1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION CHAMBER SUMMONS NO.570 OF 2006 IN EXECUTION APPLICATION NO.151 OF 2006 IN AWARD DATED 21ST MAY 2006 The Municipal Corporation of Greater Mumbai ... Applicants(MMC) Respondents Vs. M/s. Shivshakti Engineers ... Claimant Mr.R.D.Dhanuka with Mr. Pimple with Mr. R.S. Sirsikar for BMC Applicants(MMC) Mr.V.R.Nadkarni , partner of M/s. Shivshakti Engineer present (Respondent) CORAM: SMT.ROSHAN DALVI, J. DATED: 10 TH SEPTEMBER, 2008 P.C. 1. The Claimants /Respondents have obtained an Award on 24 th May, 2004 for Rs.82,197.20. The Claimants were to be paid the said amount by the Applicants (MMC). They were not paid. They sought to execute the Award by attaching the properties of the Applicants. The MMC has applied for raising the attachment upon a premise that the Claimants' claim has been adjusted against some other bill of the MMC and a lesser 2 amount on that bill would be due and payable by the claimants. Adjustment can be made by a party against the liability of the other party to it. The MMC has not shown under which contract and to what extent the liability of the claimants is. 2. The MMC has relied upon the General Conditions of Contracts for Civil Works of the MMC of November, 1980, the relevant parts of clause 87 of which run thus:- “OVER PAYMENT AND UNDER PAYMENT Whenever any claim for the payment of a sum to the Municipal Corporation arises out of or under this contract against the contractor the same may be deducted by the Municipal Corporation form any sum then due or which at any time thereafter may become due to the contractor under this contract and failing that under any contract with the Municipal Corporation or from any other sum due to the contractor from the Municipal Corporation (which may be available with the Municipal Corporation) or from his security deposit/rentention money, or he shall pay the claim on demand --------------. Provided that the aforesaid right of the Municipal 3 Corporation to adjust overpayment against amount due to the contractor under any other contract with the Municipal Corporation shall not extend beyond the period of two years from the date of payment of the final bill.” 3. The above clause refers to payments to be made to the MMC by the Contractor which can be adjusted towards the liability of the MMC to the Contractor. The attachment in this case is upon the liability of the MMC to the Contractor who has secured an Award. The clause, therefore, does not apply for any adjustment sought by the MMC. 4. Similarly, the adjustment to be made under the above clause is from a sum due to the Contractor . The Award itself is passed in favour of the Contractor which he has sought to execute. It requires the amount of the Award to be paid to the Contractor. Hence, adjustment of a sum due to the Contractor cannot be made for an Award obtained by the Contractor which requires payment to be made to the Contractor himself. Adjustment, therefore, cannot be made by the MMC from another sum, under another contract in which also the MMC is to make some payment to the Contractor. 5. The MMC must show the previous liability of the 4 Contractor to the extent of the Award or more, to be able to adjust the claim made upon the MMC, even otherwise. 6. The MMC contends that the claim has been made upon the MMC for payment of the amount due under the Award and when that claim has arisen they have deducted the said claim from another bill. 7. The MMC has written a letter dated 21 st March, 2005 to the claimants /Awardholder for adjustment of the amount. The relevant portion of the letter reads thus :- “It is to inform you that, the said amount of Rs.72,906/- has been adjusted against the amount which is to be recovered from M/s. Shivshakti Engineers in other works executed by them under Dy.Ch.E .(Rds.) W.S. The said arbitration is now treated as closed.” 8. The Claimants replied to this letter by his letter dated 18 th June, 2005 disputing the adjustment sought to be made by the MMC towards his claim. He mentioned in his letter that the claim was made under Work Code No.W-33 which was satisfactorily completed by him in June, 1992. The MMC has not annexed that letter. That letter is annexed as Exhibit- 1 to 5 the reply of the Awardholder. 9. The MMC has however, annexed their reply dated 2nd July, 2005 to the said letter as Exhibit- B in their application. It mentions that certain amount was recoverable for certain works carried out in Western Suburb. It call upon the Claimants that in respect of Work Code W-33 he may approach the relevant department. That letter reads thus:- (i)“It was informed by E.E.(Rds) W.S that certain amount is recoverable from M/s. Shivshakti Engineers as pending recoveries in the works carried out by them in Western Suburb . Therefore, the award amount as payable under Arbitration Award published by Sole Arbitrator Shri. S.T.Deokule , was adjusted against said recovery, as per sanction of competent authorities. (ii)As regards your grievances in respect of concrete road work Code W-33 , you may approach Dy.Ch.E (Roads)W.S.” 10. It is seen that for the adjustment of the claim made by MMC no particulars of the adjustment towards the sum due to 6 the MMC is shown. The letters are completely vague. The letter dated 21 st March, 2005 mentions about the amount “which is to be recovered” for “other works” . No particulars of either the amount to be recovered or the work under which the amount is to be recovered is given. When the amount to be recovered fell due is also not mentioned. 11. Upon being told about the Work Code W-33 in the reply, (which the MMC should have itself referred to in its letter), the MMC again mentioned about “certain amount” being recoverable for the works carried out “in Western Suburb” in its further letter dated 2nd July, 2005. In fact, impertinently the MMC only referred the claimants to the Deputy Chief Engineer, Roads of Western Suburbs, if they had any grievance. 12. The MMC has applied for raising the attachment. It is for the MMC to make out a case for raising the attachment. The MMC must show what adjustments it claims, under which bill. It must be remembered that in the proviso 2 Clause 87, the time period for making the adjustment is two years from the date of payment of the final bill. The MMC has suppressed the final bill. It has not shown the date of the final bill. The letter of the Claimant shows the completion of that contract in 1992. Hence, the final bill would have been submitted some 7 time in 1992. It would be for the MMC to pay the final bill. The MMC has not shown the liability of the Claimants upon that bill. A bill of 1992, cannot be adjusted in 2008 after sixteen years in view of the proviso 2 Clause 87. 13. The MMC has stated in paragraph 4 of the affidavit in support that it has to recover an amount of Rs.2,65,579/- from the Claimants under the said contract. The Claimants were the contractors. This was in respect of a contract for roads. How the Claimants themselves had to pay Rs.2,65,579 /- is for the MMC to show the Court. That has not been done. The reply letter of the Claimant dated 18th June, 2005 which forms the part of the affidavit in their reply has not been satisfactorily explained. The fact that this contract was completed in June, 1992 is not denied. Consequently no case for raising of attachment is made out. 14. The MMC have relied upon the Supreme Court Judgment in the case M/s. H.M.Kamaluddin Ansari & Co. Vs. Union of India & Ors. (1983) 4SCC, 417 in which a similar clause in standard contract of the Union of India came to be interpreted. The judgment relies upon the earlier Supreme Court Judgment in the case of Union of India Vs. Raman Iron Foundry (1974) 2 SCC, 231 , to rely upon the interpretation put by the Supreme Court on a clause similar to Clause 87 8 extracted above. 15. In the case of Raman Iron Foundry (supra) a similar clause in a contract of Union of India came to be construed by Justice Bhagwati, as he then was. What had to be considered in that case was whether the claim for payment of money was upon a debt due and payable in praesenti or whether it would also include a debt payable in future. What was also to be considered is whether an interim injunction could be granted under Section 41(b) of the Specific Relief Act restraining the Union of India from recovering by appropriation such amount. Though it was observed that the term “claim ” would be wide enough to include even the damages, it was held that to construe an expression “any claim for the payment of a sum of money”, the entire clause must be read as a whole to understand the intention of the parties as to whether the claim was for sum of money due and payable which was admitted and established in a Court of Law or by arbitration, or could be a claim for damages disputed by the Contractor. 16. Justice Bhagwati drew a distinction between the sum due and a sum which would become due. He referred to the obligation to pay in praesenti for the former and the obligation in futuro for the latter. He held that such a clause only provided the mode of recovery of such a claim. Nevertheless 9 the claim for such a sum should be “presently recoverable” and not the sum which was not due and payable by the Contractor. He, therefore, further observed that such a clause would not create a lien on other sums due to the Contractor. It would only be recovered by appropriating other sums due to the Contractor and hence, would bring within its compass, sums due or payable in presenti only. Consequently it was observed in para 10 of that judgment that a mere making of a claim by the Government would not impose a liability on the Contractor to pay it as that could not have been the intention of the contracting parties and hence, it was held that such a clause, which provided an additional mode of recovery to the Government, could be resorted to “only where there is a claim for a sum which is presently due and payable by the Contractor ”. 17. In that case both the Government as well as the Contractor claimed damages alleging breach of contract by the other. The parties referred their matter/dispute to Arbitration. The question of granting an interim injunction was considered and it was observed that the interim injunction restraining the Government from claiming by appropriation was proper and 10 the Government's Appeal was dismissed. 18. In this case no sum is shown as payable by the Contractor. What, then can the MMC adjust ? 19. In the case of Kamaluddin Ansari(supra) a similar clause, being clause 18 of the Contract with the Government, was that a claim of the Government can be appropriated against the Security of the seller or the amount due and payable to him under the contract or any other contract. There were earlier contracts in which the Seller had supplied goods and the Government had to make payment. These were sought to be appropriated against the security deposit of the Seller upon the claim made by the Government. 20. The Court had to consider whether an injunction can be granted against the Government from appropriating the amounts under another contract for a claim for damages upon non supply of the goods in the contract under reference in arbitration and also from withholding the amounts so claimed. 11 21. Referring to the case of Raman Iron Foundry (Supra) it was observed that :- In that case the Union of India put forward the extreme claim that “ by virtue of Clause 18 of General Conditions of Contract it was entitled to recover damages claimed by appropriating any sum which may become due to the contractor under other pending bills from the Union of India. This Court, however, negatived the plea on the ground that the amount of damage claimed by the Union was only a claim and unless there was adjudication of the claim by Court or admission by the contractor the Union of India had no authority to appropriate the amount due under pending bills of the contractor towards the satisfaction of its claim for damages. ” 22. Considering the arguments of the Counsel set out in paragraphs 24 and 25 of the judgment and reproducing paragraph 8 of the judgment in the case of Raman Iron Foundry in para 26 of that judgment, the Supreme Court, in para 27, interpreted clause 18 of the contract to include for adjustment and appropriation of the claim of the Government (in this case the MMC) for amounts due to the Contractor under other pending bills also. It, therefore, concluded in paragraph 28 of the judgment that a mere claim of the 12 Government for payment of money by the Contractor was sufficient for appropriating it. 23. It must be appreciated that what can be appropriated is the amount due to the Contractor. In this case the amount due to the Contractor under any other contract is not shown. What, therefore, can be adjusted by the MMC ? 24. The Award may, therefore, be adjusted against a claim the MMC. The MMC must show that it is sought to be deducted from any particular sum that was due, under any particular prior contract with that party. Consequently, at least the final bill relied upon by the MMC, under which its claim was made and which was refuted and not paid and is sought to be adjusted must be shown to Court. The MMC has been most ambiguous about what is its claim is the amount to be recovered, and under which other contract in their correspondence. The MMC has also not shown the adjustment made from any particular bill for any particular other contract to the Court also. 25. Merely stating that amount under the Award is adjusted would not be making out a case of adjustment, it having been disputed by the Claimants. Similarly, not replying to the case 13 of the Claimants that that was a contract completed way back in 1992 and hence would fall outside the purview of proviso 2 of Clause 87 would not allow the Court to raise the attachment upon a claim made outside the period of two years mentioned in the said proviso. 26. Consequently no case for raising of the attachment is made out. 27. Application is dismissed. 28. Ad-interim order already passed shall continue for four weeks. (SMT. ROSHAN DALVI, J.)