National Highways Authority Of ... vs M/S Sunway Construction Sdn Bhd
2015 Latest Caselaw 5130 Del

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          THE HIGH COURT OF DELHI AT NEW DELHI
%                                      Judgment delivered on: 17.07.2015
+       FAO(OS) 370/2015

NATIONAL HIGHWAYS AUTHORITY OF INDIA ... Appellant
                                          versus

M/S SUNWAY CONSTRUCTION SDN BHD                                ... Respondent
Advocates who appeared in this case:
For the Appellant            : Ms Ayushi Kiran
For the Respondent           : Mr Amit George with Ms Rajsree Ajay

CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE SANJEEV SACHDEVA

                                       JUDGMENT

BADAR DURREZ AHMED, J (ORAL) CM 12271/2015 Allowed subject to all just exceptions.

CM 12269/2015 We have heard the learned counsel for the parties. The delay is condoned.

The application stands allowed.

FAO(OS) 370/2015 & CM 12268/2015 & CM 12270/2015

1. This appeal is directed against the judgment and/ or order dated

13.03.2015 passed by a learned Single Judge of this Court in OMP 166/2015,

which was a petition under Section 34 of the Arbitration and Conciliation Act,

1996 (hereinafter referred to as 'the said Act') in respect of an Award dated

30.09.2014 passed by the Arbitral Tribunal. The said petition was filed by the

appellant herein being aggrieved by the said Award. The Arbitral proceedings

arose out of an agreement dated 11.08.2005 entered into between the appellant

and the respondent for rehabilitation and upgrading of Km 406.00 to km

449.150 of NH-76 to 4 lane configuration in the State of Rajasthan, Contract

Package - EW-II (RJ-9) (hereinafter referred to as 'the contract').

2. Essentially, the dispute centres around two amounts. First of all, there

is an amount of Rs 3,39,31,497/-. This amount had been withheld by the

petitioner on account of certain observations made by the Comptroller and

Auditor General of India in an enquiry which he undertook in January, 2010.

This is an undisputed amount certified for payment, but has not been paid to

the respondent because of the observations of the CAG. It essentially relates

to the excise duty liability. The learned counsel for the appellant submits that

as long as that liability stands and the vigilance enquiry is in progress, the said

amount cannot be paid. This aspect of the matter has been considered in

detail by the Arbitral Tribunal as also by the learned Single Judge. Both have

held that there is no provision in the contract which permits the appellant to

withhold payment of the said amount.

3. In response to this, the learned counsel for the appellant draws our

attention to Clause 26.1 of the General Conditions of Contract which provides

that the contractor shall keep the employer indemnified against all penalties

and liability of every kind against the breach of any statute and/or regulation.

4. In response to this submission, the learned counsel for the respondent

states that this is a condition of the contract and the respondent shall continue

to be bound by this provision even if the payment of the said amount of

Rs 3,39,31,497/- is made. He further submitted that Clause 26.1 was only an

indemnity clause and the respondent shall continue to be bound by the said

clause and shall keep the appellant indemnified against all penalties and

liability of every kind against any breach of any statute and/ or regulation. We

accept the view expressed by the learned counsel for the respondent.

5. Consequently, we feel that no interference is called for in the impugned

order or Award directing the appellant to make the payment of

Rs 3,39,31,497/-. This would, however, be subject to the indemnity given by

the respondent under Clause 26.1 which shall continue to hold good.

6. The second dispute is with regard to an amount of Rs 2,28,43,270.52.

Insofar as this amount is concerned, we note that in the Section 34 petition,

which was filed by the appellant, ground 'D' has referred to the same. In the

said ground, it was mentioned that the contractor had repeatedly and

persistently disputed the final payment certificate issued by the engineer. It

was also mentioned that all along the payment received by the contractor on

account of variation valued by the engineer was disputed and the provisional

payments were also received under protest. It was further stated that the

contractor had till date not given its acceptance of the rate analysis and rate

proposed by the engineer and on that account Rs 2,28,43,270.52 was kept on

hold by the appellant.

7. The learned counsel for the respondent submits that he accepts the rate

analysis and the rate proposed by the engineer in respect of the items which

form the subject matter of the present Award. It is also accepted by him that

in case there is an overlap with regard to the items covered by the present

Award and the subject matter of disputes which are pending between the

parties, then the statement made here shall be binding in those cases also to

the extent of the overlap.

8. Accordingly, we direct that the sum of Rs 2,28,43,270.52 shall be paid

by the appellant to the respondent and simultaneously the respondent shall

give a discharge certificate in respect of all claims which form the subject

matter of this Award.

The appeal stands disposed of in the above terms.

                                         BADAR DURREZ AHMED, J



JULY 17, 2015                             SANJEEV SACHDEVA, J
SR