INTERIORS INDIA Vs. BALMER LAWRIE AND CO LTD

JUDGEMENT

(1.) The petitioner is a proprietorship concern and is running its business of interior decoration with its office at 3244, Ranjit Nagar, New Delhi. On 22nd July, 2003, the petitioner was awarded a work for interior and partition as stipulated in the order No. CPP/161/T/060. This work was awarded by respondent No. 1 on back to back contract awarded by respondent No. 2 to respondent No. 1 under tender No. DLH/CIVIL/SCOPE/INTERIOR/02 for civil interior/partitioning, electrical, air conditioning, fire fighting system/EPABX network and structured cabling/Access control and other misc work for its office premises stipulated at Scope Minor, Laxmi Nagar, Delhi. The total work awarded by respondent No. 2 to respondent No. 1 was for a total contract value of Rs. 1,86,50,000/-. The parties entered into an agreement. Clause 42 of the tender document/agreement executed between respondent No. 1 and respondent No. 2 provides that in the event of any conflict between the provisions of these presents of the said agreement, the matter shall be liable to be referred to the arbitration in terms of method provided in the said agreement. Respondent No. 1 who had been given the entire work by respondent No. 2 informed the petitioner that part of the work had been subletted by them to M/s. Mac Associates and M/s. Happle Whhite on floor basis. As M/s. Mac Associates who were allocated the work, were not performing their work as per the conditions stipulated under the agreement, respondent No. 1 offered the interior/renovation and civil work on 9th, 10th and 11th floors to the petitioner at the schedule rate less 16.5% as mentioned in the letter dated 3rd July, 2003. Respondent No. 1 vide their letter dated 22nd July, 2003 issued the work order for a total value of Rs. 1,88,00,000/- to the petitioner for completion of the work within four months from the date of the work order. After receipt of the work order dated 22nd July, 2003, the mobilisation advance was asked for by the petitioner from respondent No. 1 and respondent No. 1 asked for bank guarantee for a sum of Rs. 25 lacs on account of advance mobilisation. Bank guarantee No. 13/03-04 was drawn and submitted by the petitioner through UCO Bank, South Patel Nagar Branch, New Delhi on 18.9.2003. This bank guarantee was renewed from time to time and was discharged on 18.3.2004. It is the case of the petitioner that due to non-action and inaction on the part of respondent No. 2, the work could not be completed within the period of four months but was completed as expeditiously as possible and they handed over the 9th, 10th and 11th floors on 15.12.2003, 22,12,2003 and 30.12.2003 respectively. A satisfactory letter was issued by respondent No. 1 and in fact they also requested the petitioner to take the work of 5th and 6th floors for which a fresh bank guarantee was furnished after taking Rs. 25 lacs as an additional advance for procuring the requisite required material. The petitioner had furnished a bank guarantee of Rs. 20 lacs being bank guarantee No. 16/03-04 drawn on Uco Bank, South Patel Nagar Branch, New Delhi on 21.10.2003. This guarantee was renewed from time to time and is in force. Respondent No. 1 vide their letter dated 20th October, 2003 allocated the composite interior and civil work for the 5th and 6th floors (except the false ceiling and modular furniture) to the petitioner and the petitioner was called upon by respondent No. 1 to give bank guarantee for a sum of Rs. 30 lacs which was furnished by the petitioner being bank guarantee No. 1/04-05 dated 8th April, 2004 and was extended from time to time. The petitioner claims to have completed the work in January, 2004 and vide their letter dated 13th April, 2004, the petitioner reiterated their stand that the work of 9th, 10th and 11th floors allocated to them on 22nd July, 2003 had been completed by them in December, 2003 but the site could not be handed over due to presence of other agencies who were working in the said premises. The respondents in fact were satisfied and happy with the work of the petitioner and even offered the work of the 15th floor cf the same building. However, the same was declined by the petitioner as the petitioner was exposed to serious huge losses even because of the breach and inaction on the part of the respondents. But later on, the respondent No. 1 offered improved rates for payment for completion of work of 15th floor which was then accepted by the petitioner and respondent No. 1 placed a fresh work order for 15th floor on 07.08.2004 upon the petitioner. During the execution of work of 15th floor, various letters were written by the petitioner to the respondent informing them again and again that they have completed the work of 5th, 6th , 9th, 10th and llth floors and they were entitled to a sum of Rs. 55,25,180.54/- in terms of their bill dated 19th August, 2004 for claim of additional items, increased measurements and other extra items as desired by the respondent. Despites reminders, no amount was paid to the petitioner. Vide their letter dated 15th December, 2004, the respondent instead of paying the amounts to the petitioner, asked the petitioner to extend the bank guarantee of Rs. 20 lacs furnished by them. The bank guarantee No. 16/03-04 dated 21.10.2003 was amended to the extent that the word mobilisation advance was deleted and the word security deposit was incorporated. Remaining terms of the bank guarantee remained to be the same. Vide their letter dated 05.04.2005, the respondent No. 1 called upon the petitioner to extend both the bank guarantees for a sum of Rs. 20 and Rs. 30 lacs respectively. The said letter reads as under:-

(2.) The said letter was replied to by the petitioner as follows:-

(3.) According to the petitioner, various disputes have arisen between the parties in regard to the dues payable to the petitioner as well as in relation to invocation of the two bank guarantees afore-referred. The petitioner claims to have invoked the arbitration agreement between the parties and has filed the present petition under Section 9 of the Arbitration & Conciliation Act wherein the petitioner prays for the following reliefs.