Delhi High Court - Orders
M/S. Skyline Air-Conditioning ... vs Public Works Department on 28 March, 2023
$~8
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 3499/2023
M/S. SKYLINE AIR-CONDITIONING
ENGINEERS P. LTD. ..... Petitioner
Through: Mr. Ashok Kumar, Advocate (M:
9015946273)
versus
PUBLIC WORKS DEPARTMENT ..... Respondent
Through: Mr. Satyakam, ASC with Ms. Pallavi
Singh, Advocate.
CORAM:
JUSTICE PRATHIBA M. SINGH
ORDER
% 28.03.2023
1. This hearing has been done through hybrid mode.
2. The Petitioner- M/s. Skyline Air-Conditioning Engineers Pvt. Ltd.
was awarded a work for 'Comprehensive Maintenance of Electrical, Civil &
Horticulture Operation relating Day to Day Maintenance, Special repair etc
of Ch. Brahm Prakash Ayurved Charak Sansthan ('CBPACS'), Khera
Dabar, Najafgarh, Delhi' during the years 2022-23 & 2023-24, vide Award
Letter dated 7th July 2022 ('the work contract). The Petitioner has
challenged the letter dated 7th February 2023, issued by Respondent - Public
Works Department, GNCTD wherein the works contract entered into
between the Petitioner and Respondent has been terminated.
3. According to the Petitioner, the work was executed by the Petitioner
but the Respondent repeatedly sent communications from dated 24th August
2022 to 18th January 2023 to the Petitioner, raising various grievances
related to the work contract. Thereafter, vide letter dated 24th January 2023,
the Petitioner submitted their bills to the Respondent for processing of
payment.
4. According to the Petitioner, the admitted amount due in terms of the
submitted bills is not being paid by the Respondent, and further, vide letter
dated 7th February, 2023, Respondent has issued a final notice for
termination of the work contract.
5. Mr. Satyakam, ld. Counsel for the Respondent, who has sought
instructions submits that, insofar as the admitted amounts which are due and
payable, the same would be paid by the Respondent. The ld. Counsel for the
Respondent also points out that the work contract provides for settlement of
disputes by Conciliation and Arbitration as per clause 25 of the General
Conditions of Contract 2020 (GCC 2020), which applies in the present case.
Accordingly, ld. Counsel submits that there were various deficiencies and
discrepancies in the manner in which the Petitioner was executing the works
contract and hence the Respondent had no option but to terminate and take
action in terms of the contract.
6. Heard counsel for the parties. A perusal of the notice dated 7th
February, 2023 shows that the Respondent has relied upon Show-Cause
Notice issued on 2nd November, 2022 and the reply of the Petitioner to the
same, dated 7th November, 2022. After considering the same, the work
contract has been terminated. The relevant portions of the said letter/notice
dated 7th February 2023 reads as under:
"Dear Sir (s),
Whereas under Clause-3 of the aforesaid
agreement the Engineer-in-charge shall have powers
to take action under clause 3 in the event of delay &
suspension in the execution of the aforesaid work by
the contractor so that in the opinion of the Engineer-
in-charge (which shall be final and binding) the
contractor will be unable to secure completion of the
work by the stipulated date of completion, whereas you
have delayed and suspended the execution of aforesaid
work and as per the opinion of the undersigned, the
Engineer-in-charge (which is final and binding), you
will be unable to secure the completion of the work by
stipulated date of completion and whereas, you were
served with show cause in this regard under this office
No.54(PWD/EMD South West/M-152/22-23/2347
dated 02.11.2022. Your reply vide no. Nil dated
07.11.2022 was received in response to above show
cause was considered but no improvement in working
was observed.
You were once again served with show cause in vide
this office No.54 (PWD/EMD/South West/M-152/2022-
23/142 dated 18.01.2023. Your reply vide No. Nil
dated 24.01.2023 received in response to above show
cause has been considered carefully but not found to
the satisfaction of Engineer-in-Charge.
Therefore under powers delegated to me under
sub-clause 3(a) & (b) I, Moti Lal Meena, the Engineer-
in-charge for the aforesaid work under the aforesaid
agreement, for and on behalf of the President of India,
hereby
(i) Determine the contract as aforesaid upon which
determination your security deposit already recovered
and Performance Guarantee stand absolutely forfeited
to the Government and shall be absolutely at the
disposal of Government, and
(ii) Take out such part of the work out of your hand, as
remains unexecuted, for giving it to another contractor
to complete the work, and you shall have no claim to
compensation for any loss sustained by you by reasons
of your having purchased or procured any materials or
entered into any engagements or made any advances
on account of or with a view to the execution of the
work or the performance of the contract. You are also
hereby served with notice to the effect that the work
executed by you will be measured up on 20.02.2023 for
which you are asked to attend for joint measurement
failing which the work will be measured by the
department unilaterally in your absence and result of
measurement will be final and will be binding on you.
(iii) You shall not be allowed to participate in the
tendering process for the balance work. This is without
prejudice to Government's right to take action under
any other clauses or sub-clauses of the agreement and
to realize Government dues and losses and damages
whatsoever under such clauses or sub-clauses."
7. The above letter/notice issued by the Executive Engineer (E), SW
Electrical Division, PWD captures the following aspects:
i. That the work contract shall stand terminated, and the security
deposit and performance guarantee submitted by the Petitioner has
been forfeited to the GNCTD.
ii. No claim to compensation for losses of the Petitioner would be
entertained by the Respondent.
iii. That in terms of the work contract which has been executed, a
joint measurement shall be conducted, and in terms thereof, further
steps would be taken.
iv. The Petitioner shall not be allowed to participate in the
tendering process for the balance work.
8. Further, a perusal of the modified clause 25 of the GCC 2020 shows
that there is a possibility of conciliation by a Conciliator who can look into
the matter. The said clause reads as under:
"Clause 25
Except where otherwise provided in the contract, all
questions and disputes relating to the meaning of the
specifications, design, drawings and instructions here-
in before mentioned and as to the quality of
workmanship or materials used on the work or as to
any other question, claim, right, matter or thing
whatsoever in any way arising out of or relating to the
contract, designs, drawings, specifications, estimates,
instructions, orders or these conditions or otherwise
concerning the works or the execution or failure to
execute the same whether arising during the progress
of the work or after the cancellation, termination,
completion or abandonment thereof shall be dealt with
as mentioned hereinafter.
(i) If the contractor considers any work demanded of
him to be outside the requirements of the contract,
or disputes any drawings, record or decision
given in writing by the Engineer-in-Charge or if
the Engineer in Charge considers any act or
decision of the contractor on any matter in
connection with or arising out of the contract or
carrying out of the work, to be unacceptable and
is disputed, such party shall promptly within 15
days of the arising of the disputes request the
Chief Engineer/ CPM, or Where there is no Chief
Engineer/CPM, the Additional Director
General/Special Director General
(CE/ADG/SDG) who shall refer the disputes to
Dispute Redressal Committee (DRC) within 15
days along with a list of disputes with amounts
claimed if any in respect of each such dispute. The
Dispute Redressal Committee (DRC) give its
decision within a period of 60 days extendable by
30 days by consent of both the parties from the
receipt of reference from CE/CP/ADG/SDG. The
constitution of Dispute Redressal Committee
(DRC) shall be as indicated in Schedule 'F'.
Provided that no party shall be represented before
the Dispute Redressal Committee by an
advocate/legal counsel etc.
The DRC will submit its decision to the concerned
ADG/SD for acceptance. ADG/SDG in a time
limit of 30 days from receipt of DR decision will
convey acceptance or otherwise on the said
decision if the Dispute Redressal Committee
(DRC) fails to give its decision within the
aforesaid period or the ADG/SDG fails to give his
acceptance in the aforesaid time limit or any
party is dissatisfied with the decision of Dispute
Redressal Committee (DRC) ADG/ SDG
theneither party may within a period of 30 days
from the receipt of the decision of Dispute
Redressal Committee (DRC), ADG/ SD or on
expiry of aforesaid the time limits available to
DRC/ ADG/SDG may give notice to the Chief
Engineer/CPM, CPWD, in charge of the work or
if there be no Chief Engineer/ CPM, the
Additional Director General /Special Director
General of the concerned region of CPWD or if
there be no Additional Director General/ Special
Director General, the Director General, CPWD
for appointment of arbitrator on prescribed
proforma as per Appendix XVII under intimation
to the other party.
It is a term of contract that each party invoking
arbitration must exhaust the aforesaid mechanism
of settlement of claims/disputes prior to invoking
arbitration.
The CE/CPM/ADG/ SDG shall in such case
appoint the sole arbitrator or one of the three
arbitrators as the case may be within 30 days of
receipt of such a request and refer such disputes
to arbitration. Wherever the Arbitral Tribunal
consists of three Arbitrators, the contractor shall
appoint one arbitrator within 30 days of making
request for arbitration or of receipt of request by
Engineer-in-charge to CE/ADG/ SDG /DG for
appointment of arbitrator, as the case may be,
and two appointed arbitrators shall appoint the
third arbitrator who shall act as the Presiding
Arbitrator.
In the event of
(a) A party fails to appoint the second Arbitrator,
or
(b)The two appointed Arbitrators fail to appoint
the Presiding Arbitrator, then the Director
General, CPWD shall appoint the second or
Presiding Arbitrator as the case may be.
(ii) Disputes or difference shall be referred for
adjudication through arbitration by a Tribunal
having sole arbitrator where claimed amount is
Rs. 20 Crore or less. Where claimed Value is
more than Rs. 20 Crore, tribunal shall consist of
three Arbitrators as above. The requirements of
the Arbitration and Conciliation Act, 1996 (26 of
1996) and any further statutory modification or
re-enactment thereof and the rules made there
under and for the time being in force shall be
applicable.
It is a term of this contract that the party invoking
arbitration shall give a list of disputes with amounts
claimed, if any, in respect of each such dispute along
with the notice to appointment of arbitrator and giving
reference to the decision of the ADG/ SDG on the
finding / recommendation of DRC.
It is also a term of this contract that member(s) of the
Arbitration Tribunal shall be Graduate Engineer with
experience in handling public works engineering
contracts, are further he shall have earlier worked at a
level not lower than Chief Engineer equivalent (i.e.
Joint Secretary level of Government of India). This
shall be treated as a mandatory qualification to be
appointed as arbitrator.
Parties, before or at the time of appointment of
Arbitral Tribunal may agree in writing for fast track
arbitration as per the Arbitration and Conciliation Act,
1996 (26 of 1996) as amended in 2015.
Subject to provision in the Arbitration and Conciliation
Act, 1996 (26 of 1996) as amended in 2015 whereby
the counter claims if any can be directly filed before
the arbitrator without any requirement of reference by
the appointing authority. The arbitrator shall
adjudicate on only such disputes as are referred to him
by the appointing authority and give separate award
against each dispute and claim referred to him and in
all cases where the total amount of the claims by any
party exceeds Rs. 1,00,000/-, the arbitrator shall give
reasons for the award.
It is also a term of the contract that fees payable to
arbitral tribunal shall be as approves by DG, CPWD,
OM issued vide no. 2/2006/SE(TLC)/CSQ/137 dated
19-11-2019 (or its latest amendment as approved by
DG, CPWD). This fee shall be shared equally by
parties.
The place of arbitration shall be as mentioned in
Schedule F. In case there is no mention of place of
arbitration, the arbitral tribunal shall determine the
place of arbitration.
The venue of the arbitration shall be such place as
may be fixed by the Arbitral Tribunal in consultation
with both the parties. Failing any such agreement
then the Arbitral Tribunal shall decide the venue."
9. The clause as extracted above, also contemplates arbitration in case
conciliation fails. From the submissions made by the parties today, it is
clear that the joint measurement is currently going on, thus, for the work
executed, the Petitioner would be entitled for payment. Insofar as the
forfeiture of performance guarantee and security deposit is concerned,
unless and until the Respondent finds that there has been complete breach by
the Petitioner, the same ought to await the outcome of conciliation.
Moreover, the said forfeiture can be effected only in terms of the contract
between the parties.
10. Let the matter including the above mentioned three aspects be
considered by the Conciliator, and payment concerning the admitted
amounts which are due and payable, be made to the Petitioner by
Respondent-PWD, GNCTD. If there are any outstanding dues of the
Petitioner, initially conciliation shall be explored and if the same fails,
arbitration, as per the GCC 2020 shall be resorted to. If there are any
outstanding RA bills, the Conciliator shall look into the same and the
payments shall be released.
11. Let the Petitioner appear before the Conciliator-Principal Chief
Engineer (Maintenance and Flyover) on 17th April, 2023 at 11:00 a.m.
12. With these observations, the present petition, along with all pending
applications are disposed of.
PRATHIBA M. SINGH, J.
MARCH 28, 2023
dj/dn
