| SooperKanoon Citation | sooperkanoon.com/965288 |
| Court | Chennai High Court |
| Decided On | Jan-28-2013 |
| Judge | T.RAJA |
| Appellant | M/S.Energo Engineering Projects Ltd., |
| Respondent | 1)sri Aishwarya Constructions, |
28. 01/2013 CORAM THE HONOURABLE MR.JUSTICE T.RAJA C.M.A.(MD).No.7 of 2013 and M.P.(MD).No.1 of 2013 M/s.Energo Engineering Projects Ltd., Rep. by its Senior Vice President, Randhir Grover, NTPL Power Plant, Thoothukudi ... Appellant Vs.
1) Sri Aishwarya Constructions, Rep. by its Managing Partner, K.Lakshmipathy No.54, Rajaji Road, Block No.18, Neyveli-607 803.
2) Neyveli Tamil Nadu Power Limited, (NTPL), Represented by its Chief Executive Officer, NTPL Power Plant, Thoothukudi. ... Respondents Prayer Civil Miscellaneous Appeal filed under Section 37 of the Arbitration and Conciliation Act, against the order dated 27.11.2012 made in I.A.No.392 of 2012 in AROP.No.470 of 2012 on the file of the Principal District Judge, Thoothukudi. !For Appellant ... Mr.G.Prabhu Rajadurai ^For R1 ... Mr.M.Vallinayagam, Senior Counsel for Mr.K.Samidurai For R2 ... Mr.P.S.Sundaram :JUDGMENT The present Civil Miscellaneous Appeal has been filed by M/s.Energo Engineering Projects Ltd., rep. by its Senior Vice President, Mr.Randhir Grover, NTPL Power Plant, Thoothukudi, challenging the impugned order passed by the learned District Court, Thoothukudi, in I.A.No.392 of 2012 in AROP.No.470 of 2012 dated 27.11.2012.
2. The controversy before this Court is when the 2nd respondent, Neyveli Tamil Nadu Power Limited, (hereinafter referred to as NTPL), Thoothukudi, has given a contract in respect of erection/construction of Thermal Power Plant to the appellant, in turn the appellant has given sub contract to the 1st respondent/Sri Aishwarya Constructions, Neyveli. During the execution of the work by the 1st respondent, there was a failure of one of the rafts. In view of that, the 1st respondent was directed to go for core cutting test. In the meantime, the 1st respondent has also submitted payment of bills of which a sum of Rs.16,35,000/- alone was paid. The two number of batching plants were procured by the 1st respondent for which the 1st respondent incurred a cost of Rs.40 lakhs. Complaining that there was a delay in payment of bills, problems were cropped up between the appellant and the 1st respondent, as a result, citing the reason that the 1st respondent has not completed the expected work, the appellant has issued termination letter dated 21.11.2012, terminating the work order given to the 1st respondent. Aggrieved by the same, the 1st respondent has approached the trial Court namely, the District Court, Thoothukudi, by filing a petition in AROP.No.470 of 2012 along with I.A.No.392 of 2012, under Order 39 Rule 1 & 2 of the Civil Procedure Code, taking a main ground that without any prior notice, the order of termination dated 21.11.2012 has been passed arbitrarily, which is impermissible in law. Ultimately, accepting the case of the 1st respondent, the learned trial Court has passed the impugned order dated 27.11.2012, granting three directions namely; i) Interim injunction was granted till 14.12.2012, restraining the appellant from in any manner giving effect to their notice of termination dated 21.11.2012 pending further orders from the trial court; ii) A commissioner was appointed by the trial court to find out the extent of the work done by the 1st respondent; iii) A direction was also issued to withhold a sum of Rs.1,74,00,000/- (Rupees one crore and seventy four lakhs only) from the amount payable to the 1st respondent and deposit the same in the trial court pending arbitration proceedings. Aggrieved by the said order, the present appeal has been filed.
3. Learned counsel for the appellant would heavily contend that when there is a contract of work by registered agreement dated 17.06.2011 entered into between the appellant and the 1st respondent specifically saying that in case of any dispute or difference of opinion during the course of execution of work, the party aggrieved by the terms and conditions should approach only the Arbitrator, but ignoring the same, the 1st respondent has approached the trial court seeking injunction and the learned trial court also without giving a short notice to the appellant and the 2nd respondent erroneously granted injunction as a result, the work given by the 2nd respondent to the appellant in respect of erection/construction of Thermal Power Plant has been completely jeopardized, due to which, not only the appellant but also the 2nd respondent is put to great prejudice. Besides, since the work which pertains to construction of Thermal Power Plant for the welfare of the state is delayed due to the pendency of the case, the people of this state would also suffer the continuous scarcity of electricity.
4. Secondly, the learned counsel for the appellant contended that when the 1st respondent can adequately be compensated in terms of Section 14(1)(a) of the Specific Relief Act, 1963, the trial court ought not to have granted injunction.
5. Finally, it was contended that in view of the specific bar under Section 41(e) of the Specific Relief Act, which states that an injunction cannot be granted to prevent the breach of a contract the performance of which would not be specifically enforced, the impugned order is liable to be interfered with.
6. A detailed counter affidavit has been filed by the 2nd respondent NTPL, Thoothukudi, taking various grounds. Learned counsel for the 2nd respondent submitted that the petition filed by the 1st respondent in AROP.No.470 of 2012 before the learned District Judge, Thoothukudi, is not legally maintainable for the simple reason that the 1st respondent being not a registered firm under Section 69 of the Partnership Act. Secondly, it was argued that the agreement entered into between the appellant and the 1st respondent clearly shows that in case of any dispute or difference of opinion, only the Delhi Court shall have the jurisdiction to deal with the disputes between the parties. Therefore filing of a petition in AROP.No.470 of 2012 on the file of the District Court, Thoothukudi, is without jurisdicion and that the District Court which has no jurisdiction, ought to have rejected the petition filed by the 1st respondent.
7. Taking this Court through Section 14(1)(a) of the Specific Relief Act, the learned counsel for the 2nd respondent further contended that when the 1st respondent cam claim damages from the appellant in the event of properly satisfying that a contract for the non-performance of which compensation in money is an adequate relief, the learned trial court ought not to have passed the impugned order injuncting the appellant and also the 2nd respondent not to proceed with the work.
8. Finally, it was also pleaded that the ratio laid down by the Hon'ble Apex Court in Ramrameshwari Devi and others Vs. Nirmala Devi and others, reported in 2011 (8) SCC 249.also has been completely overlooked. For all these reasons, the learned counsel pleaded that the petition filed by the 1st respondent before the trial court should have been dismissed and in any event, when the 2nd respondent was not a party to the contract between the appellant and the 1st respondent, the learned trial court should not have passed the impugned order behind the back of the 2nd respondent.
9. On the other hand, learned senior counsel appearing for the 1st respondent would forcibly contend that when there was a registered agreement dated 17.06.2011 between the appellant and the 1st respondent for executing the work contract, without there being any prior notice, unilaterally the appellant terminated the work contract, particularly when the 1st respondent has undertaken huge work spending enormous amount. Further, the appellant has also encashed the bank guarantee of Rs.35 lakhs and moreover all the payment of bills have not been settled in favour of the 1st respondent. Under these circumstances, the 1st respondent has approached the trial court by filing a petition in AROP.No.470 of 2012 on the file of the District Court, Thoothukudi, for restraining the appellant from in any manner giving effect to their notice of termination dated 21.11.2012 pending arbitration proceedings along with two other reliefs. Even though the matter should be resolved by the Arbitrator, unless and until the volume of work done by the 1st respondent is measured and produced before the Arbitrator, it will be highly difficult for the Arbitrator to decide the amount of compensation. Therefore, the impugned order passed by the trial court, directing appointment of Commissioner along with the injunction order shall not be disturbed, lest the 1st respondent would put to great prejudice.
10. After hearing both the partied on various grounds taken by them, to find out the extent of the work done by the 1st respondent, this Court adjourned the matter to enable the copy of the report filed by the Commissioner to be made available before this court by giving a direction to the 2nd respondent to obtain a copy of the report from the Commissioner so as to place it before this Court. Accordingly, a copy of the report of the Commissioner dated 28.01.2013 is produced before this court, which contains the extent of work done by the 1st respondent. Heard the learned counsel for the appellant and perused the materials available on record.
11. The 2nd respondent/NTPL, Thoothukudi, is a subsidiary of Neyveli Lignite Corporation Limited, a Navratna Central Public Enterprise under the aegis of Ministry of Coal. It is a joint venture company between Neyveli Lignite Corporation Limited and Tamil Nadu Generation and Distribution Company Limited (TANGEDCO), formed for the purpose of execution of construction of 2X500 MW Coal based Thermal Power Project at Harbour Estate, Tuticorin for its Operation & Maintenance. The appellant was awarded work of construction in nine Main Packages by the 2nd respondent. One among the packages is Ash Handling System awarded to the appellant for a total value of Rs.59.94 crores which includes design, engineering, manufacture, assembly, inspection, shop testing, supply, packing, forwarding to site, unloading, storage and preservation at site, handling at site insurance, erection and complete installation, supervision, pre-commissioning, testing and commissioning, completion of facilities, conducting performance guarantee tests and handing over of complete bottom ash handling system including all civil works, building steel structures, technological steel structures, electrics and control and instruments and to complete the works in all respects including the functional, operational, maintenance and safety requirements on a turnkey basis for 2X500 MW Tuticorin Thermal Power Project (TTPP) of NLC Tamil Nadu Power Limited (NTPL) at Tuticorin.
12. Whileso, the appellant after taking contract work from the 2nd respondent has sub contracted the same to the 1st respondent by agreement dated 17.06.2011. The work given to the 1st respondent by way of sub contract includes excavation of soils including disposal, backfilling, de watering, compaction, hard rock excavation laying plain cement concrete for foundation, plinth beam for grade slab, bottom core formation etc. The appellant also took a bank guarantee from the 1st respondent on 29.12.2011 for a sum of Rs.35 lakhs and as per the agreement clause, the bank guarantee shall remain valid till the completion period of civil works. After the sub contract was given to the 1st respondent by the appellant, there was a failure of one of the rafts during the execution of work. Hence, the 1st respondent was directed to go for core cutting test. In the meantime, the 1st respondent/Sub Contractor submitted payment of bills of which a sum of Rs.16,35,000/- alone was paid.
13. When there was a delay in payment of bills, a problem arose between the appellant and the 1st respondent, as a result, the Contractor/appellant decided to terminate the sub contract given to the 1st respondent, by issuing termination letter dated 21.11.2012. When the disputes arose between the appellant and the 1st respondent, it is appropriate to refer to arbitration clauses in the agreement dated 17.06.2011 namely, L.O-Disputes & Arbitration and M.O-Jurisdiction, which are extracted hereunder: L.O-Disputes & Arbitration Any disputes or differences arising out of in connection with or in relation with this contract or any of the contract documents, which cannot be settled amicable between the parties, hereto, shall be settled by arbitration in accordance with the rules of Indian Arbitration and Conciliation Act, 1996, by three arbitrators selected in accordance with said rules. The place of such arbitration shall be Delhi. The decision of the arbitrators shall be final and binding. The arbitration shall be held in English language only. M.O.Jurisdiction: Any disputes arising under this contract shall be under he purview of Delhi Jurisdiction only.
14. In view of the above arbitration clauses in the agreement dated 17.06.2011 entered into between the appellant and the 1st respondent, it appears that the 1st respondent also called for constitution of Arbitration. Simultaneously, he has approached the trial court for a direction against the 2nd respondent/NTPL, Thoothukudi, to pay a sum of Rs.22,09,630/- from the amount due to the appellant towards labour dues and material dues pending arbitration proceedings and to pass a prohibitory order to the 2nd respondent/NTPL, Thoothukudi, to withhold a sum of Rs.1,74,00,000/- from the amount payable to the appellant and deposit the same in the trial court pending arbitration proceedings and also to pass an order of injunction restraining the appellant from in any manner giving effect to their notice of termination dated 21.11.2012 pending arbitration proceedings. The learned trial court without even taking note of the fact that when there was a dispute between the sub contractor and the contractor, the work of the 2nd respondent should not be affected, granted interim injunction and also appointed a Commissioner to find out the extent of work done by the 1st respondent/sub contractor, so that the matter could be properly agitated by the Arbitrator, for the purpose of deciding the compensation, if payable to the aggrieved party.
15. At this juncture, it is relevant to extract Sections 14(1)(a) and 41(e) of the Specific Relief Act. Section 14(1)(a) a contract for the non-performance of which compensation in money is an adequate relief. Section 41(e) to prevent the breach of a contract the performance of which would not be specifically enforced.
16. A close reading of Section 14(1)(a) states that a contract cannot be specifically enforced for the non-performance of which compensation in money is an adequate relief. Similarly, Section 41(e) also clearly says that when an injunction cannot be granted particularly to prevent the breach of a contract the performance of which would not be specifically enforced. If it is found that a contract which by its very nature is determinable, the same cannot be enforced but in respect of such contract, no injunction could be granted. This is the mandate of the law.
17. When an injunction cannot be granted to prevent the breach of a contract the performance of which would not be specifically enforced, the Apex Court in Adhunik Steels Ltd., Vs. Orissa Manganese and Minerals (P) Ltd., reported in 2007 (7) SCC 125.has held that injunction is a form of specific relief. It is an order of a court requiring a party either to do a specific act or acts or to refrain from doing a specific act or acts either for a limited period or without limit of time. In relation to a breach of contract, the proper remedy against a defendant who acts in breach of his obligations under a contract, is either damages or specific relief.
18. In one another judgment of the Apex Court in Ramrameshwari Devi and others Vs. Nirmala Devi and others, reported in 2011 (8) SCC 249.the Supreme Court has laid down parameters for grant of interim injunction. The relevant portion in paragraph 52 of the said judgment is extracted hereunder. E. The courts should be extremely careful and cautious in granting ex parte ad interim injunctions or stay orders. Ordinarily short notice should be issued to the defendants or respondents and only after hearing the parties concerned appropriate orders should be passed.
19. Besides it may be mentioned that while considering the prayer for grant of interim measure under Section 9 of the Arbitration and Conciliation Act, this Court in Techmo Car SPA Vs. The Madras Aluminium Company Ltd., reported in 2004 (3) CTC 754.held that the very object of granting interim injunction is to protect the party against injury by violation of right for which he could not be adequately compensated in damages. It was further held that the need for protection of the petitioner should be weighed against corresponding need for opposite party to be protected against injury resulting form his having been protected from exercising his own legal right for which he could not be adequately compensated. In the said judgment, the Apex Court by following the judgment of the Bombay High Court in Newage Fincorp (India) Ltd., Vs. Asia Corp. Securities Ltd., reported in 2000 (3) Arbitration Law Reporter 687 (Bombay), has enunciated the following principles:- 31. The principles of granting interim reliefs can very well be applied while considering the prayer for grant of interim measures under section 9 of the Act. The discretion of the Court can very well be summarised in order to grant interim measures. It is not enough for the petitioner to show that he has a prime facie case but he has to further show, (i) that in the event of withholding the relief of interim measures he will suffer an irreparable injury; (ii) that in the event of his success in the arbitration proceedings he will not have the proper remedy, in being awarded adequate damages; (iii) that in taking into consideration the comparative mischief of inconvenience to the parties, the balance of convenience is in his favour or in other words; (iv) that his inconvenience in the event of withholding the relief of interim measures will in all events exceed that of the respondents in case he is not granted relief; and lastly; (v) the petitioner must show a clear necessity for affording immediate protection to his alleged right or interest which would otherwise be seriously injured or impaired.
20. Yet another judgment of the Delhi High Court in B.S.M. Contractors Pvt Ltd., Vs. R.S.Bridge and Construction Corporation Ltd., reported in AIR 199.Delhi 117, needs to be emphasized hereunder. The relevant conclusion arrived at is extracted hereunder.
8. On a combined reading of the averments made in the petition and the aforesaid paragraphs of the letter, it appears that the petitioner wants to plead that the contract in question was awarded to it with a clear understanding that the contract for remaining part of the work would also be awarded to it. It is for this reason only, the petitioner has been insisting that the finishing work stipulated in the agreement No.2/97 could be executed only on completion of the entire structural work of the complex. There is no document on record to support the said assumption of the petitioner. If the injunction sought by the petitioner is granted it would have the effect of practically granting the relief for specific performance of the contract, which relief cannot be granted under Section 9 of the Act. In Donald's Keating's Law and Practice of Building Contract's (2nd Edition), the remedy open to a contract on a wrongful termination of the contract is stated in following terms: "In the ordinary case, the contractor cannot obtain an injunction restraining forfeiture by the employer because this would be equivalent to specific performance of the contract and the Court does not normally grant this remedy in the case of a building contract. The contractor can be adequately compensated in dam ages, for wrongful forfeiture." 9. On a consideration of the facts and circumstances of the case, I am of the opinion that a building contract of the instant nature cannot be specifically enforced by granting interim relief under Section 9 of the Act. If there is a breach of such a contract, the appropriate remedy is to compensate the party damnified in damages. That apart, the granting of an injunction in favour of the petitioner will further delay the construction work considered very urgent by the respondent No.3. Thus, the balance of convenience also swings against the grant of injunction sought by the petitioner.
21. In B.S.M. Contractors Pvt Ltd's case, while considering the grant of interim relief under Section 9 of the Arbitration and Conciliation Act, emphasis has been given that while granting an injunction in favour of the petitioner, it must be ensured that such relief should not further delay the construction work.
22. Similarly, in the present case, the 2nd respondent/NTPL, Thoothukudi, is a subsidiary of Neyveli Lignite Corporation Limited, a Navratna Central Public Enterprise under the aegis of Ministry of Coal. It is a joint venture company between Neyveli Lignite Corporation Limited and Tamil Nadu Generation and Distribution Company Limited (TANGEDCO), formed for the purpose of execution of construction of 2X500 MW Coal based Thermal Power Project at Harbour Estate, Tuticorin, for its Operation & Maintenance. When the 2nd respondent has given the contract work to the appellant, the appellant has given sub contract to the 1st respondent, which is contrary to Clause No.10.17.2 Schedule 10 Volume I of the contract entered into between the 2nd respondent/NTPL, Thoothukudi, and the appellant. As per the said clause, the appellant has to obtain prior approval of the 2nd respondent for any sub contractor proposed to be engaged for the work and any assignment of sub contract by the contractor without prior concurrence of the 2nd respondent shall be void. Therefore, the learned District Judge before considering the grant of injunction should have ordered short notice to the 2nd respondent and after hearing the parties the matter should have been resolved. But in the present case, without any notice to the opposite party ignoring the principles laid down under Sections 14(1)(a) and 41(e) of the Specific Relief Act, which clearly show that if a contract which by its very nature is determinable, no injunction could be granted erroneously to stall the entire project to produce electricity. Be that as it may, the Commissioner who was appointed by the trial court has submitted his report dated 28.01.2013. The relevant paragraphs 2 to 5 of the report are extracted hereunder:
2) There are six numbers of incomplete Silos. Three silos are on the western side and three silos on the eastern side. Out of 3 silos on the western side, the South most silo is covered by concrete upto 2 Metre height alone, while next silo is covered by concrete upto 1 metre above. All other four silos are without concrete cover. All the six Silos are embedded with iron rods of different hight.
3) Each silo is 0.75 Metre in height, 0.3 Metre in breadth and the length is 6 Metre. Each silo is a six feet one. Foundation is 6.3 Metre which is accepted by all.
4) I am producing six Photos. Photo No.1 relates to south most silo on the western side, while photo No.2 relates to middle silo, while photo No.3 relates to northern silo, photo No.4 relates to northern most silo on the eastern side while photo No.5 relates to middle silo while photo No.6 relates to southern most silo. Photo No.7 is the site photo while photo No.8 is also site photo while photo No.9 is also site photo along with CD also. I am also producing 7 construction copies handed over to me by the 1st respondent.
5) Memo filed by the 1st respondent raising 6 points is also produced. My answer is as follows:- 1.To notedown the materials of Aishwarya Constructions available in the site. Answer - I could not answer as it is outside of the Commission Warrant. 2.To notedown that no work has been produced in the site. Answer-Yes, no work has been produced in the site. 3.To notedown the nature of construction/Amount of work done, percentage of work progressed, to note down the height of existing pillers structured iron rods. Answer - My Report paras 2, 3 and 4 are sufficient. Regarding percentage of done - It cannot be answered as it is outside of the scope of warrant. Regarding of height of existing pillars, my answer is that the iron pillars are of different height which cannot be mesured. 4.To note down the materials available in the plant office of Aishwarya Constructions functioning in the container in the site. My answer is that it cannot be done as it is outside of the scope of warrant. 5.Requested to take photos during visit. My answer is that photos taken along with C.D had been produced. 6.Requested to receive the gate pass request by Aishwarya and sector by Energo - 17 pages.
23. The Commissioner's report dated 28.01.2013 clearly shows that the Commissioner has measured the extent of work done by the 1st respondent. This is what is immensely required for the Arbitrator to decide the controversy involved between the appellant and the 1st respondent. Therefore, the parties have to redress their grievance only before the Arbitrator in terms of the Arbitration clause in the agreement dated 17.06.2011. Continuance of injunction against the 2nd respondent will work against public interest. The reason being the 2nd respondent has commissioned a project for the purpose of execution of construction of 2X500 MW Coal based Thermal Power Project at Harbour Estate, Tuticorin. To complete a part of the project, when one of the works was awarded to the appellant by way of sub contract, the same was given to the 1st respondent without there being any prior permission from the 2nd respondent. The larger interest of the Tamil Nadu Electricity Generation and the Distribution being far more important than the narrow interest of the appellant and the 1st respondent, the 2nd respondent is entitled to continue the work left out by the appellant and the 1st respondent.
24. In view of that, this Court being satisfied that when there is a work contract given by the appellant to the 1st respondent and after accepting the work during the course of execution when the contract has been completely stopped due to difference of opinion arose between the parties, the 1st respondent can very well claim damages and compensation from the appellant under Section 14(1)(a) of the Specific Relief Act, by appointing the Arbitrator, hence no prejudice would be caused to either parties by directing them to approach the Arbitrator. When the grievance of the 1st respondent could be well addressed and the damages and compensation from the appellant if found ultimately by the Arbitrator, would be decided, I do not find that the impugned order should any longer continue. Hence the interim injunction granted by the trial court is set aside and the parties are directed to approach the Arbitrator to redress their grievance.
25. It must be mentioned that only on the application filed by the 1st respondent, the trial court has appointed a Commissioner and directed him to file a report as regards the extent of work done by the 1st respondent. As mentioned above, paragraphs 2 to 5 show the extent of work done by the 1st respondent. However, the Site Inspection Status Report of the Civil Engineer Mr.Kirubakaran shows that in order to evaluate the construction made below the ground level, few more tests/inspections are required to assess the volume of civil works executed.
26. This Court to meet the ends of justice and also in the interest of all parties, in order to avoid further loss of time, deems it fit to direct the 2nd respondent to assess the real volume of civil works executed by the 1st respondent independently, without reference to the Civil Engineer's report and the Commissioner's report within a period of two weeks from the date of receipt of a copy of this order and the same can be made use of by the Arbitrator. The Civil Miscellaneous Appeal is allowed accordingly. M.P.(MD).No.1 of 2013 is closed. No costs. nb2 To The Principal District Judge, Thoothukudi.