Municipal Corporation Of Delhi vs M/S The Care Taker Group & Ors.
2009 Latest Caselaw 1689 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI


                                               Date of Reserve: March 23, 2009
                                                   Date of Order: April 27, 2009

+ OMP 123/2009
%                                                                     27.04.2009
    Municipal Corporation of Delhi                             ...Petitioner
    Through : Mr. Nalin Tripathi, Advocate

       Versus

       M/s The Care Taker Group & Ors.                   ...Respondent
       Through: Mr. Rajinder Nischal, Advocate for R-1 and R-2


       JUSTICE SHIV NARAYAN DHINGRA

1.     Whether reporters of local papers may be allowed to see the judgment?

2.     To be referred to the reporter or not?

3.     Whether judgment should be reported in Digest?


       JUDGMENT

1. By this petition the petitioner has raised objections against the award

dated 16th October 2008 passed by the Arbitrator allowing the claims of the

claimant (respondent herein) with interest @ 9% per annum from the date

when the amount became due till payment and also directed for refund of

earnest money.

2. Brief facts relevant for the purpose of deciding this petition are that the

respondent /claimant under a contract had supplied 7583 numbers of red

stone benches for the parks of MCD in Delhi. The rate quoted by the

respondent/ claimant was between Rs.3100 to 3500/-. The same was

approved and a supply order was given to the respondent. After the

respondent completed the supply and raised bills, these bills were verified

and approved by MCD for payment. However, before the payment of the bills

OMP 123.09 MCD v. The caretaker Group & Ors. Page 1 Of 5 could be released, some complaints were received regarding collusion

between MCD employees and the contractor in securing the order for the

benches at a much higher rates than the rates prevalent in the market. It was

stated that the bench like this would not cost more than Rs.600 to 700 but

the supply to MCD was made at the rate of around Rs.3350/- per bench. CBI

conducted an inquiry into this and filed a challan against the

claimants/respondents and against two employees of the petitioner/ objector

namely Shri D.P. Singh, Director (Horticulture) and one junior engineer (Civil).

Since a case was registered on the basis of CBI report, the payment of the

respondent's bill was not made. The respondent, on this raised a dispute

about the non-payment of the amount and filed an application for

appointment of an Arbitrator to this Court. This Court appointed Justice Usha

Mehra (retired) as an Arbitrator who gave an award in favour of the claimant.

3. The award has been assailed on the ground that the award was beyond

the scope and ambit of the agreement between the parties. The learned

Arbitrator failed to appreciate that no payment could be released to the

Claimant during pendency of the criminal case, more so when the challan had

already been filed. It is also submitted that the claim was hopelessly barred

by limitation and the Arbitrator allowed a time-barred claim.

4. It is not disputed that the agreement between the parties had an

arbitration clause and all issues arising out of the contract between the

parties were to be referred to the Arbitrator. Non-payment of the amount of

the bills of the claim is certainly a dispute arising out of the contract and

could have been adjudicated by the Arbitrator. The plea that the claim made

by the respondent/ claimant was beyond the terms of the contract is not

OMP 123.09 MCD v. The caretaker Group & Ors. Page 2 Of 5 tenable. A perusal of record shows that after completion of supply, bills were

raised by the claimant /respondent and when no payment was received by

the claimant, the claimant served a notice on the petitioner on 8 th December

2005 asking the petitioner to release the payment. The petitioner vide its

letter dated 2nd February 2006 informed the respondent that since CBI case

has been registered against him in respect of fixing of red stone benches,

MCD issued an office order dated 23rd August 2004 that the bills would not be

released in favour of the contractor in those cases which are pending

investigation/ inquiry with Vigilance Department or CBI. After receiving this

letter from MCD, the Claimant /respondent initially filed a writ petition for

recovery of the amount before this Court, but without success and later on

invoked the arbitration clause by making an application before this court in

July 2007. Thus under no stretch of imagination, it can be said that the claim

raised by the claimant was barred by limitation. If the limitation is counted

from 23rd August 2004 when the petitioner issued an office order that

payment shall not be made in those cases where investigation /inquiry is

made even then the claim is not barred by limitation because the claimant

had raised a dispute on 11th July 2007 by asking the petitioner to appoint an

Arbitrator. When the petitioner failed to appoint an Arbitrator, the respondent

moved this Court for appointment of an Arbitrator. However, the limitation

would actually be counted from 2nd February 2006 when the petitioner

informed respondent that the bills will not be paid. If counted from 2nd

February 2006, the award itself has been made within the period of 3 years

and the claim cannot be said to be barred by limitation.

5. The plea of the petitioner that the Arbitrator could not have proceeded

because of pendency of criminal case against the respondent has been

OMP 123.09 MCD v. The caretaker Group & Ors. Page 3 Of 5 considered by the Arbitrator. The petitioner and the respondent both had

relied upon the judgments and the Arbitrator has analyzed all the judgments

and come to conclusion that there was no bar on the Arbitrator from

proceeding with the determination/ adjudication of the disputes between the

parties. The learned Arbitrator relied upon M/s Mafatlal Industries Ltd. v MTNL

2002 IV AD Delhi 769, wherein this Court has observed that investigation by a

criminal agency or registration of an FIR was no ground to refuse enforcement

of the terms of the contract. The other decision relied upon by the Arbitrator

is Iqbal Singh Marwah & Anr. v. Meenakshi Marwah & Anr. 2005 Cr.L.J 2161 SC

wherein the Supreme Court observed that the standard of proof required in

criminal and civil proceedings are entirely different and civil cases are

decided on the basis of preponderance of evidence while in criminal cases,

the entire burden lies on the prosecution. In K.G. Premshanker v. Inspector of

Police & Anr 2002(3) JCC 1975 SC, the Supreme Court had observed that

where criminal case and civil proceedings are for the same cause, the

judgment of civil court would be relevant if conditions of Section 40 to 43 of

the Indian Evidence Act are satisfied. In State of Rajasthan v. M/s Kalyan

Sundram Cement Industries Ltd. & Ors JT 1996 (3) SC 162, the Supreme Court

has held that pendency of the criminal case would not be an impediment for

proceeding with the Civil suit. Considering this law, the learned Arbitrator

came to conclusion that there was no bar in proceeding with the Arbitral

proceedings. The learned counsel for the petitioner has failed to show as to

how there was a bar on the Arbitrator in proceeding with the Arbitration

proceedings.

6. In all, 49000 red stone benches were purchased by MCD from different

contractors. The Claimant had supplied only 7583 red stone benches. The

OMP 123.09 MCD v. The caretaker Group & Ors. Page 4 Of 5 claimant before the Arbitrator proved that the rates quoted by other

contractors were either matching with the rates of the claimant or they were

higher than the rates of the claimant. The Claimant also produced evidence to

show that the red stone benches of similar quality were procured by

Ghaziabad Municipal Authority on the similar price and the plea that the

prevalent cost of a bench was between Rs.600-700 is a false and baseless

plea. MCD failed to bring any evidence to show that the rates quoted by the

Claimant in the tender were higher than the market rates. It is surprising that

MCD had procured 49000 benches almost at the same rate but the criminal

case and investigation was initiated only against the above two claimants and

not for other claimants. It is also surprising that though it is a case of MCD

that there was collusion between its employees and the contractors, but no

departmental action was initiated by the MCD against the employees

allegedly in league with the contractors and these employees were allowed to

retire and perhaps are also taking full pension benefits and were allowed to

go scot free.

7. The petitioner in this case has miserably failed to show that the award

suffers from any illegality or the Arbitrator acted beyond the terms of the

contract or without jurisdiction. It is settled law that this Court cannot go into

the merits of the award and cannot act as a Court of appeal over the

judgment/ award passed by the Arbitrator. The petitioner has also failed to

bring its case within the ambit and scope of Section 34 of Arbitration &

Conciliation Act, 1996. This petition is liable to be dismissed and is hereby

dismissed. No orders as to costs.

April 27, 2009                                   SHIV NARAYAN DHINGRA J.
rd

OMP 123.09                MCD v. The caretaker Group & Ors.        Page 5 Of 5