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Delhi District Court
Union Of India vs M/S Enkay Enterprises on 24 April, 2025
IN THE COURT OF SH. NIKHIL CHOPRA, DISTRICT
JUDGE (COMMERCIAL COURT)-06, CENTRAL DISTRICT,
TIS HAZARI COURT, DELHI
OMP (Comm) No.102/2024
CNR No.- DLCT01-018664-2024
Union of India,
Through Central Organization
For Modernization of Workshop (COFMOW),
Railway Offices Complex, Tilak Bridge,
New Delhi-110002.
......Petitioner
Versus
M/s Enkay Enterprises,
605, Padma Tower-II, 22 Rajendra Place,
New Delhi-110008.
....Respondent
Date of Institution : 30.11.2024
Final arguments : 21.04.2025
Date of decision : 24.04.2025
ORDER
1. Orders disposes off a petition under Section 34 of
the Arbitration & Conciliation, 1996 challenging the
Award dated 04.09.2024 passed by the sole Arbitrator.
2. COFMOW (Central Organization for Modernization
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 1 of 38
of Workshop), an agency entrusted with planning and
procurement of machine tools and allied equipments for
Indian Railways, invited Tender bearing no.G806370 for
supply, installation and commissioning of coil spring,
scragging and load deflection testing machines (two
numbers). The respondent qualified the tender process. The
letter of acceptance dated 13.12.2019, accordingly, stood
issued. Subsequently, a contract dated 14.01.2020 came to
be executed. The total cost of the machines were agreed as
Rs.3,27,09,697.02/-. The due date of delivery of machines
was agreed to be 270 days i.e. by 10.10.2020.
3. The respondent could not deliver the machines and
in terms of its letter dated 13.08.2020 requested for
extension.
4. The petitioner, in turn, vide its letter dated
14.09.2020 called upon the respondent that an all inclusive
rate of Rs.1,40,00,000/- has been quoted by the respondent
in respect of the machines, as against the subsequent
tender bearing no.G 807270, opened on 17.02.2020. The
respondent was also called upon/advised to accept the
counter offer.
5. The respondent accepted and confirmed the offer of
Rs.1,40,00,000/- in terms of letter dated 05.10.2020 and
22.10.2020 for supply of the machines at the rate of
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 2 of 38
Rs.1,40,00,000/-.
6. An amendment was also communicated by the
petitioner in terms of letter dated 05.102.2020 and the
delivery was also re-fixed to be by 31.03.2021. The
respondent supplied the machines, however, its personnel
for commissioning could not be deputed. Though the time
for commissioning was agreed for 90 days i.e. till
31.06.2021, the machines could only be commissioned on
17.01.2022 i.e. with delay of around 6 months.
7. The petitioner made certain deductions towards
liquidated damages on account of late commissioning of
the machines and late submission of the Performance Bank
Guarantee.
8. As is the case of the respondent, the arbitration was
invoked by the respondent at the time of reduction of the
price and, accordingly, upon appointment of the learned
Arbitrator filed a claim qua reduced price of machines,
liquidated damages deducted by the petitioner, as well as
claimed interest thereon under the MSME Act alongwith
litigation expenses.
9. Ld. Arbitrator in terms of his Award dated
04.09.2024 awarded a sum of Rs.23,54,248/- i.e. the
amount equivalent to the reduction of rate of machines
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 3 of 38
originally agreed between the parties, while holding that
the present petitioner had misused the dominant position
and wrongfully resorted to the fall price clause; awarded a
sum of Rs.19,52,381/- holding that the deductions have
been wrongfully effected; awarded Rs.5,03,774/- as
interest and a sum of Rs.2,50,000/- towards litigation
expenses.
10. The Award dated 04.09.2024 stood communicated to
the parties through an even dated e-mail.
11. The petitioner has challenged the same under
Section 34, primarily on the following grounds:-
1. The Award of the amount towards reduced price is
erroneous and is based on assumption of misuse of
dominant position.
2. Ld. Arbitrator has overlooked the terms of the contract as
the price stood reduced on the basis of the subsequent
tender of the respondent.
3. Ld. Arbitrator has wrongfully opined that both the machines
had different specifications.
4. Ld. Arbitrator has erred in interpreting the application for
price fall clause and clause 1600(Section 1) of the bid
documents.
5. Ld. Arbitrator erred in granting a sum of Rs.19,52,381/-
ignoring that the ‘Vivad se Vishwas’ scheme was not
applicable and that there have been substantial delay on the
part of the respondent.
6. Ld. Arbitrator has wrongfully granted interest, ignoring the
terms of the contract prohibiting the grant of interest.
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 4 of 38
Besides, the Award is also assailed on the ground that the
Ld. Arbitrator has ignored the correspondence between the
parties and is against the evidence placed.
12. Pursuant to directions, the Arbitral record has also
been placed on record by the Ld. Arbitrator
13. I have heard the learned counsel for the parties and
have also gone through the written submissions filed by
the parties.
14. Main contentions of learned counsel for the
petitioner are:-
1. The impugned Award is against the law and facts of the
case inasmuch as, the Ld. Arbitrator has ignored the basic
terms of the contract and proceeded to award the sums
equivalent to the reduction in price, wrongfully holding that
there was misuse of dominant position by the petitioner.
2. Ld. Arbitrator could not have altered the terms of the
contract as it is beyond his jurisdiction and authority.
3. Ld. Arbitrator is a creature of the contract and cannot
traverse beyond the terms or even alter the terms of the
contract.
4. Ld. Arbitrator has wrongfully awarded the amount deducted
by the petitioner on account of the delay in commissioning
of the machines without actually returning any findings on
the delay cause by the respondent.
5. Ld. Arbitrator has wrongfully assumed that there was any
duress or undue influence exercised by the petitioner while
calling the respondent to agree for a lower price of the
machines and has also wrongfully observed that the
machines were different so as to justify the award of claim
no.1 as to reduced price, without there being any evidenceOMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 5 of 38
at all.
6. Ld. Arbitrator has also ignored the fact that a valid and
biding agreement qua the supply of machines with an all
inclusive price @ Rs.1,40,00,000/- each had come into
existence and further that not only the respondent had
accepted the proposal to supply the machines at such rate
unhesitatingly and without any objection, but also had
proceeded to supply and commission the same.
7. The very claim of duress or undue influence on the part of
the petitioner has gone unsubstantiated has also stands
negated by the respondent’s own conduct in supplying and
commissioning the machines after accepting the proposal
and its proceeding with the supplies at the new rates agreed
between the parties.
8. Ld. Arbitrator, thus, could not have unsettled the terms of
the contract in the name of duress or undue influence as no
such duress or undue influence stood proved in the
arbitration proceedings.
9. The Ld. Arbitrator has wrongfully presumed that the
deductions qua the liquidated damages on account of delay
in commissioning of the machines and submissions of
Performance Bank Guarantee are liable to be refunded on
account of ‘VIVAD SE VISHWAS’ Scheme even though
the same does not apply to the fact situation.
15. Main contentions of learned counsel for the
respondent are:-
1. The Award is well reasoned, and based on evidence and is
not liable to be interfered with. The Award is a speaking one
and the Ld. Arbitrator has dealt with the contentions of both
the sides at length, while returning his findings.
2. The scope of jurisdiction under Section 34 of the
Arbitration & Conciliation Act, 1996 is very limited and the
Court would not have the jurisdiction to either examine the
reasoning as the Arbitrator is the best judge as to quality
and quality of the evidence.
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 6 of 38
3. The Court is not sitting in appeal and cannot dwelve upon
errors of fact or law, much less unless any patent illegality
or gross violation of public policy is manifested from the
face of the Award itself.
4. The Ld. Arbitrator has rightfully held that the petitioner had
used its dominant position thereby compelling the
respondent to reduce the prices even though the machines
were different implying price difference between the set of
machines, and the petitioner being in a dominant position
had made the respondent agree upon in terms under duress
and without any consent.
5. A similar petition involving Award on same lines, pending
between the parties has been decided by the Ld. District
Judge (Commercial), Tis Hazari Courts, wherein the Ld.
District Judge had dismissed the challenge of the
petitioners. The dismissal of said petition under Section 34
filed by the petitioner vindicates the stand of the respondent
and correctness of the Award on same lines.
6. Petition had threatened to cancel the order and forfeit the
bank guarantee and thus, Respondent was to subjected to
forceful conditions, coercion, undue influence. The
petitioner vide its letter dated 14.09.2020 had threatened the
respondent while misusing its dominant position in order to
cause a wrongful loss.
7. The Respondent was forced to accept the price of a
different contract and had to suffer a reduction of price
from Rs.1,63,54,848/- per machine to Rs.1,40,00,000/- per
machine.
8. The price fall clause being relied upon by the petitioner
does not either find any place in contract, nor is otherwise
applicable to the kind/nature of contract between the
parties. Thus, the petitioner could not have decided to alter
the price or even to force the respondent to agree thereon.
9. The respondent had already submitted the Performance
Bank Guarantee dated 13.01.2020 for Rs.32,31,000/- and
Performance Bank Guarantee dated 01.03.2024 forOMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 7 of 38
Rs.9,69,300/- and as such could not have been claimed
guilty of belated compliance in this respect.
10. The petitioner has wrongfully deducted sums of money on
the pretext of delay, as not only the VIVAD SE VISHWAS
Scheme was to be applied in its true spirit, but also the
petitioner was estopped from claiming any delay, having
itself issued amendment and fixed fresh schedule.
16. Time now to deal with contentions.
17. The questions that are foregrounded for
consideration are:-
1. Whether grant of reduction of price on the
ground of duress/coercion/misuse of
dominance is a patent illegality vitiating the
Award;
2. Whether the Award of sum deducted by
petitioner is unjust, and is patent illegality
vitiating the Award.
18. Before proceeding further, a reference to the letter
exchanged between the parties regarding the change in
price/reduction in price, seems to be desirable.
19. The respondent, vide its letter dated 13.08.2020
requested the petitioner to refix the schedule of delivery
extending the date of delivery to February, 2021. The
contents of letter are reproduced as under:-
“Our Ref: EKE/2020-21/G-806370/01
Date : 13-08-2020To
The PCMM
Central Organization for Modemization of WorkshopsOMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 8 of 38
Railway Offices Complex, Tilak Bridge
New Delhi 110 002Sub: COMOW Contract No.
COFMOW/TR/S/P-2/G-806370 Dated 14.01.2020 for
Procurement of Coil Spring Scragging and Load
Deflection Testing Machine.
Respected Sir
This is in reference to above cited Purchase Order placed
on us and we would like to thank you for the same.
We are MSME registered, annexing the certificate for
you’re for reference.
Unfortunately due to the Pandemic SARS COVID-19, to
contain the spread our Nation went into Lock down from
March 23 2020 and till today operations Pan India have
not been resumed in complete and efficient manner, as
evident even Government Offices are working with
Staggered Staff roosters and timings.
As of now we are unable to ascertain how much time it
shall take to resume pre-lockdown production capacity
and work strength, hence we seek your assistance in this
difficult times to please RE-FIX the delivery period of the
Contract up to Feb 28 2021 without imposition of any
Liquidated Penalty Charges.
We are sure that by Feb, 28 2021, we would have had the
machine inspected and Supplied to the Consignee.
We seek Delivery Period Re-Fixation on priority basis to
enable us place the Inspection Call upon RITES and
coordinate with Consignee for pre-dispatch Inspection at
our Factories.
Thanking you and assuring you of our best cooperation at
all times.
For ENKAY ENTERPRISES”
20. The petitioner, in terms of its response dated
14.09.2020 called upon the respondent to accept counter
offer rate of Rs.1,40,00,000/- per machine, as quoted by
respondent in subsequent tender bearing no.C-807270,
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 9 of 38
opened on 17.02.200. The contents of said letter are as
under:-
"संख्या : /आई. आर/ G-806370 दिनाँक :
14.09.2020
M/s. Enkay Enterprises,
05, Padma Tower-II, 22 Rajindra Place,
New Delhi – 110 008
Sub:- This office Cotract No. COFMOW/R/G-806370
dated 14.01.20 for supply of Coil Spring Scraggingand
load deflection testing machine.
Ref:- Your letter No.EKE/2020-21/G-806370 dated
13.08.2020.
*****
In reference to above, it is intimated that all inclusive rate
of Rs.1,40,00,000/- (Rs. One crore forty lakh only) each
has been quoted by you against subsequent tender No.
C-807270 opened on 17.02.20 for the subject machine.
In view of above, it is advised lo accept counter offer rate
& submit price break-up of the same for further
consideration of your request for re-fixation of delivery
period.”
21. The respondent is found to have objected to the
above proposal of the petitioner, in terms of its letter dated
27.09.2020. The respondent has also heavily relied upon
the said letter to canvass its argument as to duress,
coercion and undue influence. It has been a vehement
contention of the learned counsel for the respondent that
the respondent had also invoked arbitration in terms of the
said letter. The contents of the letter are reproduced as
under:-
“Our Ref: EKE/2020-21/G-806370
Date: 27.09.2020To
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 10 of 38
The PCMM
Central Organization for Modemization of Workshops
Railway Offices Complex, Tilak Bridge
New Delhi 110 002Suh: COFMOW Contract
No.COFMOW/IRS/P-2/G-306370 Dated 14.01.2020 for
Procurement of Coll Spring Scragging and Load Defection
Testing Machine.
Ref.: Our Letter Ref. No. EKE/2020-21/G-806370/01 dated
13-08-2020.
Your Letter Ref. No. COTMOW/IR/G-804370 4
dated. 14-09-2020.
Respected Sir,
This in in reference to above cited Purchase Order and the
letters referred as above.
Against our requests made you vide our letter dated 13-08-
2020 and several meetings held in your office in the month
of July and August wherein we had requested your office to
consider the unfortunate spread COVID- 19 and the global
pandemic which lend to National Lockdown for almost 100
days, other MSME reliefs being granted by the Central
Government, to enable your office RE-FIX our delivery
period without imposing any Liquidated Damages as it was
a Force Majeure situation.
We are surprised to read the contents of your letter dated
14-09-2020, wherein you have asked for our acceptance to
a lower rate vide our counter offer matching the prices for
another Tender No. G B07270 received by your office.
We are struggling with Financial Crisis, Shortage of Labor,
Shortage of Raw Materials and your organization rather
than understanding the situation, giving us relief as
announced by the Government for MSME (Extension of
Time Period for up to 6 Months), is unilaterally implying
lower cost on us even of both the tenders are different and
hence cannot be treated as similar __We wish to invoke arbitration as per relevant contractual
terms and conditions to seek justice, while we in this
struggling time have no other option but to accept lower
counter offer prices under protest to seek justice via
arbitration.
Thanking you and assuring you of our best cooperation at
all times.
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 11 of 38
For ENKAY ENTERPRISES”
22. However, there seems to be a shift in stand of the
respondent, as is clear from the respondent’s
communication dated 05.10.2020, the contents whereof are
reproduced as under:-
Our Ref: EKE/2020-21/G-806370/02 Date: 05-10-2020
To
The PCMM
Central Organization for Modernization of Workshops
Railway Offices Complex, Tilak Bridge
New Delhi 1 10 002Sub: COFMOW Contract No.
COFMOW/IR/S/P-2/G-806370 Dated 14.01.2020 for
Procurement of Coil Spring Scragging and Load Deflection
Testing Machine.
Ref. COFMOW Letter No. COFMOW/IR/G-806370 dated
14-09-2020.
Respected Sir
This is in reference to above cited subject.
With reference to your above letter received we have been
advised to accept the Counter Offer Rate for consideration
of our Request for Refixation of Delivery Period.
In this regard we wish to confirm our acceptance to the All
Inclusive Counter Offer Rate of Rs 1,40, 00,000.00 (One
Crore Forty Lakhs Only) for each Machine.
Now we request you to kindly refix our Delivery Period
upto March 31 2021 at the earliest and oblige.
Thanking you and assuring you of our best cooperation at
all times.
For ENKAY ENTERPRISES”
23. It is clearly noticeable from the said letter that the
respondent had accepted the all-inclusive price of
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 12 of 38
Rs.1,40,00,000/- for each machine while requesting for re
fixation of the delivery period until 31.03.2021. The said
communication has also been stressed upon as very crucial
by the petitioner side while contending that the offer made
in terms of letter dated 14.09.2020 had been unhesitatingly
accepted without any reservation and that a new contract
had formed qua the price of the machines. The said letter is
also stated to have become final and binding as against the
respondent, as it communicated unconditional acceptance.
24. Attention of the Court is also invited towards
subsequent letter dated 22.10.2020 wherein the respondent
is shown to have provided price break-up and reiterated the
acceptance of the counter offer. The contents thereof are
reproduced as under:-
Our Ref: EKE/2020-21/G-806370/Counter Offer Acceptance
Date : 22-10-2020To
The Principal Chief Materials Manager
Central Organization for Modernization of Workshop
Railway Office Complex, Tilak Bridge
New Delhi 110002Sub: COFMOW Contract No.
COFMOW/IR/S/P-2/G-806370 dt. 14-01-2020 for Supply of
Coil Spring Scragging And Load Defection Testing Machine.
Ref: COFMOW Letter Ref. No. COFMOW/IR/G-806370
dated 19-10-2020.
Dear Sir,
This is in reference to the above mentioned Subject letter.
We hereby convey our acceptance to the counter offer as
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 13 of 38
proposed by you against the above cited tender.
In this regard we are providing you with the Price Break Up
per machine against our Acceptance of the Counter Offered
Price for Rs. 1,40,37,343/- Per Machine against Tender No.
G-807270.
S. BASIC MACHINE Price (in Rs. )
No. Per M/c.
1 Price of Coil Spring 1,30,27,643/-
Scragging and Load
Deflection Testing Machine
for LHB & IRY Coaches
2 Concomitant Accessories as
per Annexure A 9,09,500/-
3 Preventive Maintenance
Charges for 2 Years 100/-
4 Foundation, Installation,
Commissioning & Proving 100/-
Test Charges
5 25. Comprehensive
A.M.C. for 5 Year (20.000) 1,00,000/-
Per Year)
26. Total Cost of 1
Machine Inclusive of GST 1,40,37,343
(@ 18%
Thanking you with regards.
For ENKAY ENTERPRISES"
27. Turning back to the question no.1 above. While it is
the contention of the petitioner that the respondent had in
clear terms agreed to the price without any reservation, and
has also proceeded to deliver and install the machines, and
further that the respondent did not raise any claim or
objection, until receiving full and final payments from the
petitioner, the respondent side, on the other hand, has
contended that the delivery and installation of the
machines did not take away the respondent’s right to claimOMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 14 of 38
the amount which was coercively got reduced from the
petitioner. Learned counsel for the respondent has also
contended that there is a categorical finding of
duress/coercion as well as undue influence, which is
opposed by the petitioner side on the ground that the same
is merely assumptive and without any evidence.
28. The respondent side has also impressed upon the
Court that the reasonableness of the reasons adopted by the
Ld. Arbitrator cannot be examined in the proceedings
under Section 34 of the Arbitration & Conciliation Act,
1996, as it is settled law that the Arbitrator is the best judge
of quality and quantity of evidence. Petitioner side, on the
other hand, has contended that nothing prevents the Court
from looking into the records so as to find whether there
was any evidence at all or whether the findings are merely
on the basis of assumptions and informations as the
grounds of ‘patent illegality’ and ‘public policy’ cannot be
narrowed down to such as a disability of Court.
29. True that the Court is less likely to intervene to the
extent of examining the evidence, however, at the same
time, it cannot be ignored that the Award is supposed to be
made on the basis of some evidence. Having regard to the
submissions of the learned counsel for the respondent,
there appears to be no impediment in examining the issue
in greater detail.
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 15 of 38
30. At this stage, a reference to the relevant portions of
the Award appears to be desirable:-
“4.1.3 AT’s Analysis and Conclusion
i) Respondent’s action to offer price reduction, on
receipt of request for Delivery Period extension from
the Claimant, in terms of Clause 1602 (iii) of bid
documents part I of the Bio Documents is not in order.
The clause referred by Respondent is sub-para of
Clause 1602 which states in bold “Quantity Option
Clause”. The Clause states that “The purpose of
reasonable notice for the exercise of (-) 30% Option
clause consequent to decrease in prices subsequent to
the placement of contract will be served by giving a
reasonable opportunity to the contractor to
unconditionally agree to accept such lower rates for
the quantity supplied on the date of reduction/
decrease of prices or the (-) 30 % quantity option
clause.” A sample reading of the clause makes it
apparent that the reference to reduction in price is in
terms of “for the exercise of (-) 30% option clause
consequent to decrease in prices”.
a. There was no mention of this clause while
issuing the letter dated 14.09.2020.
b. The para relates to “Quantity Option Clause”.
Therefore, the exercise would have been justified in
relation to the same, and if Respondent desired to
take the benefit of said price reduction, they should
have offered Claimant to “accept such lower rates
for the quantity unsupplied on the date of reduction/
decrease of prices or the (-) 30% quantity, whichever
is less”. The Respondent did not exercise the option
in terms of the agreed terms of the contract.
ii) Respondent also in their submissions have
nowhere argued price reduction being in terms of the
price fall clause, whereas their ‘advice to accept
counter offer rate’ of price reduction ‘for further
consideration’ of request for re-fixation of delivery
period without mention of any clause of the contract,
in actual amounts to the same.
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 16 of 38
iii) The two types of machines, one in the
contract under consideration and other due to which
price reduction was offered, do not bear the same
specification. Clause 2.3.5 stated in the new tender
does not find mention in the specifications of the
machine in the subject matter. Annexure I specifying
the number of springs to be tested is also different.
Therefore, comparison of prices for those two types
of machines was not in order.
iv) Respondent has averred that “In the letter
dated 22.10.2020 the claimant has accepted the
counter offer without any opposition”. This was an
exercise of ‘dominant position’ by the Respondent,
who did so because they could. It was well
established that the machines were likely to be ready
for inspection, if not ready, from the fact that vide
their various letters Claimant had been requesting for
refixation of delivery period to 28.02.2021 and
finally vide letter dated 05.10.2020 to 31.03.2021,
and completing supply of duly inspected machine on
30.03.2021. Having invested in the manufacturer of
these two special machines which likely could only
find use against the order, the Claimant could not but
was forced to accept the counter offer to salvage
some of its investment. Furthermore the offer itself
was not in order as the contract did not have any such
clause, nor were the machines the same.
In view of the above, the AT agrees with Claimant’s
averment that the said imposition of reduced price
was under undue influence, by the way of coercion
and by misuse of dominant position by the
Respondent. The said imposition was done by
overlooking the terms of the contract, guidelines
issued by the Ministry of Railways and by ignoring
the principles of natural justice.
The AT therefore tends to agree with the averments
and submissions of Respondent. The claim is
accepted.
Amount of Award: Rs. 23,54,248.00″
31. There appears to be considerable force in the
contentions of the learned counsel for the petitioner. On
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 17 of 38
anxious consideration of the material placed, in the light of
the submissions made by learned counsel for the parties,
the said finding appears to be unjust and unsubstantiated
for a multitude of reasons.
32. The Ld. Arbitrator seems to have clearly missed the
point that in terms of letter dated 05.10.2020 and
22.10.2020, the respondent had agreed to provide
machines on a lower price. The acceptance of the counter
offer to supply machines at the reduced price resulted into
a modified agreement binding upon the parties. The price
being a material term of the contract could not have
casually unsettled by the Ld. Arbitrator, as it is also settled
law that the Arbitrator is bound by the terms of the
contract. The said proposition alone, however, by itself,
may not debar a claim for damages by respondent. It is the
respondent’s claim that agreeing to the reduced price was
on account of duress, coercion, and undue influence. In
order to maintain such a proposition, and to claim the
balance price as damages, the respondent was under a
heavy burden to prove existence of circumstances to the
effect that there was no other option available with the
respondent, but to accept the offer.
33. The petitioner’s case is that there was no duress,
undue influence or coercion and simply because there is a
price reduction on account of the subsequent tender for the
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 18 of 38
similar machines by respondent itself, the respondent
cannot claim any duress. It is the submission of the
petitioner that if the respondent was not willing for the
price reduction, nothing prevented the respondent from
pursuing its request for arbitration, but on the contrary, the
respondent not only agreed to supply and commissioned
the machine and waited until the entire payment was made,
before it started raising claim for the reduced price on the
false pretext of duress/coercion.
34. Having regard to the contentions of learned counsel
for the parties and considering the submissions of the
petitioner that the finding of duress/undue influence is
without any actual evidence and is assumptive in nature,
the Court needs to look into the question as to existence of
evidence as to duress or coercion.
35. Before proceeding further, a reference to case law
relating to proof of duress in the context of commercial
contracts appears to be desirable. In Goyal MG Gases Ltd.
Vs. Double Dot Finance Ltd. [2009 (2) ARBLR 655
(Delhi)], the Hon’ble High Court of Delhi examined the
aspect of duress, claimed by Appellant before the Hon’ble
High Court, after having received the entire amount in full
and final settlement. Though the observations have been
made in context of a full and final settlement, the Court
has emphasized that mere financial pressure is not enough.
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 19 of 38
The Court observed as under:-
“3. The learned Single Judge by the impugned
judgment has held that there was no coercion or
duress exercised against the appellant when the
receipt dt 1.2.99 was signed receiving the amount
of Rs. 1,15,00,000/-. The learned Single Judge in
the impugned judgment has held as under:
36. Coming to the question as to what is
“coercion or “duress” in commercial
contracts, we may refer to the Privy Council
case “Pao On and Ors. v. Lau Yiu and Anr.”
reported in 1979 (3) of England Reporter
Page-65. Economic duress in commercial
context was dealt with by their Lordships and
it was held that in contractual relations, a
mere financial pressure is not enough. It was
also held that the question as to whether at the
time the person making a contract allegedly
under coercion had or not any alternative
course open to him which could be an
adequate legal remedy and whether after
entering into the contract, he took steps or not
to avoid it are matters which are relevant for
determining as to whether he acted voluntarily
or not. It was also held that the compulsion
has to be of a nature which deprives a party of
his freedom of exercising free will leaving no
alternative course open to him. Therefore, the
‘coercion’ or ‘duress’ required for vitiating ‘free
consent’ has to be of the category under which
the person under ‘duress’ is left with no other
option but to give consent and is unable to
take an independent decision, which is in his
interest. Bargaining and thereafter accepting
an offer by give and take to solve one’s
financial difficulties cannot be treated as
‘coercion’ or ‘duress’ for the reason that in
trade and commerce every day such situations
arise and decisions are taken by parties some
of which they might not have taken but for
their immediate financial requirements and
economic emergencies.
37. The legal position that emerges,
therefore, is that the Arbitrator has jurisdiction
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 20 of 38
to adjudicate a dispute in regard to the
existence of ‘full and final settlement’. In case
the plea of ‘full and final settlement’ between
the parties is accepted by the Arbitrator, no
Award can be passed in favour of a claimant
but in case this plea is rejected, the Arbitrator
would be well within his rights to pass an
Award in respect of the claims filed before
him. The Arbitrator can go into the question
as to whether the ‘accord and satisfaction’
recorded between the parties was voluntary or
not inasmuch as ‘free consent’ remains the
foundation of all agreements including the
agreement in regard to the settlement of
disputes between the parties. However, the
plea of coercion, undue influence or duress
raised by a party to challenge the ‘accord and
satisfaction’ cannot be accepted lightly merely
upon word of mouth. The facts and
circumstances, material on record and conduct
of the parties at the time of signing the
settlement agreement and soon thereafter have
to be looked into. It need not be stated that the
burden to establish this plea remains on the
party which raises it.
38. If such pleas are sustained, the
sanctity and purpose of ‘amicable settlement’
between the parties would stand totally
eroded. Amicable resolution of disputes and
negotiated settlements is ‘public policy of
India’. Section 89 of the Code of Civil
Procedure, Arbitration and Conciliation Act,
1996 as well as Legal Services Authorities
Act, 1995 call upon the Courts to encourage
settlement of legal disputes through
negotiations between the parties. If amicable
settlements are discarded and rejected on
flimsy pleas, the parties would be wary of
entering into negotiated settlements and
making payments thereunder as a shrewed
party after entering into a negotiated
settlement, may pocket the amount received
under it and thereafter challenge the
settlement and re-agitate the dispute causing
immeasurable loss and harassment to the
party making payment thereunder. This
tendency has to be checked and such litigants
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 21 of 38
discouraged by the Courts. It would be in
consonance with public policy of India. The
Arbitrator, therefore, had acted against public
policy of India by accepting the plea as
raised by the respondent No. 1 and thereafter,
passing an Award. The view taken by the
Arbitrator was absolutely capricious, unfair
and unreasonable and as such, the impugned
Award dated 29.11.2002 passed by him is
liable to be set aside.
12. A reading of the Award of the Arbitrator
also shows that the relevant points which were
determinative of the issues as stated in para 4
above with regard to the receipt of Rs.
1,15,00,000/- by the appellant in full and final
settlement have been unnecessarily given a go
bye and only a lip service has been paid to the
same by referring to the same without
discussing as to how the same are not
important or clinching. We are conscious of
the position in law relied upon by the
appellant by citing Hindustan Tea Co. v. K.
Sashikant & Co. and Anr.
MANU/SC/0002/1986 : AIR1987SC81 to the
effect that no interference with the award is
warranted on the ground that the Arbitrator
arrived at a wrong conclusion or failed to
appreciate the facts. Municipal Corporation of
Delhi v. Jagan Nath Ashok Kumar and
Anr.MANU/SC/0013/1987 : [1988]1SCR180
was also cited to urge that the reasonableness
of the reasons for the award cannot be
challenged. However, in the present case the
Arbitrator has failed to follow the law laid
down in Nathani Steels Ltd. v. Associated
Constructions to the effect that once there is a
full and final settlement such a dispute does
not remain an arbitrable dispute by merely
observing that the cases cited are
distinguishable without stating any reasons
therefor. Thus this Court is sustaining the
judgment of the single judge as we are
satisfied that the dispute was finally settled
and could not have been arbitrated upon.
However in the facts of the present case we
are also of the view that the findings of the
Arbitrator are grossly unconscionable and do
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 22 of 38
not even deal with the legal position espoused
by the respondent before the Arbitrator. The
award is thus vitiated as no reasonable person
could have arrived at the conclusion of
coercion arrived at by the Arbitrator and the
learned Single Judge was justified in allowing
the objections preferred by the respondent.
39. In NTPC Ltd. Vs. SPML Infra Ltd. [AIR 2023 SC
1974], the Hon’ble Supreme Court of Delhi dealt with the
plea of duress in the context of settlement agreement
between the parties, conduct of parties and subsequent
request for reference of claims to Arbitration. The Hon’ble
Supreme Court of India held that simple narration of bare
facts would not suffice. The Hon’ble Supreme Court of
India observed as under:-
44. A simple narration of the bare facts, as
indicated above, leads us to conclude that
the allegations of coercion and economic
duress are not bona fide, and that there were
no pending claims between the parties for
submission to arbitration. The Respondent’s
claim fits in the description of an attempt to
initiate “ex facie meritless, frivolous and
dishonest litigation”. We will endeavor to
give reasons for our conclusion.
45. The whole dispute revolves around the
solitary act of the Appellant, NTPC, in not
returning the Bank Guarantees despite the
successful completion of work. This
continued even after SPML issued the No-
Demand Certificate and NTPC released the
final payment. These undisputed facts led to
the institution of the Writ Petition before the
Delhi High Court. There were no allegations
of coercion or economic duress compelling
SPML to withdraw any pending claims under
the subject contract as a condition for the
return of the Bank Guarantees. On the
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 23 of 38
contrary, the only allegation by SPML was
with respect to NTPC’s “illegal” action of
interlinking the release of the Bank
Guarantees with some other contracts. This
was precisely the argument before the High
Court, and, in fact, this submission is
recorded by the High Court while issuing
notice and injuncting NTPC. This fact clearly
indicates that the plea of coercion and
economic duress leading to the Settlement
Agreement is an afterthought.
46. We will now examine whether the
allegations of coercion and economic duress
in the execution of the Settlement Agreement
are bona fide or not. This inquiry has a direct
bearing on the arbitrability of the dispute. It
was during the subsistence of the Writ
Petition and the High Court’s interim order,
when SPML had complete protection of the
Court, that the parties entered into the
Settlement Agreement. This agreement was
comprehensive. It inter alia provided for (i)
the release of Bank Guarantees by NTPC, (ii)
the withdrawal of SPML’s Writ Petition, (iii)
restraining NTPC from filing contempt
proceedings against SPML for letting the
Bank Guarantees expire, and finally, (iv)
restraining SPML from initiating any
proceedings under the subject contract,
including arbitration. The Settlement
Agreement also recorded that there were no
subsisting issues pending between the
parties.
47 . The plea of coercion and economic
duress must be seen in the context of the
execution of the Settlement Agreement not
being disputed, and its implementation
leading to the release of the Bank Guarantees
on 30.06.2020 also not being disputed.
Almost three weeks after the release of the
Bank Guarantees, a letter of repudiation was
issued by SPML on 22.07.2020. This letter
was issued about two months after the
Settlement Agreement was executed and in
fact during the subsistence of the Writ
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 24 of 38
Petition. After reaping the benefits of the
Settlement Agreement, the Writ Petition was
withdrawn on 21.09.2020. It is thereafter that
the present application Under Section 11(6)
of the Act was filed. The sequence of events
leads us to conclude that the letter of
repudiation was issued only to wriggle out of
the terms of the Settlement Agreement.
40. In Union of India (UOI) and Ors Vs. Master
Construction Co. [2011 (2) ARBLR 105 (SC)] , Hon’ble
Supreme Court of India dealt with a question as to
appointment of an Arbitrator on the basis that no claim
certificates had been obtained under financial duress and
coercion. The request for appointment was resisted by the
petitioner on the ground of discharge of contract. The
Court observed that mere allegation as to financial duress
would not suffice observing:-
“28. The above certificates leave no manner
of doubt that upon receipt of the payment,
there has been full and final settlement of the
contractor’s claim under the contract. That the
payment of final bill was made to the
contractor on June 19, 2000 is not in dispute.
After receipt of the payment on June 19,
2000, no grievance was raised or lodged by
the contractor immediately. The concerned
authority, thereafter, released the bank
guarantee in the sum of Rs. 21,00,000/- on
July 12, 2000. It was then that on that day
itself, the contractor lodged further claims.
29. The present, in our opinion, appears to be
a case falling in the category of exception
noted in the case of Boghara Polyfab Private
Limited (Para 25, page 284). As to financial
duress or coercion, nothing of this kind is
established prima facie. Mere allegation that
no-claim certificates have been obtainedOMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 25 of 38
under financial duress and coercion, without
there being anything more to suggest that,
does not lead to an arbitrable dispute.
30. The conduct of the contractor clearly shows
that `no claim certificates’ were given by it
voluntarily; the contractor accepted the amount
voluntarily and the contract was discharged
voluntarily.”
41. The broader take away from the decisions in Goyal
MG Gases Ltd. Vs. Double Dot Finance, NTPC Ltd. Vs.
SPML Infra Ltd. and Union of India (UOI) and Ors Vs.
Master Construction Co. are:-
(i) bare plea of duress or the compulsion would not
suffice and there has to be specific averments and
proof of such duress/compulsion;
(ii) financial pressure cannot be always claimed as
duress; and
(iii) conduct of party needs to be seen to find out
whether the act is under duress or not.
42. There are various reasons that nudge the Court to
come to this conclusion. Firstly, the claim of reduced
amount being a claim for damages, in essence, ought to
have been proved with cogent and reliable evidence. A
simple assertion without any concrete evidence as to
difference of machines or actual difference of the cost
ought to have been brought on record. Simply because the
machines did not match each other in one or two
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 26 of 38
specifications, would not necessarily mean that the
respondent had suffered damages. This necessitated
concrete evidence to base a conclusion on, rather than just
an inference.
43. Ld. Arbitrator seems to have ignored that it was the
price quoted by Respondent itself in the subsequent
tenders that the petitioner sought price parity with. Being a
public entity, its seeking the price parity cannot be looked
upon as opportunism, or unjust enrichment for itself. The
respondent, thus, was heavily burdened to prove that the
difference of cost has resulted into an injury, capable of
being without grant of damages. On the contrary,
respondent is found to have taken some time to respond,
and in fact responded decisively, accepting the term as to
supplying the machine at lower price. Had it not been
finally prudent for the respondent, it would have pursued
its intent to get the dispute arbitrated.
44. As of duress, it ought to have been proved by some
credible evidence to the effect that there was no other
option but to agree. On the contrary, the respondent is
found to have accepted the counter offer for reduction of
the price unhesitatingly and without any reservation.
Undoubtedly, at a prior point of time, the respondent has
objected to the price reduction as well as sought invoking
arbitration, but considering its subsequent conduct over
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 27 of 38
considerable period of time wherein not only the
extensions were sought, machines were supplied and
commissioned, there appears to be clear waiver even if
there were some objection at the beginning. The Court,
cannot be oblivious of the fact in terms of the law
discussed above, a mere financial pressure would not
amount to duress. The lack of evidence as to duress thus
makes the finding as questionable.
45. Reduction in prices might have altered the
profitability, but the respondent cannot be heard to say that
it had suffered damages to the tune of reduction in prices
in the absence of evidence.
46. There is another jurisdictional aspect which cannot
be ignored. The Ld. Arbitrator being a creature of the
contract could not unsettle the terms of the contract or
travel beyond the same.
47. In Satyanarayan Construction Co. V. Union of India
(2011) 5SCC101 Hon’ble Supreme Court observed as
under:-
“13. Thus, as per the contract, the contractor
was to be paid for cutting the earth and
sectioning to profile etc. @ Rs. 110 per cubic
meter. There may be some merit in the
contention of Mr. Tandale that contractor was
required to spend huge amount on the rock
blasting work but, in our view, once the rate
had been fixed in the contract for a particular
Work the contractor was not entitled to claim
additional amount merely because he had to
spend more for carrying out such work.
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 28 of 38
undertaken by the Arbitrator in determining
the rate for the work at serial No. 3 of
Schedule ‘A’ was beyond his competence and
authority. It was not open to Arbitrator to
rewrite the terms of the contract and award
the contractor a higher rate for the work for
which rate was already fixed in the contract.
The Arbitrator having exceeded his authority
and power the High Court cannot be said to
have committed any error in upsetting the
Award passed by the Arbitrator with regard
to claim No. 4.”
48. In Indian Oil Corporation Ltd. V Shree Ganesh
Petroleum, Rajgurunagar 2022 INSC 130, Hon’ble
Supreme Court has considered in Arbitral Tribunal failing
to act in terms of the contract or ignoring specific terms of
the Contract as a patent illegality. The Court observed:-
“44. An Arbitral Tribunal being a creature of
contract, is bound to act in terms of the
contract under which it is constituted. An
award can be said to be patently illegal
where the Arbitral Tribunal has failed to act
in terms of the contract or has ignored the
specific terms of a contract.
45. However, a distinction has to be drawn
between failure to act in terms of a contract
and an erroneous interpretation of the terms
of a contract. An Arbitral Tribunal is entitled
to interpret the terms and conditions of a
contract, while adjudicating a dispute. An
error in interpretation of a contract in a case
where there is valid and lawful Submission
of arbitral disputes to an Arbitral Tribunal is
an error within jurisdiction.
46. The Court does not sit in appeal over the
award made by an Arbitral Tribunal. The
Court does not ordinarily interfere with
interpretation made by the Arbitral Tribunal
of a contractual provision, unless such
interpretation is patently unreasonable orOMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 29 of 38
perverse. Where a contractual provision is
ambiguous or is capable of being interpreted
in more Court cannot interfere with the
arbitral award, only because the Court is of
the opinion that another possible
interpretation would have been a better.
47. In Associate Builders (supra), this Court
held that an award ignoring the terms of a
contract would not be in public interest. In
the instant case, the award in respect of the
lease rent and the lease term is in patent
disregard of the terms and conditions of the
lease agreement and thus against public
policy. Furthermore, in Associate Builders
(supra) the jurisdiction of the Arbitral
Tribunal to adjudicate a dispute itself was not
in issue. The Court was dealing with the
circumstances in which a Court could look
into the merits of an award.
48. In this case, as observed above, the
impugned award insofar as it pertains to
lease rent and lease period is patently beyond
the scope of the competence of the Arbitrator
appointed in terms of the dealership
agreement by the Director (Marketing) of the
Appellant.
49. The lease agreement which was in force
for a period of 29 years with effect from 15th
April, 2005 specifically provided for
monthly lease rent of Rs. 1750 per month for
the said plot of land on which the retail outlet
had been set up. It is well settled that an
Arbitral Tribunal, or for that matter, the
Court cannot alter the terms and conditions
of a valid contract executed between the
parties with their eyes open.”
49. It is settled law that finding must be based on
evidence on admission. Thawardas Pherumal Vs. Union of
India (UOI) [1955 INSC 18], the Hon’ble Supreme Court
of India has held that :-
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 30 of 38
“…..Facts must be based either on evidence
or on admissions; they cannot be found to
exist from a mere contention by one side
especially when they are expressly denied
by the other.”
50. The Ld. Arbitrator has returned to the finding of the
duress in the following terms:-
4.1.3 AT’s Analysis and Conclusions
iv) Respondent has averred that “In the letter
dated 22.10.2020 the claimant has accepted the
counter offer without any opposition”. This was an
exercise of ‘dominant position’ by the Respondent,
who did so because they could. It was well
established that the machines were likely to be ready
for inspection, if not ready, from the fact that vide
their various letters Claimant had been requesting for
refixation of delivery period to 28.02.2021 and
finally vide letter dated 05.10.2020 to 31.03.2021,
and completing supply of duly inspected machine on
30.03.2021. Having invested in the manufacturer of
these two special machines which likely could only
find use against the order, the Claimant could not but
was forced to accept the counter offer to salvage
some of its investment. Furthermore the offer itself
was not in order as the contract did not have any such
clause, nor were the machines the same.
51. The aforesaid findings indicate a clear misreading of
the evidence as also ignoring material evidence. Letter
dated 13.08.2020 of the respondent cannot be interpreted
in a manner that the machines were ready or would have
been likely ready for inspection or even that the respondent
had invested in two special machines by that time. The
letter, on the contrary, would indicate that there is not even
a whisper of any investments having been made by the
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 31 of 38
respondent after the execution of the contract on
14.01.2020 as the lockdown was itself imposed in March,
2020. The letter does not even subject to any investment
made by the respondent by the said date or any status of
preparation of machines and even it is not the case that the
machines were likely to be ready for inspection if not
ready. The entire reasoning is assumptive rather than based
on facts.
52. Ld. Arbitrator seems to have proceeded on
considerations of equity, ignoring that the relationship
between the parties is a commercial one and are
regularized by the terms of the contract. An arbitrator has
no jurisdiction to decide matters ex-debito justitiae.
53. In National Hydroelectric Power vs. General
Electric Company FAO(OS) 554/2010 decided on
29.04.2013, Hon’ble High Court of Delhi observed:-
“74. Merely because it may have appeared to
the Arbitral Tribunal- equitable and fair to
grant escalation/price variation by adopting a
different formula or, different indices, than
what is agreed to between the parties
expressly in the contract, is no ground for the
Arbitral Tribunal to depart from the express
agreement between the parties. Once the
parties have laid down the formula by which
escalation/price variation shall be computed,
only that formula can be applied, and it is not
open to the Arbitral Tribunal to either vary
the formula or apply indices different from
those prescribed in the formula contained in
the contract. Unfortunately, the learned
Single Jude has not examined the objections
raised by the appellant in depth. No doubt,OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 32 of 38
the scope of interference with an Arbitral
Tribunal is limited. But it does not mean that
the Court will not examine in depth the
objections raised by the objector falling
within that limited scope.
54. Thus, it is clear that an award would not be immune
from judicial review or interference in case the basic
terms or conditions of the very contact are found to have
been transgressed. The restraint to look into the
interpretation of a Provision by the Ld. Tribunal is also not
an absolute concept and is subject to just exceptions. In a
recent decision, in Union Of India & Anr. vs M/S Jindal
Rail Infrastructure Limited [O.M.P. (COMM) 227/2019],
Hon’ble High Court of Delhi has observed as under:-
“65. As stated above, the said award is based on
interpretation of Clause 2.4 of the Agreement
(renumbered as Clause 2.8 of the Agreement), as
according to the Arbitral Tribunal, the said clause
did not entitle the Railways to place an order for
additional quantities at the price quoted by tenderer,
if there was a substantial increase in the market
value or the cost of manufacturing of wagons. This
was not a case set up by JRIL in its Statement of
Claims.
68. A commercial contract between the parties
cannot be avoided on the ground that one of the
parties subsequently finds it commercially unviable
to perform the same. The Arbitral Tribunal has,
essentially, re-worked the bargain between the
parties and re- written the contract. This is, clearly,
impermissible.
70. There is no dispute that the interpretation of a
contract falls within the jurisdiction of an arbitral
tribunal and an arbitral award based on a plausible
interpretation of a contract cannot be interfered with
under the provisions of Section 34 of the A&C Act.
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 33 of 38
75. In cases where it is found that the terms of the
contract do not clearly express the intentions of the
parties, it is open to seek recourse to various tools of
interpretation. This would include interpreting a
contract in a manner that would make commercial
sense as it is assumed that men of commerce would
have intended it so. However, it is not open to re-
work a bargain that was struck between the parties
on the ground that it is commercially difficult for
one party to perform the same.
76. The decision of the Arbitral Tribunal to award
the difference between the price quoted by the
tenderers and the price quoted by JRIL, is
unsustainable. It amounts to re-writing the contract
between the parties. The impugned award is in
conflict with the fundamental policy of Indian law
and is vitiated by patent illegality.”
55. It is not disputed that an amendment in the order was
also issued pursuant to the acceptance of the counter offer
communicated to the respondent in terms of letter dated
14.09.2020 which was not only responded to quite
decisively by means of acceptance but also acted upon
without any hesitation or objection. Once the respondent
had accepted the same, a valid contract had come into
existence which could not have lightly or casually
interfered into by the Ld. Arbitrator. The reasoning that
goes behind the award of reduced price is more of
assumption on the basis of duress, rather than being based
on any actual evidence. The letter dated 14.09.2020 of the
petitioner could not be said to be a threat for cancellation
of the order or forfeiture of the Performance Bank
Guarantee as is sought to be contended by the learned
counsel for the respondent.
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 34 of 38
56. The respondent had initially objected to the
reduction of price and invoked the arbitration. However, its
subsequent conduct until it received the entire payment as
per the amended contract goes on to show that it retained
an abiding interest in performance of the amended
contract. The Court cannot be oblivious of the fact that
during the currency of the amended contract, the
respondent did never approach the Court for appointment
of the Arbitrator or raise objections as to the validity of the
amended contract.
57. Question no.1 as mentioned above stands answered
in affirmative.
58. Turing to the question no.2 i.e. relating to
deductions. Ld. Tribunal’s findings with respect to
deductions are reproduced as under:-
4.2.3 AT’s Analysis and Conclusion:
i) Ministry of Finance, Government of India’s
Memo no. F.1/1/2023 PPD dated 11.04.2023, vide
S.No. 2 (iv) defined ‘Eligibility Condition’ as “where
original delivery period/ completion period stipulated
in contract was between 19.02.2020 and 31.03.2022
(both dates are inclusive).
ii) The contract specified ‘Original dates’ of
supply as 10.10.2020 and commissioning as
15.01.2021. Therefore, the said GOI memo becomes
applicable in the present case.
iii) The Memo provides for relief from deductions
of LD, Bid Security as well as performance security. It
also provides for revocation of debarment, if any.
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 35 of 38
iv) It is also seen from the details submitted by the
Claimant from IRFPS portal that the first requests for
consideration under said Memo was made by Claimant
on 01.05.2023 & 02.05.2023. These requests were
rejected by Respondent 27.06.2023. Claimant again
repeated the same requests on 01.06.2023 &
30.07.2023, which were rejected on various dates
subsequently. Approval of request of the Claimant for
arbitration is dated 28.07.2023. Therefore, the
Respondent’s submission that rejection of VSVT
request was on account of matter being sub-judice
(under arbitration) is partial representation of facts.
v) The Government of India, Ministry of Finance’s
OM dated 06.02.2023 on the Subject matter explicitly
states “Vivad se Vishwas I- Relief for MSMEs”. It is
reiterated vide OM dated 11.04.2023 statinig “Vivad se
Vishwa I- Relief for MSMEs: Revised Order” on
subject matter. The intent of GOI is clear spelt out as
“Government has been getting many references
from Micro, Small and Medium Enterprises
(MSMEs) regarding difficulties being faced by
them in the last two years due to Covid 19
pandemic. The Government had provided
certain benefits to the industry (including
MSMEs) in Government contracts in the past.”
and
” Para 1. In order to further support MSMEs, it
has been decided to provide relief in all
contracts…”
vi) The Respondent has submitted details of
deductions amounting to Rs.15,44,124.00 (1,50,410.00
+ 13,93,714.00) only against claimed under payment of
Rs.20,55,138.00 (13,24,028.00 + 7,31,110.00) by the
Claimant. No details/ explanation of difference in the
two amounts has been submitted by the Respondent
even after being asked. Therefore, AT includes that the
entire amount of Rs.20,55,138.00 are the deductions
related to various LDs in the subject case. In
accordance with GOI directives under “vivad se
Vishwas-I” (VSVI I) 95% of the said amount is due to
refund to the Claimant.
The claim accepted is Rs.19,52,381 (20,55,138.00 x
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 36 of 38
95%).
Amount of Award : Claim Rs.19,52,381.00
59. Learned counsel for the petitioner has contended
that there was delay in submission of Performance Bank
Guarantee as well as commissioning of the machines.
Respondent side, on the other hand, has vehemently
contended that the Government of India, Ministry of
Finance has floated a scheme for the purposes of providing
reliefs to MSMEs and as per the same, the deductions on
the basis of delay, if any assumed to be existing, cannot be
sustained and that the award of the amount on this count is
duly explained by the Ld. Arbitrator.
60. The respondent side has also demonstrated from the
record that the submissions of the Performance Bank
Guarantee was within time. The petitioner side has not
been able to provide any explanation as to why the
submission of Performance Bank Guarantee is treated as
delayed.
61. Although the petitioner side seeks to assail the
applicability of the scheme, going by the overall reasoning,
the Court is of the view that the view adopted by the Ld.
Arbitrator is one of the plausible views as to the benefit of
the scheme. The reasoning set forth in the Award does not
call for any interference, the view being one of the
plausible views.
OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 37 of 38
62. No other point has been pressed, nor is made out
from the submissions made. Question no.2 is, accordingly,
answered.
63. The Court does not have any power to modify or
alter the Award. Resultantly, the petition is allowed and the
Award dated 04.09.2024 is set aside.
64. The application for stay of operation of the Award is
also disposed off having become infructuous at this stage.
65. Needless to say that parties shall be at liberty to
pursue their remedies in accordance with law as far as the
adjudication afresh is concerned.
66. Arbitral record be sent back.
67. Parties to bear their own costs.
68. File be consigned to record room after due
compliance.
Digitally signed
Dictated and Announced today NIKHIL
by NIKHIL
CHOPRA
i.e. on 24th day of April, 2025 CHOPRA
Date:
2025.04.29
17:50:39
in the open Court +0530(NIKHIL CHOPRA)
District Judge (Commercial Court-06)
Central, Tis Hazari Court, Delhi
24.04.2025OMP (Comm) 102/2024 Union of India Vs. M/s Enkay Enterprises Page 38 of 38
