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TMI Blog2020 (5) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ex-servicemen Contributory Health Scheme (hereinafter referred to as ECHS). 3. The parties entered into an Agreement dated 31.05.2010 whereunder the petitioner was required to provide Personalized Smart Cards against the approved application of the beneficiary as provided by the respondent. Petitioner was also required to install and maintain specified quantity of computer hardware and software at 100 specified locations as per Clause 1.1.15 read with Clause 2.1.12 of the Agreement. In addition, as per Clause 2.1.2 and Clause 1.1.16, petitioner was required to maintain hardware and software supplied by the petitioner at another 127 locations. In terms of Clause 2.1.1, the petitioner had to provide one Technical Support Personnel at 114, ECHS locations which included Polyclinics, Regional Centres (RCs) and the Central Organisations. 4. As per the Agreement, the petitioner was required to supply Referral Authentication Kits (hereinafter referred to as the Kits) to the empanelled hospitals and laboratories for identifying patients referred by ECHS Polyclinics. The said hospitals / laboratories were required to procure the Kits only from the petitioner. Tenure of the Agreement was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Agreement, petitioner was left with a huge number of unutilized inventory of Red ECHS Pre-Printed Cards and White ECHS Cards. The petitioner also avers that respondent failed to ensure that all empaneled hospitals / labs procured the Kits from the petitioner. 7. In the circumstances, the petitioner through a letter dated 15.07.2015 requested the respondent to make payment. However, except for some small payment, in respect of RRNs / invoices, other payments were not released. Respondent also failed to pay for services rendered between 31.05.2015 and 08.07.2015. Amicable negotiations also did not yield any result. By a letter dated 17.12.2015, petitioner issued notice for settlement of disputes by informal mediation, but the same failed. Petitioner invoked the Arbitration Agreement by a Notice dated 25.01.2016 and nominated its Arbitrator. Finally, this Court by an Order dated 09.11.2016 passed in Arb. Pet. 227/2016, constituted an Arbitral Tribunal. 8. Petitioner filed its Statement of Claim seeking the following reliefs:- "(a) A sum of Rs. 30,239/- being the amount of outstanding dues in respect of the supply of Smart Cards made by the Petitioner to the Respondent; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal has not even referred to the provision of Limitation Act by which the claims are allegedly time barred. Limitation is a mixed question of fact and law but this aspect is not even considered by the Tribunal. Even otherwise, it is contended that the finding that the claim is time barred for three years is in the teeth of correspondences exchanged between the parties by which the petitioner had made repeated demands for issuance of Form 'C'. Learned senior counsel draws the attention of this Court to the various documents placed on record in this regard. It is argued that the demand was finally rejected by the respondent vide letter dated 07.05.2015 and it is on this date that the cause of action had accrued and the claims were certainly not time barred. The award under Claim No.2 is thus liable to be set aside being in conflict with the judgment of the Supreme Court in Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49. Learned senior counsel further argues that reliance on the letter dated 21.11.2008 is misplaced as the negotiations prior to the Agreement have no meaning in the eyes of law once detailed terms have been incorporated in the Agreement. Eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and against the contents of Exhibit C-14. Admittedly, there is no cross-examination on the said exhibits by the respondent and hence, the contents are unrebutted. It is argued that while appreciation of evidence is the domain of the Tribunal but in the present case, the evidence has been completely overlooked by the Tribunal and this calls for interference by this Court. 14. In respect of Claim No.3, it is argued by the learned senior counsel that the Arbitral Tribunal has held that on an average, petitioner was required to supply 39,620 Smart Cards per month. As a logical sequitur, the act of the petitioner in maintaining an inventory could not have been faulted with. The Tribunal failed to consider that the respondent prematurely withheld the receipt of approved applications from the Regional Centres, one month before the scheduled completion of the Agreement. Failure to provide monthly projections would not have absolved the petitioner of the obligations to supply immediately on receipt of the approved applications. Pertinently, under Clause 1.1.51 and Clause 7.1.9, petitioner was obliged to maintain stock for further supply of average volume of cards. Therefore, the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Award. The agreed rate between the parties as stipulated in the Contract was Rs. 135/- per Smart Card. The rate quoted by the petitioner was inclusive of applicable taxes and other expenditures. This is evident from the letter dated 21.11.2008 written by the petitioner. As per Clause 8.1.6 of the Agreement, all information contained in the Bid Documents or subsequent documents prior to the Agreement are taken to be true and part of the Agreement. It is argued that vide letter dated 12.02.2014, Regional Centre, Patna had clearly intimated to the petitioner that the Sales Tax Form 'C' could not be issued by the respondent. It is further argued that under Clause 2.1.9, it was the petitioner who had to bear all the Statutory Taxes and charges relating to hardware, software and turn-key solution. It is further submitted that no doubt para 2 of Annexure 'E' does refer to Form 'C', but this was erroneously carried forward from para 2 of Annexure 'F' to the Contract dated 27.01.2004, executed between the same parties. The exemption on account of Form 'C', can be claimed only in cases where the sale is made to a 'registered dealer' while in the present case, the respondent is not a regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived by the Centre. 21. The contention of the counsel for the respondent with respect to Claim No.3 is that the claim is per se contrary to Clause 9.1.3 of the Agreement. As per the said Clause, petitioner was to hand over all software source codes to ECHS one month prior to the expiry of the Contract. The requirement underscores the need for the petitioner and the respondent to stop work in the last month of the Contract so as to hand over the requisite softwares, etc. to the respondent. Clause 9.1.3 read with Clause 7.1.3 which records that the petitioner needed 25 days to produce the cards substantiates that the applications for supply of cards were to stop one month prior to 31.05.2015. Vide email dated 28.04.2015, respondent had reiterated that the Agreement would expire on 31.05.2015 and it had no intent to extend the Contract period. The petitioner was thus to hand over the software, etc. to the respondent within one month. Thus, no applications were approved with effect from the month of May 2015 in terms of the Clauses of the Agreement. Without prejudice, it is argued that the petitioner has not even produced anything on record to show that, in fact, 49,500 cards remain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ractual period. 24. I have heard learned counsels for the parties and examined their contentions. 25. Parties herein executed an Agreement dated 31.05.2010 and the tenure of the Agreement was five years from 01.06.2010 to 31.05.2015. Under the Agreement, petitioner was to provide Personalized Smart Cards against approved applications of the beneficiaries of ECHS, as provided by the respondent. Petitioner was also to install and maintain computer hardware and software at specified locations and maintain the same during the tenure of the Contract at certain other set of locations. The Smart Cards supplied are based on SCOSTA Technology, certified by NIC, Government of India. This has a memory chip, which stores the encrypted personal data of the holder including finger prints. The Polyclinics / Regional Centres of the ECHS are located across the country and provide medical facilities to the members of the Armed Forces, who are retired Ex-Servicemen including the dependents of the pensioners. The beneficiaries requiring hospitalization, OPD treatments or diagnostic tests, etc. are referred to service hospitals managed by the Armed Forces or to the empaneled private hospitals / diagn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal also notes that out of a total of 23,77,180 cards supplied, 2,38,465 cards were supplied to the Delhi Regional Centre, where admittedly no Central Sales Tax or C Form even applied. The Tribunal has also examined the legal position under the Sales Tax Act and the Central Sales Tax Act. Under Section 8(1) of the Act, a 'dealer' who sells to a registered dealer goods of the description referred to in SubSection (3) is liable to pay tax. Thus, it is only a registered dealer which can give Form 'C' under the Act. The Tribunal has come to a finding that the respondent is not a 'dealer' under Section 2(b) of the Act nor a 'registered dealer' with the Sales Tax Department under Section 7. Respondent has been established by the Ministry of Defence for providing Contributory Health Scheme to the beneficiaries under the Scheme and is not in any business so as to be termed as a registered dealer for selling or buying cards. The Tribunal also observes that the Smart Cards supplied to the beneficiaries will not be termed as a sale or a resale under the Act. Respondent was, therefore, not liable to give any Form 'C' to the petitioner. On this account, Claim No.2 has been rejected. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Similarly, in respect of the invoice of Regional Centre, Bareilly, the Tribunal notes that the amount on the invoice dated 30.05.2015 was far higher than the amount sought under the claim before the Tribunal and therefore, the invoice did not pertain to the claimed amount. Even otherwise, the Tribunal notes that it was admitted by the petitioner during the arguments that nothing was due from Regional Centre, Bareilly. With respect to Regional Centre, Bangalore, the Tribunal records that RW-1 in response to question no.44 had stated that the outstanding from this Centre had been cleared and this was not challenged by the petitioner. In so far as Regional Centre, Hissar is concerned, the cheque was sent but returned undelivered. With respect to Regional Centre, Lucknow during cross-examination of RW-1, a letter dated 17.01.2017 was placed wherein it was mentioned that 100 Smart Cards had not been received. Taking this evidence into account, the Tribunal rejected the liability of the respondent for payment against this Centre. In my view, no patent illegality can be found in the rejection of the said claim except to the extent of Rs. 2025/- which has been allowed towards the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... galore stood paid to the Claimant on 07.03.2017 and this was not challenged. As regards payment of Rs. 2025/- by RC Hissar, he admitted that the cheque sent was returned undelivered. So, this amount remains to be paid. As regards payment of Rs. 13499/- by RC Lucknow, during cross examination of RW 1 Col. Deepak Mohan Anand letter dated 17th January,2017 issued by ECHS Branch, Embassy of India, Kathmandu, Nepal, was put wherein it is mentioned that the relevant 100 Smart Cards had not been received. Hence in respect of this amount no liability can be fastened on the Respondent. In view of the said materials, in respect Claim No.1, the Claimant is entitled to recover Rs. 2,025/- only and its claim for the remaining amount stands rejected." 32. Claim No.3 has been rejected by the Tribunal on the ground that the petitioner had not placed on record any documentary evidence to show that any order was placed on it during the subsistence of the Contract for supplying the unutilized ECHS Pre-printed cards. The Tribunal observes, on the contrary that the petitioner admitted that under Clause 7.1.13, respondent was required to provide monthly projection of the required cards for the next m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant thereto. Also the Claimant has not placed on record any documentary evidence to show that any order was placed on it i.e. the Claimant by the Respondent during the subsistence of the contract Ex.Cl, for supplying the said unutilised 49,500 Red ECHS pre-printed cards and White ECHS Cards. On the contrary, the Claimant is admitting that under clause 7.1.13 of the agreement Ex. C 1 between the parties, the Respondent was required to provide monthly projections of the requiredcards, for the next month, six months prior to the expiry of the contract. It is also admitted by the Claimant that in November, 2014 and thereafter, the Respondent did not supply any such projections. It means the Respondent did not ask for any cards after November, 2014. It also implies there was no projections/no order was placed by the Respondent, for any Smart Cards after November, 2014. The email dated 28/4/15 Ex. C-19 (page276) which though has remained unproved, does not in any manner change the nature of rights of the parties under the agreement. From the total number of smart cards supplied by the claimant, average per month comes to around 39620 smart-cards. When the Respondent did not place any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndation or suggestion and not imposing or mandate. It is no longer res integra that interpretation of the Clauses of the Contract is the domain of the Tribunal. The Tribunal has given a particular interpretation to the Clause and in my view this is not only a possible but a plausible view requiring no interference. I find merit in the contention of the respondent that surely the respondent could not impose itself on the hospitals to procure the Kits from the petitioner. This was neither the mandate nor the obligation under the Contract nor can even be sustained in any commercial transaction or in the business common sense. Relevant part of the Award is as under :- "It is important to note that Clause 3.1.12 of Ex.C 1, only mentions that 'the Department i.e. Respondent shall facilitate the empanelled medical facilities to procure Referral Authentication Kits from SITL for identifying patients referred by ECHS polyclinics.' Significantly it talks of facilitation by the Respondent to the empanelled medical facilities to procure Referral Authentication Kits from the Claimant. There is no specific stipulation in Ex. C-1 the agreement dated 31/05/10 between the parties that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made by the petitioner to demolish the testimony of the witness, in cross-examination. The relevant part of the Award is as under :- "It is significant to note that Maj.Gen. Ashok Kumar in his affidavit of admission/ denial of the Claimant's documents has denied the contents of the same i.e. of the said documents Ex.D which are placed between pages 312 to 313 annexed with the Statement of Claim. It is important to note that the Claimant in its Statement of Claim had clearly mentioned that it would produce the relevant documents/ vouchers/ bills/ salary statements etc. in support of this claim in course of the proceedings before this Learned Arbitral Tribunal. However the Claimant for the reasons best known to it has failed to produce any such supporting documents in support of Ex.D and this lapse in our view is fatal particularly when the contents of the said document have been denied by the Respondent. It is important to note there is nothing on record to prove that the Respondent ever extended the period of the contract Ex.C 1 between the parties after its expiry on 31/05/15. In the absence of any such extension and the said lapses, the Claimant is not entitled to any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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