VOLTAS LTD. Vs. NCC LTD.

JUDGEMENT

(1.) The present petition has been filed under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act") for the relief that respondent No.1 be restrained from invoking three bank guarantees bearing Nos.999513BG0002397, 0999513BG0002398 and 0999513BG0002399 all dated 24.09.2013 of the following nature:- <FRM>JUDGEMENT_239_LAWS(DLH)12_2014_1.html</FRM>

(2.) The admitted facts of the case are that respondent No. 1 was formerly known as Nagarjuna Construction Company Ltd. and was a part of an unincorporated joint-venture (JV), namely M/s CRSSG-NCC(JV). The JV was awarded the work under a tender floated by National Building Construction Company Ltd. (NBCC Ltd.) on behalf of Employee State Insurance Corporation (ESIC) for the construction of ESIC Medical College-cumHospital at Mandi Himachal Pradesh. The Joint Venture ceased to exist and its rights and liabilities have been taken over by respondent No.1. Work for supply, erection and commissioning of air-conditioning equipment in the five buildings of ESIC was awarded to the petitioner for a fixed contract having value of Rs.2,19,00,000/-. The completion period of the work was 14 months. At that time, the petitioner had furnished three bank guarantees of a sum of Rs. 4,28,00,000/-. During the course of execution of the work, some dispute arose between the petitioner and respondent No.1 and respondent No.1 encashed the bank guarantees of total sum of Rs.4,28,00,000/- on 07.06.2013. The petitioner filed OMP No. 672 of 2013 under Section 9 of the Act seeking stay of the operation of termination letter dated 01.07.2013 by which the contract was terminated by respondent No.1. The petitioner also moved a petition under Section 11 of the Act being Arbitration Petition No. 284/2013, whereby a sole Arbitrator was appointed to resolve that dispute vide order dated 30.08.2013. Subsequent thereon, the parties entered into a negotiation. The petitioner sought an adjournment on 11.09.2013 from Arbitrator and subsequently, the petitioner and respondent No.1 entered into a settlement and pursuant to that settlement, a Memorandum of Understanding (MoU) dated 18.09.2013 was drawn. Pursuant to the terms of this MoU, respondent No. 1 refunded the sum of Rs.4,28,00,000/-, which the respondent was having pursuant to the encashment of three bank guarantees of the petitioner and in turn the petitioner furnished fresh bank guarantees for Rs.3,39,56,750/-. Respondent No.1 also agreed to compensate the petitioner by way of escalation charges which was quantified at Rs.1,25,00,000/- and agreed to pay in four equal instalments in the following manner:- <FRM>JUDGEMENT_239_LAWS(DLH)12_2014_2.html</FRM>

(3.) The petitioner resumed the work in view of this MoU. Under the terms of the MoU, bills for future work were to be paid within 45 days. The petitioner raised the following bills, details of which are shown as under:- <FRM>JUDGEMENT_239_LAWS(DLH)12_2014_3.html</FRM>