Andhra Pradesh High Court - Amravati
Rashtriya Ispat Nigam Ltd vs M/S Anvil Services Represented By Its ... on 27 January, 2022
Author: C. Praveen Kumar
Bench: C. Praveen Kumar
\ IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI THURSDAY, THE TWENTY SEVENTH DAY OF JANUARY, TWO THOUSAND AND TWENTY TWO : :PRESENT: | THE HONOURABLE SRI JUSTICE C. PRAVEEN KUMAR AND | THE HONOURABLE DR JUSTICE K. MANMADHA RAO I.A.No. 1 of 2022 in I.A. No. 1 of 2021 IN COMCA. No. 25 of 2021 1.A.No. 1 of 2021 :- Between: Rashtriya Ispat Nigam Ltd., Visakhapatnam Steel Plant, Having its Registered Office at Main Administration, Visakhapatnam-530031, Represented by K. Revathi, S/o. K. Jagannadha Rao, aged 54 years, Working as Deputy General Manager, Mktg.-Con. Department, RINL-VSP, Visakhapatnam. ..Petitioner/Appellant AND 1.M/s. Anvil Services, Represented by its Proprietor, Mr. Dinesh Joshi, D.No.30-15-138, 3° Floor, Binayaka Complex, Dabogardens, Visakhapatnam. 2.Hon'ble Justice Ms. $.V. Maruthi (Presiding Arbitrator), #B-202, Sree Constructions, Fates Golf Links Apartment, Yapral, Secunderabad -500 387. 3.Hon'ble Justice Sri TNC. Rangarajan, former Judge (Co-Arbitrator), High Court of Madras & Andhra Pradesh, Blue LOTUS 103 (Second Floor), Road No.3, Banjara Hills, Hyderabad. 4.Hon'ble Justice Sri C.Y. Somajaulu, Former Judge. (Co-Arbitrator), High Court of Andhra Pradesh, 301, Sanal Residency, Near Old Post Office, Raj Bhawan Road, Somajiguda, Hyderabad. Respondents/ Respondents Petition under Section 151 of CPC, praying that in the circumstances stated in the memorandum of grounds filed in COM.C.A, and the affidavit filed along with this Petition, the High Court may be pleased to suspend the operation of the Order and Decree in C.A.O.P.No. 39/2017 (old AOP No.307/2017) dt.22.03.2021 on the file of the Special Judge for Trial and disposal of Commercial Disputes, Visakhapatnam, including the Awards dt. 24-09-2016 & modified Award dt. 16-12-2016 of the 2" Respondent Arbitrator, pending disposal of COM.C.A.No. 25 of 2021, on the file of the High Court. Contd..2.. 1.A.No. 1 of 2022 :- Between :- M/s. Anvil Services, Represented by its Proprietor, Mr. Dinesh Joshi, D.No.30-15-138, 3™ Floor, Binayaka Complex, Dabogardens, Visakhapatnam. ..Petitioner/Respondent No.1 in COMCA.No. 25 of 2021 AND 1.Rashtriya Ispat Nigam Ltd., Visakhapatnam Steel Plant, Having its Registered Office at Main Administration, Visakhapatnam-530031, Represented by K. Revathi, S/o. K. Jagannadha Rao, aged 54 years, Working as Deputy General Manager, Mktg.-Con. Department, RINL-VSP, Visakhapatnam. ..Respondent/Appellant. 2.Hon'ble Justice Ms. S.V. Maruthi (Presiding Arbitrator), #B-202, Sree Constructions, Fates Golf Links Apartment, Yapral, Secunderabad -500 387. 3.Hon'ble Justice Sri TNC. Rangarajan, former Judge (Co-Arbitrator), High Court of Modras & Andhra Pradesh, Blue LOTUS 103 (Second Floor), Road No.3, Banjara Hills, Hyderabad. 4.Hon'ble Justice Sri C.Y. Somajaulu, Former Judge. (Co-Arbitrator), High Court of Andhra Pradesh, 301, Sanal Residency, Near Old Post Office, Raj Bhawan Road, Somajiguda, Hyderabad. | ..Respondents/Petitioner & Respondent Nos. 2 to 4 -do- Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the Petition, the High Court may be pleased to vacate the interim order granted in C.0.M.C.A.No. 25 of 2021 dated 02-12-2021 and dismiss the Appeal. These petitions coming on for hearing, upon perusing the Petition and the affidavit filed in support thereof and _ the earlier order of this Hon'ble Court dt. 02-12-2021 made in I.A.No. 1 of 2021 and upon hearing the arguments of Sri W.B. Srinivas, Advocate for the Petitioner in |.A.No. 1 of 2021 and respondent No.1 in 1.A.No. 1 of 2022 and of Sri Challa Gunaranjan, Advocate for respondent in I.A.No. 1 of 2021 and petitioner in I.A.No. 1 of 2022, the Court made the following ORDER :- THE HON'BLE SRI JUSTICE C. PRAVEEN KUMAR AND THE HON'BLE DR. JUSTICE K. MANMADHA RAO I.A.No.1 of 2022 in COM.C.A.No.25 of 2021 ORDER:
(Per Hon'ble Sri Justice C. Praveen Kumar) The present Interlocutory Application is filed by the petitioner/1st respondent, to vacate the interim order, dated 02.12.2021.
2. As seen from the docket proceedings vide an order, dated 02.12.2021, this Court passed the following order, which is as under:
COM.C.A.NO.25 OF 2021 "Notice before admission to R1 only.
Counsel for the Appellant/ Petitioner is permitted to take out personal notice on Respondent No.1 only by registered post acknowledgment due and file proof of the same.
List after four (04) weeks.
Meanwhile, the bank guarantee of Rs.5,95,90,291/- said to have been furnished by the Appellant/ Petitioner shall not be encashed."
3. Sri W.B. Srinivas, learned: counsel for' the respondent/appellant mainly submits that the Arbitral Tribunal as well as the appellate Court erred in changing the entire contents of the Award and application filed under Section 33 of the Arbitration and Conciliation Act, 1996 [for short, "the Act"]. He further Submits that though there is a CPK,J & Dr. KMR,J I.A.No.1 of 2022 in COM.C.A.25 of 2021 no reference to issue relating to Service Tax, the revised Award dealt with the same and awarded a sum of Rs.2,73,51,742/- which was neither discussed nor referred to in the Award. In view of the provisions of the Act, he would submit that the original award can be altered only if there is clerical or arithmetical error, which is not shown in the instant case. Referring to Section 31 of the Arbitration Act, he would submit that there is no explanation forthcoming as to why the 34 Arbitrator did not sign on the Revised Award. He took us from the material on record in support of his plea.
4. On the other hand, Sri Challa Gunaranjan, learned counsel appearing for the petitioner/1st respondent would submit that the issue relating to payment of Service Tax was infact was agitated and referred to in the Award and the amendment sought for in the claim petition was allowed after taking into consideration, the objections raised by the appellant herein. He further submits that since the quantum amount to be awarded towards Service Tax was not mentioned and application came to be filed under Section 33 of the Act, which was allowed. In so far as, not signing on the Award by the 34 Arbitrator is concerned, he would submit that since he dissented with the view expressed by the two other Arbitrators, his signature was not taken, which a CPK,J & Dr. KMR,J LA.No.1 of 2022 in COM.C.A.25 of 2021 aspect was dealt with by the Appellate court in the appeal filed under Section 34 of the Act.
5. In reply, Sri W.B. Srinivas, would contend that what was contemplated towards Service Tax was the amount which was withheld by the appellant and not the entire amount as claimed by the petitioner / 1st respondent herein. He relied upon the judgment of Hon'ble Apex Court in Gyan Prakash Arya's case in support of his plea. In any event, he would submit that an amount of Rs.5,95,90,291 /- is furnished by way of bank guarantee and as such, vacating the said order would not arise.
6. It may not be necessary for us to go in detail the issues raised herein, since any finding given may effect the parties at the time of hearing of the appeal. However, a perusal of the record prima-facie indicates that the issue of payment of Service Tax was raised in the claim statement. It has been specifically prayed for issuance of a direction to the appellant . for payment of Service Tax together with interest. In the rejoinder to the claimant, it has been specifically pleaded that the claimant is entitled for reimbursement of claim of Rs.2,73,51,742/- towards Service Tax. In the vacate stay application, an application, seeking amendment of the claim statement, was filed, to which a counter came to be filed opposing the same, but however, the said application was Ss CPK,J & Dr. KMR,J
1.A.No.1 of 2022 in COM.C.A.25 of 2021 allowed on 04.11.2015 which includes the quantification of the amount towards Service Tax.
7. One of the issues framed by the Arbitral Tribunal is as under:-
"Whether the claimant is entitled for reimbursement of Service Tax paid by them towards services rendered to the respondent?"
The Tribunal categorically came to a conclusion that the respondent that is the appellant herein withheld the Service Tax and they are liable to reimburse the same to the claimant. But, however, the quantum to be reimbursed is not spelt out. It is also to be noted that the 34 Arbitrator did not agree with the findings given by the Principal Arbitrator and another Arbitrator. Since the amount is not quantified, an application filed under Section 33 of the Arbitration and Conciliation Act, 1996 r/w.Rule 71-A of ICA Rules of Domestic Commercial Arbitration, for quantification of the amount which was allowed directing the appellant to pay a sum of Rs.2,73,51,742/- to the claimant towards Service Tax.
8. The issue as to whether the Arbitral Tribunal erred in awarding Service Tax though the issue relates to payment of the amount withheld towards Service Tax by the appellant, is a larger issue, which requires adjudication at length at the time of final hearing of the appeal. Secondly, whether the
--
Cae N CPK,J & Dr. KMR,J LA.No.1 of 2022 in COM.C.A.25 of 2021 award passed basing on an application under Section 33 of the Act, would amount to an award violating the Section 31 of the Act also requires adjudication at the time of hearing of the appeal. One another issue would be as to the effect of the award, when it is signed only by two out of three Arbitrators. It is urged that the third Arbitrator is not even aware that of the modified award. At this stage, Sri Challa Gunaranjan, learned counsel for the petitioner/1* respondent submits that normally the order which would passed by this Court at the time of admission is to direct the claimant to deposit 50% of the amount with a liberty to withdraw the same. But, however, the same was opposed by Sri W.B. Srinivas, learned counsel for the respondent/appellant that the facts in issue does not warrant passing of a routine order.
9. As seen from the record, originally an Award came to be passed on 24.09.2016 by a majority of Arbitrators, which is as under:
"There shall be an Award for:
1) Withheld-amount : Rs.56,28, 768/-
Interest on Rs.22,19,441/- at 12% from 31.10.2006 to 28.03.2007.
Interest on Rs.56,28,768/- from 07.10.2010 to 03.09.2011 at 12%.
Final bill amount : Rs. 36, 14,340/-
Both parties have to bear their own costs. The respondent is directed to pay the amount as awarded
--
above within three months fromthe date of receipt of a copy of a CPK,J & Dr. KMR,J LA.No.1 of 2022 in COM.C.A.25 of 2021 the Award failing which they are liable to pay interest at the rate of 14% till the date of payment."
10. Sri Justice T.N.C. Rangarajan, who, while agreeing the Presiding Arbitrator, held as under:
"Hence we cannot accept the defence of the respondent and its refusal to reimburse the service tax which is lawfully payable in accordance with the Service Tax Rules. The claim for reimbursement of the service tax paid by the claimant is allowed.
I agree with the award made by Justice Maruthi directing the respondent to pay to the claimant the sum of Rs. 92,43, 108/- with interest at the rate of 14% per annum from the date of the claim to the date of payment."
11. But, while entertaining the application filed under Section 33 of the 'Act, the Tribunal passed the corrected award which is as under:
"10. The respondent did not point out that the amount of Rs.36,14,340/- is calculated by adding 18% interest. The respondent also did not state that the final bill is only Rs.31,11,910/-. However, on a consideration of facts, the Tribunal holds that the amount. due to the claimant is only Rs.31,11,910/- towards final bill amount and not Rs.36, 13,340/-.
11. Accordingly, the Award is corrected and it shall be as follows:
1) The correct reimbursable amount paid by the claimant towards service tax is Rs.2,73,51,742/-.
2) The amount withheld is Rs.56,28, 768/- (-) RS.27,27,787/- = Rs.29,00,981/- (+) Rs.53,520/- (interest) (+) Rs.22,13,799/- (interest) and not Rs.56,28, 768/- totalling Rs.51,68,300/- as mentioned in the original Award.
3) The final bill amount after correction is arrived at Rs.31,11,910/-.
a CPK,J & Dr. KMR,J I.A.No.1 of 2022 in COM.C.A.25 of 2021
4) Interest at 12% on all the amounts from 10.05.2014 to 30.09.2016.
Thus, the errors crept in the original Award are corrected and ordered accordingly. The other conditions remain as they are."
12. From the above findings arrived at it is clear that even the final bill amount came to be revised in the application by the claimant under Section 33 of the Act. In other words, while the original demand was arrived at Rs.36, 14,340 /-, the same was revised to Rs.31,11,910/-. Prima-facie as observed earlier that the payment of Service Tax component was urged, but, the issue raised now by learned counsel for the appellant that relates to amount withheld by the appellant and not to the entire amount, which the claimant is entitled to, if any. As stated earlier, it requires adjudication at length at the time of final hearing of the appeal.
13. Having regard to the facts in issue, there shall be stay of the order impugned herein subject to appellant depositing 50% of the bill amount and 25% of the amount awarded as Service Tax which the respondent/claimant shall withdraw without furnishing any security. The said amount shall be deposited within a period of four (4) weeks from today, in default, the stay stands vacated.
CPK,J & Dr. KMR,J LA.No.1 of 2022 in COM.C.A.25 of 2021
14. With the above direction, the Interlocutory Application is disposed of.
Consequently, miscellaneous petitions, if any, pending shall stand closed.
Sd/- A.V. RAGHAVA SWAMY //TRUE COPY// JOINT REGISTBAR To,
1.One CC to Sri Challa Gunaranjan, Advocate[OPUCO
2.One CC to Sri W.B. Srinivas, Advocate [OPUC] .
3.Two spare copies.
TKK HIGH COURT CPK.J & DR.KMR.J DT.27-01-2022.
ORDER I.A.No. 1 of 2022 in ILA. No. 1 of 2021 IN COMCA. No. 25 of 2021 |.A. IS DISPOSED OF.
oa ee one