Allowed

M/S Ajay Construction Co. v. State of Haryana

Punjab & Haryana HC1 May 2014CWP/1467/2013

Case brief

AI extract

What is this about?

Petitioner challenged a letter declining refund of security deposit. The court held the department liable to refund the amount within one month of the arbitration award. The writ petition was allowed, and interest for delay was granted.

What did the court decide?

Direction to respondent to make payment of interest @ 10% on Rs.7 lacs for 08 months and a cost of Rs.10,000.

M/S Ajay Construction Co. Vs State… — Contract and Commercial Disputes | Punjab & Haryana HC (2014)

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CWP No. 1467 of 2013 (O&M) -1-

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IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH

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CWP No. 1467 of 2013 (O&M) Date of decision : 01.05.2014

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M/s Ajay Construction Co.

.. .. Petitioner

versus

State of Haryana

..Respondent

CORAM: HON'BLE MS. JUSTICE RITU BAHRI

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Present: Mr. D.K. Singal, Advocate for the petitioner.

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Mr. Shivendra Swaroop, AAG, Haryana

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To be referred to the Reporters or not?

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Whether the judgment should be reported in the Digest?

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********

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RITU BAHRI , J.

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The petitioner-Company has approached this Court by way

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of instant writ petition filed under Articles 226/227 of the Constitution of India, seeking a writ in the nature of certiorari for quashing of letter dated 29.11.2012 (P-6) issued by respondent No. 5 whereby respondent No. 5 has declined to refund the security deposit of Rs.7 lacs while invoking arbitration clause even after concluding of arbitration proceedings and passing of arbitration award dated 24.05.2012 (P-1)

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Brief facts of the case are an agreement No. 2/98-99 was

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entered in to between petitioner and respondent No. 5 forArora Gaurav

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Arora Gaurav 2014.05.08 16:20 I attest to the accuracy and integrity of this document

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CWP No. 1467 of 2013 (O&M) -2-

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“construction of 50 bedded Hospital (Main Building) at Mandikhera, Gurgaon including internal public health and Electrical work. Some dispute arose within the said contract and the petitioner invoked the arbitration clause as per Section 25-A of the above said agreement dated 20.08.2007. Respondent No. 4 was appointed as arbitrator and award dated 24.05.2012 was passed. The petitioner-company sent a letter for refund of his security (P-2 to P-3) and thereafter a legal notice dated 11.02.2012 (P-5). However, vide letter dated 29.11.2012, respondents replied that the security amount of Rs.7 lacs could not be returned till the finalization of application for setting aside the award dated 24.5.2012, as per Section 36 of the Arbitration and Conciliation Act, 1996.

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On notice, a reply has been filed by the respondents stating

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that the security has been released to the petitioner in the form of DD NO. 434802 dated 20.03.2013 amounting to Rs.7 lacs (R-1).

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The petitioner claims interest as the amount had been pad

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after 9 months of passing of the award on 24.5.2012. Reference at this stage can be made to Clause 25-A of the agreement/contract between the parties. Clause 25-A (7) reads as under:-

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“(7) It is also a term of this arbitration agreement that

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where the party invoking arbitration is the contractor, no

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Arora Gaurav 2014.05.08 16:20 I attest to the accuracy and integrity of this document

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CWP No. 1467 of 2013 (O&M) -3-

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reference for arbitration shall be maintainable unless the contractor, furnishes to the satisfaction to the executive engineer, Incharge of the work, a security deposit of a sum determined according to details below and the sum so deposited shall, on the termination of the arbitration proceedings, be adjusted against the cost, if any, awarded by the arbitrator against the claimant party and the balance remaining after such adjustment in the absence of any such cost being awarded, the whole of the sum will be refunded to him within one month from the date of the award.”

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As per the above said clause, the security deposit by the petitioner-company was to be adjusted after the award was passed by the arbitrator and the whole amount of the sum was to be refunded within one month from the date of the award.

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The arbitration award has been answered in favour of the petitioner-company and the same has been challenged by the department and is pending before Distt and Sessions Judge, Gurgaon. Hence, as per Section 25-A(7), the department was to refund the security within one month from the date of passing of the award. The award was passed on 24.05.2012 and the payment was given on 20.05.2013. After excluding one month, there is a delay of 08 months in

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Arora Gaurav 2014.05.08 16:20 I attest to the accuracy and integrity of this document

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CWP No. 1467 of 2013 (O&M) -4-

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making the payment.

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In view of the above position, the writ petition is being

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allowed and a direction is given to the respondent to make payment of interest @ 10% on Rs.7 lacs for 08 months. Further a cost of Rs.10,000/is imposed upon the department, which will be given to the petitioner, as he had to file this writ petition, whereas as per Clause 25-A(7), he was entitled to get his security within one month from the date of passing of the award. The department was bound to make the payment, within one month from the receipt of certified copy of this order.

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( RITU BAHRI) JUDGE

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01.05.2014

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G Arora

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Arora Gaurav 2014.05.08 16:20 I attest to the accuracy and integrity of this document

M/S Ajay Construction Co. v. State of Haryana

Case brief

What is this about?

What did the court decide?

M/S Ajay Construction Co. v. State of Haryana

Case brief

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What did the court decide?

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