Delhi High Court - Orders
Delhi State Industrial And ... vs Bawana Infra Development Pvt Ltd on 11 October, 2023
Author: Vibhu Bakhru
Bench: Vibhu Bakhru
$~29
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO(OS) (COMM) 216/2023
DELHI STATE INDUSTRIAL AND
INFRASTRUCTURE DEVELOPMENT
CORPORATION LTD ..... Appellant
Through: Ms. Anusuya Salwan, Mr.
Bankim Garg & Ms.
Nikita Salwan, Advs.
versus
BAWANA INFRA DEVELOPMENT PVT LTD
..... Respondent
Through: Mr. Dheeraj P. Deo, Adv.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
HON'BLE MR. JUSTICE AMIT MAHAJAN
ORDER
% 11.10.2023 CAV 534/2023
1. The learned counsel for the caveator has entered appearance.
2. The caveat stands discharged.
CM APPL. 53036/2023 (for exemption)
3. Exemption allowed, subject to all just exceptions.
4. The application stands disposed of.
CM APPL. 53037/2023 (condonation of delay of 123 days in filing the appeal)
5. For the reasons mentioned in the application, the delay of 123 days in filing the appeal stands condoned.
6. The application stands disposed of.
FAO(OS) (COMM) 216/2023
7. Issue notice.
FAO(OS) (COMM) 216/2023 Page 1 of 5This 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 17/10/2023 at 12:24:28
8. The learned counsel for the respondent accepts notice.
9. The appellant (hereafter 'DSIIDC') has filed the present intra court appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 (hereafter 'the A & C Act'), inter-alia, impugning a judgment dated 16.03.2023 (hereafter 'impugned judgment') rendered by the learned Single Judge of this Court in O.M.P. (COMM) 24/2019 captioned Bawana Infra Development Pvt. Ltd. v. Delhi State Industrial & Infrastructure Development Corporation Limited. The said application was filed by the respondent under Section 34 of the A & C Act praying that the Arbitral Award dated 12.09.2018 rendered by the learned Arbitral Tribunal comprising of the Sole Arbitrator, be set aside to a limited extent.
10. The said Arbitral Award was rendered in respect of a dispute that had arisen between the parties in connection with the Concessionaire Agreement dated 20.07.2011 (hereafter 'Concessionaire Agreement'), entered into between DSIIDC and the respondent. In terms of the said Concessionaire Agreement, the respondent had undertaken to redevelop, operate and maintain the infrastructure and utilities at Bawana Industrial Area, Delhi. The respondent had also agreed to employ its own funds for redevelopment of the industrial area. In consideration for the same, the respondent was entitled to receive an annual annuity of ₹7.48 crores for a period of 13 years. The total concession period was 15 years, out of which two years were for construction and redevelopment of the industrial area. In addition to the annuity, the respondent was also entitled to recover maintenance charges from various industrial units/allottees of industrial plots to maintain the entire industrial area.
FAO(OS) (COMM) 216/2023 Page 2 of 5This 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 17/10/2023 at 12:24:28
11. Some of the claims raised by the respondent were allowed, while some were rejected. The controversy in the present appeal relates to the decision of the learned Single Judge to set aside the Arbitral Award in respect of claim no. 7 and claim no. 11, that relate to payment of interest.
12. The appellant had released part of the maintenance amount collected by the respondent (75%) and had withheld the remaining amount. The said amount was thereafter released to the respondent, and it is not disputed that the respondent was entitled to the same. Since there was a delay in release of the said amount, the respondent had made a claim for interest on the amount of the maintenance charges withheld by it.
13. The learned Arbitral Tribunal has held that withholding of the 25% of the maintenance amount was justified as the respondent had not satisfied the maintenance standards. The learned Single Judge has faulted the said award for the reason that there was no provision in the contract for withholding any part of the maintenance charges. The Concessionaire Agreement provided for a specific recourse in the event the maintenance standards were not satisfied, and the same did not include withholding of maintenance charges.
14. The second issue relates to the interest on the monthly payments payable to the respondent (claim no. 11). The learned Arbitral Tribunal has rejected the claim of interest on the delayed payment of monthly instalments on the ground that the Concessionaire Agreement does not provide for payment of interest. The said findings of the learned Arbitral Tribunal are, ex facie, erroneous and overlook Section 1.2 and Section 20.21 of the Concessionaire Agreement. These clauses expressly provide for the obligation to pay interest for delayed payments. The FAO(OS) (COMM) 216/2023 Page 3 of 5 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 17/10/2023 at 12:24:29 relevant sections of the Concession Agreement, as set out in the impugned judgment, are reproduced below:
"Section 1.2 Interpretations
(p) unless otherwise provided, any interest to be calculated and payable under this Agreement, shall accrue pro-rata on a monthly basis and from the respective due dates as provided for in this Agreement.
Section 20.21 Interest and Right of Set off and Lien Any sum which is due and payable under any of the provisions of this Agreement by one party to the other shall, if the same not paid within the time allowed for payment thereof, be deemed to be a debt owed by the Party responsible for such payment to the Party entitled to receive the same. Such sum shall until payment thereof carry interest at the rate specified herein, and if not specified at the rate of SBI PLR plus 2% (two percent) per annum, from the due date, and until the date of payment or otherwise realisation thereof by the Party entitled to receive the same, Without prejudice to any other right or remedy available, under this Agreement or under law, the Party entitled to receive such amount shall also have the right of set off. Provided this provision for payment of interest for delayed payment shall not be deemed or construed to (i) authorise any delay in payment of any amount due by a party or (ii) be a waiver of the, underlying breach of the payment obligations.
Provided further, in the event any sums whatsoever are due and owing to DSIIDC shall recover the same by appropriating such dues from the Annuity, Performance Security and/or exercising lien over the revenue of the Concessionaire generated from the Project."
15. Clearly, the learned Arbitral Tribunal has ignored the express provisions of the Concessionaire Agreement, and has rendered a finding contrary to the same. We find no infirmity with the decision of the learned Single Judge in setting aside the Arbitral Award in respect of claim No. 11.
16. However, in respect of claim no. 7, there is a controversy pertaining to the issues raised before the learned Arbitral Tribunal and the averments made in regard to the said claim. The FAO(OS) (COMM) 216/2023 Page 4 of 5 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 17/10/2023 at 12:24:29 relevant pleadings before the learned Arbitral Tribunal are not on record. It would be necessary to examine the same to address the issue raised by the appellant in respect of the Arbitral Award relating to claim no. 7.
17. Let the complete record of pleadings before the learned Arbitral Tribunal be filed before the next date of hearing. The parties are also at liberty to file a short note of their submissions in respect of the controversy relating to claim no. 7, as noted above.
18. List on 31.10.2023 CM APPL. 53038/2023
19. It is relevant to note that notwithstanding that the learned Single Judge has found fault with the award rendered in respect of claim no. 7 and claim no. 11 as stated above, the respondent has been relegated to agitate the said claims once again as the Arbitral Award cannot be modified. This Court is informed that the respondent has initiated proceedings for commencing a fresh arbitration, inter alia, in respect of claim no. 7 and claim no. 11. In this regard, it is clarified that any proceedings instituted by the respondent in respect of claim no. 7 shall be subject to the final outcome of this appeal. The application (CM APPL. 53038/2023) is disposed of in the aforesaid terms.
VIBHU BAKHRU, J AMIT MAHAJAN, J OCTOBER 11, 2023 "SK"
FAO(OS) (COMM) 216/2023 Page 5 of 5This 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 17/10/2023 at 12:24:29