Delhi District Court
M/S Ntpc Bhel Power Projects Limited vs M/S Century Crane Engineering Pvt Ltd on 14 October, 2024
IN THE COURT OF DR. NEERA BHARIHOKE
DISTRICT JUDGE (COMMERCIAL COURT)-06
SOUTH EAST, SAKET COURTS,
NEW DELHI
CNR No. DLSE01-004838-2019
OMP (Comm) 70/2019
M/s NTPC Bhel Power Projects Limited
Having its Registered Office at :
NTPC Bhawan, Scope Complex,
Lodhi Road,
New Delhi - 110003
Its Branch Office at :
Mannavaram Village,
Shri Kalahastimandal,
District Chittor,
Andhra Pradesh - 517620
..... Petitioner
VERSUS
M/s Century Crane Engineering Pvt. Ltd.
Having its registered office at:
Plot No.122-129, Sector-59,
Part-II, Jajru More Ballabgarh,
District Faridabad,
Haryana - 121004
... Respondent
Date of institution of the case : 08.07.2019
Date on which judgment was reserved : 13.09.2024
Date of pronouncement of Judgment : 14.10.2024
NEERA
BHARIHOKE
Digitally signed
by NEERA
BHARIHOKE
Date: 2024.10.14
14:34:05 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 1 of 41
JUDGMENT
1. By way of this judgment, I shall decide the Petition filed by the Petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the award dated 06.03.2019 passed by the learned Sole Arbitrator Shri Satish Ahlawat, ADJ (Retired).
Brief facts of the case as stated by the Petitioner in the petition are that :
i. The present petition has been filed through Ms. Surbhi Gupta, who has been authorized by the Authority Letter dated 25.06.2019 to institute the present petition and to do all the acts more particularly mentioned in the said Authority Letter.
ii. The present petition has been filed by the Petitioner against the Award dated 06.03.2019 passed by Mr. Satish Ahlawat (Retired) in the case of M/s Century Crane Engineers Pvt. Ltd. Vs. M/s NBPPL".
iii. It was the case of Respondent before the learned Sole Arbitrator that it received a purchase order dated 26.09.2012 from the Petitioner for supply and erection and NEERA commissioning of electrical hoists, manual hoists at M/s BHARIHOKE Digitally signed by NEEPCO, Monarchak Project, Tripura.NEERA BHARIHOKE Date: 2024.10.14 14:34:09 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 2 of 41
iv. As per the terms of the said purchase order, the delivery schedule of the above-mentioned goods was four months from the date of purchase order i.e. 26.01.2013 and the delivery schedule for erection and commissioning was 7 months from the date of the purchase order i.e. 26.04.2013.
v. It was further the case of the Respondent/Claimant that the drawings were submitted by the Respondent on 09.10.2012 and further on 17.10.2012. It was the allegation of the Respondent that the Petitioner delayed in giving approval for the drawings submitted and the approval was given on 19.03.2013 by the Petitioner.
vi. It was further the allegation of the Respondent that the inspection of electrical hoist was conducted by the Petitioner on 24.08.2013 and inspection for manual hoists was conducted on 04.09.2013. Thereafter, material was received by the Petitioner on 08.10.2013 and the Petitioner issued a receipt notice against the said supply. After completion of the supply of materials by the Respondent, Respondent submitted all invoices vide letter dated 03.10.2013 alongwith all test certificates and necessary documents as per the terms Digitally NEERA signed by NEERA BHARIHOKE BHARIHOKE Date:
of the purchase order to the Petitioner. 2024.10.14 14:34:14 +0530 vii. It was further the allegation of the Respondent that the CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 3 of 41 services were duly provided by the Respondent and invoices were also raised month-wise in respect of the services as per the terms mentioned in the alleged service orders and the alleged agreement. It was further alleged by the Respondent that the Petitioners stopped making any payment after the month of June, 2012 towards the services rendered by the Respondent. As per the allegation of the Respondent, there was an outstanding amount of Rs.10,25,846/- in the account of the Petitioner.
viii. When the Petitioner failed to pay the entire outstanding amount, the Respondent approached the Haryana Micro and Small Enterprises Facilitation Council, Chandigarh on 08.08.2018. Petitioner appeared before the MSME Council for conciliation of disputes. However, the proceedings before the MSME Council was not successful. Therefore, the MSME Council in its meeting held on 02.11.2018 decided to refer the dispute to the Arbitrator empaneled by the Order No.2/5/13-IIB-II-2006. Accordingly, Shri Satish Ahlawat, ADJ (Retired) was appointed as the Sole Arbitrator vide letter dated 06.11.2018 issued by the MSME, Haryana.
ix. Petitioner filed its Written Statement before the learned Sole Arbitrator. Thereafter, the learned Sole Arbitrator vide order NEERA BHARIHOKE dated 29.12.2018 framed the issues with respect to the Digitally signed disputes between the parties. The Petitioner had annexed the by NEERA BHARIHOKE Date: 2024.10.14 14:34:18 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 4 of 41 copy of Special Conditions of the Contract (SCC) and General Conditions of Contract (GCC) alongwith the Written Statement which were a part of the purchase order. The Respondent did not file the said documents alongwith the claim petition before the learned Sole Arbitrator.
x. It was the case of the Petitioner that payments withheld were in accordance with the terms and conditions of the purchase order, GCC and SCC. The amount claimed by the Respondent was incorrect and a detailed chart was given before the learned Sole Arbitrator which is reproduced herein:-
Gros Billing Withheld Withheld Withheld Payment Value amount for amount for amount for Released contractual liquidated Security retention damages Deposit A B C D E = A-B-C-D Supply Bill Rs.22,47,953/- Rs.1,85,915/- Rs.1,85,915/- Rs.1,85,915/- Rs.16,90,208/-
E & C Bill Rs.4,68050/- Bill not Nil
processed due
to wrong bill
submitted
xi. In view of the above- mentioned chart, Petitioner had made a
payment of Rs.16,90,208/- to the Respondent out of claimed NEERA amount of Rs.22,47,953/- for the supply bill. Petitioner did BHARIHOKE not release the amount of Rs.4,68,050/- of E & C Bill since Digitally signed by NEERA BHARIHOKE in terms of the PO, Erection, Testing and Commissioning of Date: 2024.10.14 14:34:22 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 5 of 41 Electrical and Manual Hoists were in the scope of Respondent. However, the Respondent only carried out supervision of the E&C works where erection and commission were carried out by the another contractor M/s Powermech for an amount of Rs.2,92,000/- and the Respondent was duly intimated vide email dated 17.11.2016. The Respondent accepted the cost incurred by the Petitioner for hiring of the said contractor for carrying out erection and commissioning. However, the Respondent claimed full amount of Rs.4,68,050/- vide bill dated 26.08.2016 against supervision of erection of commissioning works. Thereafter, Petitioner requested the Respondent to issue a revised bill for erection and commission works since the Respondent only carried out supervision of erection and commissioning works. Despite requests made by the Petitioner, Respondent never issued any revised bill for erection and commissioning works till date and due to this reason, the Petitioner could not process E & C Bill of the Respondent.
xii. Petitioner further deducted an amount of Rs.1,85,915 on account of the liquidated damages in terms of the Clause No.14.2 of GCC. It was the case of the Respondent that due to the delay in final approval of drawings by the Petitioner, NEERA BHARIHOKE the Respondent could not dispatch the materials within the time schedule agreed between the parties. It was further the Digitally signed by NEERA BHARIHOKE case of the Respondent that Petitioner gave final approval of Date: 2024.10.14 14:34:27 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 6 of 41 drawings on 19.03.2013. The drawings were approved by the Petitioner on 22.01.2013. The flame proof control panel drawing was submitted by the Respondent on 12.03.2013 with a delay of 49 days and approval for the same was given by the Petitioner on 19.03.2013. The Petitioner approved the drawings on 22.01.2013, the Respondent was supposed to deliver the material within a period of 4 months i.e. 22.04.2013. The Respondent supplied the material on 23.09.2013 i.e. after a delay of more than 5 months.
Petitioner deducted the said amount in terms of the purchase order and GCC.
xiii. Petitioner further deducted an amount of Rs.1,85,915/- due to the failure to submit original invoice by the Respondent. As per Clause 20.1 of SCC, it is mandatory to provide original invoice for payment against supply of equipment / material. The Respondent had failed to issue original invoice to the Petitioner.
xiv. Petitioner further deducted an amount of Rs.1,85,915/- in absence of Bank Guarantee to be provided by the Respondent. The Respondent submitted the Security Deposit cum Performance Bank Guarantee (PBG) only after dispatch NEERA BHARIHOKE of materials i.e. after 23.9.2019. However, the Respondent was supposed to submit the PBG within a period of 30 days Digitally signed by NEERA BHARIHOKE after acceptance of the PO i.e. 26.10.2012. The value of the Date: 2024.10.14 14:34:31 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 7 of 41 Bank Guarantee should be 10% of the order/contract value excluding taxes, duties and freight charges. In terms of Clause 7 of GCC, Petitioner can withhold equivalent amount of Bank Guarantee to be recovered from the payments due to Respondent before releasing any payment, in absence of a valid Bank Guarantee. Thereafter, the Respondent submitted the Bank Guarantee in favour of the Petitioner and the same will be released only after the issuance of No Dues Certificate by the Respondent but the Respondent refused to submit No Dues Certificate to the Petitioner. The said deduction was in accordance with the terms and conditions of the purchase order and GCC.
xv. The Petitioner was not liable to clear any alleged dues of the Respondent because the above-mentioned reasons. It was further contended by the Petitioner that the claim petition was hopelessly barred by period of limitation. As per the claim of the Respondent, the date of final dispatch was 23.09.2013. The claim was filed by the Respondent/Claimant in the month of December, 2018. The Claim statement filed by the Respondent before the learned NEERA BHARIHOKE Sole Arbitrator was neither in proper form nor supported by Digitally signed by NEERA BHARIHOKE any affidavit.
Date: 2024.10.14 14:34:35 +0530xvi. Thereafter, the matter was fixed for final arguments.
Arguments were heard by the learned Sole Arbitrator and the CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 8 of 41 impugned Award dated 06.03.2019 was passed.
2. Aggrieved by the impugned Award dated 06.03.2019, Petitioner has filed the present petition on the following grounds:-
A) That the learned Sole Arbitrator has passed the impugned award without due application of mind and against the principles of the law as well as facts.
B) That the learned Sole Arbitrator failed to appreciate that the claim petition was barred by period of limitation. As per claim of the Respondent, the date of final dispatch was 23.09.2023. The claim was filed by the Respondent/Claimant in the month of December, 2018.
C) That the Respondent accepted the cost incurred by the Petitioner for hiring of the said contractor for carrying out erection and commissioning. However, the Respondent claimed full amount of Rs. 4,68,050 vide bill dated 26.08.2016 against supervision of erection and commissioning works. Thereafter, the Petitioner requested the Respondent to issue a revised bill for erection and commission works since the Respondent only carried out NEERA supervision of erection and commissioning works. Despite BHARIHOKE requests made by the Petitioner, the Respondent never issued Digitally signed by NEERA BHARIHOKE any revised bill for erection and commissioning works till Date: 2024.10.14 14:34:40 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 9 of 41 date and due to this reason, the Petitioner could not process the E & C bill of the Respondent.
D) That the learned Sole Arbitrator failed to appreciate that Petitioner further deducted an amount of Rs.1,85,915/- on account of the liquidated damages in terms of the Clause No.14.2 of GCC. It was the case of the Respondent that due to the delay in final approval of drawings by the Petitioner, the Respondent could not dispatch the materials within the time schedule agreed between the parties. It was further the case of the Respondent that the Petitioner gave final approval of drawings on 19.03.2013. The true facts are that the drawings were approved by the Petitioner on 22.01.2013. The flame proof control panel drawing was submitted by the Respondent on 12.03.2013 with a delay of 49 days and approval for the same was given by the Petitioner on 19.03.2013. Assuming although not admitting that the Petitioner finally approved the drawings on 22.01.2013, the Respondent was supposed to deliver the material within a period of 4 months i.e. 22.04.2013. Admittedly, the Respondent supplied the material on 23.09.2013 i.e. after a delay of more than 5 months.
E) That the learned Sole Arbitrator failed to appreciate that the NEERA Petitioner further deducted an amount of Rs.1,85,915/- due BHARIHOKE to the failure to submit original invoice by the Respondent.
Digitally signed by NEERA BHARIHOKE Date: 2024.10.14 14:34:44 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 10 of 41As per Clause 20.1 of SCC, it is mandatory to provide original invoice for payment against supply of equipment/material. The Petitioner will rely on Clause 20.1 of SCC at the time of arguments before this Hon'ble Court.
F) That the learned Sole Arbitrator failed to appreciate that the Petitioner further deducted an amount of Rs. 1,85,915/- in absence of Bank Guarantee. The Respondent submitted the Security Deposit cum Performance Bank Guarantee (PBG) only after the dispatch of materials i.e. after 23.09.2019. However, the Respondent was supposed to submit the PBG within a period of 30 days after acceptance of the P.O i.e. 26.10.2012. The value of the bank guarantee should be 10% of the order/contract value excluding taxes, duties and freight charges. In terms of Clause 7 of GCC, the Petitioner can withhold equivalent amount of Bank Guarantee to be recovered from the payments due to the Respondent before releasing any payment, in absence of a valid Bank Guarantee. Thereafter, the Respondent submitted the Bank Guarantee in favour of the Petitioner which is still in possession of the Petitioner and the same will be released NEERA only after the issuance of No Dues Certificate by the BHARIHOKE Respondent. Despite various requests made by the Digitally signed by NEERA Petitioner, the Respondent refused to submit no dues BHARIHOKE Date: 2024.10.14 certificate to the Petitioner. Hence, the said deduction was in 14:34:48 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 11 of 41 accordance with the terms and conditions of the purchase order and GCC.
G) That the learned Sole Arbitrator failed to appreciate that the Petitioner was not liable to clear any alleged dues of the Respondent. The deductions made by the Petitioner were in accordance with the terms and conditions of the purchase order, GCC and SCC. The Petitioner has not deducted any amount which is not covered under the terms and conditions of the purchase order.
H) That the learned Sole Arbitrator failed to appreciate that the Claim Statement filed by the Respondent before the learned Sole Arbitrator was neither in proper form nor supported by any affidavit.
I) That the impugned award dated 06.03.2019 passed by the learned Sole Arbitrator is liable to be set aside since the learned Sole Arbitrator totally ignored the terms and conditions of the purchase order agreed between the parties. It is a well settled principle of law that an Arbitrator cannot travel beyond the terms of the contract and is bound by the terms of the contract.
NEERA BHARIHOKE J) That the learned Sole Arbitrator awarded pre-suit and pendente lite interest as well as future interest against the Digitally signed by NEERA BHARIHOKE Date: 2024.10.14 14:34:54 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 12 of 41 principal amount whereas the contract clearly stipulated under Clause 8.12 of GCC that the Respondent/seller is not entitled to any interest. The said clause reads as:
"Clause-8.12- No interest shall be payable by the Purchaser on the security amount, bank guarantee amount or balance payment which may be lying with the purchaser or any money which may become due owing to difference or misunderstanding or any dispute between the Purchaser and the contractor, or any delay on the part of Purchaser in making periodical or final payment or any other aspects incidental thereto."
A bare perusal of the above clause would clearly show that the Respondent/Claimant is not entitled to claim any interest on the claims made by the Respondent/Claimant. In this regard, the Hon'ble Supreme Court has laid the law in explicit terms in the Judgement of 'Jay Prakash Associates Limited Vs. Tehri Hydro Development Corporation reported in 2019 SCC Online SC Page 143'wherein it is categorically held that if there is a bar under the contract for grant of interest, an Arbitrator cannot grant any interest to the Respondent/Claimant. In view of Clause 8.12, no interest is liable to be granted in favour of Respondent/Claimant.
NEERA K) That the impugned award dated 06.03.2019 is liable to set BHARIHOKE aside in as much as in Para-7 of the Evidence filed by the Digitally signed by NEERA Respondent before the learned Sole Arbitrator, it is its own BHARIHOKE Date:
2024.10.14 14:34:59 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 13 of 41 case that the work of commissioning was completed on 22.08.2016 by the Respondent/Claimant. As per the Certificate dated 30.08.2016, it was alleged, erection & commissioning of balance three number of manual hoist were also completed. Thus, 30.08.2016 is the last date when the entire works of erection & commissioning was also completed as per the admitted case set up by the Respondent/Claimant. Admittedly, the Respondent was not registered under MSMED Act, 2006 as on 30.08.2016 and hence, could not have sought the benefit of MSMED Act, 2006.
L) That the impugned award dated 06.03.2019 is liable to set aside in as much as it is a well settled principle of law that a party who registers itself under the MSMED Act under the MSMED Act subsequent to entering into a contract and supply of goods and services cannot claim the benefits of the provisions of MSMED Act. Hence, the Facilitation Council did not have the jurisdiction to entertain the request made by the Respondent for conciliation of the disputes to the Sole Arbitrator.
M) That the impugned award dated 06.03.2019 is liable to set aside in as much as even assuming the alleged Certificate NEERA BHARIHOKE dated 16.02.2018 relied upon by the Respondent was a valid Certificate of Registration, even then the same was post the Digitally signed by NEERA BHARIHOKE Date: 2024.10.14 14:35:04 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 14 of 41 contract and the supply and erection and commission having been completed, as already admitted by the Respondent/Claimant. Hence, even as per the said Certificate of NSIC, the Respondent could not have claimed the benefits of MSMED Act. In fact, the Respondent got itself registered under the MSMED Act on 27.08.2018 for the first time as per the Udyog Aadhar Registration Certificate i.e. much after completion of the erection and commissioning and closure of the contract.
3. In view of the above grounds, the Petitioner has prayed for setting aside the impugned award dated 06.03.2019.
4. Notice of the petition was sent to the Respondent. Respondent appeared and filed an application dated 27.02.2020 under Section 34 (3) of the Arbitration and Conciliation Act for dismissal of the Petition of the Petitioner.
5. On 05.09.2022, the said application was disposed off as withdrawn. However, on the same day, learned Counsel for the Respondent placed on record the judgment titled "M/s Tripuati Steels Vs. M/s Shubh Industrial Component & Anr." and submitted that as per Section 19 of MSME Act, 2006, unless and until the NEERA BHARIHOKE Petitioner deposits 75% of the Award amount, its application under Digitally signed Section under Section 34 of Arbitration and Conciliation Act, 1996 by NEERA BHARIHOKE Date: 2024.10.14 challenging the award cannot be entertained and shall be decided 14:35:09 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 15 of 41 on merits. Learned Counsel for the Petitioner submitted that six weeks time may be granted for deposit of 75% of awarded amount.
6. Vide order dated 05.09.2022 passed by learned Predecessor, Petitioner was directed to deposit 75% of the amount in the name of District Judge (Commercial-02) in the form of FDR for a period of one year with automatic renewal thereafter within 6 weeks from 05.09.2022. It was further directed that Petitioner would keep the FDR alive till the disposal of the present petition.
7. The direction for depositing 75% of the awarded amount was not complied and hence, vide order dated 26.11.2022, one last and final opportunity was granted to the Petitioner, subject to cost of Rs.11,000/- and Petitioner was directed that FDR be placed within 7 days from 26.11.2022, failing which opportunity shall be deemed closed.
8. Two applications were filed by the Petitioner, one application was seeking change of the Authorized Representative and learned Counsel for Respondent made no objection to the same which was allowed.
9. Another application was moved for placing on record the NEERA BHARIHOKE Statement of Truth which was allowed subject to cost of Digitally signed by NEERA BHARIHOKE Rs.20,000/- to be paid to the Respondent.
Date: 2024.10.14 14:35:13 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 16 of 4110. In the meantime, Shri Dhiraj Arora, Clerk from the office of MSME, Panchkula placed the arbitral record which was taken on record vide order dated 22.09.2023 passed by learned Predecessor.
11. On 19.01.2024, my learned Predecessor raised the court query about the territorial jurisdiction and vide order dated 03.02.2024, it was observed that prima facie the jurisdictional clause in the agreement would decide territorial jurisdiction of the court where the petition under Section 34 of the Arbitration and Conciliation Act, 1996 has to be filled it is Delhi as per Clause 33.1, 34 and 35 of the General Terms and Conditions of the contract.
12. Arguments on the petition under Section 34 of the Arbitration and Conciliation Act, 1996 were heard on 24.02.2024 and the matter was reserved for order. However, on 21.04.2024, it was observed by my learned predecessor that learned Counsel for the Petitioner had submitted arguments on following three grounds: -
(i) MSMED Act was not applicable as the Respondent was not registered under the MSMED Act when the contract was entered into.
(ii) The contract was a work contract and therefore, MSMED NEERA BHARIHOKE Act was not applicable.Digitally signed by NEERA
(iii) Limitation.BHARIHOKE Date: 2024.10.14 14:35:17 +0530
However, the first 2 grounds have not been mentioned in the grounds of challenge in the petition. Only the ground of limitation CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 17 of 41 and some other grounds have been taken. It was directed that arguments must be addressed according to the grounds of challenge therefore parties need to address the arguments afresh.
13. In the meantime, the Petitioner filed an application for amendment of the petition and the same was allowed with liberty to the Respondent to file Certificate of Registration with MSMED of the period prior to 2018 on or before 09.09.2024. Amended petition was taken on record vide order dated 03.09.2024. On 13.09.2024, the Respondent filed the documents but the same was not in terms of order dated 03.09.2024 whereby the liberty was granted to file Certificate of Registration with MSMED of the period prior to 2018. However, Respondent filed Government Purchase Enlistment Certificate and Store Details Certificate of the years 2021, 2020, 2018 and 2015.
14. The final arguments were heard on 13.09.2024. The written submissions of the Petitioner were already on record and liberty was given to the Respondent to file the written submissions within seven days from 13.09.2024. The matter was reserved for orders.
15. Learned Counsel for Petitioner argued that the entire works of erection & commissioning was completed as per the admitted case NEERA set up by the Respondent/Claimant on 30.08.2016. The Respondent BHARIHOKE was not registered under MSMED Act, 2006 as on 30.08.2016 and Digitally signed by NEERA BHARIHOKE Date: hence, could not have sought the benefit of MSMED Act, 2006. He 2024.10.14 14:35:21 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 18 of 41 also argued that therefore the impugned award dated 6.03.2019 is liable to set aside since it is a well settled principle of law that a party, who registers itself under the MSMED Act subsequent to entering into a contract and supply of goods and services, cannot claim the benefits of the provisions of MSMED Act. Hence, the Facilitation Council did not have the jurisdiction to entertain the request made by the Respondent for conciliation of the disputes to the Learned Sole Arbitrator. Petitioner has relied upon the law laid down in Silpi Industries vs. Kerala State Road Transport Corporation, (2021) SCC OnLine SC 439, Gujarat State Civil Supplies Corporation vs. Mahakali Foods Pvt. Ltd. (2022) SCC OnLine SC 1492 and Rastriya Ispat Nigam Ltd vs. Union of India, WP.No.27670 of 2021, decided on 26.04.2022.
16. The ground of lack of jurisdiction of learned arbitrator strikes at the root of the award and its validity and therefore, needs to be decided prior to embarking upon other grounds raised by the Petitioner. The Petitioner has submitted that the Respondent/Claimant was not registered under the MSMED Act, 2006 and therefore could not have claimed the benefits of MSMED Act.
NEERA
17. It was argued on behalf of Petitioner that Respondent was a BHARIHOKE small-scale industry registered under the Small-Scale Industries Digitally signed by NEERA BHARIHOKE Date: 2024.10.14 Act and therefore, appointment of the learned Arbitrator is itself 14:35:26 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 19 of 41 void since the Respondent at the time of issuance of the purchase order was not registered under the MSMED Act.
18. On the other hand, learned Counsel for Respondent argued that Respondent was duly registered under the MSMED Act and referred to Section 8 of the MSMED Act. He argued that as per Section 8 (5) of the MSMED Act, the Central Government notifies the list of authorities wherein an enterprise has to apply for registering itself under the MSMED Act and that Central Government vide S.O. 1636E dated 29.02.2006 had specified that General Manager, District Industry Centre or any District Level Officer of equivalent rank in the Directorate or the Department dealing with micro, small and medium enterprises of the State Government or the Union Territory Administration had the authority with which the memorandum shall be filed by a person which intends to be registered under the MSMED Act as per Section 8 of the MSMED Act.
19. Learned Counsel for Respondent further argued that in compliance of the set notification, Respondent had submitted the Entrepreneurs Memorandum before the District Industries Centre from time to time and referred to acknowledgment from District Industries Centre dated 02.09.2009 and acknowledgment dated 04.09.2014 received from the Joint Director, District Industries NEERA Centre. He also argued that the Entrepreneurs Memorandum no. BHARIHOKE 060191201282-Part II is evident of the fact that the Respondent Digitally signed by NEERA BHARIHOKE Date: 2024.10.14 14:35:30 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 20 of 41 was an MSME unit since 2009 i.e. prior to purchase order dated 26.09.2012. Learned Counsel for Respondent argued that Petitioner is misleading by relying upon GSR 750 E dated 29.07.2016 which was subsequent to the aforesaid Notification dated 29.09.2006. The Respondent relied upon Udyam Registration Certificate for the year 2012 to 2017 in terms of MSMED (Furnishing of Information) Rules, Respondent filed in pursuance of order dated 03.09.2024.
20. Learned Counsel for Respondent further argued that SO 2052 dated 30.06.2017 superseded all the earlier notifications with regard to registration of the MSME under Section 8 of MSMD Act 2006 and submitted that there have been subsequent notifications in the MSMD Act from 2006 till 2022 with regard to registration of a unit under the MSMD Act. He argued that allegation of the Petitioner is wrong that Respondent did not produce the Udyam Registration Certificate for the year 2012 to 2017 because a unit registered under the Small-Scale Industries Act has to be now registered as per the new provisions notified with effect from 01.08.2017. He also argued that the judgments relied upon by the Petitioner with respect to MSME unit registration and its retrospective effect have no relevance as the Respondent was duly registered under the MSME at the time of issuance of the purchase order. He argued that legislature has notified Udyam Registration NEERA BHARIHOKE Certificate with effect from 2017 and hence, there is no question that any unit in PAN India had the Udyam Certificate prior to Digitally signed by NEERA BHARIHOKE Date: 2017.
2024.10.14 14:35:35 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 21 of 4121. It is an admitted case of the parties that the 'Works Contract' was entered into between the Petitioner and the Respondent/Claimant when the Purchase Order dated 26.09.2012 was placed by the Petitioner on the Respondent/Claimant i.e. on 26.09.2012 and on 03.10.2013, all the invoices with respect to the supply of goods, under the 'Works Contract' were raised by the Respondent on the Petitioner and all the supplies were completed by the same date.
22. In Para-7 of the affidavit of Evidence filed by the Respondent before the learned Sole Arbitrator, Respondent had deposed that the Petitioner provided the site readiness on 16.05.2016, 01.06.2016 and 10.07.2016 for erection and commissioning and that the work of commissioning was completed on 22.8.2016 by the Respondent/Claimant. As per the Certificate dated 30.08.2016, it was submitted that erection & commissioning of balance three number of manual hoists were also completed. Thus, 30.08.2016 is the last date when the entire works of erection & commissioning was also completed as per the admitted case set up by the Respondent/Claimant.
NEERA 23. Before learned Arbitrator, despite a specific objection of the BHARIHOKE Petitioner (Respondent in arbitral proceedings) in para 5 of Digitally signed by NEERA BHARIHOKE preliminary objections of the Statement of Defence/Written Date: 2024.10.14 14:35:39 +0530 Statement filed before learned Arbitrator that the Claimant is not CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 22 of 41 registered under the MSMD Act 2006, Respondent/Claimant chose to file Central Government Purchase & Enlistment Certificate dated 16.02.2018 and not of any period prior to that and it was the case of the Respondent/Claimant that NSIC had issued the said Certificate on which the Respondent relied to show that the Respondent/Claimant was registered under the provisions of MSMED Act. The Respondent suppressed material facts from the learned Sole Arbitrator since the Respondent/Claimant submitted before learned Sole Arbitrator the memorandum with Central Government.
24. As observed above, a specific objection was raised in the Written Statement by the Petitioner before the learned Sole Arbitrator i.e. the Claimant is not registered under the MSMD Act 2006. A specific issue i.e. issue No. 4 on maintainability of the Statement of Claim was framed. The learned Sole Arbitrator, in the impugned Award, dealt with the issue No. 4 and based upon the Certificate dated 16.02.2018, issued by NSIC, held that the Respondent/Claimant was a Small-Scale Undertaking within the meaning of MSMED Act.
25. Vide order dated 03.09.2024 of this Court, the Respondent was allowed to file Certificate of Registration with MSMED of the NEERA BHARIHOKE period prior to 2018 but in place of that, Respondent filed Government Purchase Enlistment Certificate and Store Details Digitally signed by NEERA BHARIHOKE Certificate of the years 2021, 2020, 2018 and 2015 which are not Date: 2024.10.14 14:35:43 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 23 of 41 certificates of registration with MSMED of the period prior to 2018. All of these are issued by National Small Industries Corporation Limited. The Respondent has relied on the noting/clause in the Government Purchase Enlistment Certificate which reads as:
"Your name has been registered as a MSE unit eligible for participation in the Central Government's Store Purchase Program as per the single point registration scheme for the following item(s)/ Store(s)/Service(s)."
26. A perusal of 'Notes' on back page of Government Purchase Enlistment Certificate clearly indicates that the registration with NSIC was only for limited purpose of participation in Government purchases. The units enlisted under the Single Point Registration Scheme of NSIC are eligible to get the benefits as detailed in the 'Notes' under Public Procurement Policy of Micro & Small Enterprises Order, 2012 as notified by the Government of India. The Certificate issued by NSIC does not tantamount to registration of the Respondent/Claimant under the provisions of MSMED Act. Government Purchase Enlistment Certificate and Store Details Certificate of the years 2021, 2020, 2018 and 2015 which are not certificates of registration with MSMED of the period prior to 2018 filed on 13.09.2024 are not in terms with order of this court dated 03.09.2024 and cannot be taken into consideration.
NEERA BHARIHOKE 27. As per para 2 of the evidence by way of affidavit filed by the Respondent, the Respondent claimed to be a Small-Scale Industry Digitally signed by NEERA BHARIHOKE Date: 2024.10.14 14:35:48 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 24 of 41 (SSI) registered with National Small Industry Corporation Limited bearing Registration No. NSIC/BOD/GP/20(3)/04/1299-II dated 16.02.2018 and also relied upon Udyog Aadhar Memorandum No. HR03B0011108. The said documents were exhibited as Ex. CW-2 (Collectively). A bare perusal of the said Ex. CW-2 (Collectively) shows that the Respondent has relied upon NSIC Certificate and Udyog Aadhar Memorandum No. HR03B0011108. The submission of Petitioner is correct that Certificate issued by NSIC would not tantamount to registration of the Respondent/Claimant under the provisions of MSMED Act. Admittedly, the Respondent submitted the Memorandum in 2018 and Registration Certificate was issued on 27.08.2018.
28. As per Section 101 of Indian Evidence Act, 1872 burden of proving a fact always lies upon a person who asserts it as has been held in Anil Rishi vs. Gurbux Singh, (2006) 5 SCC 558, Rangamal vs. Kuppuswami, (2011) 12 SCC 120 and Subhadra Mukherjee vs. Bharat Coking Coal Ltd. (2000) 3 SCC 312 . The onus to prove that the Respondent was registered under MSMED Act, 2006 was on the Respondent. In the facts of the present case, it was the positive assertion of the Respondent that the Respondent is registered under the provisions of MSMED Act, 2006. However, the Respondent neither produced any document on record before the learned Sole Arbitrator nor proved that the Respondent was registered under the NEERA BHARIHOKE provisions of MSMED Act, 2006 at the date of contract or during Digitally signed by NEERA the supply. The Respondent also referred to mail dated 20.11.2013 BHARIHOKE Date: 2024.10.14 14:35:53 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 25 of 41 sent by claimant to the Petitioner herein and refers to same as acknowledgment on part of Petitioner. The mail contains a statement as "We are a SSI vendor, under MSMED Registration no. 00017(MSMED Certificate Enclosed). The attachment has been perused and it is noticed that the said document is not a registration under the provisions of MSMED Act, 2006. Even the Respondent never pleaded before the learned Sole Arbitrator that the said acknowledgment is a registration certificate.
29. The Respondent/Claimant before the learned Sole Arbitrator neither filed any document nor pleaded that the Respondent was registered under the MSMED Act, 2006 either at the date of contract or during the supply of materials to the Petitioner. The onus to proof that the Respondent was registered under MSMED Act, 2006 at the time of contract and during the supply was on the Respondent and the Respondent failed to prove the same before the learned Sole Arbitrator.
30. The correct factual position is that Respondent/Claimant was finally registered under the MSMED Act, 2006 vide registration Certificate dated 27.08.2018, i.e. much after the contract as well as complete supply, erection and commissioning had already been completed under the contract. The Certificate of Registration dated 27.08.2018 had been produced by learned Counsel for Petitioner. NEERA BHARIHOKE The Respondent/Claimant, for the first time registered itself under Digitally signed by NEERA the MSMED Act on 27.08.2018, i.e. much after the contract as BHARIHOKE Date: 2024.10.14 14:35:57 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 26 of 41 well as complete supply, erection and commissioning had already been completed under the contract.
31. While deciding issue no. 4 i.e. whether the claim petition is not maintainable, learned Sole Arbitrator held that:
"It is not required that at the time of supply of material or rendering services, the enterprise has to be registered with the council". The said finding of the learned Sole Arbitrator clearly establishes that the learned Sole Arbitrator was conscious and in knowledge of the fact that the Respondent/claimant was not registered with MSME at the time of referring the dispute to MSMEF Council.
32. The finding by the learned Sole Arbitrator that it is not required that at the time of supply of material or rendering services, the enterprise has to be registered with the Council is totally against the well settled principle of law held by the Hon'ble Supreme Court and various Hon'ble High Courts.
33. The Hon'ble Supreme Court in the case of Silpi Industries vs. Kerala State Road Transport Corporation(Supra) has categorically held that by taking recourse to filing a memorandum under sub- section 1 of Section 8 of the Act subsequent to entering into a NEERA contract of supply of goods or services, one cannot assume the BHARIHOKE legal status of being classified under the MSMED Act, 2006 as an Enterprise, to claim the benefit retrospectively. It was observed as:
Digitally signed by NEERA BHARIHOKE Date: 2024.10.14 14:36:02 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 27 of 41"Though the appellant claims the benefit of provisions under MSMED Act, on the ground that the appellant was also supplying as on the date of making the claim, as provided under Section 8 of the MSMED Act, but same is not based on any acceptable material. The appellant, in support of its case placed reliance on a judgment of the Delhi High Court in the case of GE T&D India Ltd. v. Reliable Engineering Projects and Marketing, but the said case is clearly distinguishable on facts as much as in the said case, the supplies continued even after registration of entity under Section 8 of the Act. In the present case, undisputed position is that the supplies were concluded prior to registration of supplier. The said judgment of Delhi High Court relied on by the appellant also would not render any assistance in support of the case of the appellant. In our view, to seek the benefit of provisions under MSMED Act, the seller should have registered under the provisions of the Act, as on the date of entering into the contract. In any event, for the supplies pursuant to the contract made before the registration of the unit under provisions of the MSMED Act, no benefit can be sought by such entity, as contemplated under MSMED Act. While interpreting the provisions of Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, this Court, in the judgment in the case of Shanti Conductors Pvt. Ltd. v. Assam State Electricity Board has held that date of supply of goods/services can be taken as the relevant date, as opposed to date on which contract for supply was entered, for applicability of the aforesaid Act. Even applying the said ratio also, the appellant is not entitled to seek the benefit of NEERA BHARIHOKE the Act. There is no acceptable material to show that, supply of goods has taken place or any services were rendered, Digitally signed by NEERA BHARIHOKE subsequent to registration of appellant as the unit under Date: 2024.10.14 14:36:06 +0530 MSMED Act, 2006. By taking recourse to filing CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 28 of 41 memorandum under sub-section (1) of Section 8 of the Act, subsequent to entering into contract and supply of goods and services, one cannot assume the legal status of being classified under MSMED Act, 2006, as an enterprise, to claim the benefit retrospectively from the date on which appellant entered into contract with the Respondent. The appellant cannot become micro or small enterprise or supplier, to claim the benefits within the meaning of MSMED Act 2006, by submitting a memorandum to obtain registration subsequent to entering into the contract and supply of goods and services. If any registration is obtained, same will be prospective and applies for supply of goods and services subsequent to registration but cannot operate retrospectively. Any other interpretation of the provision would lead to absurdity and confer unwarranted benefit in favour of a party not intended by legislation."
34. Following the said judgment of Silpi Industries vs. Kerala State Road Transport Corporation(Supra), the Hon'ble Supreme Court in the case of Gujarat State Civil Supplies Corporation vs. Mahakali Foods Pvt. Ltd. (Supra) in para 33 held that the party who was not supplier as per sub-section-2 (n) of MSMED Act on the date of entering into the contract could not seek any benefit as a supplier under MSMED Act. The party cannot become a Micro & Small Enterprise or a supplier to claim the benefit under MSMED Act by submitting a memorandum to obtain registration subsequent to entering into a contract and supply of goods or services.
NEERA BHARIHOKE 35. The Hon'ble Andhra Pradesh High Court in the case of Rahstriya Ispat Nigam Ltd vs. Union of India(Supra) followed the Digitally signed by NEERA BHARIHOKE Date: 2024.10.14 14:36:10 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 29 of 41 above mentioned judgments and held that a party who registers itself under the MSMED Act subsequent to entering into a contract and supply of goods or services cannot claim the benefits of the provisions of MSMED Act.
36. Similarly Hon'ble Bombay High Court in case of Bajaj Auto vs. State of Maharashtra, (2022) SCC OnLine Bom 4050 followed the judgment of Silpi Industries vs. Kerala State Road Transport Corporation(Supra) held that an enterprise which registered itself after entering into a contract and supply of goods & services cannot claim the benefits of the provisions of MSMED Act.
37. In view of the law laid down in these judgments, the MSMEF Council did not have the jurisdiction to entertain the request made by the Respondent/Claimant for Conciliation or to refer the disputes to the learned Sole Arbitrator since the Respondent is not covered under the provisions of MSMED Act. The appointment of the learned Sole Arbitrator, in the facts of the present case by Conciliation Council is thus bad in law. Hence, the entire arbitration proceedings are vitiated and the impugned award culminating out of the Arbitration proceedings is therefore void ab initio and liable to be set aside.
38. Arbitration Clauses are incorporated in Clauses 33, 34 and 35 NEERA BHARIHOKE of the General Conditions of Contract, and as per Clause 33.1 of Digitally signed GCC, the disputes between the parties were to be referred to a Sole by NEERA BHARIHOKE Date:
2024.10.14 14:36:14 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 30 of 41 Arbitrator to be appointed by the Competent Authority of the Petitioner and the venue of Arbitration was to be at New Delhi. In the facts of the present case, since the sole discretion was vested with the Competent Authority of the Petitioner to appoint a sole arbitrator for reference of disputes, in view of the judgment of Perkins Eastman Architects DPC and Ors. Vs. HSCC (India) Ltd.,2019(6)ARBLR132(SC) passed by Hon'ble Supreme Court holding that one party is not entitled to appoint an arbitrator without the consent of the other party and when there is a dispute, the only remedy available with either of the parties is to approach the concerned High Court by filing a Petition under Section 11 of the Arbitration & Conciliation Act for appointment of an independent Arbitrator, the only remedy available with the Respondent was to approach the Hon'ble High Court of Delhi for appointment of an independent sole Arbitrator.
39. Petitioner has submitted that the Purchase Order dated 26.09.2012 placed by the Petitioner on the Respondent/Claimant was a 'Works Contract' and that it was a composite Purchase Order which was placed by the Petitioner on the Respondent/Claimant for supply and erection & commissioning of electric and manual hoists. Petitioner has raised another objection about jurisdiction of Learned Arbitrator by submitting that the Respondent was required to supervise the erection and commissioning during the installation NEERA BHARIHOKE of hoists and as per the own document filed by the Respondent Digitally signed before the learned Sole Arbitrator, the Respondent admits that the by NEERA BHARIHOKE Date: 2024.10.14 14:36:19 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 31 of 41 contract included supply as well as erection and commission. Attention was drawn by learned Counsel for Petitioner to the relevant extract of the statement of claim filed by the Respondent/Claimant before the learned Sole Arbitrator which is reproduced herein below:
"5. As per SCC Clause No.4.0,"Zero Date : 23.07.2010 and as per SCC Clause No. 5.0,"35 Months from the Zero Date"
(turnkey project- Supply + erection and commission)"
40. Attention was also drawn to para 9 of the evidence by way of affidavit of the Respondent. The relevant extract of the said evidence by way of affidavit is reproduced hereinbelow:
"9. That the Claimant Company ............... not being released. Even after the Claimant Company performed all the work under the contract as supplies in 2013 and completion of erection and commissioning in the year 2016 (since sites were made available by Respondent in 2016)."
41. It has been argued on behalf of the Petitioner that therefore Respondent admits that the contract included both supply and erection and commissioning in the evidence by way of affidavit filed by the Respondent before the learned Sole Arbitrator.
42. Learned counsel for Petitioner argued that it has been held by NEERA BHARIHOKE Hon'ble Supreme Court as well as various Hon'ble High Courts Digitally signed that if supply and rendering of services are involved in a contract, by NEERA BHARIHOKE Date:
2024.10.14 14:36:23 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 32 of 41 the same would constitute a 'Works Contract'. He also referred to the definition of turnkey contract as per Black's Law Dictionary and submitted that it involves both rendering of supply and services.
43. It was argued on behalf of Petitioner that the purchase order dated 26.09.2012 being a 'works contract', the Respondent being awarded a 'work contract' cannot claim the benefits under MSMED Act. Reliance has been placed on the observations of Hon'ble High Court of Delhi in Shree Gee Enterprises Versus Union of India, (2015) SCC OnLine Delhi 13169.
44. On the other hand, learned Counsel for Respondent argued that in in Shree Gee Enterprises Versus Union of India, (2015) SCC OnLine Delhi 13169, the work which was awarded was indivisible in nature. However, the purchase order clearly shows that Scope of work had been clearly mentioned whereby the Respondent was to supervise the erection and Commission during the installation of hoists. Attention was drawn to the subheading of the purchase order i.e. Order value and wherein the amounts of the supervision was also mentioned as Rs. 4,07,000/-. He also stated that payment terms had also been mentioned as per clause 8.2 and 8.3 of the General Conditions of the Contract.
NEERA BHARIHOKE
45. Attention was drawn by learned Counsel for Respondent to Digitally signed by NEERA BHARIHOKE Date: 2024.10.14 clause 4.5 of the General Conditions of the Contract and the 14:36:27 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 33 of 41 heading of the same is "Supervision offer for erection and commissioning/ offer for E&C shall cover the following scope of work." He argued that the Respondent being a supplier of the electric hoists, the Petitioner had only provided supervision for installation of the hoists and the Respondent would never undertake to provide erecting and commissioning work. He also argued that as per 8.2 of the General Conditions of the Contract, 5% payment was to be made by the Petitioner only when the Respondent gets NOC from the site whether the hoist is working correctly or not. He also argued that Clause 8.2 specifically mentions the fact as to how the payment was to be made for a turnkey project and thus admit the fact that it is a 'turnkey project' and not a work contract.
46. Learned Counsel for Respondent also argued that e-mail dated 04.06.2014 and 15.01.2015 evident the fact that the payments had been made by the Petitioner as per the turnkey project. He argued that the purchase order in question was about a 'works contract' and relied on e-mail dated 17.11.2016 written by Petitioner to the Respondent stating that the erection work was completed by another vendor i.e. Powermech and the amount paid to Powermech NEERA BHARIHOKE was debited from the account of the Respondent. He thus argued Digitally signed by that it is admitted case of the Petitioner that it was a 'turnkey NEERA BHARIHOKE Date:
2024.10.14 14:36:31 project'.
+0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 34 of 41
47. It is noticed that the Petitioner had placed purchase order dated 26.09.2012 with Respondent and Scope of Supply provides "Lumpsum price for design, engineering, manufacturing, inspection and supply at site, assembly, erection and commissioning and performance testing of electric hoist and manual hoist as per specifications mentioned in the said purchase order."
48. As per the purchase order, the total value of the purchase order inclusive of all taxes was Rs. 27,05,258/-. The purchase order mentions that it was a 'Works Contract'. The definition of turnkey contract as per Black's Law Dictionary is mentioned hereinbelow:
"Engineering, procurement, and construction contract. A fixed price, schedule intensive construction contract- typical in the construction of single purpose projects, such as energy plants- in which the contractor agrees to a wide variety of responsibilities, including the duties to provide for the design, engineering, procurement, and construction of the facility; to prepare start-up procedures; to conduct performance tests; to create operating manuals; and to train people to operate the facility- Abbr. EPC Contract- Also termed turnkey contract.
49. Learned Counsel for Petitioner argued that the Respondent NEERA BHARIHOKE cannot take a contradictory stand before this Court thereby denying Digitally signed the fact that the contract did not involve erection and by NEERA BHARIHOKE Date: 2024.10.14 14:36:38 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 35 of 41 commissioning, and the Respondent was only responsible for the supervision of erection and commissioning.
50. In the matter of Shree Gee Enterprises Versus Union of India, (Supra), the petition had been filed for challenging the preference given by Respondent no.2 to Respondent no.3 as per the Public Procurement Policy for MSEs 2012. The grievance of the Petitioner was two-fold, first of all, the subject contract was a 'works contract' and the policy was not applicable to works contract. The policy was only meant for goods produced and services rendered by MSEs. Secondly it was contended that only 20% of the contract could be given to an MSE and since the contract was indivisible, entire contract could not have been awarded to Respondent no. 3 by applying the MSE policy.
Therefore, both these objections were separate and were dealt with separately. In regard to the first objection, Hon'ble High Court of Delhi held that policy is meant for giving preference in respect of procurement of goods produced and services rendered by MSME and it would not be applicable to a 'works contract' simpliciter. While deciding the said issue, the Hon'ble court had not referred to the second objection nor dealt with objection of the contract being indivisible. Thus, there is no merit in the submission of learned counsel for Respondent that the law laid down in Shree Gee Enterprises Versus Union of India,(Supra), will not apply to the facts of the case.
NEERA BHARIHOKE Digitally signed by NEERA BHARIHOKE Date: 2024.10.14 14:36:42 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 36 of 41
51. In the matter of Kone Elevator India (P) Ltd. vs. State of Tamil Nadu, (2014) 7 SCC 1, Hon'ble Supreme Court has discussed in detail as to which kind of contracts are 'works contract' and it was observed that once there is a composite contract for supply and installation, it has to be treated as a 'works contract', for it is not a sale of goods/ chattels simpliciter. The claim of the Respondent/claimant and depositions made in the affidavit of evidence on its behalf read with description of the work in the purchase order as 'Works Contract' coupled with the description given in 'scope of work' fortify the claim of the Petitioner that the purchase order in question is a 'Works Contract'. Merely because the erection work was completed by another vendor i.e. Powermech and the amount paid to Powermech was debited from the account of the Respondent does not mean that it was a turnkey project. It is thus held that the purchase order dated 26.09.2012 was a 'works contract' and therefore in view of law laid down in Shree Gee Enterprises Versus Union of India,(Supra), the Respondent was/is not entitled to claim benefits under the MSMED Act.
52. Another ground taken by the Petitioner is that the claim petition was barred by period of limitation. Petitioner has submitted that it is an admitted case of the Respondent/Claimant, in evidence, led before the learned Sole Arbitrator, that all the invoices with respect to supply of goods were raised vide letter dated 03.10.2013. It is the allegation of the Respondent that part payments were made against the supply of goods. In the SOC it NEERA BHARIHOKE Digitally signed by NEERA BHARIHOKE Date: 2024.10.14 14:36:47 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 37 of 41 was alleged that total invoices raised towards supply of goods were for a sum of Rs.22,47,953/- which were raised in September 2013 and the last payment with respect to the same was received on 09.01.2014.
53. Learned Counsel for Petitioner submitted that with respect to erection and commissioning, it was alleged by Respondent that the invoice raised was dated 26.08.2016 for a sum of Rs.4,68,050/- and that Respondent had alleged that no payment was made by the Petitioner against the said invoice. It was submitted by Learned counsel for Petitioner that it is a well settled principle of law that limitation period for each invoice commences from the date of raising of such invoice. Even if the best case of the Respondent/Claimant is considered, the last payment received for the invoices for supply which were raised on 03.09.2013 was on 04.06.2014. The limitation with respect to the said invoices expired on expiry of three years of the last payment made i.e. on or around 04.06.2017. Reliance has been placed on Manish Garg v. East India Udyog limited 2001 (3) AD (Delhi) 493. He also argued that with respect to the invoice raised on 26.08.2016, although the same is within the limitation, however, as detailed hereinabove, the Petitioner was not liable to pay any dues against the said invoice. It was the case of the Petitioner that a wrong bill had been submitted by the Respondent/Claimant and that it was repeatedly requested to the Respondent/Claimant to submit the correct bill with description NEERA BHARIHOKE and scope of works. However, the same was not submitted and Digitally signed by NEERA BHARIHOKE Date: 2024.10.14 14:36:51 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 38 of 41 hence, the Respondent/Claimant was not entitled to seek any claim against the alleged Invoices.
54. The Learned Arbitrator also framed issue no. 5 in this regard as 'Whether the Claim is time barred' and decided it in favour of Respondent/Claimant by holding that the claim has been filed within limitation.
55. Learned Arbitrator not only referred to the various payments made by the Petitioner to the Respondent in the year 2014 but also stated that it was a Turnkey Project and the process of erection and commissioning at site continued up to 2016. Reference was made to exhibit CW-15 (colly) to prove issuance of "Erection and Commissioning Protocol with Load Test Report dated 26.08.2016"
issued by the Petitioner as well as the certificate dated 30.08.2016 signed by NEEPCO, BHEL(Petitioner), NBPPL, PMPL and CCEPL (Respondent/Claimant) about successful erection and commissioning of work during 22.08.2016 to 26.08.2016. It has therefore been held by learned arbitrator that the project was completed on 27.08.2016 and the petition before Haryana Micro and Small Enterprises Facilitation Council has been filed on 08.08.2018 and that the Respondent/claimant filed the claim petition before learned arbitrator on 15.12. 2018 and amended claim petition on 29.12. 2018. Therefore, it was held by learned NEERA BHARIHOKE arbitrator that the petition had been filed within time.Digitally signed by NEERA BHARIHOKE Date: 2024.10.14 14:36:55 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 39 of 41
56. The finding of learned Sole Arbitrator is based upon observing that the purchase order in question was Turnkey project. However, the purchase order in question is a 'Works Contract', The last payment received, for the invoices for supply which were raised on 03.09.2013, was on 04.06.2014. The limitation with respect to the said invoices expired on expiry of three years of the last payment made i.e. on or around 04.06.2017 in view of law laid down in Manish Garg v. East India Udyog Limited (Supra) . Therefore, the claim petition except in regard to the invoice raised on 26.08.2016 before Learned Arbitrator was time barred.
57. With respect to the invoice raised on 26.08.2016, although the same is within the limitation, however, the Petitioner had written to Respondent that a wrong bill had been submitted by the Respondent/Claimant and that it was repeatedly requested to the Respondent/Claimant to submit the correct bill with description and scope of works. However, the same was not submitted. Therefore, the claim of the Respondent/Claimant was therefore pre-mature to seek any claim against the alleged Invoices.
58. Respondent has introduced additional documents in the written submissions filed before this Court. It is a well settled principle of law that while deciding a petition for setting aside an arbitral award nothing can be taken into consideration which was beyond the NEERA BHARIHOKE record that was before the arbitrator. Hence, the additional documents filed by the Respondent along with the written Digitally signed by NEERA BHARIHOKE Date: 2024.10.14 14:36:59 +0530 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 40 of 41 submissions cannot be considered at this stage of deciding the present petition filed under Section 34 of Arbitration and Conciliation Act, 1996.
59. In view of observations made above, the present petition is allowed and the award dated 06.03.2019 passed by the learned Sole Arbitrator Shri Satish Ahlawat, ADJ (Retired) is set aside.
60. Amount deposited by Petitioners be released/returned to them. Parties to bear their own costs.
61. Copy of the order alongwith record of arbitral proceedings be sent back to learned Arbitrator.
File be consigned to record room after necessary compliance.
Announced in the open Court on 14.10.2024 Digitally (Dr. Neera Bharihoke) signed by NEERA District Judge (Commercial Court)-06 NEERA BHARIHOKE BHARIHOKE Date:
2024.10.14 South East, Saket Courts Delhi 14:37:06 +0530 14.10.2024 Certified that this judgment contains 41 pages and each page bears my signatures.
Digitally signed by NEERA BHARIHOKE (Dr. Neera Bharihoke) NEERA BHARIHOKE Date:
2024.10.14 District Judge (Commercial Court)-06 14:37:10 +0530 South East, Saket Courts Delhi 14.10.2024 CS (Comm) 70/19 M/s NTPC Bhel Power Vs. M/s Century Crane Page 41 of 41