Compilation of Judgments On Behalf of Respondent

BEFORE THE ARBITRAL TRIBUNAL CONSISTING OF
JUSTICE MR. BIPIN CHAND,

JUSTICE MR. JANARDAN SAHAI,
JUSTICE MR. G.P. MATHUR
IN THE MATTER OF:

M/s Raj Rewal Associates …..Claimaint
Versus
National Themal Power Corporation (NTPC) ….Respondent
COMPILATION OF JUDGMENTS ON BEHALF OF RESPONDENT (NTPC

LTD.)
S. Particular Page No. Relevant

No. Paras
1. State of Rajasthan & Anr. Vs. Ferro 1-26 Para
Concrete Construction Pvt. Ltd., reported in 59 & 67
(2009) 12 SCC 1, decided on 22.04.2009.
2. Vedanta Limited Vs. Shenzhen Shandong 27-34 Para
Nuclear Power Construction Company 9, 10, 11,
Limited, reported in (2019) 11 SCC 465 16 & 21
decided on 11.10.2018.
3. M/s Essar Projects Ltd. Vs. M/s Edifice 35-38 Para 9 & 10
Developers and Projects Engineers Ltd.,
reported in 2013 SCC Online Bom 17 :
(2013) 7 Bom CR 353, decided on
04.01.2013.
Filed By
(RITURAJ BISWAS)
Advocate for the Respondent (NTPC Ltd.)
Flat No. 126, Aravali Apartment,
Alaknanda, New Delhi- 110019
M. No. 9999023225
Email: riturajbiswas@gmail.com
Date: 23.04.2022
New Delhi
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Page 1 Wednesday, April 20, 2022
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Printed For: Mr. Rituraj Biswas
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Page 1 Friday, April 22, 2022
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© 2022 EBC Publishing Pvt.Ltd., Lucknow.
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Appeal No. 86 of 2012
Essar Projects Ltd. v. Edifice Developers and Projects Engineers Ltd.
2013 SCC OnLine Bom 17 : (2013) 7 Bom CR 353
(BEFORE D.Y. CHANDRACHUD AND A.A. SAYED, JJ.)
M/s. Essar Projects Ltd. .…. Appellant

v.
M/s. Edifice Developers and Projects Engineers Ltd. .….
Respondent
Mr. Nishant Sasidharan with Mr. Nikhil Karnawat i/b Mr. Nivit Srivastava for the
Appellant.
Mr. Shailesh Shah, Senior Advocate i/b Ms. Vaishali Choudhari for the Respondent.
In
Arbitration Petition No. 313 of 2007
With
In
Arbitration Petition No. 316 of 2007
Decided on January 4, 2013
ORAL JUDGMENT (PER DR. D.Y. CHANDRACHUD, J.):
The challenge in the Appeal is to the judgment of a Learned Single Judge dated 11
November 2011 on a petition filed under Section 34 of the Arbitration and Conciliation
Act 1996. Insofar as this Appeal is concerned, the Learned Single Judge affirmed the
arbitral award of a sole Arbitrator insofar as the claim for refund of retention money in
the amount of Rs. 1,43,028/- was allowed together with interest.
2. The Appellant before the Court was the original petitioner in the Arbitration Petition
and is aggrieved by the judgment of the Learned Single Judge to the extent to which
the challenge to the arbitral award on the issue of the refund of the retention money
has not been accepted by the Learned Single Judge.
3. The following submissions have been urged in support of the Appeal:
(i) In the invocation of arbitration, no claim was raised by the Respondent for refund
of retention money;
(ii) No claim was raised even during the course of the arbitration proceedings for the
refund of retention money; and
(iii) After the proceedings before the Arbitrator were closed for an award, a statement
was tendered by the Respondent in which there was a claim for refund of retention
monies. The Appellant undoubtedly did submit its response to the statement. But the
fact which remains, according to the Appellant is that no such claim was advanced
when arbitration was invoked. Hence, it has been urged that the Arbitral Tribunal lack
jurisdiction to entertain the claim for refund of retention monies.
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4. On behalf of the Respondent it has been urged that:
(i) The entire submission proceeds on an erroneous foundation since even prior to the
invocation of the arbitration on 22 May 2002 the Respondent had claimed a refund of
the retention monies on 30 October 2000;
(ii) In the statement of claim that was filed before the Arbitrator, there was an express
reference to the amounts which were retained towards retention monies by the
Appellant. The bills which had been raised by the Respondent had been paid and the
amount which remained was the retention money which had not been refunded to the
Respondent;
(iii) In the written statement and counter claim that was filed by the Appellant, the
claim for refund of retention monies was traversed and as a matter of fact, the
Appellant in its counter claim sought a set off in respect of the retention monies;
(iv) In the written statement that was filed before the Arbitral Tribunal, no objection in
regard to the jurisdiction of the Arbitrator to entertain a claim for refund of retention
monies was taken. Consequently, the Learned Single Judge was justified, having
regard to the provisions of Section 16(2) of the Arbitration and Conciliation Act 1996
in coming to the conclusion that since an objection as to jurisdiction was not raised
before the Arbitrator in the statement of defence, the Appellant was precluded from
doing so in the Arbitration Petition challenging the arbitral award.
The rival submissions now fall for consideration.
5. The claim in regard to the refund of retention monies together with interest has
been dealt with by the Arbitral Tribunal in paragraph 32 of the award. Before the
Arbitrator the contention of the Appellant was that under the general conditions of
contract retention monies would become payable only after the end of a defect liability
period of 365 days from the completion of work and that the retention amount had not
become payable by the Appellant in consequence. Moreover, it was urged that the
retention amount due to the Respondent was calculated after giving credit for the
compensation payable to the Appellant for which a counter claim had been made. The
Arbitrator rejected this defence raised by the Appellant on the ground that the
Appellant had unfairly foreclosed and/or aborted the contract as a result of which the
question of the Respondent completing the contract did not arise as it was prevented
from completing the work by the conduct and action of the Appellant. The retention
money was deducted in the running account bills bearing Nos. 1 to 6, the last of them
being submitted on 31 May 1999. The Arbitrator noted that though the Appellant had
been assuring that the work would be restarted, the Appellant did not do so in view of
its financial difficulties until work under the contract was foreclosed/aborted. The
Arbitrator also noted that during the period of 365 days from 31 May 1999, no defects
were either pointed out by the Appellant for being rectified or remained to be rectified.
Since the completion of the work was prevented by the action of the Appellant in
foreclosing or aborting the contract, the Arbitrator came to the conclusion that the
Respondent was not required to wait for a period of 365 days. Finally, the Arbitrator
held that the claim for refund of retention monies arose under the contract and fell
within the purview of the arbitration agreement, clause 30 of the arbitration
agreement being of the widest amplitude.
6. The Learned Single Judge has while rejecting the challenge to the arbitral award by
the Appellant on the issue of retention monies held that the admitted position is that
the claim was raised by the Respondent in the statement of claim. In the reply filed by
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the Appellant no objection to the jurisdiction of the Arbitrator was raised on the basis
that the claim had not been addressed in the letter of invocation dated 22 May 2002.
In view of the provisions of sub-sections (2) and (3) of Section 16, the Learned Single
Judge held that such an objection to jurisdiction not having been raised in the
statement of defence and the Appellant having established no sufficient cause for not
raising it earlier, such a submission could not be raised in the proceedings under
Section 34. Finally, the Learned Single Judge held that the view which was taken by
the Arbitrator to the effect that the claim raised a dispute arising out of the contract
and that the arbitration clause was widely worded was a possible view. Hence, the
arbitral award has not been interfered with on the issue pertaining to the refund of
retention amounts.
7. With the assistance of the learned counsel we have perused the relevant record
during the course of the hearing of these Appeals. There was evidently a dispute
between the parties in regard to the retention monies as is evidenced from a letter
addressed by the Respondent to the claimants as far back as on 30 October 2000 even
prior to the invocation of arbitration. Arbitration was invoked on 22 May 2002 and the
statement of claim before the Arbitrator was filed on 16 April 2003. The contention of
the Appellant that no claim was made before the Arbitrator in the statement of claim
for the refund of retention monies is factually incorrect. The statement of claim
contains two statements, Statement I being the bill for work done and Statement II,
the demand for compensation. One of the statements annexed to the statement of
claim is the status of billing and amounts payable in which there is a clear reference to
the retention monies in the amount of Rs. 1,43,028/-. The statement would clearly
show that while the other amounts due and payable under the bills had been paid (as
a result of which there was nil amount outstanding) the retention monies had not been
paid. As a matter of fact, the Appellant also understood the statement of claim in the
same sense. In the written statement and counter claim the Appellant justified the
deduction of the retention money on the ground that it was entitled to hold it until the
satisfactory completion of work was carried out in accordance with the contract. The
Appellant sought to set off the retention money on the ground of non-performance and
poor quality of workmanship. It is thus evident that the Appellant joined issue with
the Respondent on the merits of the claim for refund of retention amount. This was
clearly an issue before the Arbitrator and fell within the purview of the arbitration
agreement. Sub-section (2) of Section 16 requires that a plea that the Arbitral
Tribunal does not have jurisdiction shall be raised not later than the submission of the
statement of defence. However, a party is not to be precluded from raising a plea
merely because he has appointed or participated in the appointment of an Arbitrator.
Under sub-section (3) a plea that the arbitral tribunal is exceeding the scope of its
authority has to be raised as soon as the matter alleged to be beyond the scope of its
authority is raised during the arbitral proceedings. Sub-section (4) of Section 16
allows the Arbitral Tribunal in either of the cases referred to in sub-sections (2) or (3)
to admit a later plea if it considers a delay as justified. An objection as to jurisdiction
ought to have been raised before the Arbitral Tribunal, but was not raised by the
Appellant. On the contrary, the Appellant joined issue on the merits of the claim. The
Arbitrator adjudicated upon the merits. In these circumstances, the Learned Single
Judge was justified in declining to entertain the plea of jurisdiction. There is no merit
in the submission that the claim was not raised before the Arbitral Tribunal in the
statement of claim or that it was raised for the first time after arguments were
concluded. As a matter of fact, the submission which is urged on behalf of the
Appellant is factually belied by the record of the arbitral proceedings.
8. In Appeal 92 of 2012, in addition to the submissions which have already been

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urged in the companion Appeal, learned counsel has submitted that under the
conditions of contract governing this appeal, a claim for interest on retention monies
was specifically prohibited. Hence, it was urged that the Arbitral tribunal, in awarding
interest has acted contrary to the terms of the contract.
9. Clause 47 of the general conditions of contract provides that 10% of the value of
the work done is to be deducted by the employer from each payment to be made to
the contractor towards retention money until the retention money amounts to 5% of
the contract value. The retention money is to be released by the employer after
rectification of defects pointed out during the defects liability period or at the end of
the defects liability period whichever is later. Clause 47 then contains the following
stipulation:
“The amounts retained by the employer shall not bear any interest.”
10. What clause 47 stipulates and means, is that during the term of the work, and
until the defects liability period is over, the employer is entitled to retain the retention
monies and that no interest would be liable to be paid until the monies become due
and payable. The Arbitrator has held that the prohibition contained in clause 47 would
have no application in a situation such as the present. The work under the contract
could not be completed in view of the improper foreclosure of the contract by the
Appellant. The Arbitrator has awarded interest at the rate of 15% per annum on the
retention monies from 1 August 2002. There is no merit in the challenge to the arbitral
award for the simple reason that the prohibition on the retention monies bearing
interest would continue to govern so long as the employer is justifiably entitled to
retain the retention monies. Once the retention monies become refundable and the
employer thereafter unlawfully withholds the refund of the retention monies, there is
no prohibition in clause 47 and the contractor would be justifiably entitled to refund of
retention moneys with interest, having been improperly deprived of the use of the
monies due to the conduct of the employer. It is evident from the award that interest
has not been awarded for the period during which the retention monies were
justifiably retained, but only for the period thereafter.
11. For these reasons, we do not find any merit in both the Appeals. the Appeals are
accordingly dismissed.
There shall be no order as to costs.
———
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Compilation of Judgments On Behalf of Respondent

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Compilation of Judgments On Behalf of Respondent

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BEFORE THE ARBITRAL TRIBUNAL CONSISTING OF

JUSTICE MR. BIPIN CHAND,

IN THE MATTER OF:

National Themal Power Corporation (NTPC) ….Respondent

COMPILATION OF JUDGMENTS ON BEHALF OF RESPONDENT (NTPC

S. Particular Page No. Relevant

Appeal No. 86 of 2012

Essar Projects Ltd. v. Edifice Developers and Projects Engineers Ltd.

2013 SCC OnLine Bom 17 : (2013) 7 Bom CR 353

(BEFORE D.Y. CHANDRACHUD AND A.A. SAYED, JJ.)

M/s. Essar Projects Ltd. .…. Appellant

ORAL JUDGMENT (PER DR. D.Y. CHANDRACHUD, J.):

3. The following submissions have been urged in support of the Appeal:

4. On behalf of the Respondent it has been urged that:

The rival submissions now fall for consideration.

8. In Appeal 92 of 2012, in addition to the submissions which have already been

There shall be no order as to costs.

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