UNION OF INDIA Vs. BRIDGE TRACK AND TOWER PVT. LTD.

JUDGEMENT

(1.) This arbitration petition is filed under Sec. 34 of the Arbitration and Conciliation Act, 1996 ("Arbitration Act"), to set aside the arbitral award passed by the sole arbitrator. The claim in the arbitration is based on a purchase order placed by the petitioner with the respondent (claimant) for the fabrication and supply of 344 fans weighing 60 kg, shaped switches, as per the contract between the parties. By the arbitral award, the respondent's claim is granted for non-payment of Rs.24,93,462.00 towards the cost of supply of 45 sets of contract goods, and the PVC amount of Rs.6,38,932.00, which was withheld by the respondent. Basic Facts:

(2.) The petitioner had placed a purchase order with the respondent for the fabrication and supply of 344 sets of 60 kg, overriding fan-shaped switches. The petitioner placed another purchase order for the supply of 1014117 ERC. The petitioner alleged that, without supplying the goods, the respondent, in collusion with some railway staff, fabricated the record showing delivery of the goods and fraudulently received the payment. Hence, criminal proceedings were initiated, and the CBI in Pune commenced an investigation. A charge sheet was filed for the offence of forgery and cheating. By relying on Clause No. 2401 of the Indian Railways Standard Conditions of Contract ("IRS terms and conditions"), the petitioner withheld the amount payable to the respondent towards the first purchase order.

(3.) The arbitral tribunal opined that, under Clause No. 2401 of the IRS terms and conditions, before withholding or retaining any payable amount, the petitioner was required to notify the contractor of such withholding or retention. Since the petitioner failed to submit any evidence to prove that a show cause notice or an intimation was served upon the respondent, the onus of proving the same was not discharged, and thus the petitioner was not entitled to withhold the amount on the ground of pending adjudication of the criminal proceedings. Being aggrieved by the award directing the release of the payment, the original respondent has filed this petition to set aside the award.