M/S.Movell Solution Private Limitted v. Kerala State Electronics Development Corporation Ltd.-Keltron

Kerala HC17 Nov 2021WA/1483/2021

Case brief

AI extract

What is this about?

Appellant challenged the High Court's dismissal of a petition seeking payment of a balance amount. The Bench held that the matter must be placed before the Managing Director of the Corporation under the arbitration clause in the work order, directing the corporate authority to take a decision after a hearing.

What the court decided

AI extract

M/S.Movell Solution Private Limitted Vs… — Contract and Commercial Disputes | Kerala HC (2021)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR

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THE HONOURABLE MR.JUSTICE SHAJI P.CHALY

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WEDNESDAY, THE 17TH DAY OF NOVEMBER 2021 / 26TH KARTHIKA, 1943

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WA NO. 1483 OF 2021

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AGAINST THE JUDGMENT IN WP(C)29448/2019 OF HIGH COURT OF KERALA,

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ERNAKULAM

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APPELLANTS:

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M/S.MOVELL SOLUTION PRIVATE LIMITED,
CENTRE POINT, THRISSUR – 680 021,
REPRESENTED BY ITS DIRECTOR MANAS K.V.,
S/O.MAMMU, AGED 33 YEARS.

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BY ADVS.
NIRMAL S.
VEENA HARI
RIA ELIZABETH JOSEPH
IRENE ELZA SOJI
K.REMIYA RAMACHANDRAN

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RESPONDENT/S:

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1 KERALA STATE ELECTRONICS DEVELOPMENT CORPORATION LTD., KELTRON HOUSE, VELLAYAMBALAM, THIRUVANANTHAPURAM - 695 033, REPRESENTED BY ITS MANAGING DIRECTOR.

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2 ACCOUNTANT GENERAL ACCOUNTANT GENERAL'S OFFICE, THIRUVANANTHAPURAM - 695 001.

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3 DEPUTY ACCOUNTANT GENERAL ACCOUNTANT GENERAL'S OFFICE, THIRUVANANTHAPURAM - 695 001.

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W.A.No.1483 of 2021

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4STATE OF KERALA
REPRESENTED BY SECRETARY,
DEPARTMENT OF INDUSTRIES, SECRETARIAT,
THIRUVANANTHAPURAM - 695 001.

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SRI. TEK CHAND, SR. GP,
SRI. K.I.MAYANKUTTY MATHER,
SMT. M.A ZOHRA

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
17.11.2021, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:

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W.A.No.1483 of 2021

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JUDGMENT

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Dated this the 17^th day of November, 2021

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S.Manikumar, C.J.

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Contending inter alia that the amounts due and payable to the writ petitioner has not been disbursed despite Exhibit P8 notice dated 11.06.2019, W.P.(C)No.29448 of 2019 has been filed for a direction to the Kerala State Electronics Development Corporation Ltd. (respondent No.1 therein) to consider the demand in Exhibit P8 notice afresh and pay the outstanding balance amount to the petitioner.

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Writ petitioner has also sought for a mandamus directing the Accountant General, Thiruvananthapuram (respondent No.2 therein) to take immediate steps against respondent No.1 to ensure back to back payment to the petitioner.

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Adverting to the rival submissions and material on record vide judgment dated 18.03.2021 in W.P.(C)No.29448 of 2019, writ court dismissed the writ petition as hereunder:

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“11. Though the counsel for the petitioner would

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dispute the allegations of the 1^st respondent regarding low quality of work and would contend that as the 1^st respondent has received the amount payable by the 2^nd respondent against the invoices raised by the petitioner, the 1^st respondent is bound to release the entire amount due to the petitioner. If the quality of the work rendered by the petitioner is substandard, then the 1^st respondent indeed would be justified in withholding retention amount. The question whether the work of the petitioner was up to the standard required by the respondents or was substandard, is a question of fact which this Court cannot go into, in exercise of the powers under Article 226 of the Constitution of India. For the very same reason, this Court cannot direct the 1st respondent to effect payment to the petitioner now.

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In the facts of the case, the writ petition is dismissed reserving the right of the petitioner to proceed against the respondents for balance amount if due, through appropriate legal proceedings, if the petitioner is so advised.”

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Being aggrieved, instant writ appeal is filed on the grounds inter alia that the writ court has failed to consider the relevant terms and conditions enabling conciliation and the failure to refer the matter for arbitration.

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Inviting the attention of this court on clause 11 of the

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W.A.No.1483 of 2021

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terms and conditions of the contract, submissions were made

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and taking note of the same on 11.11.2021, we passed the following order:

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“Being aggrieved by the judgment dated 18.03.2021 in W.P.(C) No.29448 of 2019, which was confirmed in R.P. No.324 of 2021, instant writ appeal is filed.

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Writ petition has been filed for a direction to Kerala State Electronics Development Corporation Ltd., Thiruvananthapuram, represented by its Managing Director, first respondent, to consider the demand in Ext.P8 notice afresh and pay the outstanding balance amount to the petitioner/appellant and for a direction to the Accountant General, Thiruvananthapuram, 2^nd respondent, to take immediate steps against 1^st respondent, to ensure back to back payment to the petitioner.

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After considering the rival submissions, writ court, by judgment dated 18.03.2021 in W.P.(C)No.29448 of 2019, ordered thus:

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“11. Though the counsel for the petitioner would dispute the allegations of the 1^st respondent regarding low quality of work and would contend that as the 1st respondent has received the amount payable by the 2^nd respondent against the invoices raised by the petitioner, the 1st respondent is bound to release the entire amount due to the petitioner. If the quality of the work rendered by the petitioner is substandard, then the 1st respondent indeed would be justified in withholding retention amount. The question whether the work of the petitioner was up to the standard required by the respondents or was substandard, is a question of fact which this Court

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W.A.No.1483 of 2021

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cannot go into, in exercise of the powers under Article 226 of the Constitution of India. For the very same reason, this Court cannot direct the 1st respondent to effect payment to the petitioner now.

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Inviting the attention of this court to the prayers sought for and clause 11.1 in the General Terms and Conditions of the Contract, Mr. Nirmal S., learned counsel for the appellant, submitted that in the light of the abovesaid clause, there is no difficulty in directing consideration of Ext.P8. He further submitted that either during execution of the work of scanning, digitalization and data entry of the documents or after the completion of the work, there was any complaint of any deficiency in the work or the quality of work executed by the appellant.

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Even though a notice was issued requesting for payment of the balance amount, respondent No.1/Kerala State Electronics Development Corporation Limited has not sent any specific reply alleging deficiency in the work or quality.

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Clause 11.1 in the General Terms and Conditions of the Contract, which is marked as Annexure A1, read as under:

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“11. Settlement of Disputes:

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11.1 If a dispute of any kind whatsoever arises between the KELTRON and the Contractor in connection with, or arising out of the Contract or the execution of the works, whether during the execution of the Works or after their completion and whether before or after repudiation or after

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W.A.No.1483 of 2021

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termination of the contract, including any disagreement by either party with any action, inaction, opinion, instruction, determination, certificate or valuation of the Project Leader or his nominee, the matter in dispute shall, in first place be referred to the Executive Director, Keltron who shall act as the conciliator on the matter. The disputes will firstly be settled by the Conciliator, failing which any party may invoke arbitration clause.”

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Mrs.M.A.Zohra, learned counsel appearing for respondent No.1/Kerala State Electronics Development Corporation Limited, submitted that writ appeal consists of 170 pages, but copy of appeal papers upto 107 alone were furnished.

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She further submitted that the appellant has produced certain other documents, such as the general terms and conditions of contract, bid form, etc. only at the appellate stage.

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Mr. Nirmal.S, learned counsel for the appellant, is directed to furnish the remaining pages in the writ appeal i.e., from 108 to 170, to the learned counsel appearing for respondent No.1/Kerala State Electronics Development Corporation Limited.

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Post on 17.11.2021.”

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On this day, when the matter came up for further hearing, Ms.M.A.Zohra, learned counsel appearing for the KELTRON submitted that in view of the amendment made in

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the Arbitration and Conciliation Act, 1996, by which the

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provision for conciliation has been deleted and inasmuch as the post of Executive Director in KELTRON has no longer in existence, clause 11.1 of the terms and conditions of the contract cannot be enforced.

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She further submitted that after the issuance of Exhibit P8 notice dated 11.06.2019, writ petitioner was asked to appear before the competent authority. The petitioner did not appear, but approached this court by filing W.P. (C)No.29448 of 2019 for the abovesaid reliefs.

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However, when the learned standing counsel for KELTRON submitted that no such post of Executive Director is in existence, Mr.S.Nirmal, learned counsel for the appellant, by inviting the attention of this court to the arbitration clause in the work order issued in favour of the appellant dated 16.09.2014, submitted that all disputes arising out of the contract can be referred to the Managing Director whose decision shall be final and binding on both parties.

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Arbitration clause provided in the work order issued

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in favour of the appellant dated 16.09.2014, is reproduced:

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“ Arbitration :

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All disputes arising out of this contract shall be referred to our Managing Director whose decision shall be final and binding on both parties.”

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When attention of this court was invited to learned standing counsel for KELTRON (respondent No.4), she submitted that there is no difficulty in placing the matter before the Managing Director, KELTRON, for appropriate decision.

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We record the submission of the learned counsel for KELTRON and considering prayer No.1 made in W.P.(C) No.29448 of 2019, we direct that the disputes so raised in Exhibit P8 lawyer’s notice dated 11.06.2019 be placed before the Managing Director, KELTRON and after providing an opportunity of hearing, the Managing Director, KELTRON is directed to take a decision in terms of the arbitration clause in the work order dated 16.09.2014.

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Though the arbitration clause in the work order dated 16.09.2014 states that the decision of the Managing Director shall be final and binding on both parties, we are of

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the view that the court cannot restrict the rights of the

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parties to seek for arbitration, if required.

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Writ appeal is disposed of as above.

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Pending interlocutory applications, if any, shall stand

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