HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Civil Miscellaneous Appeal No. 757/2021
1. State Of Rajasthan, Through Principal Secretary, Local
Self Government, Secretariat, Jaipur.
2. The Project Director, Rajasthan Urban Infrastructure
Development Project (Ruidp) Avs Building, Jawahar Circle,
Jln Marg, Jaipur.
3. D.K.Mittal, Executive Engineer, Ruidp, Avs Building,
Jawahar Circle, Jln Marg, Jaipur.
4. Rajpal Singh Shekhawat, Minister Urban Development
And Housing Department, Secretariat Building, Jaipur.
----Appellants
Versus
1. M/s Technocraft Construction Pvt. Ltd., B-27 Sector-49,
Noida
2. M/s Krishna Contractors, R/-14/128, Raj Nagar,
Ghaziabad
----Respondents
For Appellant(s) : Mr. Prakash Chandra Jain, Advocate For Respondent(s) : Mr. Sushil Daga, Advocate Mr. Anurag Kalavatiya, Advocate Mr. Chitranshu Mathur, Advocate Mr. Ankit Mishra, Advocate HON'BLE MR. JUSTICE PRAKASH GUPTA HON'BLE MR. JUSTICE PANKAJ BHANDARI Judgment ORDER RESERVED ON :: 30/07/2021 ORDER PRONOUNCED ON :: 24/08/2021 (Per HON. PANKAJ BHANDARI, J.)
1. The appellant-State has preferred the instant appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act of 1996") aggrieved by the judgment and order dated 11.02.2021 passed by the Commercial (Downloaded on 25/08/2021 at 10:09:08 PM) (2 of 5) [CMA-757/2021] Court No.2, Jaipur Metropolitan-II whereby application under Section 34 of the Act of 1996 was dismissed and against the award dated 04.11.2018 passed by the Arbitrator.
2. The factual matrix of the case are that the appellant-State floated a tender relating to construction of sewerage network and allied works, operation and maintenance services of the entire system for 10 years at Gangashahar Zone, Bikaner. The respondents applied and were awarded the contract and therefore, back guarantee of Rs.4,40,00,000/- (Rupees Four Crore Forty Lacs) in lieu of the earnest money was deposited by the respondents. The Tender Evaluation Committee recommended that an additional performance security of Rs.11.4 crore be demanded from the respondents. However, the Tender Approval Committee did not agree with the proposal of the Tender Evaluation Committee and recommended that the contract be awarded without seeking additional performance security of Rs.11.4 crore. The matter was referred to the Minister Incharge, who approved the proposal of the Tender Evaluation Committee. The respondents were not agreeable with the additional demand of Rs.11.4 crore and therefore, the contract did not materialize. The appellant- State invoked the bank guarantee of Rs.4,40,00,000/-, aggrieved by which, the respondents initiated the arbitration proceedings. Learned Arbitrator passed an award in favour of the respondents to the tune of Rs.4,40,00,000/- and also the arbitral expenses to the extent of Rs.9,50,925/- with an interest of 7% from the actual date of revoking the bank guarantee and an additional 24% interest in respect of post arbitration award. The appellant-State aggrieved by the said award, filed an application under Section 34 (Downloaded on 25/08/2021 at 10:09:08 PM) (3 of 5) [CMA-757/2021] of the Act of 1996 before the Commercial Court. The said application was dismissed by the impugned order dated 11.02.2021 and aggrieved by which, the present appeal has been preferred under Section 37 of the Act of 1996.
3. It is contended by learned counsel for the appellant-State that the decision of the Minister Incharge cannot be challenged before the Arbitrator and the Minister Incharge was competent to approve the proposal of the Tender Evaluation Committee. It is also contended that to protect the interest of the State, an additional amount was directed to be deposited by the respondents and the said term cannot be said to be onerous.
4. Learned counsel for the respondents has opposed the appeal. It is contended that the bank guarantee was wrongly invoked by the appellant-State and the earnest money of Rs.4,40,00,000/- was withdrawn, thereby depriving the respondents of their due amount and hence, there was no illegality in the award as well as the order passed by the Commercial Court. It is also contended that the Minister Incharge is required either to approve the suggestions given by the Tender Approval Committee or he can deny the same, but he cannot on his own, approve the proposal of the Tender Evaluation Committee. At most, he could have referred the matter to the Tender Approval Committee to reconsider the report of the Tender Evaluation Committee. It is further contended that no ground as provided under Section 34 of the Act of 1996 was made out for setting aside the award and the imposition of the condition of demanding an additional sum of Rs.11.4 crore was to oust the (Downloaded on 25/08/2021 at 10:09:08 PM) (4 of 5) [CMA-757/2021] respondents and deprive them of the contract, which they were otherwise entitled to.
4. It is also contended that no ground is available to the appellant-State under Section 37 of the Act of 1996, as the scope of appeal being limited. It is further contended that no loss is caused to the State. The amount, which was deposited by the respondents as earnest money, is ordered to be refunded with interest, hence, the appeal has no force.
5. We have considered the contentions raised by learned counsel for the parties and perused the material available on record.
6. From the perusal of the record, it is evident that the earnest money of Rs.4,40,00,000/- was deposited by the respondents. The Tender Approval Committee approved the contract without deposition of an additional performance security of Rs.11.4 crore. From the record, it is also revealed that it is necessary to get the approval of Minister, UDH & LSG, Government of Rajasthan before award of work. The decision not to take additional performance security was taken by the Apex Committee having members from Technical Finance as well as Tender Evaluation Committee. The said decision cannot be overruled by the Minister Incharge in his individual capacity and he has clearly erred in passing a cryptic order of taking additional performance security without the proposal being put to the Minister.
7. No ground is made out for entertaining the present appeal as what has been awarded is the earnest money deposited by the respondents. The Commercial Court has not committed any illegality in dismissing the application filed by the appellant-State (Downloaded on 25/08/2021 at 10:09:08 PM) (5 of 5) [CMA-757/2021] under Section 34 of the Act of 1996. We do not find any force in the present appeal. The appeal deserves to be dismissed and the same is, accordingly, dismissed.
8. Learned counsel for the appellant-State, in the course of the arguments advanced before the Court, prayed that if the appeal is dismissed, the appellant-State be given some time to deposit the amount.
9. We do not find any justification in the above prayer, as the bank guarantee was already invoked way back in January, 2017 and the respondents have been deprived of their due amount for last more than 4 years.
(PANKAJ BHANDARI),J (PRAKASH GUPTA),J
SUNIL SOLANKI /19
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