State Of Rajasthan vs M/S Technocraft Construction ...
2021 Latest Caselaw 3934 Raj/2

                HIGH COURT OF JUDICATURE FOR RAJASTHAN
                            BENCH AT JAIPUR

                       D.B. Civil Miscellaneous Appeal No. 757/2021

          1.        State Of Rajasthan, Through Principal Secretary, Local
                    Self Government, Secretariat, Jaipur.
          2.        The Project Director, Rajasthan Urban Infrastructure
                    Development Project (Ruidp) Avs Building, Jawahar Circle,
                    Jln Marg, Jaipur.
          3.        D.K.Mittal,    Executive        Engineer,        Ruidp,    Avs       Building,
                    Jawahar Circle, Jln Marg, Jaipur.
          4.        Rajpal Singh Shekhawat, Minister Urban Development
                    And Housing Department, Secretariat Building, Jaipur.
                                                                                ----Appellants
                                                   Versus
          1.        M/s Technocraft Construction Pvt. Ltd., B-27 Sector-49,
                    Noida
          2.        M/s     Krishna        Contractors,           R/-14/128,       Raj      Nagar,
                    Ghaziabad
                                                                              ----Respondents

For Appellant(s) : Mr. Prakash Chandra Jain, Advocate For Respondent(s) : Mr. Sushil Daga, Advocate Mr. Anurag Kalavatiya, Advocate Mr. Chitranshu Mathur, Advocate Mr. Ankit Mishra, Advocate

HON'BLE MR. JUSTICE PRAKASH GUPTA HON'BLE MR. JUSTICE PANKAJ BHANDARI

Judgment

ORDER RESERVED ON :: 30/07/2021 ORDER PRONOUNCED ON :: 24/08/2021 (Per HON. PANKAJ BHANDARI, J.)

1. The appellant-State has preferred the instant appeal under

Section 37 of the Arbitration and Conciliation Act, 1996

(hereinafter referred to as "the Act of 1996") aggrieved by the

judgment and order dated 11.02.2021 passed by the Commercial

(2 of 5) [CMA-757/2021]

Court No.2, Jaipur Metropolitan-II whereby application under

Section 34 of the Act of 1996 was dismissed and against the

award dated 04.11.2018 passed by the Arbitrator.

2. The factual matrix of the case are that the appellant-State

floated a tender relating to construction of sewerage network and

allied works, operation and maintenance services of the entire

system for 10 years at Gangashahar Zone, Bikaner. The

respondents applied and were awarded the contract and therefore,

back guarantee of Rs.4,40,00,000/- (Rupees Four Crore Forty

Lacs) in lieu of the earnest money was deposited by the

respondents. The Tender Evaluation Committee recommended that

an additional performance security of Rs.11.4 crore be demanded

from the respondents. However, the Tender Approval Committee

did not agree with the proposal of the Tender Evaluation

Committee and recommended that the contract be awarded

without seeking additional performance security of Rs.11.4 crore.

The matter was referred to the Minister Incharge, who approved

the proposal of the Tender Evaluation Committee. The respondents

were not agreeable with the additional demand of Rs.11.4 crore

and therefore, the contract did not materialize. The appellant-

State invoked the bank guarantee of Rs.4,40,00,000/-, aggrieved

by which, the respondents initiated the arbitration proceedings.

Learned Arbitrator passed an award in favour of the respondents

to the tune of Rs.4,40,00,000/- and also the arbitral expenses to

the extent of Rs.9,50,925/- with an interest of 7% from the actual

date of revoking the bank guarantee and an additional 24%

interest in respect of post arbitration award. The appellant-State

aggrieved by the said award, filed an application under Section 34

(3 of 5) [CMA-757/2021]

of the Act of 1996 before the Commercial Court. The said

application was dismissed by the impugned order dated

11.02.2021 and aggrieved by which, the present appeal has been

preferred under Section 37 of the Act of 1996.

3. It is contended by learned counsel for the appellant-State

that the decision of the Minister Incharge cannot be challenged

before the Arbitrator and the Minister Incharge was competent to

approve the proposal of the Tender Evaluation Committee. It is

also contended that to protect the interest of the State, an

additional amount was directed to be deposited by the

respondents and the said term cannot be said to be onerous.

4. Learned counsel for the respondents has opposed the

appeal. It is contended that the bank guarantee was wrongly

invoked by the appellant-State and the earnest money of

Rs.4,40,00,000/- was withdrawn, thereby depriving the

respondents of their due amount and hence, there was no

illegality in the award as well as the order passed by the

Commercial Court. It is also contended that the Minister Incharge

is required either to approve the suggestions given by the Tender

Approval Committee or he can deny the same, but he cannot on

his own, approve the proposal of the Tender Evaluation

Committee. At most, he could have referred the matter to the

Tender Approval Committee to reconsider the report of the Tender

Evaluation Committee. It is further contended that no ground as

provided under Section 34 of the Act of 1996 was made out for

setting aside the award and the imposition of the condition of

demanding an additional sum of Rs.11.4 crore was to oust the

(4 of 5) [CMA-757/2021]

respondents and deprive them of the contract, which they were

otherwise entitled to.

4. It is also contended that no ground is available to the

appellant-State under Section 37 of the Act of 1996, as the scope

of appeal being limited. It is further contended that no loss is

caused to the State. The amount, which was deposited by the

respondents as earnest money, is ordered to be refunded with

interest, hence, the appeal has no force.

5. We have considered the contentions raised by learned

counsel for the parties and perused the material available on

record.

6. From the perusal of the record, it is evident that the earnest

money of Rs.4,40,00,000/- was deposited by the respondents.

The Tender Approval Committee approved the contract without

deposition of an additional performance security of Rs.11.4 crore.

From the record, it is also revealed that it is necessary to get the

approval of Minister, UDH & LSG, Government of Rajasthan before

award of work. The decision not to take additional performance

security was taken by the Apex Committee having members from

Technical Finance as well as Tender Evaluation Committee. The

said decision cannot be overruled by the Minister Incharge in his

individual capacity and he has clearly erred in passing a cryptic

order of taking additional performance security without the

proposal being put to the Minister.

7. No ground is made out for entertaining the present appeal as

what has been awarded is the earnest money deposited by the

respondents. The Commercial Court has not committed any

illegality in dismissing the application filed by the appellant-State

(5 of 5) [CMA-757/2021]

under Section 34 of the Act of 1996. We do not find any force in

the present appeal. The appeal deserves to be dismissed and the

same is, accordingly, dismissed.

8. Learned counsel for the appellant-State, in the course of the

arguments advanced before the Court, prayed that if the appeal is

dismissed, the appellant-State be given some time to deposit the

amount.

9. We do not find any justification in the above prayer, as the

bank guarantee was already invoked way back in January, 2017

and the respondents have been deprived of their due amount for

last more than 4 years.

                                   (PANKAJ BHANDARI),J                                        (PRAKASH GUPTA),J

                                   SUNIL SOLANKI /19









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