M/S. Otik Hotels And Resorts ... vs Indian Railway Catering And ...
2017 Latest Caselaw 4454 Del

$~ 26
* IN THE HIGH COURT OF DELHI AT NEW DELHI
%                                      Judgment delivered on: 25.08.2017
+        O.M.P.(I) (COMM.) 287/2017
M/S. OTIK HOTELS AND RESORTS PRIVATE LIMITED
                                         ..... Petitioner
                             versus
INDIAN RAILWAY CATERING AND TOURISM
CORPORATION LTD.                    ..... Respondent
Advocates who appeared in this case:
For the Petitioner           :         Mr. Raman Kapoor, Sr. Advocate with Mr. Jitendra
                                       Kumar Singh and Mr. Manjit Singh Ahluwalia,
                                       Advocate.

For the Respondents          :         Mr. Nikhil Majithia, Advocate.

CORAM:-
HON'BLE MR JUSTICE SANJEEV SACHDEVA

                                 JUDGMENT

25.08.2017 SANJEEV SACHDEVA, J. (ORAL)

1. By this petition under section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act), the Petitioner has sought an interim direction, thereby, staying the operation of the termination of the letter dated 25.05.2017, whereby, the Respondent has terminated the temporary licence of Train No.12113-14, Pune-NGP Garibrath Express and debarred the Petitioner from participating in future projects of IRCTC for a period

of one year.

2. The Respondent called for quotation for Train No. 12113-14, Pune-NGP Garibrath Express. The Petitioner participated in the said tender and was declared successful.

3. On 01.05.2017, the Letter of Award was issued to the Petitioner and the Petitioner was advised to make payment of the Security Deposit of Rs.3,00,000/- by 08.05.2017 and the Licence Fee of Rs.6,92,055/- by 20.07.2017.

4. Since there was no clarity on the date of the commencement of services, the Petitioner enquired about the commencement date of the train. As per the Petitioner, the Petitioner failed to deposit the Security Deposit and Licence Fee as at the same time Petitioner was allotted another train 12213-14 YPR-DEE Duronto Express in which the onboard catering service had to start on 15.05.20-17 and thus it skipped their mind to deposit the Security Deposit by 08.05.2017.

5. The Respondent, by the impugned letter dated 25.05.2017, terminated the award of contract and debarred the Petitioner from participating in future tenders for one year.

6. Learned senior counsel for the Petitioner submits that since the Respondent had not communicated the date of commencement of the services on the train, there was no clarity on the issue and further that the contract was terminated on 25.05.2017, prior to the date for

deposit of the Licence Fee, which was 20.07.2017.

7. Learned senior counsel for the Petitioner contends that as on the date of deposit the Petitioner had outstanding claims of over Rs.30,00,000/- against the Respondent towards payment to be made for other contracts.

8. This contention is disputed by the learned counsel for the Respondent, who submits that there were several recoveries to be made from the Petitioner because of default in execution of other contracts. However, he concedes that certain amount was, certainly, due and payable to the Petitioner. He submits that the payments were being made periodically to the Petitioner as and when the amounts were received from the various zones.

9. Learned senior counsel for the Petitioner further contends that several lakhs of rupees were due and payable. Even in the month of August, payments to the tune of Rs. 55 lakhs were released to the Petitioner for the work done in other contracts.

10. It is contended that, at any given point of time, it is the Respondent which owed money to the Petitioner for the services rendered as the payments was released after 3 to 4 months of the service being rendered.

11. Learned counsel for the Respondent disputes that the payments are being delayed. He, however, submits that the payments are only

released once the accounts are reconciled and the payments are received from the various zones.

12. Learned counsel for the Respondent further submits that the train, for which the licence was granted to the Petitioner, which is the subject matter of the impugned letter, has already been re-tendered and awarded to someone else.

13. Learned senior counsel for the Petitioner, under instructions, submits that, insofar as the termination of temporary licence for the subject train is concerned, the Petitioner does not press for any interim relief and would take his remedies before the Arbitral Tribunal for wrongful termination.

14. The only issue now remaining is with regard to the relief qua the order of debarment for a period of one year.

15. The Petitioner had earlier filed a Writ Petition being W.P. (C) 5229/2017 impugning the termination letter dated 25.05.2017 with regard to cancellation of the temporary licence of the subject train. Since the licence for the subject train had already been granted to someone else and the Respondents were not willing to reduce the period of debarment, the petition was dismissed as withdrawn on 07.06.2017 with liberty to the Petitioner to take recourse to such remedies as may be available in law.

16. The Petitioner thereafter filed another Writ Petition being

W.P.(C) 5359/2017. The petition was restricted to the issue of debarment. The Respondent opposed the said petition and inter alia contended that the Petitioner had an adequate remedy by way of arbitration under the Act. Said Writ Petition was disposed of with liberty to the Petitioner to invoke arbitration and seek remedies as available.

17. The Respondent, in its reply to this petition under Section 9 of the Act, has relied on the decision of the Coordinate Bench of this Court dated 05.10.2016 in Writ Petition (C) 9158/2016 titled M/S. OTIK HOTELS AND RESORTS PRIVATE LIMITED VS. INDIAN RAILWAYS CATERING AND TOURISM CORPORATION LTD.

18. It is contended that the as per the relevant Clauses of the contract and as also agreed to by the Petitioner at the time of issuance of the Letter of Award, there is an automatic debarment for a period of one year. Further, it is contended that as the Petitioner has defaulted time and again, no indulgence is required to be shown to the Petitioner.

19. The judgment dated 05.10.2016 is inter se the parties and on identical facts.

20. Clauses 4.8 and 1.1 of the General Conditions of License relied upon by the Respondent read as under:-

"4.8 Non acceptance of award

In case the successful bidder fails to accept the offer of award of licence along with Security Deposit and Licence Fee, within the stipulated time as advised by IRCTC, the licence shall be terminated along with forfeiture of Security Deposit and Licence Fee, whole or part thereof, as the case may be. Further, he will be debarred from participating in the bidding process of future projects of IRCTC for a period of one year.

       *****                 *****           *****

       Payment of License fee

Bidders are required to quote License Fee excluding service tax as applicable, for a period of 06 months. Successful bidder will be required to deposit quoted license fee for a period 06 months along with applicable Service Tax thereon, in advance, before start of work and as advised by IRCTC."

21. Clause (f) of the Format for Submission of Bid relied upon by the Respondent reads as under:-

"(f) On account of non-acceptance of award or on account of non fulfilling tender conditions within the prescribed time, I/ We shall be debarred by IRCTC for further participation in the future tenders of IRCTC for a period of one year."

22. The learned Judge, in the case M/S. OTIK HOTELS AND RESORTS PRIVATE LIMITED (supra), which is inter se the parties and on identical facts, after interpreting identical clauses has applied the judgment of the Supreme Court in KULJA INDUSTRIES LIMITED VS.

CHIEF GENERAL MANAGER, WESTERN TELECOM PROJECT BHARAT

SANCHAR NIGAM LIMITED & ORS., (2014) 14 SCC 731 to hold that the debarment for a period of one year is too harsh, in the facts of the case, and accordingly, reduced the same for a period of one month.

23. Though, the judgment may not strictly apply in the facts of the case as it is not a case of first default but, a case of second default, however, some factors that would be required to be considered are that admittedly, the Respondents were holding onto some money of the Petitioner. Payment to the Petitioner was due and was in fact released later.

24. These aspects would have a bearing on the issues at hand. However, would fall for consideration before the Arbitral Tribunal.

25. At this stage, what is to be considered is as to whether any interim measure of protection is to be granted to the Petitioner or not.

26. The period of debarment is one year. The impugned order was passed on 25.05.2017 and three months have already elapsed. The arbitration proceedings are yet to commence. After commencement, some period would be required for the tribunal to adjudicate and make the award. If after the lapse of a period of one year, the arbitral tribunal were to come to a conclusion that the order of debarment was not warranted, then the Petitioner would have suffered an irreparable loss and injury.

27. Further contention of learned Counsel for the Respondent that

the petition is not maintainable as it is below the pecuniary jurisdiction of this court is not sustainable.

28. The pecuniary jurisdiction of this court for commercial matters is Rupees One crore and above.

29. The Petitioner in the petitioner has stated "that the petitioner has a claim of more than Rs. 1 Crore and the petitioner has lost reputation and suffered huge monetary loss of several crores due to debarment of the petitioner, as petitioner is not allowed to participate in future bidding for one year. The petitioner has claims of several crores which he reserves the right to claim before the Arbitration Proceedings."

30. The averment of the petitioner shows that the claims are above one crore and within the pecuniary jurisdiction of this court. At this juncture this court is not to consider the merits of the claims or the defence of the respondent.

31. Given the facts of the case and keeping in view the judgment dated 05.10.2016 in Writ Petition (C) 9158/2016, inter se the parties, in my view, it would be appropriate to suspend the period of debarment till the Arbitral Tribunal takes a view on the said issue.

32. Accordingly, the operation of the impugned letter dated 25.05.2017, insofar as it debars the Petitioner from participating in future tenders, is suspended pending consideration by the Arbitrator

either under Section 17 of the Act or as part of the final award.

33. Insofar as the other claims of the Petitioner inter alia qua alleged wrongful termination of the contract is concerned, the Petitioner would also be at liberty to raise the same before the Arbitral Tribunal.

34. It is clarified that this order shall not operate as an expression of opinion on the merits of the claims or the defence before the Arbitral Tribunal and the Arbitral Tribunal would be free to consider the merits, without being influenced by anything stated herein.

35. The Petitioner shall ensure compliance of Section 9(2) of the Act.

36. The petition is, accordingly, disposed of. No orders as to cost.

37. Order Dasti under the signatures of the Court Master.

AUGUST 25, 2017/ St                         SANJEEV SACHDEVA, J