ANANDILAL LALPURIA Vs. UNION OF INDIA

JUDGEMENT

(1.) This application under Sections 10 and 11 of the Arbitration and Conciliation Act, 1996 has been preferred by proprietorship firm M/s. Anandilal Lalpuria through its proprietor Anandilal Lalpuria, inter-alia, with the prayer that an independent arbitrator may be appointed to resolve its dispute with the non-applicant. Applicant firm is engaged in construction, supply and other allied work under contractorship business. Applicant is approved contractor by railway administration. The non-applicant invited tenders for work of "JP-Up-gradation of existing Rly. Hospital Jaipur to the level of Central Hospital by construction of new buildings for IPD with parking facility and modification in existing hospital building". The NIT for this purpose was published and tenders were opened on 23.07.2010. Offer of the applicant, being lowest, was accepted by the non- applicant vide letter dated 21.09.2010. Estimated costs of the work was Rs.10,17,69,187.14 and time period fixed for its completion was 11 months. Scheduled date of commencement and completion of the work was 21.09.2010 and 22.08.2011, respectively. An agreement was also executed and signed on 27.12.2010. Applicant deposited EMD of Rs.6,85,000/- with non-applicant by FDR dated 04.10.2010, on Oriental Bank of Commerce, which was duly pledged in their favour. Applicant was directed by non-applicant to submit a bank guarantee for due performance of work at the rate of 5% of the contract value. Applicant accordingly submitted bank guarantee for a sum of Rs.50,88,460/- issued by the Oriental Bank of Commerce, M.I. Road, Jaipur, which was valid up to 03.01.2012.

(2.) According to the applicant, it commenced the work in time and executed the work of Rs.2,44,15,618.00 within scheduled period but payment of Rs.1,99,29,765/- was released as gross amount of the work recorded in the third running bill and payment of Rs.44,85,853/- was not released on the ground that no funds were available with the non-applicant to release the payment. This has resulted in delay in execution of the work. Apart from shortage of funds, which was responsible for delay in completion of work, there were other reasons for that. The non-applicant did not provide drawings and designs timely and failed to give layout plan. The non-applicant delayed in recording of the measurement and also did not make payments of running bills. The applicant, by letter dated 28.11.2010, requested the non-applicant to provide drawing and designs. The applicant then, vide letter dated 11.10.2010 requested to remove hurdles like shifting of the electric cable lines and water pipe lines. Then by letter dated 03.12.2012, the applicant informed the non-applicant that the work was stopped because of non-availability of fund and payment and it wanted to remove the steel from the site, which may be permitted. On the letter of the applicant, ADEN (HQ-1), Jaipur, issued letter to the SSE (W), Spl-JP on 04.02.2012 seeking instructions whether work shall be continued or nor on account of non-availability of the funds. Instruction was also sought for the unmeasured steel lying at site to be allowed to remove by the applicant. DRM (WA) JP issued letter dated 16.03.2012 to the applicant, by which it was admitted that work was held up for want of funds and assured that the funds have been allotted and direction was issued to the applicant to apply for extension of DOC. Since the work was abnormally delayed and payment of applicant was also withheld by the non-applicants, therefore, the applicant, by letter dated 20.03.2012, requested nonapplicant to close the work. The applicant then wrote letter dated 02.04.2012 to non-applicant stating that if work is required to be completed, payment for excess quantity steel used beyond the 563 MTs should be paid extra, and actual market rate should be paid and time be also extended up to 31.03.2013.

(3.) Shri Devidutt Sharma, learned counsel for the petitioner, argued that the non-applicant, without paying any heed to the aforesaid request, issued a notice of seven days on 16.04.2012 for completion of work. The applicant again sent a letter dated 23.04.2012 to settle the dispute but the non-applicant did not consider these letters. When the non-applicant failed to settle the dispute amicably, applicant, vide letter dated 07.08.2012, requested the General Manager, NWR, Jaipur, for appointment of arbitrator, and that the amount involved in the disputes were also mentioned therein. The notice was not replied by the General Manager. The DRM (W) JP terminated the agreement by letter dated 14.12.2012 with the admission of delay in making payment. The non-applicant prepared final bill and directed to sign the final bill for processing the same. The applicant signed the bill under protest and after signing the final bill. The non-applicant vide letter dated 11.09.2013, directed to submit reason for filing the bill under protest. The applicant replied by letter dated 03.10.2013 mentioning the reasons why it signed the bill under protest. The applicant then issued notice dated 10.11.2013 to the General Manager North Western Railway, Jaipur, for referring the dispute to the arbitration. Despite that, no action has been taken by the non-applicant to refer the dispute.