Madhya Pradesh High Court
M/S Narmada Transmission Pvt. Ltd Thr vs M.P. Madhya Kshetra Vidyut Vitran Co. ... on 11 May, 2020
Equivalent citations: AIRONLINE 2020 MP 532
Author: Sheel Nagu
Bench: Sheel Nagu, Rajeev Kumar Shrivastava
-( 1 )- A.R. No.03/2017
M/s Narmada Transmission Pvt. Ltd. v. M.P. Madhya Kshetra Vidyut Vitaran Co. Ltd. & Anr.
HIGH COURT OF MADHYA PRADESH
BENCH AT GWALIOR
DIVISION BENCH
BEFORE: SHEEL NAGU
AND
RAJEEV KUMAR SHRIVASTAVA, JJ.
Arbitration Revision No. 03/2017
M/s Narmada Transmission Pvt. Ltd.
Versus
M.P. Madhya Kshetra Vidyut Vitaran Co. Ltd. & Anr.
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Shri H.K. Dixit, learned counsel for the petitioner/revisionist.
Shri Vivek Jain, learned counsel for respondent No. 1.
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ORDER
(11/05/2020) Per Rajeev Kumar Shrivastava, J.:
This arbitration revision is preferred under Section 19 of the Madhya Pradesh Madhyastham Adadhikaran Adhiniyam, 1983 (for gravity "Adhiniyam") against the award dated 28/2/2017 passed in Reference Petition No. 148/2013 by Madhya Pradesh Arbitration Tribunal, Bhopal.
2. The facts in short are that the petitioner was awarded the work of Design, Manufacture, Pre-dispatch Instructions, Testing and Supply of Materials, Transportation, Insurance, Receipt, Erection, Storage, Testing and Commissioning of "Bifurcation and New 33 Kv, 11 Kv line under Package "A" in City Circle Gwalior and O & M Circle Gwalior on turnkey basis under APDRP Scheme". As per tender, the stipulation period for completion of work was 12 months from the date of Letter of Award i.e. 10/2/2005. The work orders amounting to Rs.4,63,79,413.46 paise were issued in favour of the petitioner to complete the work within -( 2 )- A.R. No.03/2017 M/s Narmada Transmission Pvt. Ltd. v. M.P. Madhya Kshetra Vidyut Vitaran Co. Ltd. & Anr.
the stipulated period. The delay in completion of the work was due to various substantial breaches and lapses on the part of the respondents, like non-payment of time-bound bills, delay in joint survey for finalizing scope of work by respondents, delay in issue of work orders, non-grant of extension of time by respondents, which resulted in delay in execution and non-completion of work. Due to aforesaid lapses on the part of the respondents, the petitioner applied for Extension of Time (hereinafter referred to as "EOT") but the same was not granted by the respondents, however, in anticipation of EOT, the petitioner continued execution of work till March, 2008. In meeting dated 31/1/2007, the petitioner gave two offers to the respondents. Firstly, the petitioner offered to execute the work as per work orders issued, within 9 months of the contract period provided the contract is limited to these work orders and secondly, the petitioner offered to complete 11 KV Karyavati Line and 11 KV AIR feeder by March, 2007 provided extension of time is provided to the petitioner. Respondent-officials requested to execute the work of work orders issued up to LOA period. Since EOT was not given by the respondents, therefore, the petitioner could not execute the work. The respondents vide its letter dated 26/2/2009 terminated the contract and imposed penalty amounting to Rs.39.42 lakhs on the petitioner vide their letter No.28459 dated 08/2/2011.
3. Being aggrieved by the imposition of penalty, the petitioner vide its letter dated 06/4/2011 (Exhibit P-14) sought waiver of penalty from the Chairman and Managing Director of the respondents. Since, no action was taken by the CMD of the respondents, the petitioner filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 before this Court for appointment of Arbitrator and filed a Reference Petition before the -( 3 )- A.R. No.03/2017 M/s Narmada Transmission Pvt. Ltd. v. M.P. Madhya Kshetra Vidyut Vitaran Co. Ltd. & Anr.
M.P. Arbitration Tribunal, Bhopal claiming a total sum of Rs.84, 95,237/- under the heads of 'setting aside recover and interest thereon'. The M.P. Arbitration Tribunal passed the impugned order.
4. Learned counsel for the petitioner has contended that the Tribunal has committed illegality and material irregularity in analyzing the events of non-performance which amounted to fundamental breaches of the contract and further failed in correctly deciding the liability of the respondents for such breach. The Tribunal has come to an erroneous conclusion that the petitioner is responsible for delay in submission of performance guarantee. The Tribunal has lost sight of the fact that delayed issue and submission of bank guarantee towards performance guarantee was a direct result of respondents' not making timely payment to petitioner's bankers under the bill-discounting scheme. The Tribunal has not held that there was no delay in bill-discounting. The Tribunal erred in not giving finding that there was no delay in submitting vendor approval by the petitioner. The finding is contrary to the material on record. The Tribunal has held that the petitioner is responsible for delay in conducting joint inspection, which is perverse. Joint survey was not within the scope of the petitioner. Clause 4.1 of the LOA stipulates that joint survey was to be arranged by the Executive Engineer of the respondents but superintending engineer has held the petitioner responsible for delay in conducting joint survey. There is no letter on record wherein the Executive Engineer, who was supposed to be responsible for joint survey, had directed the petitioner to be present in joint survey. The petitioner conducted the survey despite delay and submitted its report which was returned back by the respondents. This fact is well documented.
5. Learned counsel for the petitioner has further submitted that -( 4 )- A.R. No.03/2017 M/s Narmada Transmission Pvt. Ltd. v. M.P. Madhya Kshetra Vidyut Vitaran Co. Ltd. & Anr.
the Tribunal has wrongly observed that issuance of work order in piece meal did not delay the progress of work whereas the EOT was not granted by the respondents. Therefore, incorrect award has been passed. The Tribunal has lost sight of the fact that estimates of AIR feeder were required to be approved by the respondents only on 04.2.2009, two years after lapse of stipulated period, inspite of which the respondents have levied penalty on this work which carried misrepresentation. The Tribunal committed error by not considering lapses caused by the respondents which resulted in delay of performance of contract.
6. Learned counsel for the petitioner has also submitted that in the light of the judgment of Apex Court in Fateh Chand vs. Balkishan Dass (AIR 1963 SC 1405), wherein it is held that it does not justify the award of compensation when in consequence of the breach no legal injury at all has resulted, the Tribunal erred in passing impugned award. On these premises, learned counsel for the petitioner/revisionist has prayed to allow the revision and allow the claims of the petitioner with cost.
7. Per contra, learned counsel for the respondents has opposed the submissions put forth by learned counsel for the petitioner and has submitted that liability was with the petitioner to complete the work as per LOA. The petitioner was at fault by not submitting the bank guarantee within stipulated period and had not taken any initiation for joint survey as was proposed in the LOA. Hence, prayed to dismiss the revision preferred by the petitioner.
8. Heard learned counsel for the parties and perused the record.
9. It is undisputed that Letter of Award of contract dated 10/2/2005 was executed. As per LOA, the petitioner was required to submit bank guarantee of specific amount which was not -( 5 )- A.R. No.03/2017 M/s Narmada Transmission Pvt. Ltd. v. M.P. Madhya Kshetra Vidyut Vitaran Co. Ltd. & Anr.
submitted within the stipulated time. The defence has been taken by the petitioner that UCO bank denied to issue bank guarantee as the respondents were involved in the contract and the petitioner was a small enterprises and was only dealing within one bank i.e, UCO bank and was unable to undertake business from any other bank. It is also apparent from the Letter of Award on contract i.e., clause 4.1 of LOA that joint survey was to be arranged. LOA is Annexure A-1 placed in Reference Case No.148/2013 of M.P. Arbitration Tribunal, which runs as under:-
"4.1 The MPSEB has proposed for "Bifurcation and New 33 KV, 11 KV line under Package "A" in City Circle Gwalior and O&M Circle Gwalior in turn key basis under APDRP Scheme." as indicated in project synopsis.
After award of the contract the contractor will be required to contact Chief Executive Officer i.e. concerning Superintending Engineer of the Circle. He will decide location wise and feeder wise exact volume of the work in a specific section (feeder). Chief Executive Officer shall further instruct the Executive Engineer of the Division who will arrange a joint survey with contractor to finalize the scope of the work before commencement of the work. This is necessary due to the reason that some items or work have been executed in urgency before the award of this letter. Therefore the contract will be evaluated for the sum of the quantity decided after joint survey. The C.E.O. i.e. concerning Superintending Engineer of the circle shall however be the incharge of the execution of work.
Tentative details of the work is already given in the price schedule of tender specifications but it is subjected to be adjusted as per requirement after final and joint survey. However details of work is given hereunder:
S.No. Item O&M City Circle
Circle Gwalior
Gwalior
1 Bifurcation of 33KV Lines 63.00 KM 64.00 Km
2 Bifurcation of 11KV Lines 57.00 KM 16.20 km"
Aforesaid clause 4.1 of LOA specifies that after award of the contract the contractor will be required to contact Chief -( 6 )- A.R. No.03/2017 M/s Narmada Transmission Pvt. Ltd. v. M.P. Madhya Kshetra Vidyut Vitaran Co. Ltd. & Anr.
Executive Officer i.e. concerning Superintending Engineer of the Circle, who will decide location wise and feeder wise exact volume of the work in a specific section (feeder). Chief Executive Officer shall further instruct the Executive Engineer of the Division, who will arrange a joint survey with contractor to finalize the scope of the work before commencement of the work. This is necessary due to the reason that some items or work have been executed in urgency before the award of this letter. But, there is no any conversation on record which shows that any initiative was taken by the petitioner for conduction of joint survey.
10. Clause 11 of LOA runs as under:-
"(11) Payments:
11.1) The terms of payment for the supply and erection portion of the equipment/material will be as under as per clause 46.0 of GCC Vol. I of Tender specification.
(I) Price component of Material / Equipment :
The Price component of all equipment shall be paid as follows:
Nature of % of total price of the package Conditions to be Payment fulfilled
a) Initial 5% Advance As laid down in clause 46.7 (i) above. This shall get adjusted proportionally From running bill/receipt of material progressively.
Running bills 90% (on following conditions)
1) Running bills on successful completion of Erection, Testing and commissioning in a lot.
2) Submission of invoices and satisfactory evidence of shipment, insurance an material dispatch clearance certificate (MDCC) issued by the Owner's Quality Assurance and Inspection (QA&I) representative and receipt of material at agency's site store & on submission of Material Receipt of Certificate (MRC) Physical verification and certification by CEO of having receive and stored the equipment at site.
c) Final bill 10 % at the time of completion and handling over of all the equipment.
(II) Price component of erection:
Nature of payment Condition to be fulfilled
a) Initial Advance 5% of total erection price component of the package subject to conditions in clause 46.7.1 (ii) -( 7 )- A.R. No.03/2017 M/s Narmada Transmission Pvt. Ltd. v. M.P. Madhya Kshetra Vidyut Vitaran Co. Ltd. & Anr.
of payment condition of Tender document clause 46.0 Vol. I. This shall get adjusted proportionally from running bill/receipt of materials progressively.
b) Running Bills 90% of erection price component of the equipment on certificationi in lot.
i) Of the Engineer for the quantum of work completed.
(ii) Completion of testing and commissioning checks and acceptance by CEO.
iii) Putting the equipment in service.
c) On successful Completing of the Package. 10 % of the total erection price components of certification by the CEO.
iii) Due dates for payment:
Progressive payment shall be made as and when the payment is due as per the terms of payment discussed above and will be paid within forty five (45) days from the date of receipt of contractor bill by MPSEB, provided the documents submitted are complete in all respect."
11. In the present case, the petitioner was awarded the work of Design, Manufacture, Pre-dispatch Instructions, Testing and Supply of Materials, Transportation, Insurance, Receipt, Erection, Storage, Testing and Commissioning of "Bifurcation and New 33 Kv, 11 Kv line under Package "A" in City Circle Gwalior and O & M Circle Gwalior on turnkey basis under APDRP Scheme". As per tender, the stipulation period for completion of work was 12 months from the date of Letter of Award. The work orders amounting to Rs.4,63,79,413.46 paise were issued within the stipulated period. The delay in completion of the work was due to various substantial breaches and lapses on the part of the petitioner, like submission of bank guarantees within the stipulated period, he was required to take initiative for joint survey as was supposed in LOA. The lapses/breaches were on the part of the petitioner, because the petitioner has not submitted bank guarantees within the time without justified reason, he has not requested to start joint survey in stipulated time and he has failed to fulfill requirements mentioned in Clause 11 of LOA despite scheduled bill payments done by the respondents.-( 8 )- A.R. No.03/2017
M/s Narmada Transmission Pvt. Ltd. v. M.P. Madhya Kshetra Vidyut Vitaran Co. Ltd. & Anr.
12. Therefore, on the basis the aforesaid discussion and for the reasons mentioned herein above, we find no merit in the present revision under Section 19 of the Adhiniyam preferred by the petitioner. The revision is hereby dismissed. The impugned order dated 28/2/2017 passed in Reference Case No.148/2013 by M.P. Arbitration Tribunal is hereby affirmed.
Let a copy of this order be sent to the Tribunal along with the record.
(Sheel Nagu) (Rajeev Kumar Shrivastava) AKS Judge Judge ALOK KUMAR 2020.05.11 16:03:38 +05'30'