Delhi High Court
Director, U.P. Technical ... vs Rites Ltd. & Anr. on 15 October, 2012
Author: Pradeep Nandrajog
$~6
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: October 15, 2012
+ FAO(OS) 467/2010
DIRECTOR UP TECHNICAL EDUCATION ..... Appellant
Represented by: Mr.Anil Mittal, Advocate.
versus
RITES LTD. & ANR. ..... Respondents
Represented by: Mr.Anil Seth, and
Mr.M.K.Pathak, Advocates for R-1.
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MR. JUSTICE MANMOHAN SINGH
PRADEEP NANDRAJOG, J. (Oral)
FAO(OS) 467/2010
1. Vide impugned order dated February 05, 2010 the learned
Single Judge has held that only a limited issue was called for decision
with respect to a petition filed by RITES Ltd. under Section 34 of the
Arbitration and Conciliation Act 1996 which challenged an award dated
September 24, 2002 published by Shri Arvind Kumar, the learned Sole
Arbitrator.
2. The learned Single Judge has noted that the Notice Inviting
Tender issued by RITES Ltd. clearly stated that the tenders were being
received by RITES Ltd. on behalf of the Government of Uttar Pradesh.
The learned Single Judge has noted that even the letter of award dated
November 08, 1996 was signed by one Lt.Col.Arun Kumar on behalf of
the Government of Uttar Pradesh. The learned Single Judge has further
noted that the Director, UP Technical Education Department was issued a
notice, in the capacity of respondent No.2 in the claim petition filed by
the claimant Shabir Ahmed and sons. Lastly, the learned Single Judge
has noted that the building in question which was constructed by the
contractor was belonging to the Technical Education Department of the
State of Uttar Pradesh. Since the award was against RITES, the learned
Single Judge has directed that the award stands modified and shall
operate against the State of Uttar Pradesh.
3. We note that the building in question was constructed at
Almora and falls in the State of Uttrakhand and with the division of assets
and liabilities, the ultimate liability, if the impugned order would stand
would be that of Uttrakhand.
4. To put it pithily, view taken by the learned Single Judge is
that the RITES has acted as the agent of the Technical Education
Department of the State of Uttar Pradesh, which as principal would be
liable under the contract in question.
5. Now, the order as penned by the learned Single Judge may
appear to be technically correct, but we find that RITES did not plead as
aforesaid before the learned Arbitrator. It did plead that the work was
being executed for the benefit of the Technical Education Department of
the State of Uttar Pradesh, but we find that RITES had raised four
counter claims, and surely RITES could not have so done if it projected
before the Arbitrator that no award could be made against it since it was
acting only in the capacity as an agent for the Technical Education
Department of the State of Uttar Pradesh. Counter Claim No.1 of RITES
in sum of `9,60,475/- was the alleged loss due to non-utilization of the
building for the period of alleged delay. Counter Claim No.2 was for
extra money spent by RITES towards engaging its own staff and
overheads during prolonged period of contract and was in sum of
`3,10,530/-. Counter Claim No.3 was for compensation on account of
loss of earning per employee of RITES and Counter Claim No.4 was for
compensation on account of loss of business opportunity.
6. We cannot but help recording that it is a case of comedy of
errors resulting in a tragedy in law.
7. It is no doubt true that the Technical Education Department
of the State of Uttar Pradesh, as per its agreement, had required RITES to
act as a consultant and for which money was paid to RITES. But, RITES
was put in charge of the entire project including funds made available to
RITES. The Notice Inviting Tender issue by RITES did bring it to the
notice of the contractor that the works were to be executed for the benefit
of the State of Uttar Pradesh and this is the reason why the letter of award
was signed by a person on behalf of the State of Uttar Pradesh.
Unfortunately, the counsel for the claimant i.e. the contractor overlooked
as aforesaid and filed a claim against RITES, which mutedly took a stand
in the reply filed to the statement of claim that the liability if any was that
of the principal, but for reasons unknown filed a counter claim, and from
the headings of the counter claim briefly noted by us herein above would
lead any person to bona-fide belief that the counter claim would be by the
owner of the works. We illustrate. How could an agent lay a claim to
Counter Claim No.1 by way of loss due to non-utilization of the building.
The very nature of the counter claim would mislead anyone to believe
that it is the owner of the work which is responding to the claim and
raising a counter claim. Similarly would be the position with respect to
the other three counter claims.
8. Since RITES is responsible for the mess, it must suffer the
consequence and must bear the burden of the award. It may seek
recompense thereafter from the State of Uttrakhand (as of today).
9. We allow the appeal and set aside the impugned order dated
February 05, 2010 and as a consequence dismiss OMP No.13/2003 filed
by RITES Ltd. and hold that as per the award RITES Ltd. has to satisfy
the claim.
10. We have something more to speak.
11. The appellant before us i.e. Director, UP Technical
Education Department was required to deposit the decretal amounts in
this Court as a condition of stay of the award being executed against it
and it proceeded to the Supreme Court challenging the order as per
SLP(C) No.7970/2011 raising a grievance that the liability had to be that
of State of Uttrakhand. Vide order dated February 25, 2011 the Supreme
Court directed that deposit made by the appellant as directed by this
Court would be made and State of Uttrakhand may be impleaded as a
party and thereafter we find that State of Uttrakhand was impleaded as a
party.
12. In view of our decision above we direct that the amount
deposited by the appellant would be returned to the appellant by
endorsing the FDR in the name of the appellant and this would mean that
the interest accrued would be to the benefit of the appellant.
13. Respondent No.2 would be free to execute the award against
RITES Ltd.
14. Parties shall bear their own costs.
PRADEEP NANDRAJOG, J.
MANMOHAN SINGH, J.
OCTOBER 15, 2012
dk
