M/S Dwarika Projects Pvt. Ltd. ... vs M/S Bhandari Engineers & Builders ...
2012 Latest Caselaw 64 Del

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*     IN THE HIGH COURT OF DELHI AT NEW DELHI
                                  Judgment delivered on: 04.01.2012
+     FAO(OS) NO.2/2012

      M/S. DWARIKA PROJECTS PVT. LTD.
      (formerly known as Raj & Associates Construction
      Division)                                              ..... Appellant

                   versus

      M/S. BHANDARI ENGINEERS & BUILDERS PVT.
      LTD.                                 ..... Respondent

Advocates who appeared in this case:

For the Appellant : Mr. Sandeep Sharma For the Respondent : None

CORAM:

HON'BLE MR. JUSTICE SANJAY KISHAN KAUL HON'BLE MR. JUSTICE RAJIV SHAKDHER

RAJIV SHAKDHER, J (ORAL)

CM No.120/2012 (Exemption ) Allowed subject to just exceptions.

FAO(OS) NO.2/2012

1. This is a classic case where the advocate appearing for the appellant

for reasons best known to him, has been unable to inform us, as to the

relationship that the appellant i.e., M/s. Dwarika Projects Private Limited

has with M/s. Raj & Associates Construction Division. The reason why

we raised this query would become clear as we proceed further with the

narrative. Suffice it to say, in the captioned appeal, a challenge has been

laid to the judgment dated 23.11.2011 passed by the learned Single Judge

in OMP No.163/2006 and an order of even date i.e., 23.11.2011 passed in

OMP No.315/2003, based on which, the earlier OMP was rejected. To be

noted, OMP No.163/2006 was filed evidently by the appellant.

2. In order to appreciate the scope of the challenge and the

submissions made before us today, by the learned counsel for the

appellant, Mr.Sandeep Sharma, one would have to advert broadly to the

facts which gave rise to the award dated 10.01.2006 passed by the learned

Arbitrator, and the impugned judgment of the learned Single Judge,

whereby objections to the award preferred by the appellant, amongst

others, were rejected. The impugned judgment of the learned Single

Judge also disposed of, in addition, two petitions filed under section 9 of

the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the

Act).

BRIEF FACTS

3. It is averred by the appellant that two entities: one of which was a

private limited company, while the other was a partnership firm, agreed to

enter into a joint venture to enable the said entity to apply to the National

Highway Authority of India (in short, NHAI), for being declared eligible

in respect of projects to be executed by NHAI under what was known as

"Phase-II Programme of North- South and East-West Corridors Project"

4. It is important to note since the counsel was unable to tell us what

was the exact legal structure of the joint venture entity, what we have

been able to gather, is that, the joint venture entity was also a partnership

firm, which was given the name of Maharia-Raj JV. The said joint

venture entity, as indicated above, was formed by Maharia Re-surfacing

and Construction Private Ltd. and M/s. Raj & Associates Construction

Division.

5. It is not in dispute that eventually, the NHAI awarded a contract of

"eight- laning of KM 16.500 to KM 29.295 of NH-I in the State of Delhi

(known as Contract Package No.NS-18/DL)", in favour of the joint

venture entity i.e., Maharia Raj-JV. This agreement was entered on

31.05.2001, for a total price of Rs.60,68,53,375.80. The time frame

provided in the agreement for execution of the work was stipulated as 24

months. It is not in dispute that the joint venture entity i.e., Maharia Raj-

JV by an agreement dated 27.05.2002 sub-contracted a part of the work

pertaining to construction of "culverts, bridges and protective works", as

specified in Bill No.5 of the BOQ, forming part of a contract package

valued at Rs.6,84,29,312.80. The sub-contract was given to Bhandari

Engineers and Builders Pvt. Ltd. (in short BEPL), vide agreement dated

27.05.2002. It is not in dispute that NHAI's approval qua the sub-contract

was received by Maharia Raj-JV.

6. It appears that the work given to Maharia Raj-JV, under the main

contract; a part of which was to be executed by the sub-contractor i.e.,

BEPL got delayed purportedly on account of failure of Maharia Raj-JV to

hand over the site, with clearances and construction drawings, within an

appropriate time frame. BEPL having executed a part of the work sub

contracted to it claimed the requisite re-compense, in respect of the work

executed by it, from Maharia Raj-JV. One of the grounds for seeking

recompense was that, Maharia Raj-JV in turn had received payments on

its behalf from NHAI. Since disputes arose on this account, the matter

was referred to an Arbitral Tribunal. The Arbitral Tribunal, it appears,

passed two separate awards dated 28.12.2005 and 10.01.2006 in respect of

two separate contract packages. To be noted in the present appeal, the

appellant has assailed the award dated 10.01.2006.

7. In so far as award dated 10.01.2006 is concerned, Maharia Raj-JV

filed its objections vide OMP No.220/2006, while the appellant (i.e.,

M/s. Dwarika Projects Pvt. Ltd.) curiously, filed separate objections vide

OMP No.136/2006.

8. It is in this context, as indicated at the very outset by us, we had

put to Mr. Sandeep Sharma as to what was the legal relationship of the

appellant with M/s. Raj & Associates Construction Division which was

one of the entities instrumental in forming Maharia Raj-JV. Mr. Sharma

feigned complete ignorance as regards this crucial aspect.

8.1 Mr. Sharma, however, sought to argue before us only one singular

point, which was that, at the time of formation of the joint venture entity

i.e., Maharia Raj-JV, one of its constituent's i.e, Maharia Re-surfacing

and Construction Pvt. Ltd., had authorised its Director Sh. Vinod Goel

vide a resolution dated 02.09.2010 passed by its Board of Directors to

further finalise the terms of a joint venture agreement with the other

constituent i.e., M/s. Raj & Associates Construction Division. He further

contended that by virtue of the very same resolution of the Board of

Directors, it had been resolved by Maharia Re-resurfacing and

Construction Pvt. Ltd. that it would enter into a joint venture agreement in

the name and style of Maharia Raj-JV solely for the purpose of

participating in the pre-qualification exercise carried out by NHAI, and

for submitting a joint tender for "Phase-II Programme of North-South and

East-West Corridors Project of NHAI".

9. In substance, it was argued that the joint venture entity i.e., Maharia

Raj-JV was formed only for the pre-qualification exercise, and that, a

further agreement had to be entered into with the other constituent of

Maharia Raj-JV i.e., M/s. Raj & Associates Construction Division to take

the matter further. Mr. Sharma thus argued that since no authority had

been conferred on Sh. Vinod Goel to enter into a contract with NHAI, the

appellant, which was purportedly the avatar of M/s. Raj & Associates

Construction Division, could not be held liable qua the dues claimed by

the sub-contractor i.e., BEPL. More specifically it was contended that the

appellant could not be held liable for the dues claimed by BEPL either

under the sub-contract dated 27.05.2002 or those which arose from the

main contract dated 31.05.2001. Mr. Sharma contended that the learned

Single Judge had not addressed himself to these issues raised in the

objections filed by the appellant.

10. On a perusal of the impugned judgment in particular paragraph 26

and 27, we find that the argument of lack of authority of Mr.Vinod Goel

has been squarely addressed by the learned Single Judge. What was

perhaps not articulated before the learned Single Judge, in our view, as it

now transpires deliberately so, as to what was the legal relationship

between the appellant i.e., M/s. Dwarika Projects Pvt. Ltd. and M/s. Raj &

Associates Construction Division. Since this was not an issue raised, the

learned Single Judge in the impugned judgment accepted the arguments

made on behalf of the sub-contractor i.e., BEPL that the joint venture

entity i.e., Maharia Raj-JV having successfully bid for the contract could

not now through one of its JV partner's i.e., M/s. Raj & Associates

Construction Division seek to disown its liability. The learned Single

Judge also noted the fact, which is not disputed before us, that the

appellant chose not to appear before the Arbitral Tribunal. Therefore, this

submission made on behalf of the appellant was rejected.

11. Having perused the record, we are of the view that the learned

Single Judge has rightly rejected OMP No.163/2006 filed by the

appellant. According to us, both the objections filed by the appellant as

well as the instant appeal appears to be a gross abuse of the process of

court. The reasons of which are as follows :-

(i). In the cause title and memo of parties in the appeal filed before us, the

appellant has been described as follows :-

"M/s. Dwarika Projects Pvt. Ltd.

Formerly known as Raj & Associates ...Appellant

Versus

M/s. Bhandari Engineers & Builders Pvt. Ltd. ...Respondnet

MEMO OF PARTIES

M/s. Dwarika Projects Pvt. Ltd.

Formerly known as Raj & Associates Construction Division, Through its Director, Sh. Raj Kishore Verma, Maharia-Raj (JV), B-7, Sector-36, Noida - UP ...Appellant

Vs.

M/s. Bhandari Engineers & Builders Pvt. Ltd.

83, Bhandari House, 91, Nehru Place,

New Delhi. ...Respondent"

12. It was not the submission of Mr. Sharma that M/s. Raj &

Associates Construction Division has ceased to exist. We had specifically

put to Mr. Sharma as to whether it was case of change of name, or

amalgamation or takeover. Mr. Sahrma's answers seemed to suggest that

none of circumstances had arisen. Therefore, the description of the

appellant that it was formerly known as M/s. Raj & Associates

Construction Division could not be understood. Undoubtedly, the joint

venture entity i.e., Maharia Raj-JV had preferred objections under section

34 of the Act vide OMP No.220/2006, therefore, it is not understood as to

how the appellant, which has been unable to explain its legal relationship

with one of the constituent partners', i.e., M/s. Raj & Associates

Construction Division could maintain either objections under section 34

of the Act or the present appeal. The learned Single Judge appears to

have taken the cause title/memo of parties on its face value and

accordingly, dealt with the submissions raised as regards the lack of

authority of Mr.Vinod Goel to enter into the main contract dated

31.05.2001 or the sub-contract dated 27.05.2002. In our opinion, there is

a deliberate obfuscation of this vital fact. The inability of the counsel to

assist us in this regard appears to be contrived.

13. Apart from the above, we agree with the conclusion of the learned

Single Judge if, it is assumed (as the learned Judge appears to have

accepted) that the appellant and M/s. Raj & Associates Construction

Division is the same entity; that the sub-contractor could not have known

as to what was the limitation on the authority of Mr.Vinod Goel, as it was

dealing with the joint venture entity i.e., M/s. Maharia Raj-JV. The

purported lack of authority, if any, fell within the domain of the "indoor

management" of the joint venture entity i.e., M/s. Maharia Raj-JV. The

joint venture entity by its very conduct demonstrated to the world at large,

including the sub-contractor (i.e., BEPL) that it had the authority to

execute both the main contract dated 31.01.2001 with NHAI, and the sub-

contract dated 27.05.2002 with BEPL. As noted by the learned Single

Judge, what makes matter worse for the appellant is that it chose not to

appear before the Arbitral Tribunal. To our minds, this folly is

compounded by the fact that a specific ground has been taken in the

appeal that the Arbitral Tribunal ought to have perused the record on its

own and come to a conclusion in its favour. We are unable to accept the

stand taken by the appellant in this regard. An Arbitrator is not blessed

with prescience so as to be in a position to anticipate the submission that a

litigant would make based on the documents on record. A party which

chose not to appear does so at its own peril.

14. We are thus of the view that the appeal deserves to be dismissed

with exemplary costs but we desist from doing so as none appears for the

respondent. Before we conclude, we may place on record that no other

submission was raised before us by the learned counsel for the appellant.

SANJAY KISHAN KAUL,J

RAJIV SHAKDHER, J JANUARY 04, 2012 yg