Madras High Court
S.P.Senthil vs The Divisional Railway Manager ... on 14 July, 2021
O.P.No.670 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 14/7/2021
CORAM
THE HONOURABLE Mr.JUSTICE N.SATHISH KUMAR
O.P.No.670 of 2019
S.P.Senthil ... Petitioner
Vs
The Divisional Railway Manager (Works)
Salem Division
Southern Railway
Salem 636 005. ... Respondent
Original Petition has been filed under Section 24 of the Arbitration
and Conciliation Act, 1996, to set aside the Award of the learned Tribunal,
dated 2/8/2018, in the Arbitration proceedings between the petitioner and
respondent.
For petitioner ... Mr.A.Vikash
For respondent ... Mr.P.T.Ramkumar
Standing Counsel
------
1/14
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O.P.No.670 of 2019
ORDER
This Original Petition has been filed under Section 34 of the
Arbitration and Conciliation Act, 2015, to set aside the Award of the learned
Tribunal, dated 2/8/2018, in the Arbitration proceedings between the
petitioner and respondent.
2. The brief facts leading to the filing of this Original Petition are as
follows:-
. The tender offer of the claimant for the works, such as Collecting,
supply and stocking of 50 mm machine crushed Ballasts, Loading of
Ballasts into Railway Hoppers/Wagon, Unloading of Ballast fro
Hoppers/wagon etc., at Depots such as Lalapet Depot, Kodumudi Depot
Minnampalli Depot, Kallar Depot and Ketti Depot under ED-TP, SA- VRI
and MTP-UAM section, in Salem Division, was accepted by the respondent,
i.e., DRM/Works/Salem and was issued with Letter of Acceptance
No.SA/W.148/274, dated 20/7/2020, to a total value of Rs.3,14,10,000/-.
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O.P.No.670 of 2019
The completion period for the work was eleven months, from the date of
issuance of Letter of Acceptance, i.e., from 20/7/2010.
3. Immediately, after Letter of Acceptance, when he wanted to
commence the work at Kodumudi Station and other places, it was noticed
that there was no space for collection of Ballast and could collect Ballast
only after four months. When the petitioner has requested the respondent to
identify the places at various depots and to earmark the same to start with
the collection of ballast, it was informed that he should wait for some more
time to get some space.
4. Similarly at Meenapalli Depot, there was no space available and
the area was full, since the ballast was being collected by some other
agencies. Similarly at Ketti and Kallar also no space is available to collect
the ballast. There was a delay of three months in allotting the place.
Thereafter, the petitioner was advised, by the Engineer, vide letter, dated
16/12/2010, to commence the work and to complete the same and further, it
was informed by the Engineer that if the measurements are recorded and
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O.P.No.670 of 2019
bills are prepared, due to financial constraints and non allotment of funds for
the work, the payments would be delayed. Details of ballast collected at
various depots by the petitioner are as follows:-
DEPOT AGT. SAMPLE APPX. REMARKS
QTY TEST SUPPLY
MADE
Kodumudi 20,000 Done 10,000 Copy of test certificate
not given
Lalapettai 20,000 Not done 3,000
Minnampalli 5,500 Done 2,600 Copy of test certificate
not given
Kallar 3,000 - Nil Site not given
Ketti 3,000 - Nil Site not given
5. In the meanwhile, seven days notice was issued for termination of
the contract. Without assessing the exact situation and also considering the
circumstances, contract was terminated, on 16/5/2011, which was much
before expiry of currency. A new Open Tender was called, on 18/5/2011.
This itself indicate that the respondent had determined to terminate the
petitioner irrespective of any reason.
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O.P.No.670 of 2019
6. It is the contention of the respondent before the Arbitrator that the
petitioner has not furnished the Performance Guarantee, as a result, the
agreement could not be executed, denying that the respondent had advised
the petitioner to wait for some time. It is stated that the petitioner had
collected the first ballast sample of 100 cum for the purpose of testing. The
petitioner had collected the ballasts, on 1/10/2010, 24/4/2011 and
26/1/2011. As far as Kallar and Ketti, though depot was available for
collecting test ballasts, there was no progress. Hence, it is the contention
that despite the space is available, the work was not progressed by the
claimant. Hence it is the contention that despite earlier notices of
termination issued and several opportunities were given to the petitioner to
complete the supply of Ballasts, no progress has been shown. Vide, letter,
dated 16/5/2011, contract was terminated. The petitioner had raised the
following claims:-
CLAIMS
1 REFUND OF EMD: Since the Rs.3,45,000
department could not identify the
space in the deport and also in
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some of the depot the space was
occupied by some of the contractors
and hence I was advised not to
collect the ballast there. As such
the termination is totally illegal and
not justified. Hence, the EMD
mentioned above has to be
refunded.
2 Compensation for not allowing me Rs.31,41,000
to do the work at 10% of the
Agreement value if I had been
allowed to do the work duly
indentifying the space, I could have
realized at least a minimum of 10%
profit. Hence, the same is claimed
i.e., 10% of Rs.3,14,10,000.
3. Idling of Machinery is calculated @ Rs.6,28,200
2% of the Agreement value i.e., I
had paid advances for machinery
like tipper lorries and Other
machineries which will not be
refunded to by them. Hence, the
same is claimed
4. Idling of Man power – This is Rs.15,70,500
calculated @ 5% of the Agreement
value since I had recruited
supervisors and watchmen etc., and
since the ballast could not be
collected, I had to pay them the
wages thereon hence 5% is
claimed.
5. The ballast already collected at 3 ----
places i.e., Lalapet & KMN
Minampally will have to be
measured and payment made to Me
as per actual. The value of the
ballast collected as per actual will
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O.P.No.670 of 2019
have to be paid to be or I may be
permitted to take back the ballast -
Declaratory
6. The damages caused to be Rs.9,42,300
consequent on the fact that I was
not allowed to do the work by way of
other aspects @ 3% of the
Agreement value. Also I have lost
my credentials which cannot be
recouped.
7. To declare that the termination is -----
illegal - Declaratory
8. Interest @ 18% p.a., on the above is -----
to be quantified.
7. Learned Arbitrator, discussed all the claims, except column No.4,
wherein the relief was sought to take back the supply of Ballasts by the
petitioner which was allowed by the learned Arbitrator. The other aspects
for claiming the compensation has been dismissed.
8. Being aggrieved, the petitioner has come forward with the instant
Original Petition, praying for the relief as stated therein.
9. Heard Mr.A.Vikash, learned counsel for the petitioner and
Mr.P.T.Ramkumar, learned Standing Counsel for the Railways.
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O.P.No.670 of 2019
10. Though various grounds have been raised to challenge the award,
the main contention put forth by Mr.A.Vikash, learned counsel appearing
for the petitioner is that the respondent has not followed the procedure,
provided in the contract before invoking Clause 62 of General Conditions of
Contract.
11. Learned counsel appearing for the petitioner further submitted
that there was a delay in handing over of possession for more than three
months by the Railways, which has not been taken note of by the learned
Tribunal.
12. It is his further contention that sub-Clause 3 of Clause 17 of
General Conditions of Contract, stipulates that in the event of any failure or
delay by the Railway to handover the Contractor possession of the lands
necessary for the execution of the works, Railways has to necessarily extend
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O.P.No.670 of 2019
the time. 17 - B of the General Conditions of Contract also provides for
extension of time, in the event of delay caused by the Contractor. When the
General Conditions of Contract itself stipulates for extension of time, Letter
of Acceptance stipulate 11 months time, same cannot be considered, as
'Time is essence of contract'.
13. He further submitted that as long as the extension is not applied,
as per General Conditions of Contract, the termination of the contract by
invoking Clause 62 of General Conditions of Contract is not valid,
according to law.
14. In support of his submission, the learned counsel appearing for
the petitioner, relied on the judgment of the Hon'ble Supreme Court, in
AROSAN ENTERPRISES LTD. Vs. UNION OF INDIA & ORS (1999)
9 SCC – 449, wherein it was held that when the contract itself provides for
extension of time, the same cannot be termed to be the essence of contract.
15. Mr.Ramkumar, learned Standing Counsel for Railways submitted
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that the petitioner has not even granted a Performance Guarantee, as agreed
in Letter of Acceptance, as a result, agreement even could not be executed.
The work has not been completed within a stipulated period and though
several opportunities were given, there was no progress done. It is not that
his conduct was terminated for the first time. Respondent has given seven
days notice and 48 days notice thrice. As there was no progress shown by
the petitioner, finally, following the procedure, by issuing 7 days notice and
48 days notice, as contemplated under Clause 62 of the General Conditions
of Contract, contract was terminated, on 16/5/2011.
16. He further submitted that Tribunal has considered the entire
aspects factually and directed the petitioner to produce documentary
evidence for idling of Men and Machinery. Since the petitioner had not
produced any documentary evidence to substantiate his claim, the Tribunal
has rightly dismissed the claim for compensation.
17. As far as the termination of the contract, the Tribunal has
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factually found that prior to the termination, notices were issued thrice,
following Clause 62 of General Conditions of Contract. Despite the same,
no progress has been shown. Hence, the learned Standing Counsel for the
Railways submitted that there is absolutely no ground made out to interfere
with the well reasoned order.
18. In fact, even though the Tribunal had granted relief to the
petitioner to take back the supply of ballasts, he has not arranged for any
labour force to stack the ballast. Hence prayed for dismissal of this Original
Petition.
19. The award can be set aside, under Section 34 of the Act, only on
the following limited grounds.
(i). Incapacity of the party
(ii). Invalidity of the arbitration agreement
(iii). Absence of proper notice for appointment of an arbitrator
(iv). Non arbitrability of disputes
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(v). Composition of the arbitral not being in accordance with the agreement.
(vi). Subject matter not capable of being settled by way of arbitration
(vii). Award is in conflict with the public policy of India and
(viii). the award is vitiated by the patent illegality.
20. Therefore, it is well settled that Public Policy of India would
mean the fundamental policy of Indian law, i.e, disregarding orders of
superior Courts in India would be regarded as being contrary to the
fundamental policy of Indian law.
21. Similarly, the patent illegality, as discussed in the above judgment
must go to the root of the matter. Admittedly, within the contract period,
the entire quantity was not supplied. Even sample of ballasts has not been
supplied to the depot. Arbitrary Tribunal also found that the petitioner was
issued with three seven days notices, i.e., on 22/12/2020, 25/1/2011 and
28/2/2011 and one 48 hours notice i.e., on 14/3/2011. Thereafter, contract
was terminated, on 16/5/2011. The termination has been done, taking note
of the failure, on the part of the contract to supply required quantity.
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Though there is a Clause providing for extension of time, it is to be noted
that such extension of time can be applied, after the expiry of the contract
period. Therefore, it cannot be said that termination notice issued by the
respondent cannot be valid in the eye of law. Arbitral Tribunal, recorded the
factual finding and found that delay was on the part of the contractor and
he has not supplied the requisite materials, as per Letter of Acceptance.
Therefore, this Court do not find any infirmity in the order passed by the
Arbitrary Tribunal.
22 . In such a view of the matter, no ground has been made to
interfere with the well reasoned award passed by the Arbitrary Tribunal.
Accordingly, this Original Petition is dismissed. It is also stated by the
learned counsel appearing for the petitioner that the respondent is not
cooperative to remove the supplied Ballasts from yards in different depots.
Such submission was opposed by the learned counsel for the respondent and
stated that Officers sent three letters in this regard. Despite the letters sent
by the Officers, the petitioner has not removed Ballasts. Now, the learned
counsel for the Railways submitted that even now, they have no objection
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O.P.No.670 of 2019
for removing the ballasts.
N.SATHISH KUMAR,J
mvs.
23. In such a view of the matter, the petitioner is permitted to remove
all the ballasts from the respective depots, within a period of four months,
finally, from the date of receipt of a copy of this order and the same is
granted only, at the request of the learned counsel for the petitioner, taking
note of the pandemic situation prevailing.
14/7/2021
mvs.
Index: yes/No
Internet: yes/No
Speaking/Non-speaking order
O.P.No.670 of 2019
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