M/S Suvidha Engineers (Project) vs The Dy Chief Engineer ...
2016 Latest Caselaw 3869 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                  Order delivered on: 23rd May, 2016

+                            ARB. P. No.71/2012

        M/S SUVIDHA ENGINEERS(PROJECT)             ..... Petitioner
                      Through   Mr.Akhil Sachar, Adv.

                             versus

        THE DY CHIEF ENGINEER (CONSTRUCTION) & ORS
                                                  ..... Respondents
                       Through   Ms.Geetanjali Mohan, Adv.for
                                 Railways.
                                 Mr.Ratan Singh, Adv. with
                                 Mr.Raghavendra M. Bajaj, Adv. for
                                 applicant Sanjeev Ummat.

        CORAM:
        HON'BLE MR.JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J. (ORAL)

O.A. No.269/2015 (Chamber Appeal against the order dated 29th April, 2015) by applicant Sanjeev Ummat)

1. After the commencement of the present proceedings, the applicant filed an application being l.A No. 16160/2012 for impleadment in the above captioned arbitration petition. The applicant is aggrieved by the order dated 29th April, 2015 passed by the Joint Registrar, whereby the application under Order 1 Rule 10 CPC filed by the applicant was dismissed.

2. By way of this order, I propose to decide the Chamber Appeal filed by Sanjeev Ummat, applicant in the application filed under Order 1 Rule 10 CPC. It is the case of the applicant that Mr. Shiv Hari Singla was the erstwhile sole proprietor of M/s Suvidha Engineers (Project)

("the petitioner") having its old office at 3744, Netaji Subhash Marg, Daryaganj, Delhi- 110002. In and around the year 2008, the petitioner reached an understanding with the applicant herein i.e. Mr. Sanjeev Ummat, whereby it was decided that the petitioner's proprietorship and the applicant's experience of construction and civil works and also financial capability would be used to participate in tenders. In view of the said arrangement, it led to the grant of an open tender by the Rail Bhawan (hereinafter referred to as "Tender-I") and execution of an Agreement bearing No.W-146-C/CSB dated 30th September, 2008 for a value of Rs.91,00,001/-. The said agreement was signed by the applicant. A new bank account was also opened for this purpose in the Allahabad Bank (hereinafter referred to as "Bank Account-I") in the name of the petitioner's proprietorship firm and full authority to operate the same was granted to the applicant by the petitioner. The tender was executed by the applicant by bringing in Rs.23,00,000/- for utilization and execution of the works. Thereafter, the applicant signed addendums with his address as the new address of the proprietorship. In lieu of the aforementioned understanding between the applicant and the petitioner whereby the applicant was utilizing the proprietorship firm of the petitioner for being awarded and executing tender work, the applicant remitted a sum of Rs.6,00,000/-(Rs.1,00,000/- through cheque in the petitioner's ICICI Bank Account and Rs.5,00,000/- by cash) out of the total consideration received under Tender-I, to the petitioner and thereafter, it was decided that the petitioner would part ways with the applicant and that the applicant would take over the entire work and ownership of the petitioner and for this purpose a new bank account was opened with Syndicate Bank, Pusa Campus (Account No.9029.101.3073 and hereinafter referred to as "Bank Account-2")

wherein the details of the PAN card of the applicant were provided as the sole proprietor of petitioner having its office at B-9/6296, Vasant Kunj, New Delhi.

3. Brief facts of the case as per the case of the petitioner is that the petitioner is a proprietary concern of Mr. Shiv Hari Singla claims that he is the sole proprietor and is engaged, inter alia, in the business of carrying out building and road works, low tension electric works, electrical engineering, power station and high tension distribution and air conditioning and refrigeration works.

4. The petitioner firm is recognized as contractors of the Indian Railways providing its services to the Northern Railways for the past 23 years. The petitioner has its head office at 3744, Netaji Subhash Marg, Daryaganj, Delhi-110002 and its branch offices at various other places.

5. The respondents floated tender being Tender No. 3l5- Acs/Dy.CE/C/CSB dated 13th August, 2009 for performance of civil engineering works in the Central Air Conditions of Central Hospital at New Delhi for an approximate cost of Rs.472.11 Lakhs. The scope of work included providing and fixing under deck insulation slabs and insulation plenum sheet under ceiling insulated glass tinted toughened and plane on window and ventilators, false ceiling, partitions and other miscellaneous civil engineering works to be completed over a period of 10 months.

6. In terms of the contract, the entire work was executed by the petitioner and in pursuance thereof, the material as well as equipments worth Rs.30,00,000/- (approximately) was delivered at the site of the respondents. Also, subsequent orders as per the drawings/designs approved by the respondents for supply of equipments for an even amount were also placed by the petitioner.

7. The petitioner firm in the past had continuous dealings with the respondents/Railway Officials and has all this while successfully carried out and executed/completed various tenders/awarded works by the respondents in the past and the entire payments thereunder has been made by the respondents via NEFT/ECS payments without any exceptions in the Current Account No. 20357904364 maintained in the name of the petitioner with the Allahabad Bank, DRM Office Branch, New Delhi.

8. It is specifically mentioned that the petitioner had various ongoing works and had authorized one of his supervisors/employees the applicant i.e. Mr. Sanjeev Ummat to sign any/ all drawings/ communications/tenders/agreements and measurements pertaining to railway works on behalf of the petitioner who otherwise used to manage all affairs, expenditure etc. incurred towards the execution of works/payments towards awarded works from bank accounts maintained with the Allahabad Bank, DRM Office Branch, New Delhi.

9. The petitioner had also authorized applicant as an Authorized Signatory for the purposes of operation of the Current Account No. 20357904364 maintained by the petitioner and in view of authority, Mr. Sanjeev Ummat on instructions of the petitioner used to manage/look after the affairs of the petitioner with respect to tender works under the control and supervision of the petitioner.

10. The petitioner for the said purpose had executed Power of Attorney dated 7th July, 2008 and 13th March, 2009 in favour of Sanjeev Ummat. In the O.A. filed by the applicant, the authenticity of the said Power of Attorney has not been disputed and the signatures of Mr. Sanjeev Ummat on the Power of Attorney dated 7th July 2008 has neither been denied nor disputed.

11. The petitioner later on subsequently discovered fraud of an egregious nature committed by Mr. Sanjeev Ummat, who had unilaterally withdrawn substantial amounts of money from the Bank Accounts maintained with the Allahabad Bank, DRM Office, New Delhi. Mr. Sanjeev Ummat deliberately started avoiding giving account details despite repeated requests and reminders made to that effect.

The petitioner was constrained to revoke the authority granted in favour of Mr. Sanjeev Ummat vide letter dated 20th October, 2010 duly received by the respondents. Similar letters dated 13th October, 2010 and 18th October, 2010 were addressed to Manager, Allahabad Bank and Manager, Dena Bank, Connaught Place, New Delhi respectively. The petitioner submits that Mr. Sanjeev Ummat had fraudulently opened a Bank Account being Current Account No.006511023893 with Dena Bank, Connaught Place Branch, New Delhi in the name of the petitioner claiming himself to be the proprietor of the petitioner with the address of his residence i.e. B-9/6296, Vasant Kunj, New Delhi, which had been shown as a Branch Office of the petitioner. 11.1 Thereafter, the petitioner came to know on 4th April, 2011, while accessing the website of the respondents qua a fresh tender notice dated 14th Marrch, 2011 issued by the respondents for the balance works without having issued any notice/communication for termination of the contract, despite the fact that the respondents had themselves vide letter dated 28th December, 2010 granted extension for the completion of awarded works till 31st March, 2011. 11.2 The petitioner thereafter filed petition being OMP No. 302/2011 which was allowed by the order dated 3rd May, 2011 directing the respondents to permit the petitioner to carry out and complete the

balance works under the subject contract while restraining the respondents to award the same to any other contractor.

12. In order to safeguard the interests of the respondents against any alleged claims that Mr. Sanjeev Ummat may raise against the respondents, a statement was made on behalf of the petitioner that the petitioner shall complete the balance work without even insisting on payments of any further amount under the contract, till so long as the inter-se disputes between the petitioner and Mr. Sanjeev Ummat are resolved in proceedings before a competent Court. The petitioner says Mr. Sanjeev Ummat, who was the son of a former employee of Railways, namely, Mr. B.K. Ummat, sought to file a Review Petition No. 333/2011 before this Court.

13. This Court dismissed the Review Petition vide order dated 30th May, 2011 with cost of Rs.20,000/- who also observed that there may be some collusion between Mr. Sanjeev Ummat and the officers of the respondents. Accordingly, The Chief Vigilance Officer of the Northern Railways was directed to conduct an inquiry into the matter.

14. The petitioner also submits that as the respondent in despite of the order dated 3rd May, 2011 had not permitted the petitioner to carry out and complete the balance works, the petitioner approached this Court by preferring an application being I.A. No. 11084/2011 in OMP No. 302/2011 to bring on record the deliberate and willful inaction on part of the respondents in non-compliance of the order dated 3rd May, 2011 passed by this Court.

15. This Court by order dated 18th July, 2011 issued notice to the General Manager (Northern Railways) to show cause as to why the Court should not initiate proceedings against him for breach of the order dated 3rd May, 2011 under the Contempt of Courts Act.

16. In compliance of the directions issued by this Court vide order dated 3rd May, 2011, the contract of the petitioner was restored by signing of a fresh contract. The Notice of Contempt issued to the General Manager was discharged in view of the unconditional apology tendered vide order dated 10th August, 2011.

17. The petitioner invoked arbitration by issuing a notice dated 20th August, 2011 which was duly acknowledged by the respondents on 22nd August, 2011. However, the respondents had failed to appoint an Arbitrator in terms of Article 64(1)(i) of the General Conditions of Contract, 1999, accordingly, the petitioner was constrained to prefer a petition under Section 11(6) of the Arbitration and Conciliation Act, seeking appointment of an Arbitrator.

18. Mr. Sanjeev Ummat, despite not being a party to the contract dated 11th October, 2010 entered between the petitioner and the respondent, preferred an application being I.A. No. 16160/2012 under Order I Rule 10 CPC seeking impleadment as a respondent. The petitioner also moved an application under Section 340 Cr.P.C which was registered and numbered as Crl. M.A. No. 18284/2014. This Court issued notice in the said application by order dated 26th November, 2014. It is denied by the petitioner that the contract was signed on behalf of the petitioner with the respondent.

19. The respondent No. 1 through Mr. Rajbir Singh, Deputy Chief Engineer, Construction, Northern Railways, Shivaji Bridge, New Delhi, vide reply dated 19th December, 2013, to the application being I.A. No.16160/2012, had stated as under:-

"That Shri Shiv Hari Singla as the sole proprietor of the firm vide letters dated 7th July, 2008 and 12th May, 2009 had only authorized Mr. Sanjeev Ummat, son of Shri B.K. Ummat to sign all lany drawings, communication, tenders, agreements and measurements pertaining to railway works

on behalf of Suvidha Engineers Project). Therefore, it is pertinent to mention herein that Mr. Sanjeev Ummat the applicant herein was only a authorized representative of the petitioner Firm M/s Suvidha Engineers (Project) of which Shiv Hari Singla is the sole proprietor. "

20. Further, at paragraph 3 of the reply dated 19th December, 2013, the respondent No. 1 has expressly stated that there is no iota of doubt that Mr. Shiv Hati Singla is the sole proprietor of the petitioner. The relevant portion of paragraph 3 is reproduced hereinbelow:

"........Therefore, there no shadow ofdoubt that Shri Shiv Hari Singla is the sole proprietor of the petitioner Firm and not the applicant as being claimed by the applicant."

21. The petitioner also filed a Criminal Complaint being C.C. No. 89/2011 against Mr. Sanjeev Ummat and others for the fraudulent acts committed by him and the same is pending adjudication before the Metropolitan Magistrate, Tis Hazari Courts, Delhi. Mr. Sanjeev Ummat in continuation of his fraudulent acts, had routed substantial amounts from the account of the applicant to M/s Krypton Heights Builders' and Infrastructures and M/s Krypton Heights Electro Pvt. Ltd. which is owned, controlled and managed by Mr. Sanjeev Ummat.

22. It is submitted by the petitioner that the claim of Mr. Sanjeev Ummat, having paid the performance guarantee of Rs.16 Lakhs from his own Bank Account being Current Account No. 006511 023 893 with the Dena Bank is belied from the fact that the amount in question i.e. Rs.16 Lakhs was withdrawn from the Allahabad Bank account of the petitioner on 17th September, 2009. The applicant in support of his submissions, relies upon a payment voucher dated 16th October, 2010 which is an incomplete document as the name of the contractor in the payment voucher was mentioned as M/s Suvidha Engineers (Project)

having its office at 3744, Netaji Subhash Marg, Delhi, the premises which belongs to Mr. Shiv Hari Singla.

23. The applicant time and again asked to produce any cogent evidence in order to show that how he became the proprietor of the firm in which he was the employee. He failed to produce the same. Counsel was simply repeating the same thing over and again that it is applicant who has taken all steps by depositing the amount on behalf of the petitioner firm and has also signed a large number of documents, therefore, he is now the sole-proprietor.Counsel appearing on behalf of Government is now supporting the case of the petitioner. The agreement was not executed in his personal capacity. It was signed on behalf of the petitioner firm. It is not disputed by the applicant that he was working with the petitioner who at that point of time was the sole-proprietor. It is also not denied that Mr. Shukla being a proprietor has issued Power of Attorney in his favour. Thus, this Court is of the view that in case, the applicant has any case against the petitioner, he may take the appropriate remedy available as per law in order to recover the amount if due or for compensation but the same would be compensated as per its own merit.

24. As far as arbitration proceedings are concerned, in view of material facts and documents available, the applicant has no case. The Chamber Appeal is accordingy dismissed. As the frivolous appeal is filed and the applicant has wasted huge time of the Court, the applicant is burdened with cost of Rs.10,000/- which shall be deposited by the applicant in Delhi High Court Mediation and Conciliation Centre within eight weeks from today.

ARB.P. 71/2012 & I.A. Nos.7306/2014, 5176/2016 and Crl.M.C.18284/2014 Learned counsel for the respondents state that she will take the instructions from her client if the sole Arbitrator can be appointed by the office to adjudicate the disputes between the parties. She is also agreeable to provide the names of five persons for the purpose of appointment of sole Arbitrator out of them. The petitioner will also be given an option to choose three out of them, out of whom a sole Arbitrator be appointed by this Court on the next date.

List on 27th July, 2016.

(MANMOHAN SINGH) JUDGE MAY 23, 2016