Pcm Strescon Overseas Ventures Limited vs Alstom Transport India Limited on 13 April, 2023

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Delhi High Court - Orders

Pcm Strescon Overseas Ventures Limited vs Alstom Transport India Limited on 13 April, 2023

1. Notice. Since the respondent is duly represented, let a reply be filed, if so chosen and advised, within a period of four weeks from today. The petitioner shall have two weeks thereafter to file a rejoinder.

2. The present petition questions the validity of the Award dated 16 December 2022. For the purposes of prima facie evaluating the correctness thereof, the Court firstly takes note of the claims which were raised by the petitioner and stand duly recorded and set forth in the Award as under:-

S. Claim Amount in From Date To No. of Int.@-- No. particulars INR Date Days %

1. Pending RA 7,66,47,051 05-03-2016 Bills (RA Bill No.7)

2. BG Invocation 10,18,87,500 19-10-2016 (as certified by the Chartered Signature Not Verified Acctt.) Digitally Signed By:NEHA Signing Date:16.04.2023 05:49:22

3. Losses due to 7,54,77,895 31-12-2015 change in design, idle labour, delayed payments etc.

4. Loss of profit 4.31.31,304 02-03-2016 expected on the works completed/ started (13934 Track Meters) (expectation as submitted to Bank while taking Loans

5. Loss of profit 14,56,88,099 02-03-2016 and direct and consequential losses for remaining 14 sections

6. Loss due to 4,51,18,900 19-10-2016 penal interest and penalty by bank due to BG Invocation and Rating decrease.

7. Loss due to 16,00,00,000 02-03-2016 idle Plants, as works lost due to reputation loss because of short termination.

8. Less: Advance -1,99,69,950 amount w.r.t.

S.No.2 above TOTAL 62,79,80,799

9. Claim for Reimbursement of Cost of Arbitration, Mediation and all logistics arrangements etc. : To be allowed as Signature Not Verified considered Digitally Signed suitable by the By:NEHA Signing Date:16.04.2023 05:49:22 Hon'ble Tribunal

10. Claim of Interest on the Amounts covered above, from the due dates shown in the table here, as deemed suitable by the Hon. Tribunal.

3. The respondents here had raised counterclaims which have also been duly noticed by the Arbitral Tribunal and are specified as follows:-

                                            Counter claim            Amount in Rs.
                    1.          Additional Amounts to Complete      13,08,93,105

the Remaining work under the Sub- Contract

2. Loss of Interest on delay of 20,66,976 repayment of advance amount

3. Recovery or Material issued 36,47,520 free to the Claimant

4. Liquidated Damages 8,15, 10,000

5. KP & KI Not pressed

6. NPOH Not pressed

7. Administrative and Legal Cost To be provided at the stage of final

8. Interest at the rate of 15% for 15%"

pre-reference, pendent lite and post award interest

4. For the purposes of considering the challenge prime facie to the Award, the Court has heard Mr. Mehta who contends that the findings with respect to liquidated damages are clearly devoid of all reasoning and have come to be mechanically entered. It was his submission that the aforesaid relief as granted clearly amounts to a patent illegality. The Court notes that while dealing with the claim for liquidated Signature Not Verified Digitally Signed damages the Arbitral Tribunal has recorded as follows:-

By:NEHA Signing Date:16.04.2023 05:49:22

"275. The Fourth counter claim is with regard to a claim of liquidated damages. „ The contractual basis for this is to be found in Annexure 4 of the SCA. This reads:

Liquidated Damages:

If the work is delayed on account of the Sub- Contractor, liquidated dainage shall be recovered as provided in the Subcontract Agreement. Such liquidated damage shall by 0.5% of the Subcontract Price per one week delay with an upper limit of 10% of the Subcontract Price.

SCC clause 23 of the Main Contract shall applicable to the Subcontractor as it applicable to the Contractor."

276. The claim of Alstom is for 10% of the SCA price which works out to ₹ 8,15,10,000. According to learned counsel for Alstom, PCM was contractually bound to complete 22 sections towards fulfilment of the SCA. As many as nine sections were handed over to PCM but it did not complete even a single section. Therefore, Alstom is entitled to liquidated damages and although the quantum of liquidated damages is quite substantial, there is a cap of 10% amount. It is further submitted that PCM did not ask for any extension of time to complete the contractual obligations nor was any extension of time granted.

277. The response of PCM is rather brief and cryptic. It is stated that "It is denied and disputed that an alleged NET COUNTER CLAIM of an alleged amount of Indian Rupees 8,15,10,000/-, is payable by the Claimant to the Respondent, and the Respondent is put to strict proof with regard thereto." There is no effective response given by PCM. Factually, since the work was not completed in any section, the claim made by Alstom is justified.

278. It is submitted on behalf of PCM that since liquidated damages have not been claimed against Alstom by DMRC, Alstom cannot, in turn, claim any liquidated damages from PCM. The Tribunal is unable to appreciate this submission or the logic behind it. In terms of the SCA, PCM is independently liable for liquidated damages and that is not dependent upon any claim made by MDRC against Alstom."

5. Taking the Court then to the grant of relief to the respondent under the head of risks and costs, the Court notes that the Arbitral Tribunal has ultimately and in Para 255 observed as under:-

Signature Not Verified "255. There is no challenge in the cross examination to the Digitally Signed By:NEHA Signing Date:16.04.2023 05:49:22

correctness of the purchase orders, terms of appointment, terms of employment and so on. Under the circumstances, coupled with the certificate of the firm of chartered accountants, the Tribunal concludes that the documents filed by Alstom are reliable and constitute evidence of extra expenditure incurred by Alstom. As mentioned by learned counsel for Alstom, the amount in this regard comes to 13,08,93,105 and this calculation is accepted, not having been challenged.

256. In the written submissions filed by learned counsel for Alstom on 10th May, 2022 this counter claim has been very fairly reworked in favour of PCM and it is stated that the counter claim amount now stands reduced to ₹ 7,15,19,167.50. To this, Alstom has added an amount of ₹ 81,00,388 for engaging staff and manpower to manage and keep track of the work done by the subcontractors.

Accordingly, the total claim of Alstom for risk and cost is ₹ 7,96,19,555.50. There is no reason to doubt this and PCM has not filed any affidavit either disputing or challenging this amount.

257. Accordingly, the Tribunal concludes that Alstom must succeed in its first counter claim and is awarded an amount of ₹ 7,96,19,555.50 against the claim of ₹ 13,08,93,105.50 in respect of this counter claim. PCM must pay an amount of ₹ 7,96,19,555.50 to Alstom against the claim of ₹ 13,08,93,105.50 in respect of this counter claim."

The challenge as raised consequently merits further consideration.

6. In view of the aforesaid, the operation of the impugned Award shall remain stayed provided the petitioner deposits a sum of Rs. 7,08,48,248.5/- [being Rs. 7,96,19,555.50/-, the amount awarded ultimately in favour of the respondent under the head of risks and costs - Rs. 87,71,307/-, the amount which has ultimately been granted in favour of the petitioner under Claim No.1].

7. The aforesaid deposit be made within a period of four weeks from today. The said deposit shall be without prejudice to the rights and contentions of the petitioner.

8. For the purposes of facilitating the disposal of the present petition, the Court also grants liberty to learned counsels for parties to place a common convenience compilation on the record. The said Signature Not Verified Digitally Signed compilation be placed 48 hours prior to the date fixed.

By:NEHA Signing Date:16.04.2023 05:49:22

9. List again on 18.08.2023.

YASHWANT VARMA, J.

APRIL 13, 2023 neha Signature Not Verified Digitally Signed By:NEHA Signing Date:16.04.2023 05:49:22

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Delhi High Court - Orders