GANGOTRI ENTERPRISES LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) Challenge in this appeal is to the order dated 12.7.2012 passed by the District Judge, Allahabad in Arbitration Case no. 216 of 2012 whereby the application of the appellant u/s 9 of The Arbitration and Conciliation Act, 1996 (to be referred as the 'Act' hereinafter) for restraining the respondents from giving effect to or withholding any sum payable to the appellant under any other contract and staying the operation and implementation of the impugned circular dated 10.6.2011 during the pendency of the arbitral disputes and till such time the award is made by the arbitrator and enforcing any other bank guarantee or recovering any amount of other contracts and for allied reliefs has been rejected.

(2.) The appellant company was awarded a contract for earth work in embankment and cutting including provision of blanketing bet CH-84700M to 114100M, construction of RCC Box type minor bridge and other ancillary work in connection with laying down of Agra Etawah new BG Rail Line by the respondents. The total value of the contract was Rs. 14,62,46,742/- to be executed withing the period 14.3.2005 to 13.3.2007. However, on the request of appellant, the period of completion of work was extended twice, firstly from 14.3.2007 to 31.12.2007 and then up to 30.9.2008 without penalty and with PVC (price variation clause) benefit. It was made clear to the appellant by the respondents that they will not be entitled to make any claim what so ever against the Railways by virtue of the extensions being granted nor shall the Railways would entertain or consider any such claim if it is made by the appellant.

(3.) The appellant alleged that the work under the contract could not be completed within the extended time as site was not available on account of agitation of farmers and non-supply of specifications or drawing of most of the small bridges by the respondents, who illegally terminated the contract vide letter dated 30.4.2009. The respondents, it was alleged, have given another contract for completing the work under the contract to M/s Hannu Infrastructure Pvt. Ltd., Kasganj on 10.6.2011 for Rs. 11 crores and without notice or providing opportunity of hearing to the appellant and have foisted the liability of their own negligence upon the appellant amounting to Rs. 5,58,16,036/- by way of damages representing risk and cost. It was further alleged that the respondents on 10.6.2011 in this regard issued letters to all General Managers of Railways to withhold the dues of the appellant available with them. The respondents also sent a letter to Indian Mercantile Co-operative Bank Ltd. for encashment of bank guarantee no. 12/2006 dated 4.8.2006 for Rs. 1,32,78,820/-, which was given by the appellant in connection with other contract pertaining to Northern Railway. The appellant has further claimed that they have suffered losses due to non-performance of contractual obligations by the respondents amounting to Rs. 7 crores and as such they have opted for arbitration which have commenced. The respondents have denied the allegations of the appellants and have blamed them for non-performance of the contract alleging that even during the extended period, no action had been taken against the appellant as per the terms of General Conditions of Contract (to be referred as 'GCC' hereinafter). According to them the work under the contract was of national and public interest, so the left over work of appellant had to be completed by inviting fresh tenders with notice to the appellant. Subsequently the risk and cost contract was awarded to M/s Hannu Infrastructure Pvt. Ltd., Kasganj following the rules and due procedure with after notice to the appellant and the tender was also uploaded on the website.