Dismissed

M/S Uday Estate Pvt. Ltd. & Anr. v. M/S Schindler India Pvt. Ltd.

Delhi HC9 May 2018FAO(OS) (COMM)/98/2018

Case brief

AI extract

What is this about?

This intra-court appeal concerned an arbitral award regarding an agreement for the installation of elevators. The High Court dismissed the appellants' challenge to the award, finding the arbitrator's findings on breach of contract and the cost of supplied materials were well-reasoned and just.

What did the court decide?

INTRA-COURT APPEAL DISMISSED; SINGLE JUDGE'S ORDER AFFIRMED; NO COSTS.

M/S Uday Estate Pvt. Ltd. & Anr. Vs M/S Schindler India Pvt. Ltd. — Arbitration | Delhi HC (2018)

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$~22

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IN THE HIGH COURT OF DELHI AT NEW DELHI

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+ FAO(OS) (COMM) 98/2018 and CM Nos. 18905/2018 &18906/2018

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Date of decision: 9^th May, 2018

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M/S UDAY ESTATE PVT LTD & ANR. ..... Appellants Through Mr. Sanat Kumar, Sr. Adv. with Mr. Anish Chawla, Ms. Shriya and Mr. Vinayak Batta, Advs.

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versus

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M/S SCHINDLER INDIA PVT LTD. ..... Respondent Through

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CORAM:

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HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE CHANDER SHEKHAR

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SANJIV KHANNA, J. (ORAL):

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This intra court appeal under Section 37 of the Arbitration and Conciliation Act, 1996 read with Section 13 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 impugns order dated 05.02.2018 passed by the Ld. Single Judge in O.M.O.(Comm.) No.7/2008, whereby objections raised by the appellants, M/s Uday Estate Pvt. Ltd. and Mr. Abhishek Gupta against the Arbitral Award dated 24.08.2017 under Section 34 of the Act have been dismissed.

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Learned counsel for the appellants submits that the

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FAO (OS) (Comm.) 98/2018 Page 1 of 7

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contract for installation of the elevators (lifts) being a Works contract, the Arbitrator and Single Judge have erroneously and wrongly relied upon Section 42 of the Sales of Goods Act, 1930. At best damages could have been awarded and therefore direction that the appellants should pay for the supplied parts/goods is contrary to law. Findings of facts recorded in the Award are challenged.

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We have considered the contentions, but do not find any merit in the submissions made. 4. Agreement dated 28.12.2009 was entered into by the parties for delivery, installation and commissioning of five elevators (lifts) in the under construction hotel of the appellants at Shastri Park, Delhi. Total contract price of Rs.98 lakhs was payable by the appellants to the respondent in three instalments, 23.5% in advance on signing of the Agreement, 65% on intimation by the respondent that the material was available at their warehouse and balance 11.5% was payable on physical completion of installation of the elevators. Material was to be dispatched within ten weeks’ from the approval of layout and technical specifications. Physical installation was to be completed in ten weeks’ from the date of start of installation work at the site.

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The parties had thereafter agreed to a change in the specifications vide letter dated 15.06.2011. Subsequently terms of agreement were modified vide supplementary agreement dated 05.01.2011, on change of specifications of elevators (lifts)

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FAO (OS) (Comm.) 98/2018 Page 2 of 7

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and the delivery schedule. The total value price was revised and reduced to Rs.96.90 Lakhs.

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It is accepted that Rs.23 Lakhs being 23.5% advance was paid by the appellants to the respondent.

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The Award records that the respondent had delivered material worth Rs. 61,98,729/- at the construction site i.e. the hotel on 11.08.2011, 19.08.2011, 20.08.2011 and 22.02.2012. The appellants do not dispute delivery of material on the aforesaid dates but had plead ignorance as the material was received late at night and was in packed condition. The material was delivered without inventory list and delivery challan and could not be inspected and verified. The Award however notices that the appellants had never challenged and contested the delivery of material for installation of lifts or stated that they wanted physical inspection of the material received.

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The Award notices other important facets. Firstly there were defaults on the part of the appellants and consequently installation of the lifts could not be completed. The Award refers to the correspondence and emails exchanged, which establish and prove that the layout plan and drawings of the lift shaft were repeatedly changed and modified. The Award relies upon letter dated 19.04.2011 issued by the respondent and rejects the appellants' purported defence in the form of letter dated 12.04.2011 which was posted only on 20.04.2011 i.e. after deficiency and defaults were pointed out by the

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FAO (OS) (Comm.) 98/2018 Page 3 of 7

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respondent. Letter dated 19.04.2011 reads as under:-

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"Dear Sir

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Reference: Elevator at your site at Shastri Park, Delhi We had visited the above site & had a meeting with your representative.

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The site is not ready for “PULL (Start of manufacturing)”, according to the attached site visit report, as per contract clause no.8-A. We kindly ask you to complete the pending open activities accordingly as per the scheduled date. Please not that due to these delays at site, final handing over of the elevator/elevators to you will get delayed. According to your very, specific request/requirement, we are going to “Pull” the material and the same will be invoiced to you for the “Pull instalment” which has to be paid before the dispatch of material to your site. With this letter we also request you to give us a proper room for material storage as per contract clause no.7. In case of unavailable and/or not proper material storage room, each missing and damaged part will be supplied to you at additional charge.

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Also please note that the installation of the elevator will start at the site based on compliance of contract clause no.8-B.

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Please get in touch with the undersigned for any support required from our end.

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FAO (OS) (Comm.) 98/2018 Page 4 of 7

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Yours sincerely

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Schindler India Pvt. Ltd.”

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The factum that the 'Pull' was not ready and the respondents were unable to finalize details stood confirmed vide email sent by Mr. Zia Ul Rehman, Assistant Architect of the appellants on 28.04.2011. Email of Mr. Amit dated 29.04.2011 had stated on that on checking it was found that there were variations in elevator drawings and actual physical position at the site. The Award also makes reference to subsequent emails and correspondence on the said aspects.

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It is apparent and beyond doubt that the construction of hotel was not completed in all respects. Mr. Abhishek Gupta, the 2^nd appellant before us, in his statement recorded before the Arbitrator on 22.09.2016 had accepted that the construction was still incomplete. Thus, construction of the hotel was not complete even on 22.09.2016. The material worth Rs.61,98,729/- as noticed above was supplied in August, 2011 and February, 2012. It may be pertinent and relevant to state here that the respondent had waited more than two years after supply of material at the site, before initiating arbitration proceedings vide notice dated 19.11.2013.

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Another aspect which is significant is that the material supplied was as per the drawings and specification of the lifts given by the appellants and thus the contention that the material could be taken back/returned has been rightly rejected. Award

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FAO (OS) (Comm.) 98/2018 Page 5 of 7

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records that the material was tailor made as per the requirements and as per the measurements of the lift shafts. Material could not be used elsewhere. Thus, the respondent was entitled to cost of the materials/goods supplied, which should not be denied.

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The Award while rejecting claim that the respondents had supplied material worth Rs. 78,15,376/- on the basis of delivery receipts and consignment notes has firmly recorded that material worth Rs. 61,98,729 was supplied. As appellants had made payments worth Rs. 23,00,000/- and accordingly balance amount of Rs. 38,98,729/- along with interest at the rate of 12% from December, 2013 i.e. from the date when the legal notice was sent, would be payable. The factual findings on defaults, breach of contract and value of the material supplied, are well reasoned and cogent. To be fair, hardly any challenge was raised to contest these findings.

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In the aforesaid background, the contention of the appellants predicated on sales of Goods Act viz. works contract pales into insignificance and are irrelevant for it would not matter whether the Arbitrator had awarded damages or whether the Arbitrator should have awarded cost of the material supplied. In fact award of damages may have been at a higher figure. Reference to the cost of material was to ensure that the respondent was paid and compensated for the cost of the material actually supplied as installation of lifts, that had got stalled and could not be completed on account of lapses and

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FAO (OS) (Comm.) 98/2018 Page 6 of 7

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defaults of the appellants. The Award is just, fair and equitable. 14. For the aforesaid reasons we are not inclined to interfere with the Award. Single Judge has examined these aspects and had also not found any infirmity and reason to upset the Award. 15. Appeal has no merit and the same is accordingly dismissed. No costs.

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SANJIV KHANNA, J

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CHANDER SHEKHAR, J MAY 09, 2018 b

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FAO (OS) (Comm.) 98/2018 Page 7 of 7

M/S Uday Estate Pvt. Ltd. & Anr. v. M/S Schindler India Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

M/S Uday Estate Pvt. Ltd. & Anr. v. M/S Schindler India Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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