Delhi District Court
Union Of India vs M/S. Kohli Consturction Company on 12 March, 2007
1
IN THE COURT OF MS. SHALINDER KAUR, ADJ, DELHI.
SUIT NO. 131/2006
UNION OF INDIA
THROUGH CHIEF ENGINEER
DELHI ZONE, DELHI CANTT.
NEW DELHI - 110 010. .....PETITIONER.
VERSUS
M/S. KOHLI CONSTURCTION COMPANY
795, AZAD NAGAR
ROORKEE - 247 667. ....RESPONDENT.
JUDGMENT:-
1. Petitioner Union of India through its Chief Engineer has filed objections under Section 34 of the Arbitration and Conciliation Act 1996 against the respondent M/s. Kohli Construction Company.
2. It was contended on behalf of the petitioner that the award is biased, illegal and contrary to the facts, law and public 2 policy thus, is liable to be set aside. The dispute was referred by the respondent for Arbitration and which involves the sale question to be determined with respect to liability of the respondent regarding the impact of Delhi Sales Tax on Work Contract Act, 1999.
3. It was contended that the petitioner had deducted a tax at source of Rs. 50,678/- as per the law promulgated by Delhi Government i.e. "Delhi Sales Tax on Work Contract Act, 1999"
and the balance amount of Rs, 2,59,375/- was deposited by the respondent himself with the sales tax authorities. Thus, it is clear that the respondent had no objection for depositing the work contract tax in any form whether deducted at source or deposited by him with the concerned authorities.
4. It was further contended that the final bill of the respondent was signed by him on 12.07.2001 without any reservation/ claims. The respondent has signed the "No Claim Certificate" without any reservation. It was only on 07.09.2001 when the respondent raised the claim for reimbursement of Rs. 3,10,321/- deducted on account of work contract tax at the rate of 4% of work done. The respondent vide letter dated 19.09.2001 informed the department to treat his final bill as 3 signed under protest. However, the respondent received the payment on 29.01.2002 without any reservation and without any specific claim.
5. It was contended that moreover, the respondent has not submitted the assessment order from where it could be ascertained that the tax deducted actually was with respect to the said contract. It has also not filed any certificate to show that the tax authorities have not given any refund of the amount to the respondent. Thus, by virtue of the clauses of the Work Contract and in view of the new legislation which came in the year 1999, the Ld. Arbitrator has wrongly allowed the claim of the respondent with interest. It has been prayed that the said award be set aside.
6. Per contra on behalf of the respondent it was contended that the objections are not maintainable under Section 34 of the Arbitration and Conciliation Act. The court cannot sit as a court of appeal over the decision of the Arbitration and can substitute its views over the views of the Arbitrator. The award cannot be challenged only on the ground of mis conduct on part of the Arbitrator or if it has been passed against the public policy. The award is well reasoned and the Ld. Arbitrator has dealt with all the aspects of the claim and contract thus, the 4 objections are not maintainable. In order to substantiate the arguments the following judgments have been cited on behalf of the respondent.
(i) Ircon International Ltd. Vs. Arvind Construction Co. Ltd. & Anr. -- 81 (1999) DLT 268.
(ii) Hindustan Construction Co. Ltd. Vs. Governor of Orissa & Ors. -- (1995) 3 SCC 8.
(iii) Puri Construction Pvt. Ltd. Vs. Union of India -
AIR 1989 SC 777.
(iv) Govt. of NCT of Delhi Vs. Khemchand & Anr. --
AIR 2003 Delhi 314.
(v) B.V. Radha Krishna Vs. Sponge Iron India Ltd. --
(1997) 4 SCC 693.
(vi) Kesar Enterprises Ltd. Vs. DCM Shriram Industries Ltd. & Anr.
(vii) M/s Jagan Nath Ashok Kumar Vs. DDA - AIR 1995 Delhi 87.
(viii) Collector of Central Excise Vs. New Tobacco Co. --
1998 (1) Apex Court Journal 2- 83 C.
(ix) Pride Construction Co. Vs. DDA & Anr. -- 1990 (1) ALR - Page 16.5
7. The sole controversy which has arisen in these objections are whether the respondent has correctly deposited and get deducted the amount of Rs. 3,10,321/- on account of Work Contract Acts at the rate of 4% for the work done for the petitioner.
8. The petitioner has relied upon the clause of sales tax at page 141 of the work contract. It was contended that it was agreed that the tenderers shall be deemed to include all duties such as Octroi, Sales Tax, Exise etc. and also to include State Government Sales Tax of work contract payable under respective state to the condition (46) Act, 1982.
9. It was contended on behalf of the respondent that the Sales Tax on work contract was not made payable on the day of submission and acceptance of the Tender. The Sales Tax on work contract uder the new legislation was made applicable to the work contract for the first time in Delhi on 01.12.1999 whereas the Tender filled by the respondent was accepted on 08.09.1999. Moreover, the respondent at the time of quoting the rates for its tender could not consider the amount of tax paid/ deducted as reimbursable to him as the said Act had not come into force. Thus, the respondent is entitled for reimbursement of 6 Rs. 3,10,053/- which has been deducted on account of sales tax.
10. It was further contended that the petitioner has relied upon escalation clause and stated that according to the clause the contract compulsorily prohibit the payment of any extra amount due to variation in prices on account of coming into force of any fresh law or statutory rule. Since the respondent of its own had deposited the part of amount towards the sales tax and did not reserve any right to protest the final bill and also received the final payment without any reservation. Thus, the respondent is debarred to claim refund of the said amount. It was further contended that the Ld. Arbitrator had arbitrarily awarded interest to the respondent. In support of the said contention the judgment Pride Construction Co. Vs. Delhi Development Authority and another - 1190 (1) Arbitration Law Reporter 16 has been cited.
11. Admittedly, the Tender has been accepted on 08.09.1999 and The Delhi Sales Tax on Work Contract Act 1999 came into force w.e.f. 01.12.1999. Thus, the same came into force after the acceptance of the tender which increased the cost of the work which could not have been considered by the respondent at the time of quoting his rates in the tender. The respondent has raised the final bill on 14.07.2001. Admittedly, 7 vide letters dated 19.09.2001 the respondent informed the petitioner to treat his final bill as signed under protest. The respondent has also written a letter dated 07.09.2001 to the petitioner requesting for refund of the amount of Rs. 3,10,321/- and not to deduct the said amount from the final bill and to enable the respondent to receive the payments without protest.
12. The final bill is stated to have been paid on 29.01.2002 Thus, at the time of the payment of the final bill the respondent had already reserved his right, vide letters dated 07.09.2001, 19.09.2001 and 30.10.2001 to treat the final bill as signed under protest and to reserve his right to claim the recovery of the amount of Rs. 3,10,321/- paid towards sale tax. Thus, there is no force in the arguments raised on behalf of the petitioner that the respondent did not raise the final bill under protest so as to enable him to agitate to claim the bill for refund of amount of Rs. 3,10,321/-.
13. The law is well settled that the jurisdiction of the civil court while deciding the objection under Section 34 of Arbitration and Conciliation Act is limited. It cannot sit as a court of appeal and examine the correctness of the award on merits. The petitioner has failed to show that the Ld. Arbitrator mis conducted or passed the award against the public policy 8 while allowing the claims of the petitioner. Accordingly, the objections are dismissed. No orders as to cost are made. File be consigned to record room.
ANNOUNCED IN THE OPEN COURT TODAY ON 12.03.2007.
(SHALINDER KAUR) ADDL. DISTT. & SESSIONS JUDGE, DELHI.
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12.03.2007
At 4.30 pm.
Present: None.
Vide judgment announced of even date on separate sheets, the objections are dismissed. No orders as to cost are made. File be consigned to Record Room.
ADJ/Delhi/12.03.07.