Arbitration Petition Nos. 891 and 893 of 2010. Case: Patel Engineering Co. Ltd. Vs B.T. Patil & Sons Belgaum (Construction) Pvt. Ltd. and Ors.. Bombay High Court

Case Number:Arbitration Petition Nos. 891 and 893 of 2010
Party Name:Patel Engineering Co. Ltd. Vs B.T. Patil & Sons Belgaum (Construction) Pvt. Ltd. and Ors.
Counsel:For Appellant: Aspi Chinoy, F.E. Divetri, M.S. Doctor, Senior Advocates and Nimay Dave i/by Bachubhai Munim & Co. and For Respondents: Virendra Tulzapurkar, Senior Advocate, Nikhil Sakhardande and Mandar Soman i/by N.V. Bandiwadekar, Advs.
Judges:R. D. Dhanuka, J.
Issue:Arbitration and Conciliation Act, 1996 - Sections 11, 11(6), 16, 23, 23(3), 33, 34; Code of Civil Procedure, 1908 (CPC) - Order XXIII Rule 1
Judgement Date:January 08, 2016
Court:Bombay High Court
 
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Judgment:

R. D. Dhanuka, J.

  1. By the Arbitration Petition No. 891 of 2010 filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short "Arbitration Act"), the petitioner has impugned the orders/decisions dated 17th December 2009, 29th December 2009 and the award dated 25th January 2010 as corrected by the order dated 22nd February 2010 in so far as it allows the claims, or part thereof, in favour of the respondent is concerned and by the Arbitration Petition No. 893 of 2010 filed under Section 34 of the Arbitration and Conciliation Act, 1996, the petitioner has impugned the orders/decisions dated 17th December 2009 and 29th December 2009 (as corrected by the arbitrator's letter dated 4th January 2010) and the award dated 25th January 2010 as corrected by the order dated 22nd February 2010 in so far as it allows the claims, or part thereof, in favour of the respondent is concerned.

  2. By consent of the parties, both the petitions were heard together and are being disposed of by a common order and judgment. The petitioner herein was the original respondent in the arbitral proceedings whereas the respondent herein was the original claimant. Some of the relevant facts for the purpose of deciding both these petitions are as under:--

  3. On 10th March 1992, the petitioner was awarded a contract by the State of Maharashtra for civil work pertaining to Stage IV of Koyna Hydro Electric Project (KHEP Contract). On 15th October 1992, the petitioner entered into a sub-contract agreement with the respondent for a portion of the work under the KHEP Contract. A part of the work under the KHEP Contract was also sub-contracted to a sister concern of the respondent namely SBP & Co. (the respondent in Arbitration Petition No. 893 of 2010) under the Piecework Agreement. It is the case of the petitioner that after execution of the sub-contract agreement, the respondent and their sister concern handed over to the petitioner two letters both dated 15th October 1992 stipulating therein that the claims paid by KHEP authorities are based on the quoted and accepted rates of PEC and that the petitioner herein would pay to the respondent after deducting 11.5% from the payment received from KHEP authorities. It was also alleged to have been stipulated that other benefits/claims which were settled and paid by the KHEP authorities were to be shared between the petitioner and the respondent on 50-50 basis after deducting expenses incurred by executing the works related to such claims/benefits.

  4. On 30th May 1996, the respondent informed the petitioner that it would henceforth be executing the work of their sister concern M/s. SBP & Co. under the Piecework Agreement and that all bills and cheques should be made by the petitioner in the name of the respondent. The disputes and differences arose between the petitioner and KHEP authorities. The petitioner herein initiated three separate arbitration proceedings for claims relating to extra items and price that is other than BOQ items/rates. Sometime in the month of October 1999, the respondent as well as their sister concern M/s. SBP & Co. completed their work under the sub-contract with the petitioner. In the arbitral proceedings filed by the petitioner against KHEP authorities, three awards (Volume Nos. I, II and III: for Rs. 31 crores, Rs. 24 crores and Rs. 2.31 crores respectively) were made by the learned arbitrator in favour of the petitioner and against the said KHEP authorities/Government. In so far as the awards in respect of Volume Nos. II & III are concerned, the KHEP authorities/Government made payment to the petitioner.

  5. On 22nd February 2000, the respondent and the said M/s. SBP & Co. demanded an alleged balance amount of Rs. 5,19,22,824/- in respect of R.A. Bill No. 139/PEC R.A. Bill No. 81 from the petitioner as per the statement of account prepared by the respondent. It is the case of the petitioner that on 2nd April 2000, a meeting was held between the representative of the respondent and the petitioner. According to the petitioner, in the said meeting for the first time, the respondent made a claim for the amount which the petitioner was to receive in respect of the arbitration awards made in the arbitration proceedings between the petitioner and the said KHEP authorities (State of Maharashtra) in respect of the awards i.e. Volume Nos. I & II in the sum of Rs. 31 crores and Rs. 24 crores respectively. It is the case of the petitioner that after negotiations, the parties agreed that in so far as the award in respect of Volume No. II is concerned, the petitioner would retain 11.50% and the balance would be shared on 50-50 basis i.e. the petitioner's share would be 55.75% and the respondent's share would be 44.25%. It was agreed that in so far as the award in respect of Volume No. I and all future/other cases are concerned, the amount would be shared by the petitioner and the respondent on 52%: 48% respectively.

  6. It is the case of the petitioner that on 2nd April 2000, on the basis of the said agreement arrived at in the meeting held on 2nd April 2000, the petitioner paid to the respondent a sum of Rs. 9,76,93,283/-, being its 44.25% share in the amount received by the petitioner from the said KHEP authorities (State of Maharashtra) in respect of the award i.e. Volume No. II.

  7. On 2nd May 2000, the State of Maharashtra challenged the award in respect of Volume No. I before the Court of Civil Judge, Senior Division, Satara. On 13th June 2000, pursuant to the order dated 2nd May 2000, the State of Maharashtra had deposited the amount awarded by the learned arbitrator arising out of Volume No. I along with interest thereon.

  8. It is the case of the petitioner that on 5th June 2000, the balance amount payable to the respondent as per the award arising out of Volume No. II relating to the work contract tax deducted by the State of Maharashtra in the sum of Rs. 77,43,750/- was made by the petitioner to the respondent by cheque No. 77520. It is the case of the petitioner that after the said payment was made, no further claim was made in respect of the award arising out of Volume No. II for the next 13 months.

  9. It is the case of the petitioner that in the month of June, 2001, the petitioner and the respondent through their representatives finally arrived at a settlement with respect to the amounts of Rs. 5,19,22,824/- payable by the petitioner to the respondent which the respondent had originally demanded from the petitioner with regard to the owners R.A. Bill No. 139/PEC R.A. Bill No. 81.

  10. It is the case of the petitioner that on 8th June 2001, the respondent signed an updated statement of account prepared by Shri.Murlidharan P. of the petitioner showing the amounts payable by the petitioner to the respondent in regard to the claim of Rs. 5,19,22,824/- which amount after adjustment was shown as Rs. 28,132.51 payable to the respondent and Rs. 21,121/- payable to M/s. SBP & Co.

  11. It is the case of the petitioner that on 8th June 2001, drafts of two 'No Claim' letters which were to be executed between the respondent and the said M/s. SBP & Co. on receiving the agreed final payment were prepared by Shri. Sapre on instructions of Shri. Pravin Patel of the petitioner and were faxed to Shri. Balasaheb Patil of the respondent.

  12. On 15th June 2001, the State of Maharashtra withdrew its challenge to the award in respect of Volume No. I. The petitioner accordingly received an amount of Rs. 30,07,33,273/- after deduction of TDS/Income Tax + Works Contract tax of Rs. 1,26,61,131/- from the total amount of Rs. 31,33,94,404/- in respect of the award i.e. Volume No. I. According to the petitioner, out of the said sum, the petitioner was liable to pay a sum of Rs. 15,50,98,891/- to the respondent.

  13. It is the case of the petitioner that on 16th June 2001, a meeting was held between authorised representative of the petitioner and the respondent where in pursuance of the aforesaid full and final settlement arrived at between the parties, the representative of the petitioner had handed over to the representative of the respondent a cheque for Rs. 18,132.51 dated 14th June 2001 in favour of the respondent and a cheque for Rs. 21,121/- in favour of M/s. SBP & Co. and post dated cheque for the sum of Rs. 14,85,26,717/- towards the share of the respondent and the said M/s. SBP & Co. in respect of the Volume No. I award.

  14. It is the case of the petitioner that by their letter dated 16th June 2001 to the respondent, the petitioner recorded that the cheques towards full and final settlement including dues toward Volume No. I have already been paid to the respondent and the respondent has accepted the same in full and final settlement including the dues towards Volume No. I. It was recorded that all the issues pertaining to Koyna Stage IV Project along with Arbitration (Volume Nos. I, II and III) stand completed and settled once for all. It was recorded that no further discussion will be entertained in future. It is the case of the petitioner that the said letter was admittedly acknowledged/confirmed by Shri. Balasaheb Patil, Director of the respondent without any demur or objection.

  15. It is the case of the petitioner that the said Mr. Balasaheb Patil had carried with him the two 'No Claim' letters both dated 8th June 2001 and at the request of Shri. Balasaheb Patil, representative of the petitioner Shri. Murlidharan mentioned the details of the cheques/demand drafts in the said letters after which the said Shri.Balasaheb Patil signed the said letters and handed over the same to the petitioner along with a covering letter dated 9th June 2001.

  16. On 20th June, 2001 the respondent claimed a sum of Rs. 5,00,000/- from the petitioner towards the expenditure incurred with respect to legal proceedings pertaining to arbitration award Volume No. I.

  17. By letter dated 27th June 2001, the petitioner informed the respondent that all matters with regard to Volume No. I had already been settled in the meeting...

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