Dismissed

Vinay Heavy Equipments& Foundation Pvt. Ltd. v. Oriental Structural Engineers Pvt. Ltd. & Anr.

Delhi HC20 Nov 2018O.M.P./696/2010

Case brief

AI extract

What is this about?

Single judge order upholding an arbitral award fixing the net quantum due to the petitioner contractor. The court accepted the Respondent's explanation regarding TDS and ordered a structural adjustment reducing the payable amount.

What did the court decide?

Modified the award amount to Rs. 12,28,072/-; increased statutory delay interest to 14% p.a. if payment is not made within three months.

Vinay Heavy Equipments& Foundation Pvt. Ltd. Vs Oriental… — Arbitration | Delhi HC (2018)

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$~13

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IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision: 20^th November, 2018

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- O.M.P. 696/2010 VINAY HEAVY EQUIPMENTS & FOUNDATION PVT LTD. ..... Petitioner Through: Mr. Thomas Franklin Caesar, Advocate (M-9818805668).

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versus

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ORIENTAL STRUCTURAL ENGINEERS PVT LTD & ANR. ..... Respondents Through: Mr. Anil Airi, Senior Advocate with Mr. Ravi K. Chandna, Ms. Sadhna Sharma, Ms. Sukanya Lal & Mr. Satyam Bhatia, Advocates (M9711752002).

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CORAM: JUSTICE PRATHIBA M. SINGH

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Prathiba M. Singh, J. (Oral)

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The present petition under Section 34 has been preferred challenging the award dated 28^th June, 2010 passed by the Ld. Sole Arbitrator who was the Executive Director (Retd.) of the Airport Authority of India.

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The Petitioner - Vinay Heavy Equipments & Foundation Pvt. Ltd. was awarded the work “Piling work at Chidambaram Bypass at 301, 302, 303 & 304” vide Order No.OSE/TNRSP01/PRW-WO/274 dated 29^th February, 2008. The contract was awarded by the Respondents - Oriental Structural Engineers Pvt. Ltd. The total value of the work was Rs.1,42,25,000/-. The date of start, as per the contract, was 10^th March, 2008. The work order was accepted by the contractor, however, disputes arose between the parties. The Respondent invoked arbitration and the Ld. Sole Arbitrator was appointed.

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O.M.P. 696/2010

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Page 1 of 7

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The Respondent raised various claims and the contractor raised counter claims which are extracted herein below:

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“Claim No.1 - for a sum of Rs.17,11,250.00 being the advance payment along with interest @ 18% p.a. to be refunded to OSEPL by M/s Vinay Heavy Equipments & Foundation Pvt. Ltd.

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Claim No.2 - for a sum of Rs.1,34,434.00 being the amount on account of Crane and Monkey hammer to be paid to OSEPL by M/s Vinay Heavy Equipments & Foundation Pvt. Ltd.

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Claim No.3 - for a sum of Rs.1,99,968.00 being the amount for providing bentonite material & for organizing the mixing & swelling arrangements to be paid to OSEPL by M/s Vinay Heavy Equipments & Foundation Pvt. Ltd.

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Claim No.4 - for a sum of Rs.50,000.00 being the amount for scrap fabricating material to be paid to OSEPL by M/s Vinay Heavy Equipments & Foundation Pvt. Ltd.

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Claim No.5 - for losses and damages on account of delay towards loss of Head Office overheads and profits (Rs.13,65,600.00) and loss of site office overheads (Rs.34,14,000.00)

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Claim No.6 - for interest at 18% p.a. from 19.06.2008 until date of payment

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Claim No.7 - for a sum of Rs.2,22,46,643.00 being the penalty levied along with interest @ 18% p.a. from 23.08.08 till date of payment to be paid to OSEPL by M/s Vinay Heavy Equipments & Foundation Pvt. Ltd. Claim No.8 - for cost of Arbitration.

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Counter Claims of Respondents

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Page 2 of 7

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O.M.P. 696/2010

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Counter Claim No.1 - for payment of Rs.10,97,000/for the work done between 02.04.2008 and 09.06.2008.

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Counter Claim No.2 - for payment of Rs.17,40,000/towards idle charges for the machineries kept idle at site for want of clearance from Claimant’s consultant to erect liner up to depth of refusal level.

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Counter Claim No.3 - for payment of Rs.28,25,600/as damages.

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Counter Claim No.4 - for payment towards interest on payments due at the rate of 18% per annum.

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Counter Claim No.5 - for cost of Arbitration proceedings.”

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The Ld. Sole Arbitrator, under Claim No.1, records the fact that the contractor had been paid mobilisation charges and mobilisation advance to the tune of Rs.10,00,000/- and Rs.7,11,250/- respectively, constituting a total amount of Rs.17,11,250/-. The case of the Respondent was that the contractor had failed to mobilise the equipment required for completion of the work and in fact it is the admitted position on record that the contractor did not stay even for a period of four days at site despite the mobilisation charges and advance having been paid by the Respondent. Considering this position, the Ld. Arbitrator came to the conclusion that the contractor is liable to pay back the mobilisation charges and the mobilisation advance paid to him after deducting the amount of work actually done by the contractor.

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Claim No.2 of Respondent was rejected. In Claim No.3, the Respondent had claimed a sum of Rs.1,99,968/-. The Arbitrator records as

Page 3 of 7

O.M.P. 696/2010

under:

“4.02 The Respondents, on its part, has admitted (Exh C-12 dated 04.11.2008) their liability for a sum of Rs.99,968.00 on account of cost of bentonite material but have denied their liability to the charges for mixing and swelling as they claimed to have done the operation themselves. During the oral hearing, I had directed the Claimant to submit detailed analysis of their claim of Rs.1,99,968/-. The Claimants could not submit a detailed analysis but orally stated that a lump sum (Emphasis supplied) of Rs.1,00,000/- was charged towards organizing, mixing and swelling arrangement of bentonite material.”

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In view of the fact that the Respondent could not place evidence supporting the claim of Rs. 1,99,968/-, but the contractor had admitted the liability for the sum of Rs. 99,968/-, this claim was allowed by the Arbitrator in the following terms:

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“4.03 I have carefully examined the documents and have heard the Learned Counsels for the parties at length. There is absence of any detailed analysis of the claim. In view of the facts and circumstances of the case, and keeping in view the liability admitted by the Respondent for the cost of the material, I allow this claim to the extent of the cost of material supplied i.e. Rs.99,968/- together with 10% thereupon pursuant to clause 6.06 of the Work Order. This Claim is thus admitted for Rs.1,09,964.80P only.”

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The remaining claims of the Respondent were all rejected except claim for interest where interest @12% was awarded.

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In respect of the counter claims, the Arbitrator held that a net amount of Rs.4,33,178/- is liable to be paid to the contractor in view of the work done by them. In respect of this claim, the contractor had sought a sum of

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Page 4 of 7

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O.M.P. 696/2010

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Rs.10,97,000/-, but the Arbitrator went by the figures given by the Claimant and not refuted by the Respondent. The Arbitrator then applied the rates mentioned in the work order and arrived at a sum of Rs.7,28,000/- as per the said rates as being payable to the contractor.

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Since the contractor had already made recoveries towards a sum of Rs.2,94,822/- net amount payable to the contractor was held to be Rs.4,33,178/-. The remaining counter claims related to interest and cost. 10. In conclusion, therefore, the Arbitrator awarded a sum of Rs.1,27,872/- calculated in the following manner:

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“10.01 The Claimants shall be paid by M/s Vinay Heavy Equipments & Foundation Private Limited (Respondent), under Claim no.1, an amount of Rs.12,78,072/- as per statement given below, along with simple interest @ 12% per annum w.e.f. 19.06.2008 until the date of realization.

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A. Total payments made to M/s Vinay Heavy Equipments & Foundation Private Limited (Respondents) (i) Free Mobilization charge for Rs.10,00,000 Transportation of all necessary plants, equipments, piling rigs, materials, etc. at site and demobilization on completion of work. (ii) Mobilization Advance Rs.17,11,250.00 (@ 5% of value of work) Total amount Rs.17,11,250.00

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B. Dues for M/s Vinay Heavy Equipments & Foundation Private Limited (Respondents) (i) Work done as per Work Order Rs.7,28,000.00 Rates from March 2008 to June 2008 (ii) Recoveries

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Page 5 of 7

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O.M.P. 696/2010

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(a) Diesel issued and other material Debits ( i/c pile driving hammers ) Rs.2,13,490.63

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(b) Crane, Transit mixer and JCB Rs.53,694.18 Charges

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(c) Any other expenses incurred Rs.27,637.00 By OSE (TDS 1,113%) Total Recoveries Rs.2,94,821.81 Say .................................... Rs.2,94,822.00 C. Net Amount due B(i) – B(ii) Rs.4,33,178.00 D. Payment due to Claimant Rs.12,78,072.00 From Respondent (A-C) along with simple Interest @ 12% p.a. ”

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The Ld. Counsel for the Petitioner – Mr. Thomas Franklin Caesar submits that there are calculation errors made by the Arbitrator. The first submission is that the entire mobilisation charges were not paid to the contractor. As under Clause 6.05, 5% of the gross value of the work was deducted. Thus, this amount ought to have been given credit for. The second submission is that the TDS was to be deducted in respect of PRW and not the contractor.

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Mr. Anil Airi, Ld. Senior Counsel for the Respondents submits that insofar as the retention money of 5% is concerned, it should be considered as having been advanced and since the contractor had abandoned, the adjustment is not liable to be given. Insofar as the TDS is concerned, the Ld. Counsel for the Respondents submits that PRW is only a description of the contractor who was supposed to execute the `Piling Related Work (PRW)’ . The explanation of the term PRW is mentioned in Clause 1.03 of the Sub Contract Work Order (General Terms and Conditions). The PRW is not another entity but the contractor itself, who is referred as PRW. It is submitted by Mr. Thomas that the TDS was not paid in respect of the O.M.P. 696/2010 Page 6 of 7

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expenses which were deducted., The arbitrator has held that the recoveries have been effected to the extent as calculated. This obviously has to include the TDS amount towards the said recoveries. Thus, the TDS amount cannot be removed and is rightly considered as being part of the amount paid to the contractor.

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The Court has heard the counsels for the parties. Insofar as TDS is concerned, this Court accepts the explanation given by the counsel for the Respondent inasmuch as the work order refers to the sub-contractor as PRW, who is the contractor - Vinay Heavy Equipments & Foundation Pvt. Ltd. The Petitioner is described as a sub-contractor because the Respondent - Oriental Structural Engineers Pvt. Ltd. was the main contractor from the Tamil Nadu Road Sector Project 01.

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Insofar as the amount of Rs.50,000/-, which was deducted under Clause 6.05 is concerned, as the same was retained by the Respondent and was not released to the Petitioner, the adjustment deserves to be granted. Accordingly, the award is upheld holding that the amount due to the Respondent from the contractor is Rs.12,28,072/-. The Arbitrator has granted interest @ 12% per annum which shall be applicable till date of this order. If the payment is not made within three months, interest @ 14% per annum would be liable to be paid by the contractor to the Respondent. 15. The petition is disposed of with the above terms.

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PRATHIBA M. SINGH JUDGE

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NOVEMBER 20, 2018/ Rahul

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Page 7 of 7

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O.M.P. 696/2010

Vinay Heavy Equipments& Foundation Pvt. Ltd. v. Oriental Structural Engineers Pvt. Ltd. & Anr.

Case brief

What is this about?

What did the court decide?

Vinay Heavy Equipments& Foundation Pvt. Ltd. v. Oriental Structural Engineers Pvt. Ltd. & Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Parties & counsel

Coram

Case details

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