Gujarat High Court
Larsen And Toubro Limited vs Jmc Projects (India) Ltd on 14 February, 2017
Bench: M.R. Shah, B.N. Karia
C/CA/455/2017 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CIVIL APPLICATION (FOR STAY) NO. 455 of 2017
In FIRST APPEAL NO. 490 of 2017
For Approval and Signature:
HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE B.N. KARIA
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1 Whether Reporters of Local Papers may be allowed to see
the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law as
to the interpretation of the Constitution of India or any
order made thereunder ?
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LARSEN AND TOUBRO LIMITED....Applicant(s)
Versus
JMC PROJECTS (INDIA) LTD.....Respondent(s)
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Appearance:
MR MIHIR JOSHI, SR. ADVOCATE with MR RASESH H PARIKH, ADVOCATE for the
Applicant(s) No. 1
MR HEMANG H PARIKH, ADVOCATE for the Applicant(s) No. 1
MR MANISH BHATT, SR. ADVOCATE with MR JAY KANSARA with MR RAHUL DEV for M/S
WADIA GHANDY & CO, CAVEATOR for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE B.N. KARIA
Date : 14/02/2017
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] RULE. Shri Jay Kansara, learned Advocate appearing for Wadia Ghandy & Company, who is on caveat, waives service of notice of Rule Page 1 of 7 HC-NIC Page 1 of 7 Created On Sun Aug 13 15:13:46 IST 2017 C/CA/455/2017 JUDGMENT on behalf of the respondent. In the facts and circumstances of the case and with the consent of learned Counsel appearing for respective parties, present application is taken up for final hearing today.
[2.0] Present application has been preferred by the applicant herein - original appellant - original applicant before the learned Commercial Court, City Civil Court, Ahmedabad (hereinafter referred to as "Commercial Court") and original opponent before the learned Arbitrator for an appropriate interim order to stay further execution and implementation of the impugned judgment and order passed by the learned Commercial Court under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "Arbitration Act") during the pendency and final disposal of the main First Appeal.
[3.0] Shri Mihir Joshi, learned Counsel appearing on behalf of the applicant herein has vehemently submitted that as such in the facts and circumstances of the case, the learned Arbitrator as well as the learned Commercial Court has materially erred in awarding the interest at the rate of 15% per annum. It is submitted that when the First Appeal is admitted and the impugned judgment and order passed by the learned Commercial Court is at large before this Court, if this Court directs the applicant to deposit the entire amount as per the judgment and order passed by the learned Commercial Court, in that case, the respondent may not be permitted to withdraw the entire amount. He has submitted that as such in the facts and circumstances of the case, the applicant may not be directed to deposit the entire amount and the applicant may furnish the Bank Guarantee of the like amount.
No other submissions have been made.
[4.0] On other hand Shri M.R. Bhatt, learned Counsel appearing on Page 2 of 7 HC-NIC Page 2 of 7 Created On Sun Aug 13 15:13:46 IST 2017 C/CA/455/2017 JUDGMENT behalf of the respondent - original claimant has submitted that the award passed by the learned Arbitrator confirmed by the learned Commercial Court / modified by the learned Commercial Court can be said to be a money decree. It is submitted that as such the dispute between the parties is since 2002 and is a commercial dispute and therefore, the applicant may be directed to deposit the entire amount due and payable under the impugned judgment and order passed by the learned Commercial Court and the respondent - original claimant, who has succeeded after a period of 14 years, may be permitted to withdraw the same either on furnishing the Bank Guarantee to the extent of 50% and rest 50% on furnishing the corporate guarantee backed by the resolution passed by the Board of Directors of the respondent Company and/or the rest 50% may be permitted to be withdrawn without furnishing any security / Bank Guarantee.
[5.0] Heard learned Counsel appearing for respective parties at length.
At the outset it is required to be noted that the dispute between the parties can be said to be a commercial dispute. The dispute between the parties arose in the year 2002. The dispute was referred for arbitration. There were in all 13 claims before the learned Arbitrator. Most of them came to be allowed by the learned Arbitrator except the claim Nos.7 to 12. Before the learned Arbitrator there were counter claims raised by the applicant herein - original opponent, out of which learned Arbitrator partly allowed the counter claim No.4. On an appeal the learned Arbitrator has by and large confirmed the decision of the learned Arbitrator, however has reversed the finding recorded by the learned Arbitrator with respect to claim No.1, which is the subject matter of First Appeal preferred by the original applicant. The statement with respect to claim, the status in award and the status in the impugned Page 3 of 7 HC-NIC Page 3 of 7 Created On Sun Aug 13 15:13:46 IST 2017 C/CA/455/2017 JUDGMENT judgment and order passed by the learned Commercial Court is as under:
Sr. Description Amount (Rs.) Status in Status in No. Arbitration Award impugned judgment
1. OGL Preparation 84,40,957 Allowed Reversed
2. Extra over for Kerb laying 12,11,898 Allowed Allowed
3. Extra charges for 7,90,636 Allowed Allowed transporting of earth beyond 1 km
4. Extra/over for payment 6,53,814 Allowed Allowed marking thermoplastic plant
5. Surface drain 90,73,642 Allowed Allowed
6. Additional cost incurred due 2,84,58,260 Allowed Allowed to change in bulk density and compacted density
7. Escalation (beyond ceiling of 1,90,40,119 Rejected These claims 5% up to May 2002) as per were not price variation formula challenged and including bitumen therefore, attained finality with Arbitration Award.
8. Escalation beyond May 2002 1,52,81,372 as per price variation formula including bitumen.
9. Reimbursement of over 92,10,284 heads / fixed expenses for extended period
10. Reimbursement for 1,44,54,500 deployment / idling of equipment during extended period
11. Compensation towards 57,89,536 interest cost due to late release of payment.
12. Loss of business opportunity 1,07,00,452 13(i) Claim for retention money 6,65,778 Allowed under clause 16.4 of the agreement 13(ii) Amount billed but not paid 6,18,986 Allowed by Appellant 13(iii) Claim for additional work 12,34,537 Allowed done by Claimant 13(iv) Amount not paid to Claimant 11,32,144 Allowed due to pending work Page 4 of 7 HC-NIC Page 4 of 7 Created On Sun Aug 13 15:13:46 IST 2017 C/CA/455/2017 JUDGMENT 13(v) Claim in respect of ROB 14,20,454 This claim of the work Claimant is rejected. In fact, Appellant is given credit of Rs.7,17,401/ in the final award as amount for ROB was paid by appellant.
Counter Liquidated Damages Rs.2,13,31,595/ Rejected Rejected Claim No.1 being 5% of sub contract value for an amount of Counter Reimbursement of Rejected Rejected Claim No.2 idling charges paid to Toll Booth Contractor / Sub Contractor Counter Reimbursement of Rs.23,44,372.60 Rejected Claim No.3 expenses incurred by respondent for completing BOQ items not executed by JMC Counter Reimbursement of Rs.70,03,710.80 Partly allowed Claim No.4 costs incurred by respondent for competing Balance works and defective works not executed by JMC That the learned Arbitrator has awarded the interest at the rate of 15% from the date of reference till the award declared by the learned Arbitrator and at the rate of 18% for the period thereafter. Thus, the award passed by the learned Arbitrator confirmed / modified by the learned Commercial Court can be said to be money decree. As observed hereinabove the dispute is commercial dispute and the dispute arose between the parties in the year 2002.
[5.1] Considering the aforesaid facts and circumstances and bearing in mind the amended Arbitration Act (though in strict senso it may not be applicable retrospectively), however considering the fact that the award Page 5 of 7 HC-NIC Page 5 of 7 Created On Sun Aug 13 15:13:46 IST 2017 C/CA/455/2017 JUDGMENT declared by the learned Arbitrator, confirmed / modified by the learned Commercial Court can be said to be money decree, we deem it fit to grant the interim relief on condition that the applicant shall deposit entire amount as per the judgment and order passed by the learned Commercial Court impugned in the appeal together with the interest and cost and the original applicant may be permitted to withdraw 50% on furnishing Bank Guarantee on and balance 50% on furnishing corporate guarantee which shall be backed by the resolution of the Board of Directors of the respondent Company. So far as the contention on behalf of the applicant that the learned Arbitrator has awarded exorbitant interest at the rate of 15% and therefore, the applicant may not be directed to deposit the amount with 15% interest is concerned, it is required to be noted that as such the learned Arbitrator has awarded the interest at the rate of 15% from the date of reference to the learned Arbitrator till the award is passed and no interest has been awarded for the period between the date on which dispute arose till the reference to the learned Arbitrator was made.
[5.2] Under the circumstances, prima facie it cannot be said that the interest awarded by the learned Arbitrator confirmed by the learned Commercial Court can be said to be too exorbitant.
[6.0] In view of the above and for the reasons stated above, by way of AdInterim Relief, it is directed that the impugned judgment and order dated 14.10.2016 in Commercial Civil Misc. Application No.04 of 2016 passed by the learned Commercial Court, City Civil Court, Ahmedabad is stayed on condition that the applicant shall deposit the entire amount as per the impugned judgment and order passed by the learned Commercial Court together with interest and cost with the learned Commercial Court within a period of 4 weeks from today and on such Page 6 of 7 HC-NIC Page 6 of 7 Created On Sun Aug 13 15:13:46 IST 2017 C/CA/455/2017 JUDGMENT deposit the respondent is directed to withdraw 50% of the amount so deposited on furnishing Bank Guarantee which shall continue to remain in operation till the final disposal of the main First Appeal and the balance 50% of the amount is permitted to be withdrawn by the respondent - original claimant on furnishing corporate guarantee backed by the resolution of the Board of Directors of the respondent - original claimant Company. However, aforesaid shall be without prejudice to the rights and contentions of the respective parties in the main First Appeal. Rule is made absolute to the aforesaid extent. In the facts and circumstances of the case there shall be no order as to costs.
Sd/ (M.R. SHAH, J.) Sd/ (B.N. KARIA, J.) Ajay Page 7 of 7 HC-NIC Page 7 of 7 Created On Sun Aug 13 15:13:46 IST 2017