Delhi District Court
Container Corporation Of India vs Sanjay Rana Security Agency on 23 November, 2024
IN THE COURT OF SH. AJAY KUMAR JAIN:
DISTRICT JUDGE COMMERCIAL COURT 03 - SOUTH EAST
DISTRICT SAKET COURTS, NEW DELHI.
OMP (COMM) 63/2023
CONTAINER CORPORATION OF INDIA
Concor Bhawan, C 3 Mathura Road
Opposite Apollo Hospital, Sarita Vihar
New Delhi- 110076
..... Petitioner/ Respondent in
Arbitral proceedings
VERSUS
SANJAY RANA SECURITY AGENCY
R/o 3042, Sector A Pocket BAMPC
Vasant Kunj, New Delhi- 110070.
.....Respondent/ Claimant
Date of Institution : 03.07.2023
Date when final arguments heard : 18.11.2024
Date of Judgment : 23.11.2024
JUDGMENT
1. The petitioner vide this petition U/s 34 of Arbitration and Conciliation Act challenged the impugned award dt. 01.03.2023 passed by Ld. Arbitrator.
2. Brief facts of the case as per petition that the claimant was issued letter for sponsorship for security and allied services by DGR OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 1 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency (Directorate General Resettlement, Ministry of Defence), thereafter, a contract dated 31.12.2015 was awarded to the respondent by the petitioner vide letter dated 31.12.2015. As per contract, respondent firm were to provide security services to the petitioner w.e.f 15.01.2016 for a period of two years. As per Clause 3 of the Contract, it was for the respondent to raise their bills in accordance with the wage structure issued by DGR from time to time. The respondent deployed only two security guards at the residence of the then CVO from January 2016 to July 2017 but raised the bills for three guards and a rest reliever, therefore a amount of Rs. 5,39,188/- was recoverable from the respondent by the petitioner towards excess payment. The petitioner, therefore, issued a show cause notice dated 16.12.2017 to the respondent. In reply to the notice, respondent admitted supplying of guards at the CVO's residence only up till July 2017 and not thereafter, however filed a petition before the MSME Patparganj, New Delhi. The MSME referred the dispute to Delhi Arbitration Centre vide letter dated 27.06.2022. Thereafter, Sole Arbitrator was appointed. A statement of claim was filed by the claimant/respondent for a sum of Rs. 20,09,330/- alongwith interest, thereafter a statement of defence was also filed by the petitioner on 30.08.2022. After completion of pleadings and hearings, the impugned award was passed.
3. In reply, it is stated that as per contract dated 31.12.2015, respondent started providing security services to the petitioner w.e.f. 15.01.2016 at five sites and provided 28 security guards to the petitioner. The monthly bills were raised by respondent firm against the OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 2 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency security personal provided to the petitioner strictly as per DGR guidelines/published rate, however the short payment of Rs. 9,40,526.04/- was paid by the petitioner. The petitioner withheld the service charges and some amount of the bill on ground of non submission of bank guarantee. The bank guarantee was duly submitted to the petitioner on 24.06.2016.
4. For CVO site contract, petitioner paid/cleared all the bills raised from Jan 2016 to July 2017 i.e. for 19 months. There was not a single complaint regarding any shortage of duty/guards at CVO site during the currency of the contract. The respondent kept on clearing the bills of CVO site for 19 consecutive months after due verification of muster roll/attendance sheet by its officials and due diligence of the bills. The petitioner, however deducted Rs. 5,39,543/- after almost two years of raising of first bill. The respondent/ claimant vide letter dated 04.04.2019, 23.04.2018, 15.08.2018, 26.09.2018 and emails dated 27.12.2017 made request to resolve the disputes and settle the outstanding dues of payment of Rs. 20,09,330.09/- by way of mutual discussion, however the petitioner not taken any action, therefore, respondent filed petition before the MSME, Patparganj, New Delhi. Then dispute was referred to the Delhi Arbitration Centre (DAC) vide letter dated 27.06.2022, pursuant to which Sole Arbitrator was appointed. On conclusion of arbitration proceedings, impugned award was passed.
5. In rejoinder, it is stated by the petitioner that the impugned award is contrary to the terms of the contract and without any legal basis. The OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 3 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency respondent only deployed two security guards at the residence of the then CVO from January 2016 to July 2017 whereas the bills being raised by the respondent for three guards and a rest reliever. A amount of Rs. 5,39,188/- was recoverable from the respondent. During present proceedings, matter was referred to mediation, however could not be settled in mediation. The petitioner also made certain payments during the pendancy of the present proceedings.
Submissions of counsels :
6. Ld. Counsel for the petitioner submitted that claimant/respondent was required to provide complete security solution for the petitioner's corporate office and training center at Gurgaon w.e.f. 15.01.2016 for a period of two years as per Clause 1 (1) and 2. There were three more locations namely Chief Vigilance Officer's (CVO) residence, Chairman and Managing Director's residence, were also included verbally within the ambit of the aforesaid agreement and the total 28 guards were provided by the claimant/respondent to the aforesaid five locations. As per clauses, amounts have to be reimbursed by the petitioner to the respondent/claimant as per the wage structure prescribed by the DGR which does not specify any fixed time line to release the bills. Ld. Counsel for the petitioner submitted that the Ld. Arbitrator had mis-appreciated the facts of the case and not considered the valid plea of the petitioner. The petitioner has not even received the invoice of Rs. 4,21,505/- and the said fact is also not considered by Ld. Arbitrator. The impugned award is patently illegal thus liable to be set aside.
OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 4 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency
7. Ld. counsel for the respondent/claimant submitted that the Ld. Arbitrator decided all the claims of the claimant on the basis of evidence on record and with reasons and there is no infirmity in the impugned order passed by Ld. Arbitrator. Ld. Counsel submitted that the present petition is devoid of any merit and liable to be dismissed.
8. Both the counsels for the parties also filed written submissions.
9. Arguments heard. Record perused.
10. Before consideration of contentions the relevant findings in the impugned award dt. 01.03.2023 of the Ld. Sole Arbitrator is reproduced as under :
"......Consideration/Reasoning by the tribunal A. The very first requirement for the continuation and adjudication of present arbitration proceedings under MSMED Act, 2006, is that to check out first as to whether the parties come under the purview of MSMED Act, 2006, or not ?.
Whether the claimant is a valid supplier and respondent a valid buyer, or not?
For this the relevant definitions in MSMED act, 2006 are:
Sec. 2(e) "enterprise" : means an industrial undertaking or a business concern or any other establishment, by whatever name called, engaged in the manufacture or production of goods, in any manner, pertaining to any industry specified in the First Schedule to the Industries (Development & Regulation) Act, 1951 or engaged in providing or rendering of any service or services.
Sec. 2(d) "buyer": means whoever buys any goods or receives any services from a supplier for consideration.
Sec. 2(n) "Supplier": means a micro or small enterprise, which has filed a memorandum with the authority referred to in sub- section (1) of section 8, and includes, -
OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 5 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency
(i) The National Small Industries Corporation, being a company, registered under the Companies Act, 1956
(ii) The Small Industries Development Corporation of a State or a Union Territory, by whatever name called, being a company, registered under the Companies Act, 1956
(iii) Any company, co-operative society, trust or a body, by whatever name called, registered or constituted under any law for the time being in force and engaged in selling goods produced by micro or small enterprises and rendering services which are provided by such enterprises;
As contended by the Ld. Counsel for the claimant that claimant is a valid in undertaking that the claimant is valid registration as an MSME and date of the Udyog Registration as per the record of the claimant is 21.12.2016. The claimant has also filed its MSME Certificate as Micro Enterprises with the claim petition.
And, as the respondent being a PSU and has received the goods from the claimant. Thus, the parties to the present dispute are "enterprise", as defined under section 2(e) of MSMED Act, 2006.
B. Now, this tribunal has to see, as to whether, as per the Purchase order/service agreement/work order, respondent is liable to make payment towards the claimant as provided U/Sec. 15 MSMED Act, 2006, or not ?.
Section 15 MSMED Act, 2006 says :
15. Liability of buyer to make payment- Where any supplier, supplies any goods or renders any services to any buyer, the buyer shall make payment therefore on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day:
Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed forty-five days from the day of acceptance or the day of demand acceptance.
AND the definition of Appointed Day is given under Section 2(b) MSMED Act, 2006 as:
OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 6 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency 2(b) "appointed day" means the day following immediately after the expiry of the period of fifteen days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier.
Explanation. - For the purpose of this clause, -
(i) "the day of acceptance" means,-
(a) the day of the actual delivery of goods or the rendering of services;
Or
(b) where any objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day on which such objection is removed by the supplier;
(ii) "the day of deemed acceptance" means, where no objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day of the actual delivery of goods or the rendering of services;
Apart from MSMED Act, 2006, the legislature has also provided provision of Liability of Buyer to make payment Under Section 3 of The Interest on Delayed Payments to Small Scale & Ancillary Industrial Undertakings Act, 1993, "3. Liability of buyer to make payment- Where any supplier, supplies any goods or renders any services to any buyer, the buyer shall make payment therefore on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day:
Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed forty-five days from the day of acceptance or the day of demand acceptance."
It is the case of the claimant that it is a security firm duly recognized by directorate of general of resettlement (DGR), Ministry of Defence India for providing security and allied services to various organizations as per DGR guidelines. The respondent is a Public Sector Undertaking (PSU) and is among one of the Navratana Central Public Sector Enterprise of Govt. of India. It is engaged in the transportation of goods and OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 7 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency material. The respondent has floated a tender for sponsorship for security and allied services through DGR and the same was awarded to the claimant vide empanelment letter 31.12.2015. The contract was awarded initially for 2 years and agreement has entered between the parties as per the terms and conditions of the contract, and the same is annexed at page no. A4 of the SOC. As per the terms of contract the claimant has deposited an amount of Rs. 5,00,000/- as a security deposit. It was mentioned that the said security deposited shall be refundable after completion of 4 calendar months after termination of the contract.
The claimant started providing its services w.e.f. 15.01.2016 on 5 sites embarked by respondent and total 28 security guards were employed for that purpose. The respondent has admitted this position in its reply. The claimant contended that the contract was successfully completed for 2 years and thereafter terminated. During the subsistence of the contract some dispute arose between the parties wherein the claimant alleged non-
payment of part of the invoice amount raised by it and the respondent has taken a stand that everything which was due everything has paid and nothing is unpaid according to its calculation.
The claimant contended that as per the DR guidelines the invoices were supposed to be cleared for payment within 30 days from raising the bills but the respondent contended that no fixed timeline was stipulated as per the agreement for clearing of the invoices. The claimant has raised claim for outstanding principal amount of Rs. 20,09,330/- on the respondent in respect of following heads: -
a. Rs. 1,04,384/- in respect to pending services charges for period of January 2016 to April 2016 b. Rs. 5,00,000/- towards release of security deposit in form of bank guarantee c. Rs. 74,119/- in respect to pending bills of CVO for the month of August 2017 d. Rs. 1,45,626/- in respect to pending GST amount of bill for month of October 2017 e. Rs. 1,41,466/- in respect to pending GST amount of bill for month of November 2017 f. Rs. 6,22,230/- in respect of due amount of bill for month of December 2017 OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 8 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency g. Rs. 4,21,505/- in respect of pending bill for the month of January 2018(with GST) Total amounting to Rs. 20,09,330/- in respect of above outstanding payments.
Per contra the respondent has taken point wise defence in countering the above claims of the claimant and taken following stands on the aforesaid claim of the claimant: -
a. On outstanding payment of Rs. 1,04,384/- towards service charge for period of Jan. 2016 to Apr. 2016, the respondent clarified that the same was the part of the short payment of Rs. 1,57,787/- made by the respondent to the claimant on 16.11.2016 and the same cannot be said to be withheld payment.
b. On pending refund of Rs. 5,00,000/- towards release of security deposit in form of bank guarantee, the respondent took a stand that the said bank guarantee was expired and was not renewed subsequently by the claimant. Further, the respondent was supposed to recover Rs. 5,39,188/- towards excess payment made to the claimant in view of security guards which was not employed by the claimant on the site of respondent. As such the release of security amount was withheld by the respondent.
c. On pending payment of Rs. 74,119/- in respect of bills of CVO for the month of August 2017, the respondent took a stand that discontinuance of service from the residence of CVO was given to the claimant from August 2017 onwards. As such no amount due towards this head.
d. On pending payments of Rs. 1,45,626/- & Rs. 1,41,466/- in respect to pending GST amount of bill for month of October 2017 and November 2017 respectively, the respondent has taken a stand that same was already paid and nothing is due.
e. On pending payment of Rs. 6,22,230/- in respect of due amount of bill for month of December 2017, the respondent has taken a stand that total bill amounting to Rs. 8,67,964/- (including GST) was raised by the claimant and after deducting Rs. 5,39,188/- towards excess payment made by the respondent in respect to security guards which were not employed by the claimant the balance payment of Rs. 2,45,734/- was made to the claimant as nothing remains due.
OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 9 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency f. On pending payment of Rs. 4,21,505/- in respect of pending bill for the month of January 2018(with GST), the respondent has taken a stand that no such bill was ever received by it from the claimant, therefore no question for payment in respect to same arises.
This tribunal has considered the claim of claimant and submissions made by the respondent in its defence and after careful examination and perusal of the records, have reached to the following conclusion: -
In respect to the outstanding payment of Rs. 1,04,384/- w.r.t. pending service tax charges, the respondent has taken a stand that the service tax amount deducted from the claimants bill directly by the respondent on claimant's behalf and the same was not paid to claimant, the claimant was not required to deposit the same absurd .
The said defence of the respondent is totally absurd as the service tax regulations clearly stipulates levy of the service tax by the person raising the invoice and deposition of the same with authorities. The admission of respondent and its stand that claimant was not required to deposit the service tax and the same was paid by the respondent themselves is not legally acceptable in contravention of the service tax regulations. Moreover, the respondent has not filed any single document depicting deposition of the said amount with Govt. authorities. In the absence of the same, the contention of the respondent withholding the said amount of Rs 1,04,384/- is unjustified, the same is therefore declined. The claimant is therefore well entitled for grant of Rs. 1,04,384/-towards service tax charges for the said period.
2. The second claim of the claimant is towards refund of security deposit taken in form of bank guarantee by the respondent amounting to Rs. 5,00,000/-. The respondent has taken stand that release of security deposit amount was withheld due to the fact that the said guarantee was expired and the same was not extended by the claimant. On perusal of the record filed by the claimant at page no. A-11, it shows the said bank guarantee was valid till 14.05.2018 i.e. even after the date of termination of contract. Further the respondent in para 10 of the SOD has also taken a stand that the said bank guarantee shall be returned to the claimant on receipt of no-due certificate from the claimant.
OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 10 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency In view of the admission of the respondent it is evidently cleared that the said bank guarantee was withheld without any justifiable cause by the respondent, as such claimant is well entitled to seek refund of Rs. 5,00,000/-towards security deposit. However, no delayed payment interest is payable on release of security deposit amount in form of bank Guarantee.
3. The third claim of the claimant is reimbursement of Rs. 74,119/- towards bill for the month of August 2017 of services rendered at residence of CVO. The respondent has denied paying the said charges due to the fact that claimant itself admitted vide its reply through letter dated 28.12.2017 annexed at annexure 6 at page no. 138 of the SOD that services were rendered till July 2017. As such the claimant cannot raise the invoice for the month of August 2017. Per contra the claimant in its rejoinder annexed latter dated 18.08.2017 of the respondent clearly issuing notice for discontinuation of existing security arrangements provided at CVO residence w.e.f. 18.08.2017. Moreover, the claimant has only raised the said invoice for the month of August 2017 for only 18 days. As such, the claimant has proved its invoice and the contention of respondent is devoid of merits. Therefore, the claimant is well entitled for reimbursement of Rs. 74,119/-towards bill for the month of August 2017.
4. The 4th and 5th claim of claimant is towards the reimbursement of GST for the month of Oct-Nov 2017. The respondent has taken a stand that the payment of GST for the month of Oct & Nov is already paid to the claimant and nothing remains due. In support of its contention the respondent has annexed annexure 7 at page no. 139 of the SOD showing payment of Rs. 8,07,118/- including Rs. 1,23,120/- towards GST charges. On perusal of records the said payment advice of the respondent annexed at page no. 139 shows the period of service as Dec 2017-2018, whereas the claim of claimant is w.r.t. GST charges for the month of Oct & Nov 2017. The respondent has not filed any document showing. reimbursement of said GST charges for the month of Oct & Nov 2017, in the absence of any record the said contention of the respondent is devoid of merits. Therefore, the claimant is well entitled for reimbursement of Rs. 1,45,626/- & Rs. 1,41,466/- towards GST reimbursement charges for the month of Oct. & Nov. 2017 respectively.
OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 11 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency
5. The sixth claim of the claimant is reimbursement of Rs. 6,22,230/- for the bill of Dec 2017. The respondent has taken a stand that the claimant has raised total invoice of Rs. 8,64,964/- and after deducting Rs. 5,39,188/- towards charges of excess payment already made on account of third security guard and rest reliever for the complete duration of the contract period the balance payment of Rs. 2,45,734/- was made to the claimant. Per contra the claimant contended that the respondent has unauthorizedly deducted the said payment of Rs. 5,39,188/- without any justifiable cause w.r.t. the period for which service was already completed by the claimant. On perusal of the records it was seen that the respondent has deducted the said payment only on the basis of self-assumption.
The letter dated 16.12.2017 issuing "show cause notice for non- deployment of security guard at the residence of Ex- CVO" on the claimant mentioned that as per the enquiry conducted by the vigilance department it is observed that during the period from Jan 2017 to July 2017 only 2 security guards were deployed against sanctioned strength of 3 guards and rest reliever. Hence Rs. 5,39,188/- is recoverable. The said notice is issued on 16.12.2017 and the same was duly replied by the claimant on 28.12.2017. The claimant specifically stated that it has provided the services of 3 guards and not 2 and all duties were performed diligently as per requirements. Further, monthly attendance sheet, certified salary sheets and bills were submitted during the said period. During the deployment period not once any grievance was mentioned by the respondent's office. The tribunal finds force in the contention of the claimant and it is against the principle of natural justice for deducting the full amount for blanket period from day of start of service till its end. Further the respondent has not perused any document on record to justify as to what enquiry has been conducted by it and fate of such enquiry before deducting the full amount from the subsequent invoice of the claimant. The said unilateral enquiry if any conducted by the respondent without giving opportunity to the claimant is not legally tenable in the eyes of law. Therefore, this tribunal is of the considered view that deduction of Rs. 5,39,188/-from the subsequent invoice of the claimant is unjustified, as such the said deduction is hereby set aside. The claimant has raised total invoice of Rs. 8,67,964/- in respect to bill of Dec. 2017. Admittedly the respondent has made the payment of Rs. 2,45,734/- (as per stand taken in SOD), hence OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 12 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency the balance payment of Rs. 6,22,230/- is still outstanding on the respondent and the same is payable to the claimant.
6. The claimant has raised the 70 and last claim of Rs. 4,21,505/- in respect to the invoice for the month of Jan 2018(with GST) the respondent has however taken a stand that it has not received this invoice from the claimant and as and when the said invoice is received the same shall be paid after verification. It is pertinent to note that the respondent has nowhere denied availing services mentioned in the said invoice from the claimant. Moreover, the claimant has also paid the GST on the said invoice and vide annexure at page no. A-75 to A-99 of the rejoinder the claimant has filed the said invoice along with salary sheet, PF & ESI payment along with attendance sheet. The respondent has nowhere denied the said documents to be fabricated or not availing the said services from the claimant. Therefore, the claimant has successfully proved this invoice amounting to Rs. 4,21,505/-, as such the same stood duly payable to the claimant by the respondent.
Therefore, in view of the above observations and findings this tribunal awards the claim of Rs. 20,09,330/- to be true and genuine and the withheld of the said amount by the respondent is totally unjustified. The claimant is well entitled for recovery of the said amount from respondent along with delayed payment interest as per the provisions of MSMED Act, 2006.
C. The Interest Now, this tribunal is to check out as to whether the respondent is also liable to pay interest to the claimant as provided Under Section 16 & 17 MSMED Act, 2006 Sec. 16: Date from which and rate at which interest is payable.- Where any buyer fails to make payment of the amount to the supplier, as required under section 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay compound interest with monthly rests to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at three times of the bank rate notified by the Reserve Bank.
OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 13 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency Sec. 17: Recovery of amount due. --For any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the amount with interest thereon as provided under section 16.
Apart from MSMED Act, 2006, the legislature has also provided provision of Compound Interest Under Section 5 of The Interest on Delayed Payments to Small Scale & Ancillary Industrial Undertakings Act, 1993, as:
Sec: 5. Liability of Buyer to pay compound interest. - Notwithstanding anything contained in any agreement between a supplier and a buyer or in any law for the time being in force, the buyer shall be liable to pay compound interest (with monthly interest) at the rate mentioned in section 4 on the amount due to the supplier.
Therefore, it is held that claimant is entitled for grant of delayed payment interest on its/his aforestated claimed amount except on bank guarantee amount from respondent as per the provision of MSMED Act, 2006:
D. The Authoritative / Directions:
Herein, as stated above, that respondent has not paid his legitimate dues beyond appointed day and that too till date, so his said payment can be absolutely held as "Delayed Payments". And, legislature has put necessary obligation as a mandate upon the respondent/buyer to pay interest as the wordings used in section 16 are "shall ....... be liable to pay compound interest with monthly rests to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at three times of the bank rate notified by the Reserve Bank".
Thus, there is no scope or escape for Buyer from paying interest upon delayed payment, but he must have to pay the same and that too the Compound Interest monthly rests at Three times of the bank rate notified by the Reserve Bank and at present the bank rate of interest is 4.65% per year and its three times comes as 13.95% per year, from 07.03.2018, so far a total period of 59 months approx., till 01.03.2023.
It is therefore, held that respondent/buyer is liable to pay Compound interest to claimant/seller of principal amount of Rs. 15,09,330/- (20,09,330 less 5,00,000/- i.e. security deposit OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 14 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency amount) that too with MSME interest rate which is monthly rests at three times of rate of 4.65 % per annum i.e. @13.95%, which comes out as Rs. 14,75,625/-. Hence, it is held that respondent / buyer shall pay claimant/seller the total amount of Rs. 29,84,955/- (Rs. 15,09,330 + Rs. 14,75,625) plus 5,00,000/- security amount for a period from 07.03.2018 till 01.03.2023.
E. Future Interest :
In view of deliberate non-payment of legitimate payment of claimant since the appointed day till date by respondent, this tribunal deems it appropriate to hold that claimant/petitioner is entitled for getting the future Interest.
Hence, this tribunal in view of total reluctant and deliberate delayed conduct of respondent, deems it appropriate to hold claimant entitled for grant of MSME Interest at the rate of interest as per RBI guidelines in accordance with provisions of Sec.16 MSMED Act, 2006 per annum on the Award Amount (Rs. 34,84,955/- i.e. 15,09,330/- principal amount + 14,75,625/- interest amount + 5,00,000/- security amount), payable by respondent, w.e.f. from the date of passing of award by this tribunal i.e. 01.03.2023 till realization.
F. Cost of arbitration:
Both the parties shall bear their respective cost of arbitration fees.
G. Regime For The Costs:
As provided under Sec. 31-A, Arb. & Conc. Act, 1996, the following Cost is being determined by this tribunal :
Cost of Litigation : Rs. 50,000/-
The Conclusion :
NOW THEREFORE, I, the said VIKESH RATHI, Sole
Arbitrator, DO HEREBY MAKE AND PUBLISH MY AWARD AS FOLLOWS:
OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 15 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency In view of above findings and observation of this arbitral tribunal, claim petition of the claimant is allowed and award is being passed in favour of claimant, hereby holding claimant entitled to get paid the following reliefs:
i.) award amount of Rs. 29,84,955/- (Rs. 15,09,330 + Rs. 14,75,625/-) including Interest on principal amount, plus ii.) release of security deposit amount of Rs. 5,00,000/- in form of bank Guarantee iii.) total Cost of Rs. 50,000/- and iv.) future MSME interest at the rate of interest as per RBI guidelines in accordance with provisions of Sec. 16 MSMED Act, 2006 per annum on the Award Amount (Rs. 34,84,955/-), payable by respondent, w.e.f. from the date of passing of award by this tribunal i.e. 01.03.2023 till realization, as awarded above, all to be paid by respondent.
Respondent is hereby directed to pay claimant the awarded amount immediately, failing of which claimant would be well entitled to recover the same with due process of law against the respondent. The awardee is liable to pay deficiency in stamp duty as per Indian Stamp (Delhi Amendment) Act, 2007 before filing execution of this award.
In view of this award, present arbitration proceedings are being terminated. File (complete record) of present dispute be sent back to DAC, for future action like as supplying copy of present Award to parties concern."
11. Vide impugned award, Ld. Sole Arbitrator observed that the claimant started providing services w.e.f. 15.01.2016, however during the subsistence of the contract some dispute arose between the parties regarding the non payment of part of the invoice amount. The claimant contended that as per the DGR guidelines the invoices were supposed to be cleared for payment within 30 days from raising the bills but the respondent contended that no fixed timeliine was stipulated as per the agreement for clearing the invoices. The claimant has raised claim for OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 16 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency outstanding principal amount of Rs. 20,09,330/- on the respondent in respect of following heads:-
a. Rs. 1,04,384/- in respect to pending services charges for period of January 2016 to April 2016 b. Rs. 5,00,000/- towards release of security deposit in form of bank guarantee c. Rs. 74,119/- in respect to pending bills of CVO for the month of August 2017 d. Rs. 1,45,626/- in respect to pending GST amount of bill for month of October 2017 e. Rs. 1,41,466/- in respect to pending GST amount of bill for month of November 2017 f. Rs. 6,22,230/- in respect of due amount of bill for month of December 2017 g. Rs. 4,21,505/- in respect of pending bill for the month of January 2018(with GST) Total amounting to Rs. 20,09,330/- in respect of above outstanding payments.
12. The petitioner's stand in arbitration proceedings that the outstanding payment of Rs. 1,04,384/- towards service charge for period of January 2016 to April 2016, and clarified that the same was the part of the short payment of Rs. 1,57,787/- made by the petitioner to the claimant on 16.11.2016. On pending refund of security deposit of Rs. 5,00,000/-, it is stated by the petitioner that the bank guarantee was expired and was not renewed, and the respondent was supposed to recover Rs. 5,39,188/- towards excess payment. On pending payment of Rs. 74,119/-, the petitioner took a stand that discontinuance of OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 17 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency service from the residence of CVO was given to the claimant from August 2017 onwards. As such no amount due towards this head. On pending payments of Rs. 1,45,626/- & Rs. 1,41,466/- in respect to pending GST amount of bill for month of October 2017 and November 2017 respectively, the petitioner has taken a stand that same was already paid and nothing is due. On pending payment of Rs. 6,22,230/-
in respect of due amount of bill for month of December 2017, the petitioner has taken a stand that total bill amounting to Rs. 8,67,964/- (including GST) was raised by the claimant and after deducting Rs. 5,39,188/- towards excess payment made by the respondent and the balance payment of Rs. 2,45,734/- was made to the claimant as nothing remains due. On pending payment of Rs. 4,21,505/-, the petitioner has taken a stand that no such bill was ever received from the claimant, therefore no question for payment in respect to same arises.
13. The Ld. Arbitrator on hearing parties observed that in respect to the outstanding payment of Rs. 1,04,384/- w.r.t. pending service tax charges, there is an admission of respondent (petitioner) that claimant was not required to deposit the service tax and the same was paid by the respondent themselves is not legally acceptable. Moreover, the respondent has not filed any single document depicting deposition of the said amount with Govt. authorities. With regard to the refund of security deposit the plea of the respondent/petitioner was that release of security deposit amount was withheld due to the fact that the said guarantee was expired and the same was not extended by the claimant, however Ld. Sole Arbitrator observed that bank guarantee was valid till OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 18 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency 14.05.2018 i.e. even after the date of termination of contract, therefore held that bank guarantee was withheld without any justifiable cause, however no delayed payment interest is payable on release of security deposit amount in form of bank Guarantee.
14. The claimant also raised a claim of Rs. 74,119/- towards bill for the month of August 2017 of services rendered at residence of CVO, however respondent raised the plea that services were rendered till July 2017. The claimant in its rejoinder annexed letter dated 18.08.2017 of the respondent clearly issuing notice for discontinuation of existing security arrangements provided at CVO residence w.e.f. 18.08.2017 and the claimant has raised the bill for 18 days for the month of August 2017, therefore, entitled for reimbursement of Rs. 74,119/-.
15. The 4th and 5th claim of claimant is towards the reimbursement of GST for the month of Oct-Nov 2017. The Ld. Arbitrator observed that the respondent has not filed any document showing reimbursement of said GST charges for the month of Oct & Nov 2017, therefore the claimant is well entitled for reimbursement of Rs. 1,45,626/- & Rs. 1,41,466/- towards GST reimbursement charges. The sixth claim of the claimant is reimbursement of Rs. 6,22,230/- for the bill of December 2017. The Ld. Arbitrator observed that the respondent has deducted the said payment only on the basis of self-assumption. The claimant in reply to the show cause notice specifically stated that it has provided the services of 3 guards and not 2 and all duties were performed diligently as per requirements and further, monthly attendance sheet, certified salary sheets and bills were submitted and the during the OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 19 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency deployment period not even once any grievance was mentioned by the respondent's office. The unilateral enquiry if any conducted by the respondent without giving opportunity to the claimant is not legally tenable, thus deduction of Rs. 5,39,188/-from the subsequent invoice of the claimant is unjustified, therefore the said deduction is set aside, hence the balance payment of Rs. 6,22,230/- is still outstanding.
16. The last claim of Rs. 4,21,505/-, however the stand of the respondent that it has not received this invoice from the claimant, however the respondent nowhere denied availing services mentioned in the said invoice from the claimant. The claimant has also paid the GST on the said invoice and the documents annexed with the said invoice were not denied by the respondent/petitioner, therefore claimant also proved this invoice amounting to Rs. 4,21,505/-, hence the tribunal awarded the total amount of Rs. 20,09,330/- alongwith interest, cost etc.
17. The Ld. Arbitrator has passed the impugned award over the claims raised by the claimant after considering the relevant documents and pleas of both the parties. There is no infirmity in the reasons recorded by Ld. Arbitrator while passing the impugned award. The petitioner unable to show any illegality leave aside the patent illegality in appreciation of the material on record by Ld. Arbitrator. The petitioner also unable to show any infirmity with regard to the terms and conditions of the contract or the law.
18. Scope of interference under section 34 of Arbitration and Conciliation Act with Arbitrator's award is very limited. The Court OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 20 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency would not be justified in reappraising the material on record and substituting its own view in place of the view taken by Arbitrator. Once the Arbitrator has applied his mind to the matter before him, the Court cannot reappraise the matter as if it were an appeal and even if two views are possible, the view taken by the Arbitrator would prevail as held by Hon'ble Supreme Court in the case of Navodaya Mass Entertainments Ltd. v. J.M. Combines reported in (2015) 5 SCC 698.
19. Hon'ble Supreme Court in the case of 'Sutlej Construction Ltd. v. State (UT of Chandigarh) reported in (2018) 1 SCC 718' has held that when it comes to setting aside of an award under the public policy ground, it would mean that the award should shock the conscience of the court and would not include what the court thinks is unjust on the facts of the case seeking to substitute its view for that of the arbitrator to do what it considers to be "justice. Paragraph nos. 10 to 13 of the said judgment are extracted below:-
......."10. We are not in agreement with the approach adopted by the learned Single Judge. The dispute in question had resulted in a reasoned award. It is not as if the arbitrator has not appreciated the evidence. The arbitrator has taken a plausible view and, an in our view, as per us the correct view, that the very nature of job to be performed would imply that there has to be an area for unloading and that too in the vicinity of 5 km as that is all that the appellant was to be paid for. The route was also determined. In such a situation to say that the respondent owed no obligation to make available the site cannot be accepted by any stretch of imagination. The unpreparedness of the respondent is also apparent from the fact that even post-termination it took couple of years for the work to be carried out, which was meant to be completed within 45 days. The ability of the appellant to comply with its obligations was interdependent on the respondent meeting its obligations in time to facilitate appropriate areas for OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 21 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency unloading of the earth and for its compacting. At least it is certainly a plausible view.
11. It has been opined by this Court that when it comes to setting aside of an award under the public policy ground, it would mean that the award should shock the conscience of the Court and would not include what the Court thinks is unjust on the facts of the case seeking to substitute its view for that of the arbitrator to do what it considers to be "justice".
12. The approach adopted by the learned Additional District Judge, Chandigarh was, thus, correct in not getting into the act of re-appreciating the evidence as the first appellate court from a trial court decree. An arbitrator is a chosen Judge by the parties and it is on limited parameters can the award be interfered with. 13. The learned Single Judge ought to have restrained himself from getting into the meanderings of evidence appreciation and acting like a second appellate court. In fact, even in second appeals, only questions of law are to be determined while the first appellate court is the final court on facts. In the present case, the learned Single Judge has, thus, acted in the first appeal against objections dismissed as if it was the first appellate court against a decree passed by the trial court."
20. The scope of interference with an arbitral award under Section 34 of the Act has been considered and discussed by Hon'ble Supreme Court in a judgment rendered in the case of 'MMTC Ltd. v.
Vedanta Ltd. reported in (2019) 4 SCC 163'. Paragraph nos. 11 to 14 of the said judgment are extracted below:
"11. As far as Section 34 is concerned, the position is well- settled by now that the Court does not sit in appeal over the arbitral award and may interfere on merits on the limited ground provided under Section 34(2)(b)(ii) i.e. if the award is against the public policy of India. As per the legal position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 22 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the "fundamental policy of Indian law" would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury reasonableness. Furthermore, "patent illegality" itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract.
12. It is only if one of these conditions is met that the Court may interfere with an arbitral award in terms of Section 34(2)(b)(ii), but such interference does not entail a review of the merits of the dispute, and is limited to situations where the findings of the arbitrator are arbitrary, capricious or perverse, or when the conscience of the Court is shocked, or when the illegality is not trivial but goes to the root of the matter. An arbitral award may not be interfered with if the view taken by the arbitrator is a possible view based on facts.
13. It is relevant to note that after the 2015 Amendment to Section 34, the above position stands somewhat modified. Pursuant to the insertion of Explanation 1 to Section 34(2), the scope of contravention of Indian public policy has been modified to the extent that it now means fraud or corruption in the making of the award, violation of Section 75 or Section 81 of the Act, contravention of the fundamental policy of Indian law, and conflict with the most basic notions of justice or morality. Additionally, sub-section (2-A) has been inserted in Section 34, which provides that in case of domestic arbitrations, violation of Indian public policy also includes patent illegality appearing on the face of the award. The proviso to the same states that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence.
14. As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 23 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency arbitral award has been confirmed by the court under Section 34 and by the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings."
21. In the case of 'Maharashtra State Electricity Distribution Company Ltd. v. Datar C.C.L. Ltd. reported in (2018) 3 SCC 133' it has been held by Hon'ble Supreme Court that "the proposition of law that the Arbitral Tribunal is the master of evidence and the findings of fact which are arrived at by the arbitrators on the basis of evidence on record are not to be scrutinised as if the Court was sitting in appeal now stands settled by catena of judgments pronounced by this Court without any exception thereto."
22. Ld. Arbitrator has passed the award upon consideration of material placed before him. There is nothing on record that the relevant material is not placed before the Ld. Arbitrator. There is nothing perverse or patent illegality in the findings of the Ld. Arbitrator.
23. The Ld. Sole Arbitrator has drawn inferences and conclusions after the factual appreciation in the light of the legal principles. The views of the Ld. Sole Arbitrator can not be found fault with only for the reason that some other views can emerge by appreciating the same set of facts and evidence, until and unless it is shown that such a view is totally obnoxious and unsupported by the sound legal principles.
24. This Court cannot substitute its own views or the views of the parties with the view taken by the Ld. Arbitral Tribunal, if the view taken by the Ld. Arbitrator is not in conflict with the settled legal OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 24 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency position. There is nothing to suggest that the findings and conclusions rendered by the Ld. Arbitrator are per-se perverse, illegal or non- sustainable or against public policy.
25. Accordingly, the present petition under Section 34 of the Arbitration and Conciliation Act as pressed into service by the petitioner is therefore not sustainable within the scope and ambit of the provision, therefore, liable to be dismissed and accordingly dismissed and disposed of.
26. File be consigned to record room after necessary compliance.
Digitally signedAJAY by AJAY KUMAR JAIN KUMAR Date:
2024.11.23 JAIN 16:45:46 +0530 Announced in open court (Ajay Kumar Jain) on 23rd November, 2024 District Judge, Comm-03 South-East, Saket Courts, Delhi OMP (COMM) 63/2023 Dt 23.11.2024. Page nos. 25 of 25 Container Corporation of India Vs. Sanjay Rana Security Agency