The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK ARBA No.31 of 2024 Mahanadi Coalfields Ltd., Sambalpur & Ors. …. Appellant(s) Mr. Rakesh Sharma, Adv. M/s. GSCO Infrastructure Pvt. Ltd, Chandigarh -versus- …. Respondents(s) CORAM: DR. JUSTICE S.K. PANIGRAHI Order No. ORDER 23.10.2024 01. 1. This matter is taken up through hybrid arrangement.
Legal Reasoning
2. In filing this ARBA, the appellant has challenged the orders dated 18.07.2024 and 08.10.2024 passed by the learned District Judge, Sundargarh in Arbitration Case No.05 of 2021. Apart from the above prayer, the appellant has also prayed for allowing him to deposit the amount before the Executing Court as awarded by the learned District Judge, Sundargarh vide order dated 04.04.2024/Annexure-7. 3. Factual Scenario of the case as well as submission made on behalf of the Appellant in brevity remains:- (i) Pursuant to the e-tender bearing No.NIT-088 dated 07.11.2012, the Respondent submitted its bid and on being Signature Not Verified Digitally Signed Signed by: AYASKANTA JENA Designation: Personal Assistant Reason: Authentication Location: High Court of Orissa Date: 28-Oct-2024 18:43:50 successful in said tender process the Respondent was awarded with the work of “Hiring of HEMM (Shovel, Drill, Dozer etc.) for transfer and transportation of materials in various strata including drilling, excavation, dumping, Page 1 of 8 spreading, dozing and other allied works in specified areas of dumping as per the instructions of the Project Officer/Manager of the Kulda OCP, Basaundhara- Garjanbahal area of MCL for a quantity of 248.70 Lakh Cum”. (ii) Thereafter, as per the Official requirement/General terms and conditions the Respondent/Company on 12.04.2013 deposited two Bank Guarantees. One towards Performance Guarantee for an amount of Rs.2,35,72,615/- vide Bank Guarantee No.4207ILG000113 dated 12.04.2013 and another towards Security deposit for an amount of Rs.1,34,90,000/- vide Bank Guarantee No.0372-BG 0023-14 dated 15.09.2014. The Respondent was, accordingly, awarded the work of Over Burden Removal for contractual quantity of 2,48,70,000 M3. (iii) At this juncture, learned counsel for the Appellant submits that since the Respondent violated the terms and conditions of the agreement pertaining to the above noted work vide reference No.MCL/GM/NGA/SO(M)2013/68 dated 01.08.2013 and also failed to complete the work in time, the Respondent was saddled with penalty and a sum of Rs.43,40,345/- was also withheld from the running bill of the Respondent. Signature Not Verified Digitally Signed Signed by: AYASKANTA JENA Designation: Personal Assistant Reason: Authentication Location: High Court of Orissa Date: 28-Oct-2024 18:43:50 (iv) Being aggrieved by the said action of the Appellant, the Respondent preferred multiple Writ Petitions before this Court. Finally, as per the order of this Court in W.P.(C) Page 2 of 8 No.474 of 2017, the Respondent as per the provision of the Arbitration and Conciliation Act, 1996 filed three Arbitration Proceedings vide Arbitration Proceeding Nos.1, 2 & 3 of 2020 before the sole Arbitrator appointed by this Court in the above noted Writ Petition. (v) Upon hearing the parties concerned, the learned sole Arbitrator through the award dated 25.10.2021 disposed of the above noted three Arbitration Proceedings with the following relief in favour of the Respondent:- “To what relief, the claimant is entitled to As has been found above, the claimant-company is the be the amounts held by to in Ext.R/10, to refund of as admitted entitled Respondents, Rs.3,35,72,511.85. The claimant-company is also entitled to get return of both the Bank Guarantees bearing Nos.42071-LG000113 dated 12.04.2013 and 0372-BG-023-14 dated 15.09.2014. The respondents shall pay the amount of Rs.3,35,72,511.85 (Rupees three crores thirty five lakhs seventy two thousands five hundred eleven and eighty five paise only) to the claimant-company within a period of three months from the date of receipt of this award and shall also return the Bank Guarantees Nos.42071-LG000113 dated 12.04.2013 and 0372-BG-023-14 dated 15.09.2014 to the claimant-company within that period. Failing to pay the amount within three months, the said amount of Rs.3,35,72,511.85(Rupees three crores thirty five lakhs seventy two thousands five hundred eleven and eighty five paise only) shall be paid along with 9% interest from the date of award till payment. COST As it has been found that the delay, if any, in execution of the work within the stipulated time is attributable to both the parties, parties are directed to bear their respective costs. All the three arbitration proceedings are
Decision
accordingly disposed of.” Page 3 of 8 Signature Not Verified Digitally Signed Signed by: AYASKANTA JENA Designation: Personal Assistant Reason: Authentication Location: High Court of Orissa Date: 28-Oct-2024 18:43:50 (vi) Challenging the above award dated 25.10.2021 passed in Arbitration Proceeding No.1 of 2020, the Appellant initiated a proceeding vide Arbitration Case No.5 of 2021 before the Court of learned District Judge, Sundergarh. Similarly, soon after getting the award in the above noted three Arbitration Proceedings, the Respondent also filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 vide Arbitration Petition No.3 of 2022 before the Commercial Court, Cuttack for payment of interest as per law and setting aside the paragraph No.25 of the Arbitration Award dated 25.10.2021. The prayer made in the said petition is extracted herein below:- “i) allow the present petition by setting aside the Paragraph-25 of the award dated 25.10.2021 passed by the Hon’ble Arbitrator and modify the award with regard to the claims in favour of the petitioner with regards to interest on the performance security given in the form of Bank Guarantee No.4207ILG000113 dated 12.04.2013 amounting to Rs.2,35,72,615/- and grant such interest as claimed in the claim statement, ii) modify the award to the extent of granting interest @12% on the pending-admitted bills for the work done amounting to Rs.3,35,72,511.85 as awarded.” (vii) Paragraph No.25 of the award dated 25.10.2021 is also extracted herein below:- Signature Not Verified Digitally Signed Signed by: AYASKANTA JENA Designation: Personal Assistant Reason: Authentication Location: High Court of Orissa Date: 28-Oct-2024 18:43:50 “Claim with regard to interest. Clause-4.1 and 4.2 of the General Terms and Conditions deal with Security Deposit. The said clause-4.1 and 4.2 are quoted hereunder, “4. SECURITY DEPOSIT. 4.1 Security deposit shall consist of two parts; a. Performance Security to be submitted at award of work and Page 4 of 8 b. Retention Money to be recovered from running bills The security deposit shall bear no interest. 4.2 Performance Security should be 5% of annualized value of contract amount and should be submitted within 28 days of receipt of LOA by the successful bidders in any of the form given below: - A Bank Guarantee, for Rs.1.00 Lakh and above, in the form given in the bid document. Govt. Securities, FDR or any other form of deposit stipulated by the owner. Demand Draft drawn in favour of Mahanadi Coalfields Ltd. On any Scheduled Bank payable at its Branch at Sambalpur. - - The bid security deposited in the form of Bank Guarantee shall be duly discharged and returned to the Contractor. The bid security deposited in the form of Demand Draft shall be adjusted against the Security deposit.” It has been clearly agreed by the parties in the said clause that the Security Deposit shall bear no interest. In view of the above clause and the well settled principle of law that when the term of a contract denies payment of interest, no interest can be paid on such amount, the security deposit, which has been deducted from the running bills shall not bear any interest. Hence, the claim for interest on such amount is denied.” (viii) Thereafter, the Respondent also filed thee Execution Cases vide Execution Case Nos.1, 2 & 3 of 2022 before the Court of learned Civil Judge (Sr. Divn.)-cum-Commercial Court, Sambalpur. (ix) Soon after filing of the above noted Execution Cases, the Appellant filed a petition under Section 9(ii)(a), (b) & (d) of the Arbitration and Conciliation Act, 1996 in the above noted Arbitration Case bearing No.5 of 2021 for stay of the arbitral award dated 25.10.2021 passed in Arbitration Proceeding Signature Not Verified Digitally Signed Signed by: AYASKANTA JENA Designation: Personal Assistant Reason: Authentication Location: High Court of Orissa Date: 28-Oct-2024 18:43:50 Nos.1, 2 & 3 of 2020. Page 5 of 8 (x) Thereafter, upon hearing the said petition under Section 9(ii)(a), (b) & (d) of the Arbitration and Conciliation Act, 1996, the learned District Judge, Sundargarh vide impugned order dated 04.04.2024 directed that if the Appellant deposits 25% of the total awarded amount i.e. Rs.83,93,128/- before the Executing Court on or before 18.06.2024, further proceeding in Execution Case No.1 of 2022 shall remain stayed till 18.06.2024, failing which, the order dated 04.04.2024 shall automatically stand recalled. In addition to this direction, it is also made clear therein that prayer for staying the further proceeding in Execution Case Nos.02 and 03 of 2022 pending before the Court of learned Senior Civil Judge-cum-Commercial Court, Sambalpur cannot be considered due to non-admission of the Arbitral proceeding. The relevant portion of the order dated 04.04.2024 is extracted herein below:- “Upon hearing both the counsels, I am of the considered view that further proceeding in Execution Case No.1 of 2022 arising out of above Arbitration Proceedings pending before the learned Senior Civil Judge-cum-Commercial Court, Sambalpur should remain stayed till the next date i.e. 18.06.2024 subject to condition that the petitioner shall deposit a sum of Rs.83,93,128/- (Rupees eighty three lakhs ninety three thousand one hundred twenty eight) only which is 25% of the total award amount of Rs.3,35,72,511.85 (Rupees three crore thirty five lakhs seventy two thousand five hundred eleven and eighty five paise) only before the executing Court on or before 18.06.2024, failing which, this order shall automatically stand recalled. Further, if such an amount is deposited within the time stipulated as aforesaid, the same shall be kept in fixed deposit in Page 6 of 8 Signature Not Verified Digitally Signed Signed by: AYASKANTA JENA Designation: Personal Assistant Reason: Authentication Location: High Court of Orissa Date: 28-Oct-2024 18:43:50 any Nationalized Bank renewable from time to time until further order. Further, stay of further proceeding in Execution Case no.02/2022 and 03/2022 pending before the Senior Civil Judge-cum-Commercial Court, Sambalpur arising out of the Arbitral proceeding No.02/2020 and 03/2020 passed by the sole Arbitrator Mr. Justice M.M. Das, Former Judge, High Court of Orissa, Cuttack cannot be considered since the Arbitral proceeding has not yet been admitted by this Court, as the petitioner has not filed the original/certified copy of the arbitral award in Arbitration Case No.06/2021 and 07/2021, pending before this Court.” (xi) At this juncture, learned counsel for the Appellant submits that since the Appellant could not comply with the order dated 04.04.2024 in time due to some untoward reason, the impugned orders dated 18.07.2024 and 08.10.2024 have been passed by the learned District Judge, Sundargarh in Arbitration Case No.5 of 2021. He further submits that the Appellant may be permitted to deposit 25% of the awarded amount as per the order dated 04.04.2024 passed by the learned District Judge, Sundargarh. 5. Considering the submission made on behalf of the appellant, looking to the factual scenario of the case and since the Appellant could not comply with the order dated 04.04.2024 in time, this Court imposes a cost of Rs.10,000/- (Rupees Ten thousand only) on the appellant, which will be deposited with the learned District Legal Service Authority, Sundargarh within two weeks. Receipt showing payment of cost shall also be submitted before the learned District Judge, Sundargarh. In the process, this Court while setting aside the Signature Not Verified Digitally Signed Signed by: AYASKANTA JENA Designation: Personal Assistant Reason: Authentication Location: High Court of Orissa Date: 28-Oct-2024 18:43:50 Page 7 of 8 orders dated 18.07.2024 and 08.10.2024 passed in Arbitration Case No.05 of 2021, also permits the Appellant to deposit 25% of the awarded amount i.e. Rs.83,93,128/- before the Executing Court as per the order dated 04.04.2024 along with the receipt showing payment of cost within a period of fifteen working days hence. The said amount shall be kept in fixed deposit in any Nationalized Bank with a rider of renewal from time to time. 6. The ARBA stands disposed of. Judge (Dr. S.K. Panigrahi) Ayaskanta Signature Not Verified Digitally Signed Signed by: AYASKANTA JENA Designation: Personal Assistant Reason: Authentication Location: High Court of Orissa Date: 28-Oct-2024 18:43:50 Page 8 of 8