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TMI Blog2023 (3) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... work in time. Thereafter, the supplementary agreements were entered into between the parties. As the provision for grant of advances had exhausted, NBCC approached IRCON with modified programme for completion of works and sought for additional financial aid on certain terms and conditions. IRCON in consultation with CIDCO, agreed to grant advance as a special case against Bank Guarantee. Accordingly, a supplementary Agreement dated 17.12.1991 was entered into between the parties providing for special advance of an amount of Rs. 68 lakhs bearing interest at the rate of 18% per annum on furnishing of Bank Guarantee. In terms of the supplementary Agreement dated 17.12.1991, a special advance of Rs.68 lakhs was also given to NBCC. As there was delay in the work of NBCC and the work was practically abandoned and came to a standstill, IRCON served on NBCC a notice dated 21.02.1994 terminating the contract relying upon Clause 60.1 of the Agreement. 2.2 That, thereafter, after some litigation before the Delhi High Court, the NBCC invoked the arbitration clause. The Arbitral Tribunal was constituted. The Arbitral Tribunal passed the award dated 04.11.2011. That the Arbitral Tribunal rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 37 of the Arbitration Act to the extent upholding the award passed by the learned Arbitral Tribunal insofar as awarding the interest on special advance is concerned. The rest of the judgment and order passed by the learned Single Judge has been affirmed / confirmed by the Division Bench of the High Court. 2.7 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the Division Bench of the High Court, IRCON has preferred the present appeal. 3. Shri R.S. Hegde, learned counsel has appeared on behalf of the appellant - IRCON and Shri Arvind Minocha, learned Senior Advocate has appeared on behalf of the respondent - NBCC. 4. Shri R.S. Hegde, learned counsel appearing on behalf of the appellant has vehemently submitted that on appreciation of entire evidence and the material on record as the learned Tribunal has observed and held that the IRCON was justified in rescinding the contract due to abandonment of work by NBCC and when the said finding attained the finality, the IRCON was justified in forfeiting the security deposits. It is submitted that as such the High Court has taken too technical view. It is submitted that as such both, Clause 17.4 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act. It is submitted that even the learned Arbitral Tribunal also observed and held that the IRCON was not justified in rescinding the contract under Clause 60.1. It is submitted that however, thereafter the Arbitral Tribunal justified the termination of the contract under Clause 17.4, which as rightly held by the learned Single Judge / Division Bench was not permissible. 5.1 It is submitted that the finding recorded by the learned Arbitral Tribunal that the contract could not have been rescinded under Clause 60.1 had attained the finality. It is submitted that therefore the learned Arbitral Tribunal was not justified in rejecting the claim Nos.33 and 34 which has rightly been set aside by the learned Single Judge and the Division Bench, which are not required to be interfered with by this Court in exercise of limited jurisdiction under Article 136 of the Constitution of India. 5.2 It is further submitted by learned Counsel appearing on behalf of the respondent - NBCC that in absence of any specific provision in the contract / supplementary Agreements on interest on the amount advanced against hypothecation of equipments, the Division Bench of the High Court has rightly set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the part of the contractor to complete the works within the further extension of time allowed as aforesaid the Company (IRCON) shall be entitled, without prejudice to any other right or remedy available in that behalf, to appropriate the contractor's security deposit and rescind the contract, whether or not actual damage is caused by such default. RIGHT OF COMPANY (IRCON) TO DETERMINE CONTRACT: 59.1 The Company (IRCON) shall be entitled to determine and terminate the contract at any time should in the Company's (IRCON) opinion, the cessation of work become necessary owing to paucity of funds or from any cause whatsoever, in which case the value of approved materials at site and of work done to date by the contractor will be paid for in full at the rates specified in the contract. Notice in writing from the Company (IRCON) of such determination and the reason therefore shall be conclusive evidence thereof. DETERMINATION OF CONTRACT OWING TO DEFAULT OF CONTRACTOR: 60.1 If the contractor should: i. become bankrupt or insolvent or ii. make an arrangement with or assignment in favour of his creditors, or agree to carry out the contract under committee of Inspection of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusive evidence, in which case the security deposit of the contractor shall stand forfeited to the Company IRCON without prejudice to the Company's (IRCON) right to recover from the contractor any amount by which the cost of competing the works by any other agency shall exceed the value of the contractor. b) to carry out the works or any part thereof, by the employment of the required labour and materials, the costs of which shall include lead, lift, freight, supervision and all incidental charges and to debit the contractor with such costs, the amount of which as certified by the Project Manager shall be final and binding upon the contractor, and to credit the contractor with the value of the works done as if the works had been carried out by the contractor under the terms of the contract. And the certificate of Project Manager in respect of the amount to be credited to the contractor shall be final and binding upon the contractor; c) to measure up the work executed by the contractor and to get the remaining work completed by another contractor at the risk and expense of the contractor in all respects in which case any expenses that may be incurred in excess of the sum whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 60.1 or under Clause 17.4. Even otherwise, from the material on record and even the notice dated 21.02.1994 and the subsequent notice dated 07.03.1994, we are satisfied that the IRCON was satisfied that the work could not be completed by the contractor even within further extension of time. Clause 17.4 provides that if the company (IRCON) is not satisfied that the works can be completed by the contractor and in the event of failure on the part of the contractor to complete the works within further extension of time allowed, the IRCON shall be entitled, without prejudice to any other right or remedy available in that behalf, to appropriate the contractor's security deposits and rescind the contract, whether or not actual damage is caused by such default. Even Clause 60.1 also provides for determination of contract owing to default of contractor. It provides that if the contractor should abandon the contract, or persistently disregard the instructions of the Project Manager or contravene any provisions of the contract.... then the Project Manager on behalf of the Company may serve the contractor with a notice in writing to that effect and if the contractor does not within 7 days af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Single Judge as well as the Division Bench of the High Court quashing and setting aside the award passed by the learned Arbitral Tribunal rejecting Claim Nos.33 and 34 deserve to be quashed and set aside and the award passed by the learned Arbitral Tribunal rejecting Claim Nos.33 and 34 is required to be restored and upheld. 7.5 Now, so far as the quashing and setting aside the award passed by the Arbitral Tribunal awarding interest @ 18% on advance for the hypothecation of equipment, by the learned Single Judge confirmed by the Division Bench is concerned, at the outset, it is required to be noted that the Division Bench of the High Court has upheld the order passed by the learned Single Judge quashing and setting aside the interest awarded by the learned Arbitral Tribunal on advance for the hypothecation of equipment on the ground that there is no such stipulation in the agreement / contract. However, the High Court has not at all considered Section 31(7)(a) of the Arbitration Act, which permits the arbitrator that unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the Arbitral Tribunal may include in the sum for which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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