Deioners vs West Central Railway Kota

Manmohan Singh, J.—The petitioner has filed the abovementioned petition u/s 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ''the Act'') who has sought the following reliefs:-

(a) grant ex-parte ad-interim injunction, restraining the respondents from encashing/forfeiting the earnest money & security money;

(b) grant ex-parte stay whereby directing and restraining the respondents not to enforce any penalty;

(c) grant ex-parte ad-interim injunction, restraining the respondents not to recover any amount, from any outstanding amount available with the respondent;

(d) after notice to the respondents, the above order may be confirmed till the Arbitrator makes and publishes the award;

(e) award cost of the petition to the petitioner.

On 29th November, 2012, the interim order was passed restraining the respondent to encash the performance Bank Guarantee No. 02100005711 in the sum of Rs. 2,13,591/- which is stated to be valid till 5th June, 2013 or forfeit the earnest money and security deposit furnished by the petitioner.

The petitioner has made various averments in the petition. However, it is not necessary to discuss each and every averment for the purpose of deciding the issue in hand as to whether the petitioner is entitled for the interim relief sought.

The fact of the matter is that the Work Order No. W/1623/15/136/2010 dated 27th October, 2010 was sanctioned in favour of the petitioner on acceptance of its tender bid. The work order was expected to be close on 26th February, 2011. However, the petitioner failed to complete the work within time.

The petitioner made request to the respondent for extension of time and the respondent twice extended the time for completion of the work. The petitioner was granted extension from 27th February, 2011 to 30th June, 2011 without penalty and further from 1st July, 2011 to 30th December, 2011 with penalty. The petitioner did not start the work within seven days of the acceptance letter. The petitioner started work on 1st March, 2011 and its first running bill of Rs. 10,61,972/- was paid on 11th April, 2011 and the second running bill of Rs. 4,58,962/- was paid on 1st March, 2012.

As per the respondent, the petitioner did not want to complete the work, so it started making excuses and in its effort to wriggle itself out of the contractual obligation demanded closure of the contract on administrative reasons. Despite of two extensions, the petitioner could only complete 40% of the work and its extension was expired on 30th December, 2011.

It is the case of the respondent that the entire payment due to the petitioner till date was made. The respondent vide letter dated 31st March, 2012 intimated the petitioner that since it failed to perform and only 40% of the work was completed by it, hence either it should complete the work expeditiously or action as per clause 62 of the General Conditions of Contract would be initiated against the petitioner. Again, vide letter dated 15th May, 2012 the respondent intimated to the petitioner that no amount was due to the petitioner and it should complete the work, but to no effect which constrained the respondent to give notice of 7 days in compliance of clause 62 of the General Conditions of Contract to the petitioner. As the petitioner did not comply with the provisions of the contract, hence, the respondent was compelled to rescind the same vide letter dated 11th October, 2012. The respondent submitted that it had to suffer losses on account of petitioner''s failure to comply with the contract and complete the work, issued letter for forfeiture of security and earnest money deposited by the petitioner vide letter dated 21st November, 2012.

In view of the above said facts and circumstances, I am of the view that there is no force in the submissions of the learned counsel for the petitioner, as the respondent has already rescinded the contract vide letter dated 11th October, 2012 under the compliance of Clause 62 of the General Conditions of Contract particularly in view of the statement made that the entire amount due to the petitioner has already paid and the petitioner even failed to perform his complete part, as only 40% of the work was completed by him. In fact, the respondent has suffered losses on account of the petitioner''s failure to comply with the contract and to complete the work.

Therefore, the question of granting the stay order, directing the respondent not to enforce any penalty and not to recover any amount from the petitioner, does not arise, as the matter between the parties has to be considered by the Arbitrator to be appointed as per the agreement as and when any dispute is raised by either of the parties.

The petitioner is also not entitled for the prayer, restraining the respondent from encashing the Performance Bank Guarantee in the sum of Rs. 2,13,591/- in view of the reasons mentioned above. Similar is the position regarding forfeiture of the earnest money and security deposit furnished by the petitioner who is otherwise entitled to raise its claims before the Arbitrator in case of any amount due. The petition is accordingly dismissed. The interim order as granted by order dated 29th November, 2012 stands vacated. No costs.