Delhi High Court
The Deputy Secretary (Hospitals) vs Bhayana Builders Pvt Limited on 11 December, 2018
$~45
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 11.12.2018
+ O.M.P. (COMM) 498/2018
THE DEPUTY SECRETARY (HOSPITALS) ..... Petitioner
Through Mr. Saurabh Mishra, Mr. Abhishek
Singh and Mr. Vivek Tyagi, Advs.
versus
BHAYANA BUILDERS PVT LIMITED ..... Respondent
Through Mr. Gaurav Mitra, Ms. Manmeet
Kaur and Mr. Yashvardhan Bandi,
Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SHAKDHER
RAJIV SHAKDHER, J. (ORAL)
CAV 1153/2018
1. Since the respondent has entered appearance caveat stands
discharged.
I.A. 16920/2018
2. Allowed, subject to just exceptions.
O.M.P. (COMM) 498/2018 & I.A. 16919/2018 & I.A. 16921-22/2018
3. Issue notice. Mr. Mitra accepts notice on behalf of the respondent.
3.1 Learned counsel says that he does not wish to file a reply and that he
will argue the matter based on the record.
4. Via this petition filed under Section 34 of the Arbitration and
Conciliation Act, 1996 (for short '1996 Act') challenge is laid to the interim
award dated 26.5.2018.
O.M.P. (COMM) 498/2018 Pg.1 of 5
4.1 The interim award is confined to claim no.3 lodged by the respondent.
5. To be noted, before the Arbitral Tribunal, the respondent was the
claimant.
6. Briefly, in respect of claim No.3, the respondent took the following
stand.
6.1 The respondent averred that it had raised fifteen (15) running account
bills during the construction and submitted a final bill on conclusion of the
subject work.
6.2 It was the respondent's stand that upon scrutiny of the final bill the
petitioner had made illegal deductions.
6.3 Accordingly, according to the respondent, the amount that was
admitted by the petitioner was only for a sum of Rs.1,57,54,177.61.
6.4 The respondent further averred that out of the admitted amount, a sum
of Rs.1,20,00,000/- was paid and the balance sum, i.e. Rs.37,54,177.61 was
withheld.
7. The record discloses that an agreement was arrived at between the
parties on 2.9.2015, whereby, following was agreed vis-a-vis the claim in
issue i.e. claim no.3.
"Claim No. 3-. This Claim is for Rs. 37,54,178/- with
interest. The Respondent is willing to make the payment of
this amount subject to a discharge certificate under clause
60.11-60.13 of the General Conditions of Contract (GCC).
Since the dispute is pending before the Arbitrator on
various issues a discharge certificate will not be proper to
be given at this stage. The Respondent can make the
payment leaving it to the adjudication by the Arbitrator as
to whether the Respondent has any interest liability on this
score. The Arbitrator will also give an appropriate
direction regarding the discharge certificate when the
O.M.P. (COMM) 498/2018 Pg.2 of 5
stage comes."
(emphasis is mine)
Arguments therefore were heard on the question as to whether
claimant is entitled to interest on a sum of Rs.37,54,177.61 and
the period for which such interest can be granted. The
Respondent relies on the rules called General Conditions of
Contract or GCC which formed part of the contract between the
parties. The time for payment is provided in Section 60.8 of the
GCC which is as under:
"60.8 Time of Payment
The amount due to the Contractor under any Interim
Payment Certificate certified by the Engineer pursuant to
this Clause, or to any other term of the Contract, shall,
subject to Clause 4 7.1 to 4 7.2, be paid by the Employer to
the Contractor within 30 days after the Contractor's
monthly statement has been submitted to the Engineer for
certification or, in the case of the Final Certificate
pursuant to Sub-Clause 60.13, within 120 days after the
agreed Final Statement and written discharge have been
submitted to the Engineer for certification."
8. Concededly, pursuant to agreement dated 2.9.2015, a sum of
Rs.37,54,177.61 has been paid by the petitioner to the respondent. The
payment was made on 20.10.2015.
9. Therefore, the only aspect with which the Arbitral Tribunal was
concerned with and that which was agitated before me by the parties was
whether or not the interest was payable to the respondent.
10. The respondent had claimed interest at the rate of 18 per cent per
annum.
10.1 The petitioner resisted the claim for interest on the ground that a
discharge certificate had not been submitted by the respondent.
O.M.P. (COMM) 498/2018 Pg.3 of 5
11. The learned Arbitral Tribunal has discussed in detail as to why a
discharge certificate for triggering the payment of interest would be an
unsustainable proposition in context of clauses incorporated in the GCC in
that behalf.
11.1 The core reasoning of the Arbitral Tribunal is contained in paragraphs
9 and 11. For the sake of convenience, the same are extracted hereafter.
"9. The argument of the learned counsel of Respondent cannot be
accepted as it leads to absurdity. If the argument is accepted the
day when the agreed Final Statement can be prepared, becomes
absolutely uncertain. Although the construction took place in
2010, the parties are still litigating before the Arbitrator. The
Arbitrator's award is subject to scrutiny under Section-34 of the
Arbitration and Conciliation Act. Therefore it can be said that till
the objection under Section 34 gets decided the dispute remains
pending since the Final Statement can be prepared only on
disposal of the Arbitration case and till then the liability to pay
does not arise. This certainly cannot be the intention of the rules.
11. The Respondent has already paid Rs.1,20,00,000/- out of
the amount agreed to by the engineer. The Respondent agreed to
pay this amount without the discharge certificate. It is not
explained how, if the rule regarding the discharge certificate is
so sacrosanct how Rs. 1,20,00,000/- was paid without the
discharge certificate. The Respondent itself waived the rule
regarding discharge certificate. If payment of
Rs.1,20,00,000/lacs could be made to without complying with the
provisions of discharge certificate, the Respondent could as well
pay the entire amount withholding only Rs.1. This certainly is not
the position taken by the Respondent. We do not find any merit
in the Respondent's contention that the Respondent did not
become liable to payment as the discharge certificate was not
regarding the final bill has not been settled."
(emphasis is mine)
O.M.P. (COMM) 498/2018 Pg.4 of 5
11.2 Having regard to the reasoning articulated in the impugned award, I
find that there is no error in the conclusion reached by the Arbitral Tribunal
that the interest was wrongly awarded.
11.3 Furthermore, the interest, as noted in the impugned interim award has
been granted not at 18 per cent but at 12 per cent per annum for the period
commencing from 1.10.2012 and ending on 20.10.2015. The interest has
been quantified as Rs.13,59,012/-. In addition thereto, Arbitral Tribunal has
also indicated that if the interest is not paid within the two months it will
carry future interest at the rate of 12 per cent per annum till the date of
actual payment.
11.4 As alluded to above, I find nothing wrong in the conclusion reached
by the Arbitral Tribunal.
12. Accordingly, the petition preferred under Section 34 of the 1996 Act
is dismissed.
13. Consequently, all pending applications shall stand closed.
RAJIV SHAKDHER, J
DECEMBER 11, 2018
rb
O.M.P. (COMM) 498/2018 Pg.5 of 5
