Madras High Court
Union Of India vs Shri S.K.Selvam on 5 December, 2018
Author: S.Vaidyanathan
Bench: S.Vaidyanathan
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 05.12.2018
CORAM
THE HONOURABLE MR. JUSTICE S.VAIDYANATHAN
O.P. No. 1040 of 2017
and
O.A. No. 1236 of 2017
Union of India
Rep by Senior Divisional Mechanical Engineer
Mechanical Branch, Salem Divisional Office
Southern Railway, Salem – 636 005. ... Petitioner
Vs.
Shri S.K.Selvam ... Respondent
Prayer : Petition filed under Section 34 of the Arbitration and Conciliation Act,
1996, to set aside the arbitral award dated 02.06.2017 made in relation to the
dispute arising out of agreement No.2/SA/M.27/VII/Vlg/12674/12656 dated
08.04.2015 in so far the amount of Rs.3,31,400/- Awarded towards claims 2 & 3 are
concerned.
For Petitioner : Mr.P.T.Ramkumar
For Respondent : Mr.V.Bhiman for Mr.C.Prakasam
ORDER
This original Petition has been filed by the Southern Railway, challenging the Award dated 02.06.2017 by which a sum of Rs.10,01,439/- was directed to be paid to the claimant.
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2.Learned counsel for the Petitioner submitted that the Petitioner /Railways have entrusted /awarded a contract for the work of “ Cleaning and complete washing including watering of the coaches of Train No.12674/12566/12655/12673 Cheran/Navajeevan Express maintained at Coimbatore Depot for a period of 2 years for a value of Rs.47,12,880/- to the claimant. He further submitted that the Respondent herein/ Railway Contractor did not provide sufficient manpower to perform the contract, which resulted in termination of contract on 24.08.2015. Several claims have been made, by the claimant before the Arbitrator and by way of Award, those claims were directed to be paid by the Petitioner herein. The challenge in the present O.P. is to the grant of Earnest Money Deposit and Performance Guarantee to be released FDR to the claimant.
3.Learned counsel for the Petitioner has submitted that for the work done by the Respondent a sum of Rs.6,70,079/- (Rupees Six Lakhs Seventy Thousand and Seventy Nine Only) has been paid. However, Rs.95,700/- as Earnest Money Deposit & Rs.2,35,700/- as Performance Guarantee to be released FDR have not been parted with. Accordingly to him, even there is a categorical finding by the Arbitrator to the effect that there are lacunas on the part of the contractor with regard to the implementation of the contract as per the agreement clauses thereby declined to grant the expenses towards consultancy and legal charges. He also drew the attention of this Court to the specific plea raised before the Arbitrator, which reads as follows:
http://www.judis.nic.in 3 “Suddenly from 18.07.2015 the contract staffs have not turned up for duty and the contractor has stopped the work of cleaning activities without any notice/intimation to the Railway Administration. Based on the above, seven days notice was issued to the contractor vide this office Lt.No.SA/M 271/Clg/12656 dt.20.07.2015 (f7) with a chance to the contractor to carry out the work within the seven days of receipt of the letter. The contractor has not carried out the contract within seven days of the receipt of the above letter.
Hence, 48 hours notice was issued to the contractor vide this office Lt.No.SA/M 271/cLG/12674/12656 dt.13.08.2015 (f8). But, even after this notice, the contractor has not deputed staff to commence the work. In view of the failure by the contractor in executing the said work as per the agreement the contract was terminated vide this office Lt.No.SA/M 271/Clg/12674/12656 dt. 24.08.2015(f9).
On reviewing the Records maintained at Coimbatore Depot and duly signed by both contractor's supervisor and Railway Supervisor, it is seen that the contractor had not used any machinery for clearing of coaches for the period of execution of contract work from 05.04.2015 to 17.07.2018. The purpose of the cleaning of coaches by using machineries could not be achieved by the way of non-utilization of machines.”
4.It is further submitted that the violations of the conditions of the agreement have been informed to the Contractor by various communications, despite which, the http://www.judis.nic.in 4 Contractor did not execute the work in terms of the agreement and in terms of the conditions thereof. Even though some works have been manually done, proper cleaning was done and the Railway supervisor had also certified that the work performed by the Contractor was not satisfactory. He further submitted that the Arbitrator ought not to have granted the relief insofar as the aforesaid two heads are concerned, when there is no performance of the contract by the Contractor to the satisfaction of the Petitioner herein.
5.Heard Mr.P.T.Ramkumar, learned counsel for the Petitioner/Railway and Mr.V.Bhiman, learned counsel for Mr.C.Prakasam, learned counsel appearing for the Respondent and perused records.
6.Learned counsel appearing for the Respondent has submitted that this is the first contract of its kind with “mechanized cleaning” involved and without machineries and electric machines, the work should not have started and the Petitioner has failed to ensure the use of machineries and has not maintained proper records, and no qualification has been mentioned for the manpower operators, i.e. Skilled/ semi skilled manpower, as the minimum manpower required per day is 16 workers with one supervisor per rake.
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7.It is the further submission of the learned counsel for the Respondent that the Arbitrator has rightly pointed out that the abnormalities were not informed to the owner of the contractor on daily basis through register /records/letters and that there is no checks and balances by the field office, officer at Coimbatore and the Petitioner has simply terminated the contract by giving only 7 days notice and 48 hours notice as per the General Condition of Contract Clause 62.
8.For the sake of brevity it is worthwhile to refer to Clause 16(4)(g)(iii) of the Indian Railways Standard General Conditions of Contract, which is reproduced as under:
“(g) The engineer shall not make a claim under the Performance Guarantee except for amounts to which the President of India is entitled under the contract (not withstanding and /or without prejudice to any other provisions in the contract agreement) in the event of :
(iii) The contract being determined or rescinded under provision of the GCC, the Performance Guarantee shall be forfeited in full and shall be absolutely at the disposal of the President of India ” From the above, it is obvious that whenever the contract is rescinded,the security deposit shall be forfeited. There is a specific clause in the agreement that even after receipt of notice, if the Contractor has not deputed any staff to commence the work, it can be merely construed that there is a failure on the part of the Contractor and http://www.judis.nic.in 6 in terms of the contract agreement and General Conditions of Contract, the Earnest Money Deposit has to be forfeited. Similarly, EMD refund of performance guarantee has to be forfeited without reference to these provisions and without rendering any finding as to whether any illegality has been committed by either of parties, the Arbitrator has granted the relief as such with regard to the claims namely, EMD of Rs.95,700/- with the direction to the Petitioner to refund the performance of guarantee of Rs.2,35,700/-, which is not justified and unsustainable. As the finding rendered by the Arbitrator is contrary to the terms of the agreement and General Conditions of Contract; that there is no performance of contract within the time stipulated even after receipt of the notice and that there is no finding with regard to the illegality committed by the Railways, I am of the view that the Award needs interference by this Court insofar as the aforesaid two heads alone and this Petition is liable to be allowed. Accordingly, this Original Petition is allowed and the Award in respect of aforesaid two heads alone is hereby set aside. No costs. Consequently, connected original application is closed.
05.12.2018 maya Index : Yes/No Internet : Yes/No Speaking /Non-speaking order http://www.judis.nic.in 7 S.VAIDYANATHAN, J.
maya ` O.P. No. 1040 of 2017 and O.A. No. 1236 of 2017 Dated : 05.12.2018 http://www.judis.nic.in