Delhi High Court
B.S.M. Contractors Pvt. Ltd. vs Rajasthan State Bridge & Construction ... on 1 January, 1999
Equivalent citations: 1999IAD(DELHI)519, AIR1999DELHI117, 1999(49)DRJ108
Author: M.S.A. Siddiqui
Bench: M.S.A. Siddiqui
ORDER M.S.A. Siddiqui, J.
1. By this order, I propose to dispose of the OMP No. 196/98 and the IAs No. 7479/98, 8503/98, 10451/98 and 11511/98.
2. IA No. 7479/98 is an application under Order 39 Rule 1 and 2 CPC filed by the petitioner seeking an ad interim injunction. IAs No. 8503/98 and 10451/98 are applications filed by the respondents seeking vacation of the exparte injunction order dated 2998. IA No. 1511/98 is an application u/o 7 R 11 CPC filed by the respondent No. 2 for rejection of the OMP No. 196/98.
3. To appreciate the merits of the controversy, it will be necessary to give brief narration of the material facts. The respondent No. 3 entered into an agreement with the respondent No.1 for construction of D.I.T. Complex at Dwarka (Phase I and II). The estimated cost of the contract was Rs. 5,45,72,958/. The respondent No.1 invited labour rate tenders for construction of Boys Hostel at D.I.T. Complex, Sector 3, Dwarka, New Delhi. Consequent upon acceptance of tender submitted by the petitioner, the respondent No. 1 and the petitioner entered into two separate agreements dated 20101997 (agreement No. 1/97 and agreement No. 2/97 Annexure A3) by virtue of which the petitioner was to execute the work of construction of DIT complex (R.C.C. frame and brick work, flooring, furnishing and electrical installation work etc.) for a total estimated cost of Rs. 225 lacs. The stipulated dates of commencement of the work and the completion thereof were 20101997 and 19101998 respectively. According to the petitioner, the petitioner completed the work stipulated in the agreement No. 1/97 within six months. But, in certain items the quantities exceeded beyond the deviation limits provided in the agreement and the petitioner requested the respondent No. 1 to take decision with regard to the rates to be applied for the deviated quantities. The petitioner also represented to the respondent No. 1 to award balance work of the entire contract to it as the finishing items of the agreement No. 2/97 could be executed only on completion of the entire structural work of the DIT complex. However, the said representation did not evoke any positive response from the respondent No. 1. Since the respondent No. 2 wanted to take the unexecuted part the work out of the hand of the petitioner and give to another contractor, he started harassing the petitioner. Thus, the disputes have arisen between the petitioner and the respondent no. 1 in relation to the said contract which are to be resolved by arbitration in accordance with the arbitration agreement. On these allegations, the petitioner filed the present petition u/s 9 of the Arbitration and Conciliation Act, 1996 (for short "the Act") for an interim relief by way an injunction restraining the respondents from getting the construction work executed from any other agency or contractor and from utilising the petitioner's material, T & P, Centring and Shuttering etc. lying at the site.
4. The petition has been opposed by the respondents on the ground that the petitioner has deliberately suppressed the material facts. According to the respondents No.1 and 2, the petitioner did not complete the contract within the stipulated time. Despite service of notice, the petitioner did not execute the remaining work in accordance with the contract as a result whereof the contract was rescinded by the respondent No.1. The unexecuted part of the work is to be completed departmentally. The respondent No.1 is entitled to recover a sum of Rs.54,94,684/ from the petitioner on account of excess payment made to it. It is further alleged that the material lying at the site belonged to the respondent No.1. On these allegations, it is contended that the petitioner has failed to make out a case for grant of temporary injunction. The respondent No.3 pleaded that since the respondent was not a party to the arbitration agreement, the present petition is not maintainable against it.
5. At the outset, I must make it clear that admittedly the respondent No.3 is not a party to the arbitration agreement and so the petition is liable to be rejected against the respondent No.3 on this count alone.
6. The question is : whether the petitioner has made out a prima facie case for grant of injunction under Section 9 of the Act. It is beyond the pale of controversy that the respondent No.3 awarded a contract to the respondent No.1 for construction of D.I.T. Complex, Sector 3, Dwarka New Delhi for a total cost of Rs.5.45, 72.958. Part of the contract work was awarded to the petitioner vide two separate agreements dated 20.10.97 (Annexure A/3). The stipulated dates of commencement of the work and the completion thereof were 20.10.97 and 19.10.98 respectively. The petitioner did not complete the finishing work stipulated in the agreement No.2/97 as a result whereof the hostel could not be occupied by the students of the D.I.T. According to the petitioner, the said work could be executed only on completion of the entire structural work of the complex. It is also undisputed that a dispute has arisen between the petitioner and the respondent No.1 in relation to the contract, which is to be resolved by an arbitrator in accordance with the arbitration agreement. The petitioner and the respondent No.1 has made claim and counter claim against each other.
7. It is significant to mention that on 13.8.1998, the petitioner addressed a letter (at page 87 of the Part II of the paper book) to the respondent No.3 explaining the cause of delay in executing the work stipulated in the agreement No.2/97. The relevant paragraphs of the letter are as under:
"(1) The work was awarded to us on labour rates and we had executed the work of about Rs.14 lacs when the RSBCC Ltd. awarded the work to us on with material basis. The total work to be executed was to be to the tune of Rs.550 lacs. However, it was decided that the work could be divided into two agreements amounting to Rs.225 lacs each because of departmental constraint of CMD. Each agreement which further subdivided into two parts one relating to RCC frame work, brick work and the other relat ing to finishing flooring and electrical installations etc. The date of start as per agreement was 20.10.97 and the stipulated date of completion was 19.10.98.
(2) That on the work being subdivided into two parts the items with respect to structural work were completed by us way back in March'98 i.e. within a period of 5 months and also executed many items the quantities of which exceeded beyond the deviation limit provided in the agreement. We were unable to start the finishing items under agreement No.2/97 due to the fact that the structural work was incomplete and in many cases quantities were exceeding. No decision till today has been taken with regard to the comple tion of the structural work, as a result of which the work of staff housing type I, II & III is at a standstill from the month of May, 1998. Till the time we are awarded the balance structural work, we cannot execute the finishing items under Agreement No.2/97.
For the best interest of the project we request you to intervene and award us the balance work."
8. On a combined reading of the averments made in the petition and the aforesaid paragraphs of the letter, it appears that the petitioner wants to plead that the contract in question was awarded to it with a clear understanding that the contract for remaining part of the work would also be awarded to it. It is for this reason only, the petitioner has been insisting that the finishing work stipulated in the agreement No.2/97 could be executed only on completion of the entire structural work of the complex. There is no document on record to support the said assumption of the petitioner. If the injunction sought by the petitioner is granted it would have the effect of practically granting the relief for specific performance of the contract, which relief cannot be granted under Section 9 of the Act. In Donalds Keating's Law and Practice of Building Contract's (2nd Edition), the remedy open to a contract on a wrongful termination of the contract is stated in following terms: "In the ordinary case, the contractor cannot obtain an injunction restraining forfeiture by the employer because this would be equivalent to specific performance of the contract and the Court does not normally grant this remedy in the case of a building contract. The contractor can be adequately compensated in dam ages, for wrongful forfeiture."
9. On a consideration of the facts and circumstances of the case, I am of the opinion that a building contract of the instant nature cannot be specifically enforced by granting interim relief under Section 9 of the Act. If there is a breach of such a contract, the appropriate remedy is to compensate the party damnified in damages. That apart, the granting of an injunction in favour of the petitioner will further delay the construction work considered very urgent by the respondent No.3. Thus, the balance of convenience also swings against the grant of injunction sought by the petitioner.
10. The petitioner has also sought an injunction restraining the respondents No.1 and 2 from using the material lying at the site. It is alleged by the respondent No.1 that the aforesaid material belonged to it. There is sufficient documentary evidence on record to support the said contention of the respondent No. 1. Moreover, this dispute also can be resolved by the arbitrator in terms of the arbitration agreement. I, therefore, hold that the petitioner has failed to make out a primafaccie case for grant of the injunction sought by it.
11. Before I part with the order, I would like to make it clear that nothing stated herein shall be taken into consideration, when the disputes between the parties on merits are decided in any future proceedings that any party may be advised to initiate.
12. In the result, the petition under Section 9 of the Act fails and is dismissed. Interim order is vacated. No order as to costs.