Zonal.Gen.Manager,Ircon ... vs M/S Vinay Heavy Equipments

2 The Appellant, IRCON International, is impugning the Judgment of the Learned Division Bench of the Madras High Court, which had dismissed two Original Second Appeals preferred by the Appellant. Recapitulating the facts of this litigation, the Appellant was the successful tenderer in respect of a contract awarded to it by SIPCOT (not a party to the present dispute/ Appeal), for the construction of an Internal Road for the Industrial Complex at Irungattukottal, Sriperumbpudur Taluk, Kanchipuram District, Tamil Nadu. The contract between these parties was made on 10.07.1997 and was valued at Rs.13,06,60,587/-. In furtherance of the execution of this contract, the Appellant entered into two subcontracts (hereinafter, “the subcontracts”) with the Respondent herein, in respect of two Packages, namely “C1” and “C2”, for the laying of roads valued at Rs.3,20,64,752/- and Rs.1,67,01,821/- respectively. The cumulative value of both packages amounted to Rs.4,87,66,573 /-.

3 The Respondent completed approximately 67 per cent of the work under the two subcontracts but thereafter ceased work on both. The Appellant cancelled the subcontracts, and managed the completion of the work by engaging other agencies. The cost of 67 per cent of the contractual work completed by the Respondent was estimated at Rs.3.23 crores, out of which the Appellant admittedly paid a sum of Rs.2.62 crores. The Respondent claimed an unpaid balance of Rs.61 lakhs as arrears due to it by the Appellant, and resorted to arbitration. The Appellant also took recourse to arbitration against the main contracting authority, SIPCOT, in respect of the pending payments pertaining to C1 and C2 packages. The Arbitrator was thus adjudicating the claims made by the Respondent against the Appellant in the First Arbitration, and the claims made in turn by the Appellant against SIPCOT in the Second Arbitration. The Arbitrator passed a common Award in the First Arbitration for both packages in favour of the Respondent for the sum of Rs.7,87,21,820/- for C1 and Rs.1,38,78,139/- for C2, both sums carrying with them interest at the rate of twelve per cent from 04.03.2001 until the date of payment. Interest apart, the Appellant stood liable as a result of the Award to pay the Respondent Rs.9,25,99,959/- , including the aforementioned Rs.61 lakhs.

8 The Learned Division Bench wholly ratified the reasoning of the Arbitrator and Single Judge below it, finding no reason to disencumber the Appellant from the obligation to fulfill the Respondent’s claim. While entirely agreeing with the reasons given against the Appellant by the Arbitrator and the Courts below, we also find additional reasons for dismissing this set of Appeals.

9 While the Award in the SIPCOT arbitration is not immediately an appellate subject herein, yet it is still part of the record and therefore merits our consideration. Until an order to the contrary be adduced before this Court, this Award must be assumed to be standing and valid. Its validity and legitimacy in law, insofar as it has depended on the earlier Award qua the adjudication of claims, would only be justifiable by the validity of the earlier Award in the Respondent’s favour. The earlier Award must, therefore, be presupposed to be valid, when the validity of the later Award has not been disproved or rebutted. Seen from this dimension, the Award in favour of the Appellant is positively valid, and its unsettlement an uninviting prospect.

13 For the foregoing reasons, we decline to interfere with the judgment properly exercised by the Arbitrator and Courts below, and sustain the impugned order in its entirety.

14 Interim orders stand recalled. Appeals dismissed. Parties are to bear their respective costs.