NDLI: Indian Railway Construction Company Limited Vs. M/s National Buildings Construction

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Arbitration & Conciliation Act 37 ss. 34 1996
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Arbitration and Conciliation Act, 1996 (26 of 1996)
Case(s) Referred	Referred Case 0
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Arbitration & Conciliation Act, 1996 – ss. 34, 37 – Appellant-IRCON and the respondent-NBCC entered into an agreement under which NBCC was awarded the work of construction of railway station cum commercial complex – NBCC failed to carry out the work within the time stipulated and the work was practically abandoned – IRCON served notice upon the NBCC for termination of the contract relying upon clause 60.1 of the agreement – NBCC invoked the arbitration clause – Arbitral Tribunal rejected the NBCC’s claim for refund of two security deposits i.e. claim nos.33 and 34 – Tribunal held termination with reference to clause 60.1 bad in law, but justified the termination with reference to clause 17.4 and consequently rejected NBCC’s claim for refund of two security deposits – Tribunal also allowed counter claim no.3 (towards interest at rate of 18% p.a. on various advances given to NBCC, particularly (1) special advance and (2) advance against hypothecation of equipment) in favour of IRCON – Single Judge of the High Court set aside the rejection by the Arbitral Tribunal of claim nos. 33 and 34 of NBCC to the extent it concerned the return of security deposit amounts concluding that once the Arbitral Tribunal found that the termination with regard to Clause 60.1 was not justified, it was not open for the Arbitral Tribunal thereafter to consider the termination under Clause 17.4 justifying forfeiture of the security deposits – Single Judge also set aside the award passed by the Tribunal on counter claim no.3, observing that there is no clause in the contract awarding 18% interest p.a. on special advance – Division Bench of the High Court partly allowed the said appeal and allowed the interest in favour of IRCON at the rate of 18% so far as special advance is concerned – On appeal, held : The finding recorded by the Arbitral Tribunal on applicability of Clause 17.4 and/or rescinding of the contract under Clause 17.4 was not set aside either by the Single Judge or by the Division Bench of the High Court and therefore, the findings recorded by the Arbitral Tribunal on applicability of Clause 17.4 has attained the finality – Both, under Clause 17.4 and 60.1, on failure of the contractor to complete the work, the IRCON was justified in rescinding the contract and forfeit the security deposit – Award passed by the Tribunal rejecting the claim nos.33 and 34 restored – However, at the same time award of interest @ 18% on advance for hypothecation of equipment by the Tribunal can be said to be on a higher side and therefore in the facts and circumstances of the case, if the interest is awarded @ 12% on advance for the hypothecation of equipment, the same can be said to be reasonable interest.
Judge	Hon'ble Mr. Justice M.R. Shah
Neutral Citation	2023 INSC 248
Petitioner	Indian Railway Construction Company Limited
Respondent	M/s National Buildings Construction
SCR	[2023] 2 S.C.R. 713
Judgement Date	2023-03-17
Case Number	8460

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