Delhi District Court
M/S Ncl Global Infratech vs M/S Sbi Infra Management Solutions Pvt. ... on 29 June, 2020
IN THE COURT OF MS. ANJU BAJAJ CHANDNA, DISTRICT
JUDGE (COMMERCIAL COURT)-01, PATIALA HOUSE COURT
NEW DELHI
Arbtn No.223/20
M/s NCL Global Infratech
A Partnership firm
Through its Partners.
Office at:
B-57, Mansrovar Garden,
New Delhi-110015.
............Petitioner
Versus
M/s SBI Infra Management Solutions Pvt. Ltd.
D-Block, LHO Building,
11 Parliament Street,
New Delhi-110001.
Through its Chief General manager
E-mail ID: [email protected]
.............Respondents.
Date of Institution : 10.06.2020
Arguments heard on : 29.06.2020
Decided on : 29.06.2020
Appearances : Sh. Vikram Jit Saini, Ld. Counsel for petitioner.
Sh. Jai Mohan, Ld. Counsel for respondent.
(Through video conferencing).
JUDGMENT
1. The present petition is filed by the petitioner under Section 9 of Arbitration & Conciliation Act, 1996 for the following interim Page 1 of 15 relief:
(a) Pass an interim injunction in favour of the applicant against the respondent thereby restraining the respondent from forfeiting the earnest money of Rs.1,25,000/- and further restraining the respondent from canceling the tender and debarring the applicant from tendering in SBI PAN India in future tender.
(b) Pass an order thereby directing the respondent bank to clarify the items in tender of dismantling work at site and fixing vitrified tiles items, in the interest of justice.
2. The relevant facts necessary for adjudication of the present matter are that the petitioner (a partnership firm) is engaged in the field of construction/renovation/up-gradation works in civil, interior furniture & furnishing etc. The respondent floated a tender for doing interior furnishing work for SBI F-1 and MM at West Wing, Second Floor, NBCC Place, Lodhi Road, New Delhi, in response to which petitioner submitted its bid on 04.03.2020 with earnest money of Rs.1,25,000/- (Rupees One Lakh Twenty Five Thousand Only). The applicant has been the successful bidder and has been awarded Page 2 of 15 tender as per tender documents through e-mail dated 06.03.2020. Due to lock-down in Delhi, the permission was not granted by NBCC management for entrance of labour at site, although several times management was requested to get issued pass work permission so that the dismantling work could be carried out. Vide e-mail dated 11.05.2020 petitioner had shown its preparedness for starting work subject as also the petitioner has been ready to start the work at the site. The e-mail dated 13.05.2020 has also been referred to whereby architect was requested to allow the labour to enter the premises subject to permission granted by NBCC through SBI. The petitioner has also been ready to submit bank guarantee and security deposit as per tender conditions but due to lock-down and banks working with limited staff and entertaining emergency work only, the bank guarantee and security deposit could not be prepared.
3. It is further the case of the petitioner that while executing the work, the quantity of vitrified tiles mentioned in the tender document came out to be much lesser than actual/existing quantity. It is specifically asserted that first item for removing, dismantling and leveling is 2055 sq. [email protected]/- per sq. mtrs and second Page 3 of 15 item for P/L vitrified tiles is 350 sq. mtrs @ Rs.1150/- per sq. mtrs, but in the tender documents both the items have been clubbed together and accordingly the petitioner requested the respondent through its architect to clarify both the items and accordingly sent e-mails dated 23.05.2020 and 26.05.2020. The respondent however instead of clarifying the tender documents started putting pressure on the petitioner to submit bank guarantee of Rs.27,99,335/- (Rupees Twenty Seven Lakhs Niney Thousand Three Hundred and Thirty Five only) with security deposit of Rs.70,413/- and also threatened to cancel the tender and forfeit the earnest money. Further petitioner was warned that in case bank guarantee and security deposit are not submitted till 06.06.2020, the petitioner firm would be debarred from tendering in SBI Bank.
4. The petitioner sent e-mail dated 04.06.2020 to the respondent requesting to clarify the items and shown its willingness to submit bank guarantee. The respondent through its architect again sent letter dated 04.06.2020 through e-mail but again instead of clarifying the controversy, threatened to forfeit the earnest money and blacklist the firm of the petitioner. Another e-mail dated 05.06.2020 was sent by the respondent to pressurize the petitioner. Page 4 of 15
5. It is contended by the petitioner that they have always been ready to complete the work at the site and also to submit the bank guarantee and security deposit as per tender conditions but the respondent has been deliberately and intentionally not clarifying the ambiguity and confusion. If the bank guarantee and security deposit are submitted first without seeking clarifications, the petitioner firm would suffer unnecessary financial loss.
6. Since tender documents provide for arbitration clause for resolution of the disputes, the present application is filed.
7. The respondent filed reply to the petition taking preliminary objections that there has been no cause of action in respect of the present petition as also no arbitration agreement existed between the parties. The contentions of respondent has been that Notice Inviting Tender (NIT) was floated on 21.02.2020 and bids were to be submitted till 04.03.2020 and furnished bids were to be opened on 04.03.2020 itself. All the tenderers were given 14 days to understand, deliberate, calculate and to assess their own capability to execute the work as also pre-bid meeting was held on 27.02.2020 with all contractors were invited at the site to give an opportunity to analyse the nature of work and working Page 5 of 15 conditions and to calculate the costs etc. The petitioner submitted its bid, which was conditionally accepted vide letter of acceptance dated 12.03.2020. Salient features of the offer have been as follows:
Clause Name of Work Terms and conditions 2 Time allowed for completion 40 days from date of handing over of the site 4 Initial security deposit 2% of the total values of the contract including earnest money.
6 Pre-Bid Meeting 27/02/2020 at 12:00 P.M (at 2nd Floor, NBCC Place, Lodhi Road, New Delhi).
7 Last date and time of 04.03.2020 upto 3:00 pm. receipt to Tenders 9 Date and time of opening of 04.03.2020 at 4:00 pm Tenders 15 Note The vendor has to obtain all necessary approvals / permissions, lesioning if any from the appropriate government authorities required for the completion of the above contract at the site mentioned in this tender. The vendor has to comnply all the rules and regulations which are necessary for the execution of the contract and shall indemnify the SBIIMS/SBI from all legal and monetary liabilities arising due to the Page 6 of 15 violation of the approvals/permissions, rules and regulations.
Special Conditions The works must be
completed and handed over
latest by April 15, 2020.
Time is Essence of the
Contract
If L 1 amount is below more
than 10% from estimated
amount, a performance
guarantee of difference in
amount shall have to be
deposited by the L 1
Contractor
8. Besides the Bid documents, an undertaking had also been given by the petitioner, which is as under:
▪ I refer to the tender notice issued by you for Electrical works and allied works in connection with the above.
▪ I undertake to submit in hard copy the tender document alongwith all terms & conditions, specifications and subsequent annexure and corrigenda duly signed and stamped by authorized representative/signatory on becoming L1. However, we accept all the terms and conditions alongwith the specifications, drawings, layouts etc defined in the tender documents.Page 7 of 15
▪ I hereby offer to perform, provide, execute, complete and maintain the works in conformity with the drawings, designs, conditions of contract & specifications schedule of quantities relating to the works.
▪ I have satisfied myself/ourselves as to the site conditions, examined the drawings drawings and all aspects of the tender conditions, subject to above, I / We do hereby agree, should this tender be accepted in whole or in part, to abide by and fulfill all the terms and provisions of the said conditions annexed hereto. Complete the works within 40 days as per the work programme enclosed with the tender in two or three shifts if considered necessary by the Employer/Consultants at no extra cost to the Employer.
2. I have deposited a non-refundable amount of Rs.3000/- (Rupees Three Thousand Only) towards processing fee of tender and an earnest money of Rs.125000/- (Rupees One Lakh Twenty Five Thousand Only) in the form of Demand Draft/Banker's Cheque drawn in favor of SBIIMS payable at New Delhi and State Bank of India payable at New Delhi, respectively which, I note, will not bear any interest and is liable for forfeiture.
▪ If our offer is withdrawn within the validity period of acceptance by the Employer.
Or Page 8 of 15 ▪ If the contract agreement is not executed by us within 7 days from the date of receipt of the letter of acceptance.
Or ▪ If we fail to pay the initial security deposit as stipulated. ▪ If the work is not commenced within 3 days from issue of work order.
▪ I understand that you are not bound to accept the lower or any tender you receive.
9. In pursuance to the acceptance of bid, the petitioner was informed vide e-mail dated 06.03.2020 as successful bidder and was required to submit the performance guarantee of Rs.27 lakhs without loss of time as the time was essence of contract which was to be completed on 15.04.2020. Again the information was sent to petitioner vide letter dated 07.03.2020 to submit performance guarantee and security deposit. It is further the case of the respondent that bid of the applicant was accepted subject to conditions, inter alia as under:
(a) Execution of the formal agreement within seven days from the date of receipt of the LOA or the date of handing over Page 9 of 15 the site whichever is later.
(b) Payment of the initial security deposit (ISD) less EMD by means of demand draft in favor of respondent within a period of three days from the intimation of the letter of acceptance of tender.
(c) Submission of performance guarantee (PG) for Rs.27,99,335/- in favour of respondent within a period of three days from the intimation of the letter of acceptance of tender.
(d) Start the work at once.
(e) Time will be the essence of the contract.
10. According to the respondent, despite various communications to the petitioner to perform the conditions of the bid, the applicant/petitioner has failed to submit performance guarantee and initial security deposit as well to resume the work and has shown no interest in the tender work. The respondent was constrained to issue new tender dated 10.06.2020 which has been opened on 24.06.2020 and bids are being scrutinized. The Page 10 of 15 petitioner for the fist time on 23.05.2020 disputed its own price bid and is responsible for delaying the project. Further, the respondent has denied each and every claim of the petitioner and has prayed for dismissal of the petition.
11. In support of his contentions, Ld. Counsel for respondent has relied upon following judgments:
1. Provident Multi Trading Pvt. Ltd. Vs. Maharashtra Maritime Board Home Department 2019 (5) RAJ 574 (Bom).
2. Allied Medical Ltd. Vs. Uttar Pradesh Health Systems Strengthening Project 2019(3) RAJ 581 (Del).
3. Banara Bearing & Pistons Ltd. Vs. Mahle Engine Components India Pvt. Ltd. 2018 (5) RAJ 370 (Del).
4. M/s National Coop. Consumer's Federation of India Ltd.
Vs. UOI through HIEF Director of Purchase 2008 (3) RAJ 69 (Del).
5. Ajanta Paper & General Products Ltd. Vs. Union of India 2006 (4) RAJ 208 (Del).
6. FCI Vs. Subhash Chander Laxmi Narain 2006 (2) RAJ 515 (Del.).
Page 11 of 15
7. Hindustan Steel Works Constructions Ltd. Vs. UOI 2019 (3) RAJ 92 (Del).
12. I have heard both the Counsels through video conferencing and have perused the judicial record.
13. According to Section 9 of the Arbitration and Conciliation Act 1996:
9. Interim measures, etc. by Court.--A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court--
(i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or
(ii) for an interim measure of protection in respect of any of the following matters, namely:--
(a) the preservation, interim custody or sale of any goods which are the subjectmatter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any property or thing which is the subjectmatter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or Page 12 of 15 any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may appear to the court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.
(2) Whether, before the commencement of the arbitral proceedings, a court passes an order for any interim measure of protection under sub section (1), the arbitral proceedings shall be commenced within a period of ninety days from the date of such order or within such further time as the Court may determine. (3) Once the arbitral tribunal has been constituted, the Court shall not entertain an application under subsection (1), unless the court finds that circumstances exist which may not render the remedy provided under Section 17 efficacious.
14. Un-disputedly, petitioner has been successful bidder and bid of the petitioner was accepted by the respondent. However, it is also true that petitioner was required to fulfill certain conditions as the acceptance was conditional and only thereafter the parties were required to execute formal agreement. The petitioner was required to submit performance guarantee and security deposit, which Page 13 of 15 despite various communications petitioner failed to deposit. The issue raised by the petitioner as to the quantity of vitrified tiles to be much lesser than actual/existing quantity, was for the first time raised on 23.05.2020 i.e. much after the time period for fulfillment of conditions, had already expired. A valid agreement / contract was not executed between the parties and therefore the petitioner can not be allowed to invoke the terms of the proposed agreement. The contract in question is a public contract and pre conditions thereof should have been fulfilled at the earliest, which admittedly the petitioner has failed to adhere to.
15. There is no prima facie case in favor of the petitioner and in my opinion the petitioner is not entitled for any interim relief, primarily for the reason that no valid and conclusive agreement came into existence between the parties. Mere conditional acceptance of bid would not give rise to cause of action under the proposed agreement.
16. The ratio of judgments relied upon by the respondent are categorical to the effect that conditional acceptance amounts to counter offer and the relevant date is the date on which the conditions are complied with. The failure to perform the obligations Page 14 of 15 under tender cannot be ignored.
17. As primary obligations to furnish performance guarantee and security deposit were not complied with by the petitioner, and agreement was not formally entered into by the parties, petitioner is not entitled to take the benefit of arbitration clause.
18. In view of my aforesaid findings, the petition of the petitioner under Section 9 of Arbitration & Conciliation Act, 1996 as well as interim application, are dismissed. However, petitioner is at liberty to pursue any other remedy available to him under Civil Law.
19. File be consigned to Record Room.
ANNOUNCED IN THE OPEN COURT on 29th June, 2020 ANJU BAJAJ CHANDNA District Judge (Commercial Court)-01 Patiala House Court, New Delhi.
29.06.2020 Page 15 of 15