21

BEFORE HON’BLE MR. JUSTICE ANIL R. DAVE (RETIRED),

SOLE ARBITRATOR, NEW DELHI

In the matter of arbitration case between:

Predominant Engineers & Contractors Pvt. Ltd. …Claimant

Versus

Trimula Industries Ltd. …Respondent/

Counter Claimant

INDEX

S.NO. PARTICULARS PAGE NO.

1. Written submissions on behalf of 1 – 20
Respondent.

[NISHANT DATTA]
DATTA & CO.,
ADVOCATES FOR RESPONDENT
12, Lawyers’ Chamber Block-I,
Delhi High Court,
New Delhi 110003.
Email: dattacoadvocates@gmail.com
Tel: 011-23388305, 9811698993.
NEW DELHI
DATED: ___.04.2021.
 1

BEFORE HON’BLE MR. JUSTICE ANIL R. DAVE (RETIRED),

SOLE ARBITRATOR, NEW DELHI

In the matter of arbitration case between:

Predominant Engineers & Contractors Pvt. Ltd. …Claimant

Versus

Trimula Industries Ltd. …Respondent/

Counter Claimant

WRITTEN SUBMISSIONS ON BEHALF OF RESPONDENT

Most respectfully showeth:-

1. That the present arbitration case involves a statement of claims

filed by the claimant as well as a counterclaim preferred by the

respondent herein.

Reliefs prayed by Claimant

2. That the Claimant initiated the present arbitration proceedings

seeking the following reliefs:

A. Declaration that the three agreements comprise of a composite contract

and all disputes arising from all three must be resolved in this arbitration

proceeding;

B. payment of Rs.16.52 crores ordered to the claimant company since 30th

May 2015;

C. payment of taxes of Rs.4.48 crores to claimant company;

D. payment of O&M charges of Rs.0.22 crores;

 2

E. payment of interest on the amount owed at 18% per annum thereby

amounting to Rs.9.22 crores from 21st May 2015 till date;

F. interest @ 18% per annum from initiation of claim till realization.

3. That the Statement of Claims filed by the Claimant was based on

three agreements all dated 12th August 2009 namely the

Engineering Agreement, the Supply (Procurement) Agreement

and the Erection (Commissioning) Agreement. Loosely, in

commercial parlance, such agreements are often referred to as EPC

contracts. It is pertinent to mention here that out of the above

mentioned three agreements, the erection or commissioning

agreement did not have an arbitration clause.

4. That the Claimant and Respondent had made certain averments in

the Statement of Claims and Reply thereto respectively, which are

relevant and are as under:

Para No. Statement of Claim Respondent’s Reply

15. That it is submitted that the above That the contents of these paragraphs

stated three Agreements, namely, are denied as wrong, incorrect and

Engineering Agreement, Supply false. It is submitted that the said

Agreement and Erection engineering, supply and erection

Agreement all dated 12th August agreements are three different and

distinct agreements having their own

 3

2009 are inter- related and part individual scope. It is submitted that

and parcel of one contract i.e. the claimant herein in its endeavor to

Engineering, Procurement and wrongfully extract money from the

Construction Contract (“EPC respondent as well as to cover up for

Contract”). The said Agreements its blatant failure to complete the

were signed on the same date; i.e. project in the prescribed duration and

12th August, 2009 between the as per the schedule of completion is

parties at New Delhi. The three attempting to prove the three different

agreements were segregated only and distinct agreement as one single

for the sake of convenience and agreement. It is submitted that if the

for division and apportionment of claimants so wished, the EPC contract

responsibilities but in fact all could have very conveniently be

three are inter-linked and part of drafted in the form of one single

one transaction. agreement. However, the claimants

failed to do that and now wish to take

benefit out of their own wrong caused

to the respondents herein.

68. The Engineering Agreement and That the contents of the instant

the Supply Agreement provide for paragraph are admitted to the effect

an Arbitration Agreement at that engineering and supply

clauses 11 and 13 respectively to agreement dated 12.08.2009 provide

resolve all disputes and for arbitration agreement at clause 11

differences. It is pertinent to and 13. It is also admitted that the

mention herein that the Erection erection agreement does not contain
 4

Agreement does not contain any any dispute resolution /arbitration

dispute resolution / arbitration clause. The rest of the paragraph is

clause. However, all the above denied as wrong and incorrect. It is

said agreements were entered into submitted that the issues relating to

on the same date, i.e., 12th the validity of the erection agreement

August, 2009 between the same being apart of the arbitration

parties and are part of the same proceedings were adjudicated upon

contract, pertaining to the service by the Ld. Arbitrator on 13.12.2017,

of the same Power Plant and as whereby the Ld. Arbitrator was

such, the three agreements are a pleased to observe as under:

part of the same running EPC

Contract. The Erection Agreement

is a necessary party of the EPC

Contract and the non-performance

of breach of any of the terms

therein would render the EPC

Contract unworkable. The

disputes that have arisen between

the parties cover the entire

contract and take within its ambit,

any non-performance and/ or

breach that arose with respect to

the terms and conditions forming

part of the Erection Agreement

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dated 12th August, 2009. The

Arbitration Clause of the other

two agreements is thus applicable

to the Erection Agreement dated

12th August, 2009.

Orders passed by Hon’ble Arbitral Tribunal

5. That the Respondent filed an application before the Arbitral

Tribunal interalia challenging the jurisdiction of the Hon’ble

Tribunal to adjudicate upon the claims arising out of the above

mentioned erection agreement dated 12.08.2009. This application

was decided by the Hon’ble Tribunal vide order dated 13th

December 2017 allowing the application and interalia holding as

under:

“17. For the afore stated reasons, I come to the conclusion that there

are three different contracts and there is no specific or implied

understanding or there is no term with regard to refering any

dispute pertaining to erection for arbitration. Therefore, any

claim or dispute which might be raised under the contract with

regard to election, cannot be entertained by this Tribunal.”

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6. That during the course of proceedings on 9th June 2019, the

Hon’ble Arbitral Tribunal was pleased to pass the following order:

“The learned counsel appearing for the Claimant had submitted that in

view of the order passed by the Tribunal dated 13th December, 2017,

the Claimant would make some changes/amendments in the

statement of claims because it was held by the Tribunal that the

dispute pertaining to erection of the plant was not subject matter of

any arbitration and as there was no clause with regard to arbitration,

the claim in respect of erection of the plant cannot be entertained. The

learned counsel had, therefore, prayed for some time so as to make

necessary amendment or file a further supplementary claim petition so

that the claim petition already filed and the supplementary claim

petition to be filed be read together so as to avoid further delay by

amending the entire statement of claim. The learned counsel for the

Respondent was also agreeable to the said proposal and accordingly it

was decided that the Claimant shall file a supplementary claim petition

so that the supplementary claim petition and the statement of claim

already filed can be read together.

In view of the fact that a comprehensive reply has already been given

by the Respondent to the claim, it would not be necessary for the

Respondent to file any further reply. However, it would be open to the

Respondent to delete some portion of the reply already filed.”

 7

7. That the order dated 13th December 2017, insofar as the same

pertain to direction agreement was concerned, the same was in the

nature of an interim award and the same was never challenged by

the claimant herein. Therefore, there cannot be any dispute that

none of the parties can be entitled to any relief pertaining to or

arising out of Erection Agreement dated 12th August 2009.

Consequence of orders dated 13.12.2017 & 9.06.2019

8. That in furtherance of the directions passed by the Hon’ble

Tribunal vide it's order dated 9th June 2019, the claimant filed its

supplementary claim petition, however, the same was not in

consonance with directions passed by the Arbitral Tribunal and

the Claimant, in its supplementary claim, had failed to furnish a

break up in any manner whatsoever.

Arbitrability of entire case and Two of Three agreements

9. That what emerges from a perusal of the above is that the entire

claim is now non-arbitrable as it is admitted case of the Claimant

that out of the 3 contracts executed, one contract did not have an

arbitration clause. In para 5, 7, 9, 11, 13, 15 there is a clear

admission by the Claimant that 3 contracts were executed for the

sake of convenience and that they are part of the same transaction.
 8

10.It is submitted that CW-1, during his cross examination in

response to question no.8, has categorically stated that “I agree

that all the three agreements were interlinked and there was only

one contract.”

11.It is also submitted that CW-2, during his cross examination in

response to question no.7 has admitted that it is correct that in

calculating the amounts claimed in the updated/supplementary

statement of claim, the claimant company had factored/taken into

account the payments made by the Respondent in furtherance of

the Erection Agreement. Further, CW-2 also answered question

no.8 in the affirmative, conceding that the amounts mentioned in

CW-2/1 were clubbed amounts pertaining to both the engineering

and erection under one head.

12.It is also the admitted case of the Claimant that the contract for

engineering services and for erection and commissioning

subsequently merged in para 25 there is an admission with regard

to the contract being novated - Rs. 60.14 Cr for supply and Rs.47.86

for engineering, erection and installation. After the merger no

arbitration clause was provided for the said two contracts taken

together. Any claim which has a relation either the engineering or

 9

the erection and installation of the plant cannot be a subject matter

of arbitration.

13.In the claim petition, the claimant has proceeded and has built up

its entire case on the presumption that all the 3 contracts being a

part of the same series, a claim arising under either of the 3

contracts can be subjected to resolution by arbitration (please see

para 59 – Claimant’s entire claim of Rs. 16.27 Crores, Progress

Report of August 2014 and Email of 21.5.2015). Further, in Para 66

again a claim is made on the basis of the progress reports.

Claimant does not give any breakup of the outstanding dues and

on what account and/or under which agreement the amounts

mentioned therein are being claimed; there is no segregation. In

Para 68 Claimant relies on arbitration clause of engineering and

supply agreement.

14.From a reading of the progress reports it is evident that the entire

claim is being treated as a single claim, without any bifurcations

into the supply, engineering, erection and installation components.

Even in the amended statement of claim, other than making a bald

statement, no basis has been given by the claimant to show as to

what amount is on account of the supply contract and what

 10

amount is on account of the other contracts. Claimant has not filed

its statement of account to show under what head the invoices

have been raised. It is further submitted that the invoices never see

the light of the day. The rule of best evidence must be applied and

the non-production of such material must be read against the

Claimant and an adverse inference must be drawn against the

Claimant.

15.It has been strenuously stated by the claimant it is written

submissions and has also been vehemently argued that the

respondent had started making payment of all the third party

vendors who had to supply the material for the contract in

question. It has also been stated by the claimant that on account

thereof, the claimant’s role was allegedly reduced to a mere

supervisory role and that the Claimant allegedly had no control

over the vendors/sub vendors for the supply of the material. This

only goes to establish that, if sake of argument this contention is

accepted then, firstly, the Claimant cannot in any way be said to

loose control over the suppliers and secondly, said loss of control

can only occur in case the Claimant wanted to resort to arm

twisting tactics. Thus, it is clear that this is a mere frivolous excuse

 11

and the Claimant actually could not ensure compliance with the

timelines.

16.The claimant agreed to all these changes and in fact required them.

Further, no grievance can be raised at this stage about it. When the

contract terms are novated and such change would make the

contract financially unviable to a party, then why would Claimant

agree. The plea of duress is completely false and baseless and the

parties were in an equal bargaining position; neither party being in

a dominant position. It is further submitted that sanction of loans

for Respondent was in 2011 and 2012 and because of that the entire

basis of letter dt. 24.2.10 (alleging that it was done at the instance

of banks falls as the banks were not in the picture in 2010 even as

per claimant).

17.In view thereof, and keeping in mind the admitted case that the

payments for the supply of the goods was being made directly by

the respondent, it is evident that no material has been supplied by

the claimant. Thus, the entire claim for the supply of the goods is

without any merit whatsoever and the same is only an attempt to

cover up the shortcomings of the claimant and the same cannot

also be considered for want of material details and documents.

 12

18.Entire claim of the claimant being intermixed and being

impossible to bifurcate between the three different components,

the claim petition as a whole is liable to be dismissed and the

disputes cannot be the subject matter of arbitration. In the

engineering, erection and installation agreement there is no

provision for supply and purchase of equipment thus their claim

for expenses incurred for erection is also dubious and doubtful.

Failure to discharge onus of proof and lack of evidence

19.All factual contentions made by Claimant were such as would not

entail any presumption and the onus lay entirely on the Claimant

to prove its case. Any alleged lack of response being forthcoming

from the Respondent cannot shift the onus of proof in any manner.

20.The Claimant has not led any direct evidence whatsoever to show

the nature and extent of goods allegedly supplied by the claimant

nor of the value of the same. No primary evidence in the nature of

any invoices for the purchase and/or proof of delivery/supply of

the goods has been placed on record by the claimant. The claimant

is basing its entire case on the progress reports, which is only in

the nature of a self-serving and unaudited statement of account

 13

and cannot form the basis of awarding any amount of money in

favour of the claimant.

21.In support of its claim, the claimant has filed various challan

showing the payment of service tax. However, the supply of goods

at the relevant point of time was covered under the value added

tax mechanism and no challan for payment of any value added tax

has been placed on record by the claimant. Further, there is no

material to show that the service tax payments challans filed by

the claimant are in relation to the contract(s) in question.

22.The claimant has also failed to place on record any delivery

receipts by which the goods have been delivered to the respondent

at the site nor has any other evidence been produced by the

claimant to show that the alleged goods have been brought at the

site by the claimant. No proof of supplies has been filed, much less

proved and only progress reports are being relied upon, which at

best are a self-created statement or tabulation without primary

evidence. Nothing can be awarded on its basis as per Section 34 of

the Evidence Act, 1872. Further, the Claimant has also not filed

any evidence that it had made any advance payments, final

payments or any payment for that matter to any vendors. There is

 14

also no evidence to show that orders had already been placed by

the Claimant.

23.It is also material to note that there are no details whatsoever

forthcoming as to the exact, specific goods which have been

supplied by the claimant and for which payment has not been

made by the Respondent. The goods are tangible items which

could have been easily identified. The onus to produce the said

evidence, which is the best evidence available, was entirely on the

claimant. Failure of the claimant to produce such evidence on

record is fatal to the case of the claimant and an adverse inference

is liable to be drawn against the claimant in that regard.

24.The claimant has also failed to place on record any measurement

books, inspection reports, joint inspection reports or any other

document which is routinely maintained during the course of the

execution of a construction contract to show the extent of the

construction/execution undertaken. There is no evidence of work

having been undertaken and Claimant having spent its own

resources or funds for the same at any point of time.

25.It is the admitted case that the supply contract is worth Rs. 60

Crores. The Claimant admits that Rs.59 crores have been paid to it.
 15

If Rs. 59 Crores is paid then the entire payment is made to the

Claimant is towards supply and the outstanding can only be on

account of erection contract. Further, even as per the Claimant,

98% of the work is done, which means, all supplies are complete

and paid for, only the erection part remains. 98% would constitute

or be equivalent to approximately Rs.105.50 crores worth of work

done.

No responses to Claimant’s emails

26.The claimant has laid great stress on the fact that Respondent has

not replied to its emails. Respondent’s failure to deny will not

suffice as the emails being from the claimant, it would have to

prove its own case independently and on its own strength. It is

settled law that the claimant has to prove his own case and cannot

rely on the failure of the defence.

Claimant’s allegations about the state of project site

27.The Claimant’s plea regarding evacuation of electricity is

completely false as such plants can be started and shut at will.

Quantum of electricity generated can be varied and whatever is

generated can always be used in the factory for other purposes. In

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any case Respondent had the requisite arrangement for evacuation

of power with the State grid.

28.The road was already there as the Claimant admits that a running

plant was set up by it.

Claim regarding claimant employing and maintaining

manpower for operations and maintenance

29.Even as per the Claimant, there was no direction to deploy the

material and men and the same was done by it on the assumption

of being awarded the contract. This claim will also be beyond the

present agreement(s).

30.The sub-contractors were sitting idle as inspite of investing its

own funds by the claimant their dues were not being cleared:

On the one hand the Claimant says nothing could be done as there

was no money and on the other hand, the Claimant also says that

it worked by investing its own funds. Thus, if the Claimant is to

be believed, lack of funds could not have come in the way of work

being done.

31.Respondent’s letter 30.01.2013: If one looks at the number and

kind of complaints, it shows the nature of the shoddy work done

 17

which cannot be even said to be execution of work. Only TG Sets

were to be second hand and all other equipment was required to

be new, which was also supplied second hand, due to which the

sets have not operated), which is admitted. In written arguments

the Claimant admits that it did not dispute the points/defects. If

everything was alright then why did the Claimant undertake

repairs. Secondly, if the work had to be done by Thermax and

commissioning by them, then why would claimant undertake

repair work. They should tell the Hon’ble Tribunal that it the job of

someone else. The minutes of meeting being Annexure R-11 at

page 52 of Respondent’s documents have been admitted in

admission denial by the Claimant. If all this was the job of

Thermax and not the Claimant, then why would the Claimant do it

and not protest.

Performance guarantee not furnished

32.The performance guarantee had to be given at the end of the

contract and since it was abandoned, the claimant ran away

without furnishing one. One of the reasons for Claimant’s

abandoning the project was that the equipment was

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malfunctioning and it could not have sustained and/or repaired

the same, therefore they abandoned the site.

Claim No.2: Project overrun charges Rs. 5.40 crores.

Claim for expected profit from the work awarded to it on

account of breach of contract by the Respondent

33.The Claimant’s claim for the overrun cost shall be 30% on the

balance work and the claim for liquidated damages cannot be

allowed as the claimant has not proved any actual loss suffered by

it and thus no amount can be granted to it. The judgement in case

of KNA has held that damage/loss should be proved. The

Claimant has not led any evidence to show the extent of loss

suffered by it. Entire material was available and ought to have

been produced, however, the same was never produced. This

requirement of proof of actual loss/ damage cannot be dispensed

with under any circumstances. The Liquidated Damages figure is

only the outer limit. Actual loss has to be proved. The Claimant

has also relied upon judgment in case of KNA and as such must

adhere to the law laid down therein.

 19

34.Salary and establishment costs must have been known as also

other alleged overheads, which would been actually incurred and

as such must have been duly accounted for, which do not see the

light of the day. The Claimant’s has claimed amounts for allegedly

being burdened with salary and other expenditure of maintaining

the establishment but has failed to give any details or proof

thereof.

Claim No.3:

Lack of evidence in support of claim for O&M charges

35.Similarly, even in respect of the claim Claimant has specifically

claimed an amount of Rs. 22 lakhs without furnishing any details

or evidence, which amount would have been based on actual

amounts and figures.

Claim No.4: pending taxes

36.Similarly, even in respect of this claim Claimant has claimed

amounts, which amounts would have been based on actual

amounts and figures and the same should have been furnished.

Claim No.5 Interest and Cost:

37.Firstly, there was no claim for costs in the original statement of

claims, so this relief cannot be considered. Secondly, the amount of

 20

Rs.2 crores has again not been proved and no cost certificate has

been furnished. Lastly, the interest rates and duration claimed are

also not tenable and 18% is overly excessive. The Claimant has

failed to show its net profit percentage and/or cost of any alleged

finance taken and in absence thereof, such an excessive rate of

interest cannot be considered.

In light of the above, the Hon’ble Tribunal may kindly reject the

claims of the Claimant being non arbitrable and even otherwise on

merits the same are not tenable while the Respondent’s counter

claims are valid.

[NISHANT DATTA]
DATTA & CO.,
ADVOCATES FOR RESPONDENT
12, Lawyers’ Chamber Block-I,
Delhi High Court,
New Delhi 110003.
Email: dattacoadvocates@gmail.com
Tel: 011-23388305, 9811698993.
NEW DELHI
DATED: ___.04.2021.