Ircon International Ltd v. Afcons Infrastructure Ltd

JASMEET SINGH, J AUGUST 1, 2024/NG/PP (Corrected and released on 17.08.2024)

* IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision: 01.08.2024 + O.M.P. (COMM) 315/2024 & I.A. 35095/2024, I.A. 35096/2024, I.A. 35097/2024 IRCON INTERNATIONAL LTD .....Petitioner Through: Mr. Siddhant Goel, Ms. Jyotika Jain, Mr. Shubham S. Saxena, Ms. Karmanya D. Sharma, Ms. Ashma Jain, Ms. Kratvi Kawdia, Advs. versus AFCONS INFRASTRUCTURE LTD .....Respondent Through: Mr. R.V. Prabhat, Adv. Mr. Abhishek Bithkaray, Mr. Tanmay Nandi, Mr. Saurabh Suman, Advs. CORAM: HON'BLE MR. JUSTICE JASMEET SINGH : JASMEET SINGH, J.(ORAL) 1. This is a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the Impugned Interim Award dated 29.04.2024 passed by the majority of the Arbitral Tribunal directing the petitioner to return the performance bank guarantees for Rs. 22,41,17,116/-. 2. The facts are that the petitioner invited bids for the construction of tunnel T – 74 R for a length of 3290 mtr, on the Dhrama – Qazigund section of the Udhampur – Srinagar – Baramulla New BG Railway line project (hereinafter referred to as "Project"). 3. The petitioner and the respondent entered into a Contract Agreement dated 14.03.2014 for the execution of the project. 4. Since certain disputes arose between the parties, the respondent invoked arbitration in accordance with clause 62 SCC – 1, and the Arbitral Tribunal was constituted. 5. During the arbitral proceedings, the respondent filed an application under section 31(6) of the Arbitration and Conciliation Act, 1996 seeking the release of bank guarantee, and the Interim Award came to be passed on 29.04.2024. 6. The majority Arbitral Tribunal passed the following interim Award on 29.04.2024: "a) Part of Claim No. 1(B) is allowed, and the Respondent is directed to release Performance Bank Guarantee for Rs.22,41,17,116/-; b) Claim No. 1(C) is deferred and shall be considered at the time of Final Award; c) Claim No. 2(B) is deferred and shall be considered at the time of Final Award; d) Claim No. 4(A) and 4(C) are allowed and the Respondent is directed to pay a sum of Rs. 2,08,56,361/- to the Claimant" 7. Aggrieved, the petitioner has filed the present petition, however the petitioner by way of this petition only restricts his claim to the extent whereby the Arbitral Tribunal has awarded release of bank guarantee to the tune of Rs 22,41,17,116/-. 8. Mr. Goel, learned counsel for the petitioner draws my attention to para 8 and 40.2 of the Statement of Claims filed by the Respondent before the learned Arbitral Tribunal, which reads as under: "8. The Respondent has not issued the Maintenance Certificate despite fulfilment of all required conditions as per the Contract by the Claimant. The Claimant seeks issuance of the Maintenance Certificate and related reliefs by way of release of bank guarantees, retention amount etc. …. 40.2. The Claimant is entitled to issue of Defect Liability/ Maintenance Certificate in terms of Clause 50(1) of GCC and consequently, release of Bank Guarantees towards Performance Security and Retention Money and to refund Retention Money withheld." 9. In this regard, he further draws my attention to para 12 of the application filed by the respondent under Section 31(6) of the Arbitration and Conciliation Act, 1996, and states that the respondent itself has asked for a defect liability certificate which is subsequent to the completion certificate. Para 12 of the Application filed under section 31(6) reads as under: The disputes referred to the Hon'ble Tribunal in the present reference, include the Claim for issuance of Defect Liability Certificate w.e.f. 29 May 2020, and consequent Release of Performance Bank Guarantee (PBG), Retention Money Bank Guarantee (RBG) and Bank Guarantee submitted by the Claimant, in lieu of Liquidated Damages (LD), cash retention money withheld by the Respondent, extension of time and consequent compensation, and other Claims. 10. My attention has also been further drawn to prayers sought by the respondent in th