In a significant legal development, the Delhi High Court has delivered a landmark judgment in a settlement claim case involving a contractor and Container Corporation of India. The ruling signifies a triumph for justice and adherence to contractual obligations, setting a positive precedent for future disputes within the realm of commercial agreements. This decision showcases the importance of upholding contractual integrity and fairness in business dealings within the Indian legal framework.
Facts
- The Petitioner has filed a writ petition seeking direction for settlement of their claim with the Container Corporation of India under the Vivad Se Vishwas-II Scheme.
- The scheme is applicable to various entities including Central Public Sector Enterprises like the Respondent, where the Ministry of Railways holds majority shares.
- The Respondent has not opted out of the Scheme despite considering it.
- Various claims have been made by the Petitioner including reimbursement of taxes, interest on principal amounts, and legal expenses.
- The matter was heard on multiple dates with adjournments for seeking instructions and arguments.
- A detailed claim amounting to Rs. 76,01,821/- has been put forth by the Petitioner.
- The Court is considering the claims made by the Petitioner and the applicability of the Scheme in this case.
- The Arbitration proceedings were initiated by the Petitioner.
- An Arbitral Award was passed in favor of the Petitioner.
- The Award granted the Petitioner a sum of Rs. [amount awarded].
Analysis
- The Scheme ‘Vivad se Vishwas II (Contractual Disputes)’ is applicable to contractors who wish to participate in it.
- The scheme covers cases of domestic arbitration only, not international arbitration.
- It applies to all kinds of procurement, including goods, services, and works.
- Contractors must submit their claims through Government e-Marketplace (GeM) using a dedicated link provided by GeM.
- The scheme offers settlement for disputes involving court awards passed on or before 30.04.2023, with specific conditions and percentages of the net amount awarded.
- Both court awards and arbitral awards passed on or before specific dates are eligible based on certain criteria.
- The scheme aims to reduce litigation and clear backlog, benefiting both contractors and procuring entities.
- Stamp duty for settlement agreements under the scheme is to be paid by the contractor.
- Time periods and conditions for acceptance of settlement offers are clearly outlined in the scheme.
- The settlement agreement under the scheme should lead to withdrawal of all pending litigation related to the dispute.
- The Government aims to create a pro-business environment by resolving disputes efficiently and attract more private investment.
- Each person signing the Settlement Agreement is fully authorized by the Party represented.
- Each signatory understands the contents of the Settlement Agreement.
- Signing the agreement is done willingly and without any pressure or influence.
- The Settlement Agreement is final, binding, and enforceable against the Party and persons related to them.
- The Respondents were found to be acting arbitrarily and capriciously, violating Article 14 of the Constitution of India.
- The reasons given by the Respondents in their written submissions were deemed unacceptable.
- The Petitioner claimed an amount based on government assurance, which it legitimately believed would be honored.
- The claim should have been settled much earlier and before resorting to legal action.
Decision
- The writ petition filed by the Petitioner is allowed.
- The court is inclined to accept the claim of the Petitioner and allow the writ petition.
- Any pending application(s) are disposed of.
- The contractor must accept the offer within the prescribed time period.
- The Respondents are directed to act in accordance with the scheme and provide their offer to the Petitioner within two weeks.
- The Petitioner is directed to give its acceptance within the Scheme timeframe if they wish to proceed.
- No relaxation options are allowed, including claims of GeM portal issues on the last day.
- The settlement amount shall be 65% of the net amount awarded by the court or 65% of the claim amount lodged by the contractor, whichever is lower.
- If the contractor accepts the offer, Step 4 will follow; otherwise, Step 5 will be initiated.
- The contractor has 30 calendar days to respond to the offer (calendar day ending at midnight).
Case Title: ROADWINGS INTERNATIONAL PRIVATE LIMITED Vs. CONTAINER CORPORATION OF INDIA LIMITED & ORS. (2024:DHC:3917)
Case Number: W.P.(C)-13824/2023
