M/S Siddhi Ferrous vs M/S Uppal Builders

Vibhu Bakhru, J

I.A. 7491/2022

This is an application seeking condonation of delay in filing the application.

For the reasons stated in the application, the same is allowed.

I.A. 7490/2022

This is an application seeking restoration of the above-captioned petition, which was dismissed in default on 23.08.2021. This Court had noted that the petitioner had not appeared on the previous hearing as well (that is, hearing held on 28.07.2021).

The present petition was first listed on 13.01.2015. The parties had taken an inordinately long period to complete the pleadings. The parties have not filed their submissions. It is seen that the petitioner had also not been diligently pursuing the present petition.

Accordingly, on 21.03.2016, the petition was dismissed in default. After lapse of more than one and a half years, the petitioner once against sought restoration of the above-captioned petition, which was restored by an order dated 31.01.2018.

On 23.08.2021, the petition was dismissed in default for the second time.

Since the learned counsel for the petitioner contends that he had not noted down the next date of hearing in his diary and therefore, the listing of the matter had escaped his attention, this Court considers it apposite to allow the present petition.

The petition is restored to the position as existing on 23.08.2021.

O.M.P. (COMM) 357/2020

The petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter ‘the A&C Act’) impugning an arbitral award dated 17.04.2014 (hereafter ‘the impugned award’).

The impugned award was rendered in context of the disputes that have arisen between the parties in connection with an agreement dated 24.01.2009 (hereafter the ‘Agreement’).

The petitioner is the owner of an industrial premises at Bajpur District, Udhamsingh Nagar, Uttarakhand. The parties had entered into the Agreement for carrying out construction of the factory building at the said industrial premises for a total consideration of Rs. 2,57,00,000/-.

The Arbitral Tribunal had found that after the parties had entered into the Agreement, the respondent had commenced the work of excavation of the foundation for constructing the factory premises, however, the petitioner had thereafter, issued instructions for stopping the work and to defer further construction for a period of two to three months. Admittedly, the work could not be resumed because the petitioner had not secured the necessary sanctions from the competent authority for carrying out the said construction. The respondent continued to await further instructions from the petitioner, however, the same were not forthcoming.

In view of the above, the respondent served a legal notice dated 02.08.2011 raising the claims, as set out in the following tabular statement:-

Claim No.

Particulars

Claimed Amount

Claim No.1

The value of work done without discount.

Rs. 49,219.63/-

Claim No.2

The refund of Bank Guarantee Charges incurred by the Claimant.

Rs. 18,200/-

Claim No.3

Interest at the rate of 24% On blocked payment of dues as per Claim Nos.1 & 2 above.

Rs. 54,748.43/-

Claim No.4

Loss of profit and overheads.

Rs. 53,39,000/-

Claim no.5

Interest Pendente lite and PreSuit at the rate of 24 % per annum.

Claim no.6

Cost of arbitration.

Rs. 41,00,000/-

The Director of the respondent company filed evidence by way of an affidavit and was also cross-examined. After evaluation of the evidence available on record, the Arbitral Tribunal concluded that the respondent was entitled for a sum of Rs. 67,619/- on account of the works executed. The petitioner resisted the aforesaid claim on the ground that it was not certified by an architect. However, the material on record indicates that the respondent’s claim had not been forwarded as, according to the petitioner, it was less than Rs. 10,00,000/- and the respondent was not entitled to raise a bill of less than Rs. 10,00,000/-.

Clearly, the decision of the Arbitral Tribunal to accept the claim of the respondent for the work done, cannot be faulted. The Arbitral Tribunal has also awarded interest at the rate of 12% per annum on the said amount. This Court finds no ground to interfere with the said award as well.

The learned counsel for the petitioner contended that the award of loss of profits, is without any material. The said contention is also unpersuasive. The respondent had raised a claim of loss of profit and overheads, estimating the same to be 20% of the contract value. As noted above, the Director of the respondent had led evidence and was also cross-examined. Undeniably, since the Arbitral Tribunal had found that the petitioner was responsible for terminating the Agreement, a claim for loss of profits and overheads would be maintainable.

Insofar as the quantification is concerned, the Arbitral Tribunal had awarded loss of profits at the rate of 7.5% based on the Delhi Schedule of Rates published by CPWD, which provides for 15% as profits and overheads. The respondent’s claim for overheads was restricted to 1.5% of the contract value, as according to the petitioner, the respondent was also carrying on the work at another site in the vicinity of the site in question and therefore, its expenditure on overheads relating to the project would have been negligible.

This Court is unable to accept that the arbitral award is not based on any material evidence and warrants any interference in these proceedings.

The learned counsel for the petitioner had also earnestly contended that the interest rate awarded was excessive. The said contention is also unmerited. The Arbitral Tribunal has allowed simple interest at the rate of 12% per annum. This Court finds no ground whatsoever to interfere with the same.

The petition is unmerited and, accordingly, dismissed.