M/S Icomm Tele Ltd v. Punjab State Water Supply & Sewerage Board And ORS
Gurbax Singh 2016.10.17 16:27
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH CWP No.18917 of 2016 Date of decision: 14.09.2016 M/s ICOMM Tele Limited ......Petitioner Vs.
Punjab State Water Supply and Sewerage Board and another .....Respondents CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE RAMENDRA JAIN Present: Mr. Rajiv Kataria, Advocate for the petitioner. Ajay Kumar Mittal,J.
1.
By way of present petition under Articles 226/227 of the Constitution of India, the petitioner prays for a direction that Clause 25(viii) of the Notice Inviting Tender (NIT)/contract be declared as bad in law being arbitrary, unconstitutional and against the principles of public policy. Further direction has been sought to release the sum of 19.336 crores to the petitioner being withheld by the respondents on account of deduction from various running bills.
2.
A few facts relevant for the decision of the controversy involved as
narrated in the petition may be noticed. The petitioner is a company incorporated under the Companies Act, 1956 and is having its registered office at Hyderabad. It is involved in various civil/electrical works in the country. In the year 2008, respondent No.2 issued a notice inviting tender for the extension and augmentation of water supply, sewerage scheme, pumping station and sewerage treatment plant at Mansa, Bhikhi, Budhlada, Bareta, Sardoolgarh and Talwandi Sabo towns on turnkey basis. The notice inviting tender contained various clauses including clause 25 for arbitration. Respondent No.2 issued a letter on 28.11.2008, Annexure P.5, in which technical issues were discussed regarding the scope of work.
According to the petitioner, so far as the other terms and conditions of the contract are concerned, no opportunity was given to it to make any changes in the same and it was required to sign the contract on the dotted line which was basically a standard form contract. The said letter infact was the final acceptance of the tender for which formal agreement was to be written. Accordingly, an agreement was signed between the parties. The petitioner had no option except to accept the contract which was already written and typed on the dotted lines. After the completion of the work, so many payments remained unpaid. The petitioner had to incur extra costs for certain works which it was entitled to receive from the respondents. On 13.10.2014, Annexure P.
7, a letter was written by the petitioner to Executive Engineer, Punjab Water Supply and Sewerage Board, Water Works Road, Mansa to release the said payments wherein a demand of 1933.60 lacs was raised. According to the petitioner, those payments were not disputed which were only on account of unilateral money retained by the respondents. Having received no response, the petitioner wrote a letter on 23.12.2014, Annexure P.8, to respondent No.2.
the provisions of clause 25 of the NIT, it sought the appointment of an arbitrator other than some officials of the respondents. It made a request that it be exempted from depositing 10% of the claims before the arbitration as these were the payments on hold with the respondents. The respondents refused to entertain the request of the petitioner and rather asked it to deposit 10% amount as "deposit at call". After the issuance of letter dated 25.2.2015, Annexure P.9 by the petitioner, vide letter dated 2.7.2015, Annexure P.11, by respondent No.1, the petitioner was advised to proceed in the matter as per the contract agreement and in other words, the petitioner was asked to invoke the provisions of Section 25 of the NIT.
The petitioner again made a request for invoking the contract for the appointment of an independent arbitrator other than the officials of the respondents and also made a request to exempt the petitioner from depositing 10% of the claim amount as per the provisions of clause 25(viii) of the NIT. The petitioner asserts that it is being deprived of its legal rights and the amount of more than 19 crores is not being paid to it by the respondents. Hence the instant writ petition.
3.
We have heard learned counsel for the petitioner. 4.
It would be expedient to quote Clause 2.5(viii) of the NIT which reads thus:- "It shall be in essential terms of this contract that in order to avoid frivolous claims the party invoking arbitration shall specify the dispute based on facts and calculations stating the amount claimed under each claim and shall furnish a deposit at call for 10% of the amount claimed, on a scheduled bank in the name of the arbitrator, by his official designation who shall keep the amount in deposit till the accouchement of the award. In the event of an award in favour of the claimant, the deposit shall be
refunded to him in proportion to the amount awarded with reference to the amount claimed and the balance, if any, shall be forfeited and paid to the other party." 5.
A perusal of the above clause shows that a condition was put in the NIT by the respondents that in case of any dispute, the party invoking arbitration was required to specify the dispute and the amount claimed under each item and deposit 10% of the amount claimed in the name of the arbitrator. In case of award in favour of the claimant, the deposit was to be refunded to him in proportion to the amount awarded and the balance if any was to be forfeited and paid to the other party. It had been incorporated in the contract to avoid frivolous claims of a party. The said condition in no way can be said to be arbitrary or unreasonable. In case, any condition in the NIT was not acceptable to the petitioner, it was open for it not to respond to the NIT.
Once having participated in response to NIT, it was too late in the day to claim that it was arbitrary or unreasonable and thus unsustainable. It was within the domain of the respondents to have put any reasonable condition in the NIT. Learned counsel for the petitioner has failed to substantiate that Clause 25(viii) in the NIT as reproduced above is illegal or arbitrary. No material was produced by the learned counsel for the petitioner to show that there was any malafide in putting the said condition or it was to benefit somebody. Once it is so, the imposition of said condition could not be faulted.
6.
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Adverting to the judgments relied upon by the learned counsel for the petitioner, it may be noticed that in Central Inland Water Transport Corporation Limited and another vs. Brojo Nath Ganguly and another, AIR 1986 SC 1571, it was held by the Apex Court that the courts will, not enforce and will when called upon to do so, strike down an unfair and unreasonable contract or an unfair and unreasonable clause in a contract entered into between the parties who are not equal in bargaining power. There is no dispute with this proposition. The position in the present case is different. Herein, the condition imposed under clause 25(viii) of the contract relating to arbitration, which has been incorporated to avoid frivolous claims made by a party, has not been shown to be unfair or unreasonable. Thus, the
petitioner cannot derive any advantage from the said decision. The above judgment was followed by this Court in IFFCO TOKIO General Insurance Company Limited vs. Permanent Lok Adalat (Public Utility Services) Gurgaon and others, 2012(1) RCR (Civil) 901.
9.
In view of the above, we do not find any ground to interfere in exercise of writ jurisdiction under Articles 226/227 of the Constitution of India. Consequently, finding no merit in the petition, the same is hereby dismissed.
(Ajay Kumar Mittal) Judge September 14, 2016 (Ramendra Jain) 'gs'
Judge Whether speaking/reasoned Yes/No Whether reportable Yes