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Showing contexts for: de-scoping in M/S. Hll Biotech Limited vs M/S. Eta Engineering Pvt. LtdMatching Fragments
The Terms of Payment under the Service Order is as follows:-
(i) 60% against installation of material at site;
(ii) 30% on successful commissioning; and
(iii) 10% on submission of all documentation and issuance of Final Acceptance Certificate from the respondent.
4.2. The progress of the work was very slow despite repeated reminders from the respondent. Thereafter the claimant expressed its inability to continue to the work due to financial limitation and requested the respondent to de-scope the balance work vide email dated 12.10.2017, through its Senior Manager-Electrical. The respondent also acceded to the https://www.mhc.tn.gov.in/judis claimant's request to make direct payment to its sub-vendors to ensure supply of materials and accordingly obtained administrative sanction and made direct payment to the sub-vendors of the claimant for supply of LT Cables and LT Panels. It was proposed to de-scope the balance work from the claimant and select alternate vendor to complete the said work to avoid further damages and also to initiate recuperative measures as per the terms and conditions of the tender document. The claimant herein was also informed about the same vide letter dated 03.10.2017. The respondent also de-scoped the work on the administrative approval granted and was re- tendered and awarded to M/s. Shri Vaari Electricals Limited, Chennai for a total value of Rs.86,30,358/-. In fact, the value of the de-scoped work as per the Purchase and Service Orders dated 29.09.2015 issued to the claimant was Rs.41,89,537/-. The increase of Rs.44,40,821/- in value occasioned due to the claimant abandoning the work and its failure in executing the work in time.
4.6. Due to de-scoped work, the increase of Rs.44,40,821/- was occasioned due to the abandonment of work by the claimant. Therefore, the respondent is liable to recover the said escalation amount from the claimant. Already, the claimant submitted Bank Gaurantee for a sum of Rs.21,19,968/- and the same has to be deducted from the escalated price of Rs.44,40,821/-. The remaining amount of Rs.23,20,853/- has to be paid by the claimant. Further, the respondent is entitled to recover the liquidated damages to the maximum of 5% of the contract price as per Clause-II (c) of the Purchase and Service Orders dated 29.09.2015. Thereby, the respondent is entitled to recover a sum of Rs.21,19,968/- from the claimant https://www.mhc.tn.gov.in/judis towards liquidated damages. Therefore, in total, the respondent is entitled to claim a sum of Rs.55,47,704/-.
In spite of several extension of time given to the respondents, he failed to complete the work and requested to de-scope the uncompleted work through email dated 12.10.2017. Thereafter, de-scoped work was awarded to M/s. Shri Vaari Electricals Limited, on 21.10.2017 for a total value of Rs.86,30,358/-. In fact, the value of the de-scoped work issued to the claimant for a sum of Rs.41,89,537/-. The increase of Rs.44,40,821/- was due to the abandonment of work by the respondent. All the invoices raised by the claimant were paid then and there. The total value of Purchase Order is Rs.3,69,29,065/-. 100% value of RA Invoices raised by the respondent is Rs.2,58,60,244/-. The 2nd milestone payment of 60% would come to a sum of Rs.1,73,72,921.90. The 1st milestone payment of 10% is Rs.16,54,656/. The respondent before the learned Arbitrator had claimed to be entitled for Purchase Order's balance milestone payments, alleging that the milestone works have been completed. But the respondent had never completed the work and thereby, the respondent is not entitled to the 100% value of the RA Invoices as claimed by them i.e., Rs.2,58,60,244/-. The above said aspects have not been considered by the learned Arbitrator. https://www.mhc.tn.gov.in/judis 7.1. The contract between the parties is based on Bill of Quantities [BOQ] and the mode of payment is milestone payment. The total amount shown in the RA Invoices is not per se value of the materials supplied. The calculation of the alleged payment due to the respondent arrived at by the Arbitrator has been based on addition of total amount of the RA bills minus 60% paid, is totally against the concept of milestone payment. The Arbitrator has totally gone against the essence of the contract. The Hon'ble single Judge has slighted away all these aspects by virtue of the principles of plausibility without considering the true essence of the contract. There is no termination of the contract, because the contract was de-scoped at the request of the respondent. Hence appropriation of the Performance Bank Guarantee is justifiable. Therefore the fair and decreetal order dated 28.02.2022 in Arb O.P. (Com. Div.) No.87 of 2022 on the file of the Original side of this Court by confirming the Arbitration Award in O.P. No.359 of 2020 dated 18.09.2021, is liable to be set aside.
8.1. As per the payment terms, the respondent / claimant is entitled to 60% payment at the time of delivery and the balance payment needs to be paid on various dates. There is no dispute that the stages set out in payment clause did not arise as the scope of work granted to the respondent was de-scoped vide letter dated 03.10.2017. Thus, transaction relationship between the appellant and respondent ended after supplying materials. The supply of materials is independent of service order. Hence, the de-scoping happened seamlessly. Since payments were not made, the respondent / claimant, for the materials supplied under the Purchase Order dated 29.09.2015, had invoked the Arbitration Clause and initiated the Arbitration proceedings. After filing the claim statement, the appellant herein filed a counter claim claiming that the respondent has to refund the excessive advance amount of Rs.11,06,883/- and to pay towards escalation charges of Rs.23,20,853/- after deducting the Performance Bank Guarantee and also claimed liquidated damages @ 5% on the total value of contract. https://www.mhc.tn.gov.in/judis 8.2. The learned Arbitrator passed a detailed and reasoned award by partly allowing the claim of the claimant and by partly allowing the counter claim filed by the respondent herein. The appellant challenged the said award and the learned single Judge has penned a very reasoned order by holding that the learned Arbitrator has passed award analysing all the facts, understanding between the parties and the performance of the contract by the respective parties. The Arbitral Tribunal had further clearly calculated the value of the total materials supplied and passed an award.