copies to the opposing counsel.

12. Re-notify on 02nd August 2024.

13. By way of the present application filed under section 36(3) of the A&C Act, the petitioner seeks stay of the impugned arbitral award.

14. Issue notice.

15. Mr. E. R. Kumar, learned counsel appears on behalf of the respondent on advance copy; accepts notice; and submits that subject to the petitioner depositing the principal awarded sum of about Rs. 1.27 crores, the respondent does not oppose the prayer made in the application.

16. After making some submissions, Mr. Johri leaves it to the court to pass appropriate orders.

This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/04/2024 at 00:12:47

17. In the circumstances, the present application is disposed-of, directing the petitioner to deposit the principal awarded sum of about Rs. 1.27 crores with the Registrar General of this court, within 04 weeks from today; subject to which the operation and effect of impugned arbitral award dated 04.08.2023 shall remain stayed during the pendency of the present petition.

18. The Registrar General is directed to retain the said amount in an interest-bearing fixed deposit account in a nationalised bank, initially for a period of 01 year; to be renewed thereafter for the like term, from time-to-time, during the pendency of the present suit, without awaiting any further orders in that behalf.

19. Application stands disposed-of in the above terms.

ANUP JAIRAM BHAMBHANI, J APRIL 10, 2024 ds O.M.P. (COMM) 487/2023 Page 4 of 4 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/04/2024 at 00:12:47