V.K. Sood Engineers And ... vs Northern Railways
2016 Latest Caselaw 5702 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                           Order pronounced on: 31st August, 2016

+                     O.M.P.(I) (COMM.) No.242/2016

       V.K. SOOD ENGINEERS AND CONTRACTORS      ..... Petitioner
                      Through  Ms.Anusuya Salwan, Adv. with
                               Ms.Renuka Arora and Mr.Kunal
                               Kohli, Advs.

                            versus

       NORTHERN RAILWAYS                              ..... Respondent
                     Through         Mr.Jagjit Singh, Adv. with
                                     Mr.Preet Singh, Adv.
       CORAM:
       HON'BLE MR.JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J.

1. The petitioner has filed the present petition under Section 9 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the "Act"), wherein the following reliefs were sought by the petitioner:-

"(i) Stay the order dated 31.03.2016 by which the amounts payable to the petitioner are being kept in a miscellaneous account.

(ii) Stay the implementation of the letter dated 20.01.2015 qua M/s V.K.Sood Engineers & Contractors;\direct the respondent to release the admitted payments."

2. The petitioner M/s V.K.Sood Engineers & Contractors is a registered partnership firm of Mr.Puneet Kumar Sood and Mr.Pramod Kumar Bhatia. The petitioner was awarded the work of "Construction of Road Bridges in lieu of Level Crossing No.52-C at Km.75/6-7 at

Garhmukteshwar on Moradabad-Ghaziabad section over Moradabad Division" on 3rd January, 2012, and a contract Agreement dated 30th March, 2012 was executed between the parties.

3. The contract was awarded to the partnership firm M/s V.K.Sood Engineers & Contractors comprising of Mr. Puneet Kumar Sood having a share of 99% and his brother Mr.Vaneet Kumar Sood having a share of only 1% in the partnership deed.

4. As per the contract, the stipulated date of start of the Agreement was 3rd January, 2012 and the stipulated date of completion was 2nd March, 2013. As per the petitioner, the contract was extended on various dates and the work is almost 99% complete and it had executed works of more than Rs. 2 crores but the respondent did not release the payments on account of some recovery pending against a proprietorship firm by the name of 'M/s V.K.Sood Engineers & Contractors-DDS(JV)' of Mr.Vaneet Kumar Sood. Though, the name of the said firm is similar but admittedly it is a separate entity. Mr.Vinod Kumar Sood is the father of Mr.Puneet Kumar Sood, partner of petitioner's firm as well as Mr.Vaneet Kumar Sood, who is the brother of Mr.Puneet Kumar Sood.

5. It is further stated by the petitioner that w.e.f. 1st April, 2014, Mr. Vaneet Kumar Sood had retired from the partnership firm and gave up his 1% share in the partnership firm. In his place, Mr. Parmod Kumar Bhatia was inducted into the partnership firm to the extent of 1% share and a fresh deed of partnership dated 1st April, 2014 was executed between the parties. The respondent was duly intimated about the said changes vide letter dated 5th May, 2014.

6. The history of the firm owned by Mr.Vaneet Kumar Sood is that the work relating to fabrication, supplying, assembling, erection of Rocker and Roller bearing with base plate etc. at the site on already constructed sub-structure of bridge No. 52 across River Ganga at Garhmukteshwar Bridge Railway Station on Ghaziabad- Moradabad section was awarded to M/s V.K.Sood Engineers & Contractors-DDS(JV), the sole properitorship firm of Mr.Vaneet Kumar Sood.

6.1 V.K.Sood Engineers & Contractors-DDS(JV) completed the work by 21st May, 2013 and the security deposit and performance guarantee of V.K.Sood Engineers & Contractors-DDS(JV) was also released as the work was satisfactorily completed.

6.2 The disputes had arisen on 21st January, 2013 between the Railways and V.K.Sood Engineers & Contractors-DDS(JV) with respect to the execution of the said contract and the said proprietorship firm had invoked the arbitration clause between the parties. Since an Arbitrator was not appointed by the respondent, the said proprietorship firm approached this Court in a petition under Section 11(6) of the Act for the appointment of an Arbitrator. By the order dated 21st November, 2013, this Court had appointed Justice M.Jagnanda Rao, Former Judge of the Supreme Court as an Arbitrator.

6.3 The respondent on 9th December, 2014 had sent a recovery of Rs.1.70 Crores against the proprietorship firm of M/s V.K.Sood Engineers & Contractors-DDS(JV).

6.4 On 20th January, 2015, the petitioner-Firm had challenged the said demand letter dated 9th December, 2014 and 23rd December,

2014 by filing a petition under Section 9 of the Act being OMP No. 71/2015 for seeking a restrained order against the Railways from taking coercive steps to recover the amount of Rs.1.79 Crores pursuant to the letter dated 9th December, 2014 and 23rd December, 2014. This Court by order dated 20th January, 2015 restrained the Railways from taking the coercive method to recover the amount of Rs.1.79 Crores in terms of the letter dated 9th December, 2014 and 23rd December, 2014.

7. While the stay was granted by this Court on 20th January, 2015, the respondent on 20th January, 2015 had issued an order to all the divisions of the Railways stating that an amount of Rs.1.79 crores is to be recovered from M/s V.K.Sood Engineers & Contractors on account of excess payment to be made to the agency under the PVC clause.

8. The petitioner on coming to know about the said order immediately contacted the respondent informing them that M/s V.K.Sood Engineers & Contractors was a firm completely different from M/s V.K.Sood Engineers & Contractors-DDS(JV) as M/s V.K.Sood Engineers & Contractors was a partnership firm comprising of Mr.Puneet Kumar Sood and Mr.Pramod Kumar Bhatia, whereas the firm M/s V.K.Sood Engineers & Contractors-DDS(JV) was a proprietorship firm of Mr.Vaneet Kumar Sood and one of the brother of the partners of the petitioner firm who had taken up the work and completed the same. However, the respondent took a legal opinion on the said issue and referred the case to Sinha and Associates, Advocates.

9. M/s Sinha and Associates, Advocates opined that no amount could be recovered from the petitioner-Firm as it was a different firm

and the contract did not permit recovery from a different firm and also that there was a stay order from this Court.

10. The petitioner on 31st March, 2016 had come to know that the respondent had certified a part payment of Rs.51,37,707/- but instead of releasing the payments to the petitioner, the respondent had passed an order dated 31st March, 2016 for keeping the amount payable to the petitioner in miscellaneous deposit and not to release the same to the petitioner.

11. Despite of the fact that the recovery of Rs.1.79 crores is against a separate Company, the respondent is withholding the payments from the petitioner for works executed and certified by the respondent.

12. It is a matter of fact that the dispute with respect to M/s V.K.Sood Engineers & Contractors-DDS(JV) is referred to arbitration to Justice M. Jagnanda Rao (Retd.). This Court had granted the stay against the said recovery in the Section 9 petition.

13. It is argued by the learned counsel for the petitioner that the respondent is not paying the dues of the petitioner towards the work executed by the petitioner. The petitioner has dues of more than Rs.2 crores towards the work done and the petitioner is facing an acute financial crunch.

The respondent has not released a penny to the petitioner for about two years though the petitioner is still at site and the work is being executed in the interest of the project. The petitioner is suffering irreparable loss because of the actions of the respondent and till date an amount of Rs.2 crores is pending towards the work done.

14. The counsel for the respondent has submitted that Mr.Vaneet Kumar Sood and Mr.Puneet Kumar Sood are real brothers and the members of the same family. Even the name of the firm is similar, in order to get the benefit. As the huge amount is due from Mr.Vaneet Kumar, the petitioner is trying to manipulate the entire thing and by making misrepresentation, the petitioner was able to get the work awarded in its favour. Counsel says that since the respondent has to recover similar amount from Mr.Vaneet Kumar Sood, therefore, the respondent is justified to issue the letter dated 31st March, 2016 by stalling the payment.

15. Ms.Anusuya Salwan, learned counsel for the petitioner submits that firstly the petitioner has nothing to do with the firm owned by Mr.Vaneet Kumar Sood; it is a separate business and has no connection whatsoever. If any amount is recoverable from the firm owned by Mr.Vaneet Kumar Sood, the same can be recovered by the respondent as per the law; however, the respondent which is fully aware that the two firms are totally different is bound to make the payment towards the work done by the petitioner. She says that it is also immaterial if at one point of time, they were doing the business jointly. In the present matter, Mr.Vaneet Kumar Sood was never involved and has nothing to do with the contract. She says that in any case, the recovery sought by the respondent against Mr.Vaneet Kumar Sood and his firm has been stayed by this Court; thus, the respondent cannot more harass the petitioner in this way.

16. In view of the above said facts and circumstances, it appears that the petitioner is entitled for the relief claimed. Admittedly as per the case of the petitioner, the petitioner has completed 99% of the work at the site and the said amount is due. There is no

justification on the part of the respondent to stall the payment of the petitioner. Thus, the operation of the order dated 31st March, 2016 and implementation of the letter dated 20th January, 2015 qua petitioner is stayed and without prejudice the respondent is directed to release the admitted payments within four weeks from today against the certified bills. In case of any dispute left between the parties, they are entitled to initiate the arbitration proceedings as per the law. No further orders are required to be passed. The petition is disposed of accordingly.

17. No costs.

(MANMOHAN SINGH) JUDGE AUGUST 31, 2016