Chief Engineer Iv, D... v. Well Protect Manpowe...

VIBHU BAKHRU, J

1. The petitioner (hereinafter DSIIDC) has filed the present petition under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter the A&C Act) impugning an arbitral award (hereinafter the impugned award) dated 11.12.2020 delivered by the Arbitral Tribunal consisting of Justice (retd.) Swatanter Kumar as the Sole Arbitrator (hereinafter the Arbitral Tribunal). O.M.P. (COMM.) 309/2021 Page 2 of 12

2. The impugned award was rendered in the context of disputes that have arisen between the parties in connection with the Agreement dated 23.11.2016 (hereafter the Agreement). Factual Context

3. On 27.06.2016, DSIIDC issued a notice inviting tender for providing watch and ward services for various housing projects completed by it at different locations in Delhi (hereafter the Services).

4. The respondent (hereinafter WPMS), submitted its bid and by a Letter of Acceptance (hereinafter LOA) dated 19.10.2016, DSIIDC awarded the contract for providing the Services to WPMS.

5. Thereafter, on 20.10.2016, prior to the commencement of the Services, WPMS furnished a performance bank guarantee for 5% of the tendered value, which amounted to a sum of 16,76,830/-.

6. Thereafter, on 23.11.2016, the parties entered into the Agreement. The Agreement was for an initial period of three-hundred and sixty-five days, which commenced from 09.11.2016; that is upto 08.11.2017. The parties agreed that it could be extended further by mutual consent.

7. By a letter dated 02.11.2017, WPMS requested DSIIDC to extend the Agreement. DSIIDC agreed to do so and by a letter dated 04.11.2017 extended the Agreement upto 08.04.2018.

8. WPMS claims that on oral instructions, it continued to provide the Services even after the 08.04.2018. It called upon the concerned officers of DSIIDC to take over the charge of security. However, no alternative arrangement was made and WPMS was requested to continue providing Services. The invoices raised by WPMS remained O.M.P. (COMM.) 309/2021 Page 3 of 12 outstanding. WPMS claims that it continued to provide Services till 1.12.2018 but thereafter, was constrained to lock up the gates and withdraw its security staff.

9. DSIIDC claims that no further extensions were granted and the Agreement stood terminated on 08.04.2018. Notwithstanding the same, a bill dated 15.01.2019 for a sum of 3,32,05,013/- was raised by WPMS for the period of 28.10.2017 to 30.11.2018, which was not accurate. Further, the same was not compliant with the procedures as specified in the Special Conditions of Contract, which were a part of the Agreement. DSIIDC further claims that none of the other two bills dated 30.06.2017 and 06.11.2017 submitted by WPMS were of the right amount or in accordance with the procedure agreed under the Special Conditions of Contract.

10. WPMS, issued a legal notice dated 18.10.2018 calling upon DSIIDC to pay the entire due amount, a sum of approximately 5 crores, along with interest at the rate of 18% per annum from the date the amount became due till its realization. Further, DSIIDC was also asked to issue a formal letter of extension with effect from 18.11.2017 and to pay damages quantified at 10,00,000/-.

11. On 19.03.2019, DSIIDC sent a letter to WPMS whereby, WPMS was called upon to submit the correct bills along with the relevant supporting documents in accordance with the terms and conditions stipulated in the Agreement.

12. In response to the legal notice dated 18.10.2018, DSIIDC sent a letter dated 06.04.2019, alleging that WPMS had blatantly disregarded the Agreement by neither placing adequate security at the sites nor O.M.P. (COMM.) 309/2021 Page 4 of 12 informing DSIIDC about the number of employees employed for the providing the Services. Further, DSIIDC also stated that no amount was due to WPMS and the sum of 5 crores was wrongly claimed by WPMS.

13. Aggrieved by the letter dated 19.03.2019, WPMS issued a notice dated 06.05.2019 seeking to refer the disputes to the Dispute Redressal Committee (DRC). There is some controversy regarding reference of disputes to DRC. WPMS claims that DRC did not act. DSIIDC claims that DRC was constituted but, WPMS failed to respond to its communication dated 17.07.2019.

14. Thereafter, WPMS issued a notice dated 31.10.2019 and sought the appointment of an Arbitrator. This Court, by an order dated 15.01.2020, appointed Justice (Retd.) Swatanter Kumar, a former judge of the Supreme Court, as the Sole Arbitrator. Arbitral Proceedings

15. Before the Arbitral Tribunal, WPMS filed its Statement of Claims. The claims made by WPMS are summarized as under: Claim 1 Bill No.105 dated 30.06.2017 for the period 15.11.2016 upto 30.06.2017 1,70,57,755/- Claim 2 Bill No. 0111 dated 06.11.2017 for the period 01.07.2016 upto 27.10.2017 89,02,554/- O.M.P. (COMM.) 309/2021 Page 5 of 12 Claim 3 Bill No. 299 dated 15.01.2019 for the period 28.10.2017 upto 30.11.2018 3,32,05,013/- Claim 4 Total amount of performance guarantee deposit 16,76,830/- Claim 5 Court and litigation expenses incurred 2,50,000/- Total () 6,10,92,152/- along with pendente lite and future interest @18% per annum

16. DSIIDC filed it Statement of Defence, however, it did not raise any counter-claims.

17. After considering the rival contentions of the parties, the Arbitral Tribunal framed the following issues for determination:

1. Whether the parties have performed their obligations in accordance with the terms of the agreement executed between them? ...Onus on parties (OPC)

2. Whether the Claimant is entitled to receive the payment of bill No.105 dated 30.06.2017, and bill no.111 dated 06.11.2017 and the bill dated 15.11.2019 in accordance with the terms of the agreement between the parties? O.M.P. (COMM.) 309/2021 Page 6 of 12

3. Whether the Contract of Agreement between the parties was extended by the Respondent beyond 08.04.2018?

4. Whether the Claimant is entitled to a refund of the Performance Guarantee as claimed?

5. Whether the Claimant is entitled to interest on the amount claimed, if so, at what rate and for what period?

6. Whether the Claimant is entitled to the costs incurred by it, in Court, Proceedings and the present Arbitration Proceedings, if so, to what amount?

7. Relief.

18. With respect to issue no.1, the Arbitral Tribunal held that there was no evidence to show that WPMS had failed to perform its obligations under the Agreement. On the contrary, the Arbitral Tribunal held that DSIIDC had failed to discharge its supervisory obligation as required under the Agreement.

19. In respect of issue no.2, the Arbitral Tribunal held in favour of WPMS and stated that WPMS could not be denied payment for the Services rendered by it. The receipt of the bills was not disputed by DSIIDC in its Statement of Defense. The Arbitral Tribunal accepted WPMSs contention that the condition of submitting monthly bills as mentioned in the Special Conditions of Contract was waived by the parties.

20. The Arbitral Tribunal held that the Agreement was extended by DSIIDC beyond 08.04.2018. It held that under Clause 13 of the Agreement, the Agreement could be extended based on the satisfactory O.M.P. (COMM.) 309/2021 Page 7 of 12 performance of WPMS and there was no evidence to show that the work performed by WPMS was unsatisfactory or deficient in any manner. The Arbitral Tribunal accepted WPMSs case that it had continued to render Services till 1.12.2018 pursuant to instructions given by the officers in charge of DSIIDC.

21. The Arbitral Tribunal proceeded to hold that since, upto 08.04.2018, no grievance of any kind was raised by DSIIDC with respect to the performance of WPMS and no penalty was imposed on it for any default, DSIIDC was entitled to refund the Performance Guarantee, which was furnished by WPMS for due performance of the Agreement.

22. The Arbitral Tribunal awarded interest at the rate of 7.5% per annum on the awarded amounts from 18.10.2018 till realization. The Arbitral Tribunal awarded costs to the extent of 1,50,000/- to WPMS.

23. Aggrieved by the impugned award, DSIIDC has filed the present petition. Submissions

24. Ms. Wani, learned counsel appearing for DSIIDC assailed the impugned award, essentially, on two grounds. First, she submitted that the Arbitral Tribunal had grossly erred in holding that any amount was payable to WPMS for providing the Services after 08.04.2018. She submitted that the Agreement for providing the Services was for a period of three-hundred and sixty-five days. However, prior to the expiry of the term of the Agreement, WPMS had by letter dated 02.11.2017, sought confirmation whether it should continue to provide Services beyond 08.11.2017. In response to the said letter, DSIIDC O.M.P. (COMM.) 309/2021 Page 8 of 12 confirmed that the term of the Agreement was extended for a further period of five months with effect from 08.11.2017, therefore, the term of the Agreement expired on 08.04.2018. Admittedly, there was no written communication from DSIIDC extending the Agreement beyond 08.04.2018. She submitted that the conduct of WPMS clearly indicated that a written confirmation from DSIIDC was necessary. Since there was no written agreement extending the Agreement beyond 08.04.2018, the contention that WPMS had assumed that the Agreement was extended was untenable.

25. Second, she submitted that in terms of the Agreement, WPMS was required to provide full details of the amount paid to workmen including contribution to ESIC / EPFO. The submission of such proof was a necessary condition for making any payments. However, WPMS had not submitted the necessary proofs to establish that it had paid wages to the security staff deployed at the site and therefore, was not entitled to the amount claimed. Reasons and Conclusion

26. The contentions as advanced by Ms. Wani were duly considered by the Arbitral Tribunal. There is no dispute that there was no written communication from DSIIDC extending the Agreement to provide Services from 08.04.2018. However, WPMS had established that it had written letters calling upon DSIIDC to confirm whether it should continue to provide the Services beyond 08.04.2018. The Arbitral Tribunal had specifically noted that WPMS had written a letter dated 30.04.2018 requesting DSIIDC to inform it whether it should continue the services beyond the said period. WPMS had also written a letter O.M.P. (COMM.) 309/2021 Page 9 of 12 dated 14.05.2018 indicating that it was ready to handover the charge with effect from 15.05.2018. It was WPMSs case that it had continued to render services under instructions of the officers of DSIIDC. There was ample material on record to establish that WPMS had also sent several letters requesting that its dues be cleared; however, no response was received from DSIIDC.

27. After evaluating the material, the Arbitral Tribunal had found in favour of WPMS that it was instructed to continue providing the Services. It is also important to note the nature of services; WPMS was providing security services. It was clearly not expected that a security agency would withdraw its security staff without formally handing over the charge to another agency or to the officers of DSIIDC. There is no material on record to indicate that DSIIDC had deputed any officer or appointed any other security agency to take over the charge of security from WPMS.

28. In the given circumstances, this Court finds no infirmity with the decision of the Arbitral Tribunal accepting WPMSs claim that it had continued to provide Services till 01.12.2018 and it was constrained to lock up the gates and withdraw its security guards. This Court finds no fundamental flaw or error in the conclusion of the Arbitral Tribunal, which would vitiate the impugned award on the ground of patent illegality.

29. It was DSIIDCs case that it had provided its own security guards after 08.04.2018. The Arbitral Tribunal found that DSIIDC had failed to establish the same. DSIIDCs witness (RW-1) had claimed that DSIIDC had deployed its own guard. However, the Arbitral Tribunal O.M.P. (COMM.) 309/2021 Page 10 of 12 found the testimony of the said witness to be false. There was no material provided on record to establish any payment to the security guards. Further, no records were produced by DSIIDC to even remotely establish that any guards had been deployed at site. RW-1 was cross- examined in this regard but he had failed to produce any documents to establish deployment of guards by DSIIDC. On 18.08.2020, the Arbitral Tribunal had specifically directed the witness of DSIIDC to produce all documents along with copies of letters written by DSIIDC for deployment of security guards at sites which were the subject matter of disputes before the Arbitral Tribunal. However, despite specific orders passed by the Arbitral Tribunal, neither DSIIDC nor its witness (RW-1) had produced any documents to substantiate its assertion.

30. The Arbitral Tribunal had evaluated the evidence available on record to conclude that the case set up by DSIIDC that it had deployed guards was untrue. This Court finds no ground to fault the decision of the Arbitral Tribunal.

31. The next question to be addressed is whether the impugned award is liable to be set aside on the ground that the Arbitral Tribunal had erred in accepting WPMSs claims while ignoring that it had not supplied the necessary documents as required under the Agreement. It is DSIIDCs case that the bills submitted by WPMS were deficient particularly in respect of submission of proof of payment of PF and ESIC. WPMS had denied this allegation.

32. The Arbitral Tribunal carefully examined the correspondence in regard to payment of bills raised by WPMS and found certain letters referred to annexures, which included documents of EPF, ESI, UAN, O.M.P. (COMM.) 309/2021 Page 11 of 12 Challans of payment of tax, ESI history sheet, details of ECS and list of deployment. The Arbitral Tribunal also noted that the letters sent by WPMS bore the receipt and signatures of representative of DSIIDC. Some of the letters also indicate the total number of pages. DSIIDC had not produced the documents submitted by WPMS to point out any deficiency. On the other hand, WPMS furnished an affidavit and lead evidence that it had fully complied with the conditions of the Agreement. WPMSs witness (CW-1) had testified that WPMS had submitted consolidated bills as it was orally instructed not to submit monthly bills because DSIIDC was facing certain financial constraints. CW-1 was cross-examined and he had specifically named the officers who had issued the verbal instructions.

33. The Arbitral Tribunals decision to accept WPMSs claim is supported by sufficient evidence. A plain reading of the impugned award indicates that the Arbitral Tribunal had carefully evaluated the evidence led by the parties.

34. The scope of examination under Section 34(2A) of the A&C Act is limited. This Court is not required to revaluate and reappreciate the evidence and supplant its opinion over that of the Arbitral Tribunal. Unless the decision is found to be patently illegal, no interference with the Arbitral Award is called for. In Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail Corporation Ltd.: 2021 SCC OnLine SC 695, Supreme Court had authoritatively explained that even an erroneous view would not vitiate the Arbitral Award on the ground of patently illegality unless the error is manifest and one that strikes at the root of the matter. It is trite law that an Arbitral Tribunal is a final adjudicator O.M.P. (COMM.) 309/2021 Page 12 of 12 of the evidence and its conclusion cannot be interfered with except where it is found to be patently illegal or in conflict with the public policy of India. In Dyna Technologies Pvt. Ltd. (S) v. Crompton Greaves Ltd. (S).: (2019) 20 SCC 1, the Supreme Court had held that courts would not interfere merely because an alternative view on facts exists. Similarly, in the case of Associate Builders v. Delhi Development Authority .: (2015) 3 SCC 49, the Supreme Court had observed that "a possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award."

35. In view of the above, the petition is unmerited and is accordingly dismissed. All pending applications are also disposed of. VIBHU BAKHRU, J MARCH 30, 2022 gsr/v