Mr. V. Krishnamurty vs Union Of India And 2 Ors
2016 Latest Caselaw 3587 Bom

     Rng                                     1                                                     
                                                                              APP.233.15.AP736.16

                IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                                    
                    ORDINARY ORIGINAL  CIVIL  JURISDICTION
                           APPEAL (L) NO.233 OF 2016
                                       IN




                                                       
                     NOTICE OF MOTION (L) No.1829 OF 2016
                                       in
                     ARBITRATION PETITION NO.736 OF 2016 




                                                      
     V.Krishnamurthy                                        }
     running sole proprietor business
     in the name and style of                               }
     M/s Meena Advertisers




                                       
     having his office at A-11, 3rd floor,
     Shree Siddhivinayak Plazaig                            }
     Near Orritel Hotel, Off New Link Road
     Andheri (W) Mumbai-400 053                                     .. Appellant
      
                            
                         vs

     1. Union of India                                       }
     through the Ministry of Law and Justice  
     Aikar Bhavan, New Marine Lines
      


     Churchgate, Mumbai-400 020.                             }
   



     2.  The General Manager
     Western Railways,
     Churchgate, Mumbai-400 020                               }





     3. The Sole Arbitrator
     cum Senior Divisional Operating                          } 
     Manager,
     Western Railways,
     Churchgate, Mumbai-400 020.                              }





                                                                    .. Respondents
                                                                    (Ori.Respondents)

     Mr.Shailesh Shah Sr.Advocate with Mr.Aditya Chitale
     I/b M/s MNSQ Legal  for Appellant
     Mr.Induprakash Tripathi for Respondents 
                                   ...

CORAM: ANOOP V.MOHTA & G.S.KULKARNI,JJ

APP.233.15.AP736.16

JUDGMENT RESERVED ON: 27TH JUNE, 2016 JUDGMENT PRONOUNCED ON: 5TH JULY, 2016

ORAL JUDGMENT (Per G.S.Kulkarni, J)

1. This appeal under section 37 of the Arbitration and

Conciliation Act, 1996 (for short the 'Act') is directed against the

order dated 8th June 2016 passed by the learned Single Judge

whereby the appellant'/claimant's petition under section 34 of the

Act has been dismissed upholding the award passed by the learned

sole Arbitrator.

2. The appellant was the beneficiary of a three year

contract of "bulk advertising rights" awarded by the respondents

namely General Manager, Western Railways, Churchgate, Mumbai

for the Andheri, Jogeshwari and Goregaon Railway Stations in

Mumbai. Disputes had arisen between the parties in relation to the

said contract.

3. The appellant inter alia had raised a claim for

Rs.51,88,135/- along with interest against the respondents. The

prayer clauses in the statement of claim, read thus :

" The claimant therefore prays :

APP.233.15.AP736.16

(a) that this Hon'ble Tribunal be pleased to grant an award in terms of the Particulars of Claim annexed at Exhibit N hereto amounting to Rs.51,88,135/- (Rupees

Fifty One Lakh Eighty Eight Thousand One hundred thirty five only) that this Hon'ble Tribunal be pleased to direct the respondent to pay interest and/or compensation and also loss of reputation by invoking bank guarantee on the amount to be awarded under the Statement of Claim from the date of Award till payment

and/or realization at an exemplary rate to be fixed and/or decided by the Hon'ble Tribunal being not less than 18% per annum simple rate of interest;

(b) that this Hon'ble Tribunal be pleased to award

costs of this Arbitration Reference and of all the proceedings precedent thereto by directing the respondent

to pay the same to the claimant;

(c) this Hon'ble Tribunal may be pleased to pass further necessary orders as this Hon'ble Tribunal may deem fit

and proper."

4. The dispute underlying the above claim of the

appellant was on the basis of an interim contract awarded by the

respondents for the said advertisement work for a period of three

months till finalization of the main contract under the tender issued

by the respondents. In this regard the appellant by its letter dated 5

September 2006 offered to take up advertisement rights from the

respondents-railways at the above stations on interim basis. This was

at the same rate as for the main three year contract, namely at

Rs.1,32,00,000/- which came to Rs.11,00,000/- per month as stated

by the appellant in the said letter. In this letter, the appellant

requested the respondents to provide 15 days gestation period from

APP.233.15.AP736.16

the date of the contract for business arrangement to be undertaken at

these three stations. The appellant also stated that the interim

award period be fixed till a final award letter in respect of the main

tender is issued in favour of the appellant.

5. The respondents by their letter dated 13 September

2006 accepted the above offer of the appellant. It would be useful

to refer to the contents of the said letter, as the controversy between

the parties in the arbitration proceedings revolve around the

"gestation period" as agreed between the parties. This letter of the

respondents reads thus:

" The competent authority has sanctioned the awarding of contract for Bulk Advertising Rights of

Andheri station alongwith Goregaon and Jogeshwari as one whole cluster for an interim period on month to

month basis till finalization of tender or maximum of 03 months at the same rate as bidded in the above referred tender and offered by you i.e. Rs,.11,00,000/- per month.

The administration has agreed your request

for granting 15 days as gestation period for putting up displays subject to condition that after finalization of tender, the contract period will start from the date of letter of acceptance and no gestation/grace period would be given."

(emphasis supplied)

6. It is clear from the above letter of acceptance that the

respondents had agreed to the request of the appellant for granting

15 days as gestation period for installation of the advertisement

subject to the condition that after finalization of the main three year

tender, the contract period would start from the date of letter of

APP.233.15.AP736.16

acceptance and no gestation/grace period would be given. As can be

seen, this letter of the respondents reiterated that the interim

contract would commence after 15 days of the receipt of the above

letter or date of display whichever is earlier on the same tender

terms and conditions. There is no dispute on the fact that for the

interim contract the appellant had made payment of Rs.11,00,000/-

to the respondents for the first month, in pursuance of the

respondents' above letter dated 13 September, 2016.(supra).

7. Under this interim contract, the appellants were

accordingly granted a gestation period from 9 October 2006 till 28

October 2006. Thereafter, on 12 December 2006 another contract

came to be awarded to the appellant under which the gestation

period up to 28 December 2006 was granted and thereafter the

appellant removed its display on 28 December 2006.

8. On 19 January 2007 the appellant was informed by

the respondents about the acceptance of the appellants offer under

the main tender and was called upon to make payment under the

same. On 27 January 2007 the appellant paid an amount of

Rs.66,00,000/- to the respondents.

APP.233.15.AP736.16

9. As regards the main tender which was for three

years, an agreement dated 13 April 2007 came to be executed

between the parties. This agreement in clause 5.2 provided for

commencement period which provided as under :

"5.2 Commencement period

D: Day of issue of Letter of Acceptance

D+10 days: (1) Payment of full annual licence fee in ig case of the annual licence fee quoted is less than Rs.One crore/annum.

                                       (2) In case annual Licence fee quoted is 
                                       more   than   Rs.One   crore   per   annum  
                                       payment of 50% of annual Licence fee
                            
                       D+15:            Issue of Authority letter
                       D+30:           Submission of Bank guarantee
                       D+40:           Signing of the Agreement with Railway 
                                       Administration.
                       D+45:           Commencement of the contract 
      

                                       (maximum)" 
                                                         (Emphasis supplied)
   

10. The contention on behalf of the appellant before

the learned Arbitrator was that the appellant had not utilized

gestation period of 15 days under the interim Award and that the

appellants by their letter dated 14 September 2006 had intimated

respondent that the appellant would not be utilizing 15 days

gestation period under the said interim award of the contract. The

appellant therefore, asserted that under the main award of the

contract the appellant was entitled to gestation period of 30 days as

APP.233.15.AP736.16

per condition 5.1,D+45 (supra) and accordingly raised a claim.

11. On the other hand, it was the respondent's case before

the learned Arbitrator that the appellant had accepted the contract

on interim basis based on the gestation period of 15 days as informed

to the appellant in the respondent's letter dated 13 September 2006

(supra) which was nothing but the appellant's offer as accepted by

the respondents. The appellant thus would not be entitled to any

gestation in the main contract awarded by the respondents. As the

appellant did not make payment of the contractual amount and

within the time prescribed thus the respondent nos. 1 and 2 also

demanded compensation in terms of the contract and in that regard

raised a counter claim before the learned Arbitrator.

12. The learned Arbitrator however, did not find any

merit in the claim as made by the appellants on the basis of the

gestation period and rejected the appellant's claim.However, the

respondent's counter claim in regard to the outstanding licence fees

at Rs.97,73,030/- was awarded.The learned Arbitrator in awarding

the counter claim in favour of the respondents has observed as under

:

APP.233.15.AP736.16

" The claimant in his affidavit did not opted to contest

the statement submitted by the respondent which stipulates the period of contract amount due, amount paid, delayed days, period of delayed days, interest on

late payment tabulated for the entire contract which amounts to Rs.97,73,030/-"

13. On a challenge being raised by the appellant to

the award of the learned Arbitrator, the learned single Judge having

examined the issues rejected the appellants' Section 34 petition,

upholding the award of the learned Arbitrator.

14. ig Mr.Shah learned senior counsel for the appellant

in support of the appellants plea, would submit that the learned

arbitrator as also the learned single Judge have failed to appreciate

that by the appellant's letter dated 14 th September 2006, the

appellant had informed the respondents of not utilizing 15 days

gestation period in respect of the interim award and that the

appellant would be utilizing the gestation period as per the terms

and conditions of the regular award of the tender. It is therefore,

submitted that clause 5.2 of the main tender which provides for

commencement period to be D+45 was required to be considered

and benefit of 30 days gestation period ought to have been entitled

to the appellant. It is submitted that the learned Arbitrator therefore,

ought to have allowed the appellant's claim. No other issue was

APP.233.15.AP736.16

raised on behalf of the appellant in assailing the impugned orders

passed by the learned Single Judge.

15. We are not persuaded to accept the submissions

as urged on behalf of the appellant. From the facts which we have

noted above, it is clear that the appellant was a beneficiary of an

interim award which was on the appellant's own offer as made under

its letter dated 5 September 2006. In this letter, the appellant had

categorically offered that the respondents should provide 15 days

gestation period from the date of interim contract for business

arrangements to be made at these three railway stations. The

respondents by their letter dated 13 September 2006 accepted the

offer of the appellant for the interim award, of the said advertisement

contract, for three months at the same rate as per the bid in the

main tender and accepted the offer of the appellant for granting 15

days gestation period for putting up the display. However, this was

subject to a condition that after finalization of the main tender the

contract period would start from the date of the letter of acceptance

and no gestation/grace period would be given. It is therefore, clear

that the award of the main contract was subject to this condition of

the appellant availing 15 days gestation period under the interim

APP.233.15.AP736.16

contract and that the main contract would start from the date of

letter of acceptance and no gestation/grace period would be given.

This was the manner and/or method in which the parties agreed to

treat the gestation period in regard to the final contract. The

contention of the appellant that after award of the final contract the

letter of acceptance dated 13 September 2006 of the respondents for

the interim award should be discarded and as regards gestation

period full benefit under clause 5.2 of the main agreement dated 13

April 2007 (supra) be granted to the appellant cannot be accepted.

The interim award of the contract was inter-linked to the main

contract in relation to the gestation period as we have discussed

above. This was the agreement between the parties. Before the

learned arbitrator the appellant was not permitted to take a position

reverse and/or contrary to what it had agreed namely that the main

contract would start from the letter of acceptance and no gestation

period would be availed, in asserting its claim.

16. We also cannot accept the submission as made on

behalf of the learned counsel for the appellant on the basis of the

appellants' letter dated 14 September 2006 for the reason that the

letter dated 5 September 2006 was the offer of the appellant for the

APP.233.15.AP736.16

interim award which came to be accepted by the respondents-

railways by their letter dated 13 September 2006. (supra).

17. The appellants' letter dated 14 September 2006 was

post-acceptance of the appellant's offer by the respondent, and

contained conditions in deviation from what was accepted by the

respondents in the acceptance letter dated 13 September 2006.

Significantly, the conditions as put by the appellant in this letter

dated 14 September 2006 were never accepted by the respondents.

This being the position the appellant would not be correct in

contending that the counter condition as asserted on behalf of the

appellant in letter dated 14 September 2006 be enforced against the

respondents. The learned Arbitrator has appropriately recorded

findings of fact in regard to the gestation period and declined to

accept the claim as made by the appellant as also confirmed by the

learned Single Judge.

18. In view of the above discussion, we are of the clear

opinion that the appeal is devoid of any merit and it is accordingly

rejected. No order as to costs.

APP.233.15.AP736.16

19. In view of the order passed in the appeal, notice of

motion (L) No.1829 of 2016 does not survive and is accordingly

disposed of.

     G.S.KULKARNI, J                                             ANOOP V.MOHTA, J