Tmb Electronics vs. Shanti Developers & Anr.

Facts

The Petitioner, TMB Electronics, challenged an arbitral award dated August 29, 2023, which directed it to pay the entire amount claimed in a final bill of INR 13,37,98,982/- to Respondent No. 1, Shanti Developers. The dispute arose from a construction agreement dated March 13, 2018, for a factory building. Respondent No. 1 claimed an outstanding balance of INR 8,21,98,982/- for work done and additional work, along with loss of profits and interest. The Petitioner contended that Respondent No. 1 did not complete the work, acted unprofessionally, violated contract clauses, and failed to deposit GST on invoices. The Arbitrator framed issues regarding the claimant's entitlement to reliefs, interest, and costs. Both parties agreed not to lead oral evidence, and the matter was decided on pleadings and documents.

Held

The Court held that the Arbitrator's findings were well-founded and reasonable, not warranting interference under Section 34 of the Arbitration and Conciliation Act, 1996. Regarding Issue 1, the Arbitrator correctly concluded that Respondent No. 1 was entitled to the amounts due under the final bill. The Arbitrator found the Petitioner's plea of abandonment of work to be vague and unsubstantiated, supported by evidence like ongoing work photographs contradicting the Petitioner's stance. The Arbitrator also found that the Petitioner did not dispute the working area in the arbitration proceedings, justifying the conclusion that the work claimed under the Final Bill was completed. The issue of non-reporting of the Final Bill to GST authorities was deemed separate from the arbitration dispute and would follow its independent course within the tax regulatory framework, not directly impinging upon the legitimacy of the claims. The Arbitrator's reliance on a comprehensive review of evidence, including admitted WhatsApp messages and the Statement of Defence, supported the conclusion that the work was completed. The Petitioner failed to present compelling material to counter Respondent No. 1's assertion of executing the work. The Arbitrator's factual findings on the amount due under the Final Bill were deemed reasonable and well-justified. Regarding Issue 2 and 3, the Arbitrator awarded interest and costs, which were not specifically challenged by the Petitioner in this petition. The petition was dismissed.

Key Issues

1. Whether the claimant (Respondent No. 1) is entitled to the reliefs claimed in the statement of claim, specifically the amount due under the final bill and loss of profits, under the Agreement dated March 13, 2018. 2. Whether the claimant is entitled to interest, and if so, at what rate. 3. Whether the claimant is entitled to costs. Petitioner's arguments: Respondent No. 1 acted unprofessionally, did not complete the work, and the Petitioner had to finish it. Respondent No. 1 violated several clauses of the Agreement, including those related to billing, rates for additional work, material quality checks, timelines, reasons for delay, and labor norms. Furthermore, Respondent No. 1 failed to deposit GST on four invoices and did not report the Final Bill to GST authorities, casting doubt on its veracity. The Petitioner also alleged discovery of defects in the building's foundation and basement during completion. Respondent No. 1's arguments: Respondent No. 1 contended that it employed requisite manpower and resources, executed sanctioned and additional work timely, and handed over the site without objections. Periodical bills were verified, and the Final Bill was issued for the outstanding amount. The Arbitrator's findings were based on admitted WhatsApp messages, the Statement of Defence, and other documentary evidence, demonstrating the completion of work.