Delhi High Court
Larsen & Toubro Ltd. & Anr. vs Ntpc Ltd. on 9 November, 2011
Author: Manmohan Singh
$~41
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. 589/2011
LARSEN & TOUBRO LTD. AND ANR. ..... Petitioners
Through Mr Rajiv Nayar, Sr. Adv. with
MrAnanya Kumar and
Mr. Dhirendra Negi, Advs.
versus
NTPC LTD. ..... Respondent
Through Mr S.K. Taneja, Sr. Adv. with
Mr Puneet Taneja, Adv. with
Mr Amrit Anand, Adv.
CORAM:
HON'BLE MR. JUSTICE MANMOHAN SINGH
ORDER
% 09.11.2011
MANMOHAN SINGH, J. (Oral)
1. The petitioners have filed the present petition under Section
9 of the Arbitration and Conciliation Act, 1996 praying that the
interim injunction against the respondent be passed from deducting
any amount from the running accounts of bills of the petitioners on
the ground of import duty benefits or interest thereon till such time
as final decision is taken on the question of examination of duty by
the custom authorities.
2. The prayer of the petitioners is strongly opposed by the
respondent. The case of the respondent is that it had invited bids
for the "Construction of Head Race Tunnel" Package vide IFB
No.CS-5505-908(R)-2 dated 31.06.2006 wherein under Clause
No.12 of ITB (Instructions to Bidders) of Volume-1 of Bidding
Documents, the provision for benefits with respect to Mega Power
Project and other policies of Government of India were provided
which reads as under:
"12.0 Non availability of benefits under mega
power project policy and other relevant policies of
Govt. of India :
Tapovan Vishnugad HEP (4X130 MW) has been
declared a Mega Power Project by Ministry of Power,
Govt. of India.
However, Bidders may note that none of the
Item(s)/Material(s)/Equipment(s) (including
Construction Equipments) included under the scope of
this package are eligible for benefits under Mega
Power Projects Policy, Project Import and/or Deemed
Export Benefit and therefore NTPC shall not issue any
Certificate/Document for imports under Mega Power
Project Policy, Project Import and/or Deemed Export
Benefits for any Item(s)/Material(s)/Equipment(s)
(including Construction Equipments).
In case the Mega Power Project Benefits/Project
Import/Deemed Export benefits for any
Item(s)/Material(s)/Equipment(s) (including
Construction Equipments) etc. or any other benefits
for Power Project becomes applicable in future based
on the Notification by the concerned Government
Authorities, the matter shall be discussed and
finalized with the bidder/contractor including price
reduction to NTPC." (emphasis supplied)
3. It is further contended by the respondent that subject
package was awarded by NTPC to Joint Venture of Larsen &
Toubro Ltd. and Alpine Bau Gmbh vide Letter of Acceptance
(LOA) No. CS(OS) No.-5505-908(R)-2-CS(OS) No.-LOA-4784
dated 28.11.2006 and a Contact Agreement Ref. No. CS(OS) No.-
555-908(R)-2-CS(OS) No.-COA-4784 dated 19.01.2007 was
signed between the parties i.e. NTPC Ltd. and L&T-AM Joint
Venture. Further, Joint Venture of Larsen & Toubro Ltd. and
Alpine Bau Gmbh by accepting the LOA and signing the
agreement, not only unequivocally accepted the said clause, but
also confirmed the acceptance of the above provisions by giving a
declaration in terms of the said clause along with their bid and also
stated that "we further confirm that we shall not raise any dispute
or prefer any dispute or prefer any claim whatsoever at a later date
in this regard for availing of benefits.
4. The last contention of the respondent is that from the above
said provisions specified in the Bidding Documents for the subject
package that at the time of invitation of the Bids Tapovan
Vishnugad Hydroelecric Project was having status of Mega Power
Project as declared by Ministry of Power (MOP), Government of
India. However, no custom duty benefits/exemption were available
for import of Construction Equipment till the time contract was
awarded to Joint Venture of Larsen & Toubro Ltd. and Alpine Bau
Gmbh. Accordingly, all the Bidders, including Joint Venture of
Larsen & Toubro Ltd. and Alpine Bau Gmbh quoted their prices,
i.e., inclusive of custom duty component to be paid by them at the
time of import of Construction Equipment for the subject package
and the said cost is being recovered from NTPC in the cost price of
the contract.
5. The contention of the respondent has been refuted by the
petitioner in its rejoinder.
6. Both the parties had addressed their submissions and after
some time, the learned counsel for the respondent sought time to
take instructions from the respondent regarding the issue of benefit
and interest being recovered thereon for deferred recovery of
principal amount of benefit, if on the final assessment the benefit is
refused/reduced by the custom authorities and if the matter could
be disposed of.
7. After instructions from the respondent, Mr Mukum Gautam,
DGM of the respondent, has filed an affidavit dated 12.10.2011.
Paras 6 to 11 of the said affidavit read as under:
"6. Accordingly L&T-AM after discussions with
the respondent availed import duty benefit of
Rs.21,94,47,045/- from Custom Authorities which
benefit was to be passed on to NTPC in terms of
clause 12.0.
7. Therefore, the respondent started the recovery
of import duty benefit on pro-rata basis from the
running bills of the contractor in similar manner as
adopted in case of recovery of other advances
(mobilization & equipment advances).
8. Though the respondent is entitled to recover the
benefit at one go but as a considerate measure, the
respondent is recovering the amount from the
contractor on a pro-rata basis in line with the request
made by the contractor vide letter dated 25.06.2009,
for which the respondent is recovering the interest for
such staggered recovery of principle amount of
benefit.
9. As L&T-AM JV expressed their apprehension
that the benefit availed is on the basis of provisional
assessment and on final assessment, the same benefit
may not be available. NTPC vide letter
No.TVHPP/5505/CCD/HRT/E-1190 dated 11.11.2009
clarified to the contractor that "in case there is some
difference on import duty in future based on the final
assessment, the same shall be dealt accordingly."
10. By virtue of the present affidavit, the
respondent wishes to further clarify its stand that, if
the benefit arising upon final assessment is lesser than
Rs.21,94,47,045/- or is withdrawn, the differential
shall be reimbursed/refunded with the recovered
interest to M/s L&T-AM JV.
11. However, in case any further import duty
benefit is availed by the contractor beyond
Rs.21,94,47,045/-, the same will be passed on to
NTPC in the same line as adopted in the past."
8. The learned counsel for the petitioner needed more
clarification from the respondent. When the matter is taken up
today by this Court, the learned counsel for the petitioner has made
a statement that the petitioner is agreeable if the present petition is
disposed of with the following terms and conditions:
a. That the respondent will continue deducting the amounts
on account of custom duty paid upto Rs.21.64 crores in
the same manner as has been done till date.
b. In case any demand is raised by the custom, the
respondent will pay such demand within such time upto
the amount deducted by the respondent so as to enable
the petitioner to deposit the duty within the time
stipulated by the custom department.
9. Though the suggestion given by the petitioner's counsel are
acceptable but Mr. Taneja, learned Senior counsel for the
respondent has clarified that the respondent shall only pay the
amount which has been deducted by the respondent within such
time.
The learned counsel for the petitioner submits that the order
passed by this Court and agreed by the petitioner would be without
prejudice to the rights of the petitioner to claim any amount from
the respondent arising in relation to the issue of custom duty.
10. Ordered accordingly.
11. The present petition stands disposed of. No cost.
MANMOHAN SINGH, J.
NOVEMBER 09, 2011
jk
