UNION OF INDIA vs M/S ANS CONSTRUCTION LTD

$~ 46
* IN THE HIGH COURT OF DELHI AT NEW DELHI
%     Date of decision: 24.01.2024
+ FAO(OS) (COMM) 289/2018
UNION OF INDIA ….. Appellant
Through: Ms Arunima Dwivedi, CGSC with Ms Pinky Pawar and Mr Aakash Pathak, Advocates.

versus

M/S ANS CONSTRUCTION LTD ….. Respondent
Through: Mr Sandeep P. Agarwal, Sr. Advocate with Mr Sushil Aggarwal, Advocate.

CORAM:
HON’BLE MR JUSTICE RAJIV SHAKDHER
HON’BLE MR JUSTICE AMIT BANSAL
[Physical Hearing/Hybrid Hearing (as per request)]
RAJIV SHAKDHER, J.: (ORAL)
1. This appeal is inter alia, directed against the order dated 09.03.2018 passed by the learned Single Judge, as corrected by order dated 23.03.2018.
1.1. Besides this the appeal also seeks to assail the award dated 26.07.2017 and the order dated 13.09.2017 passed by the learned arbitrator.
2. The moot point which arises for consideration in the appeal is whether the settlement offered by the appellant/Union of India (UOI) adverted to both claims and counterclaims?
3. Ms Arunima Dwivedi, learned counsel, who appears on behalf of the appellant/UOI, says that the settlement offer made by the appellant/UOI adverts only to claims and that too Claim Nos. 8, 9 and 23 via settlement letter dated 05.12.2017.
4. In other words, Ms Dwivedi says that counterclaims preferred by the appellant/UOI were not up for settlement.
5. Mr Sandeep P. Agarwal, learned senior counsel, who appears on behalf of the respondent, contends otherwise. Mr Agarwal points out that no such submission (proffered for the first time before the Division Bench) was made before the learned Single Judge.
5.1. It is Mr Agarwal’s submission that the only contention that the appellant/UOI advanced before the learned Single Judge, was that the settlement offer contained in letter the dated 05.12.2017 had not been formally accepted, and therefore, the fact that a petition under Section 34 of the Arbitration and Conciliation Act, 1996 [in short, “Act”] was filed should be construed as withdrawal of the offer.
6. It is Mr Agarwal’s contention that the appellant/UOI should have, as a matter of fact, disclosed the settlement offer to the learned Single Judge.
6.1 Ms Dwivedi concedes that the letter dated 05.12.2017 which was emailed to the respondent on 06.12.2017 was not made subject matter of the petition filed under Section 34 of the Act.
6.2 It is Ms Dwivedi’s contention that the OMP was filed on 08.01.2018, although the said petition was served on the respondent on 06.12.2017.
7. Having perused the impugned order, what is quite clear is that the counsel for the respondent i.e., Mr Agarwal, brought the letter dated 05.12.2017 offering a settlement to the notice of the court. Mr Agarwal, unhesitatingly, based on instructions received from the respondent, accepted the offer.
8. The question that arose and was framed by the coordinate bench at the hearing held on 07.12.2018 was, whether the offer of settlement was withdrawn by the appellant/UOI. This question, in our opinion, stands answered by the conduct of the appellant/UOI.
8.1. The fact that the letter offering the settlement dated 05.12.2017 was dispatched to the respondent on 06.12.2017 is not disputed. Furthermore, though the Section 34 petition was served on the respondent on the same date i.e., 06.12.2017, it was not filed till 08.01.2018.
8.2. The appellant/UOI could have disclosed the existence of the settlement offer in the Section 34 petition and averred that since there was no acceptance by the respondent, a decision has been taken to file the said petition.
8.3. The fact that the offer letter was kept back indicates that the appellant/UOI took a chance with its Section 34 petition, perhaps, for the reason that if its Section 34 petition was entertained by the court, it could formally withdraw the offer of settlement. The court obviously had no clue that an offer of settlement had been made.
9. In sum and substance, the record clearly depicts that the settlement offer dated 05.12.2017 was alive, which the respondent was entitled to accept, in law, by authorizing its counsel to accept the same.
10. We must indicate that Ms Dwivedi also submitted that even though a settlement was reached vis-à-vis the claims, there was no settlement with regard to the counterclaim.
11. In our view, this submission also has no merit. A perusal of the award shows that the respondent was awarded a sum of Rs.1,12,65,584/- against Claim Nos.8, 9, 17, 18, 20 and 23.
11.1. Besides this, the respondent was also awarded Rs.50,86,526/- against the final bill after adjustment was made qua statutory recoveries, water proofing, non-submission of FLR, mobilization advance and interest on mobilization advance.
11.2 The gross amount claimed by the respondent in respect of the final bill was Rs.79,62,427/-. To this, the Arbitrator had added the amounts which were withheld by the appellant/UOI and deducted the recoveries. The recoveries referred to hereinabove totaled up to Rs.75,08,794/-.
11.3. Thus, the net amount that the Arbitral Tribunal awarded to the respondent against the final bill, as indicated above, was Rs.50,86,526/-. 11.4. Besides this, the Arbitrator also awarded the simple interest @ 11% per annum.
12. Thus, having regard to the aforesaid, according to us, the arguments advanced on behalf of the appellant/UOI that the offer did not include any settlement towards the counterclaim is untenable as the claims, as awarded by the Arbitrator, had embedded in it the counterclaims.
13. For easy reference, the contents of the letter dated 05.12.2017 are set forth hereafter:
“’To,
M/s ANS Construction Ltd.
E-2/Bl, Extn. Mohan,
Co-op. Indl. Estate,
Mathura Road,
New Delhi-1,10044
Sub: Award dated 26.07.2017 (Received on 06.09.2017) made by Shri V.K. Malik, Arbitrator in regard to the disputes arising of out of agreement No.20/EE/LCD-II/2010-11 and referred to arbitration in arbitration case no
ARB/VKM/228.

Dear Sirs,

With reference to the award mentioned above, I am to say that the President of India has decided to accept the award of Rs. 55,47,124/- ((Rs. 18,64,352/- ( against Claim .No. -8:) + Rs. 4,63,898/- (against Claim No. – 9:)+Rs. 4,09,000 (against claim No. 17:) + Rs 4,25,762. (against claim No.-18:) + Rs.9,18,058/- (correct amount against Claim No. -23:.)) i/c [interest @11% from 21.04.2014 to 26.07,2017 of Rs. 14,66,054/- against total corrected amount of Award of Rs. 1,56,37,090/- (original award amount is Rs.1,63,52,110/-) i/c interest @ 11% from 2!.04,2014 to 26.07.2017- provided you accept the same as final and binding. Please intimate that you agree to accept payment, of the sum awarded in full and final settlement of all your claims forming the subject matter of the reference to arbitration in
the above case.

Yours faithfully

Executive Engineer
For and on behalf of the President of India””
[Emphasis is ours]

13.1. A close perusal of the settlement letter dated 05.12.2017 would demonstrate that the offer of settlement as framed by the appellant/UOI was that they would pay certain sums towards Claim Nos. 8, 9, 17, 18 and 23 which, if accepted, would result in full and final settlement of all claims that were subject matter of reference to the arbitration.
13.2. In other words, Claim No. 20, as well as the claim for the final bill were also subject matter of the offer, as these were claims which were subject matter of the award rendered by the Arbitral Tribunal. As a matter of fact, against Claim No. 20, Rs. 64,69,500 was awarded and insofar as claim made with respect to the final bill, Rs. 50,86,526 was awarded. Claim No.20 and the sum awarded against the final bill were, in fact, given up by the respondent. This is evident from reading that part of the settlement offer which stipulated that if monies offered towards settlement by the appellant/UOI was accepted, then all claims lodged by the respondent before the Arbitral Tribunal would stand satisfied.
14. The learned Single Judge, in this behalf, in the order dated 23.03.2018, has made the following observations, while closing the Section 34 petition filed by the appellant/UOI:
“6. Mr Agarwal, the learned Senior Counsel appearing for the respondent states that the respondent is agreeable to, accept the payment, as indicated in the said letter, as full and final settlement of all their claims.

7. Mr Bhardwaj, the learned counsel appearing for the petitioner states that the petitioner has filed the present petition after the said letter was sent and, therefore, the said letter may be ignored.

8. It is difficult to accept the aforesaid contention. There is. no dispute that the petitioner had sent the aforesaid letter to the respondent communicating that it had decided to accept the award for an amount of 55,47,124/- and had further called upon the respondent to accept the same.

9. Admittedly, the said letter has not been withdrawn as yet and the learned counsel appearing for the respondent unequivocally states, on instructions, that the same is acceptable to the respondent.

10. In view of the above, the petitioner cannot resile from its offer. It is, also apparent that the present petition does not survive in view of the petitioner having accepted the award to the extent of 55,47,I24/-. The petition is, accordingly, disposed of. The pending application also stands disposed of in view of the above.”

15. We are in agreement with conclusion arrived at by the learned Single Judge. Since the subsisting offer of the appellant/UOI had been accepted by the respondent and a settlement had been arrived at both concerning the claims and the counterclaims, the learned Single Judge was right in dismissing the Section 34 petition.
16. Thus, for the forgoing reasons, we are not inclined to interfere with the order dated 23.03.2018 passed by the learned Single Judge.

17. Accordingly, the award dated 26.07.2017 and the order dated 13.09.2017 are also not interfered with.
18. The appeal is accordingly closed.

RAJIV SHAKDHER, J

AMIT BANSAL, J
JANUARY 24, 2024 / tr

FAO(OS) (COMM) 289/2018 Page 1 of 7