ZONAL GENERAL MANAGER, M/S IRCON INTERNATIONAL LTD. versus M/S VINAY HEAVY EQUIPMENTS

Citation: [2015] 6 S.C.R. 938 · Decided: 06-05-2015 · Supreme Court of India · Bench: VIKRAMAJIT SEN · Disposal: Dismissed

Judgment (excerpt)

[2015] 6 S.C.R. 938 
A 
ZONAL GENERAL MANAGER, M/S IRCON 
INTERNATIONAL LTD. 
v. 
M/S VINAY HEAVY EQUIPMENTS 
B 
(Civil Appeal No. 4211 of 2015) 
MAY06, 2015 
[VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ.] 
Arbitration and Conciliation Act, 1996 -
s. 34 -
c Arbitration award - Challenge to - Main contract between 
the Company S as main contractor and the appellant as 
successful tenderer - For execution of the same appellant 
entered into sub-contracts, C1 and C2 packages with the 
respondent-sub-contractor- Completion of67% of the work 
D by respondent but thereafter ceased to work- Non-payment 
of certain amount to respondent by appellant - Arbitration 
matters - In the First Arbitration, respondent made claims 
against appellant claiming the unpaid b~lance amount - In 
E 
the Second Arbitration, appellant made claims against the 
main contractor regarding pending payments pertaining to 
C1 and C2 packages - Award passed by the arbitrator 
wherein appellant liable to make payment to respondent -
Appellant challenged the award by filing petitions uls. 34 -
F Subsequently respondent filed applications contending that 
while appellant rejected its claim initially, at the same time it 
claimed the amount against the main contractor-Appel/ant's 
case that the main contract and the sub-contracts are wholly 
of 'back to back nature and thus, liability of the appellant 
G would be restricted to and co-extensive of that which main 
contractor acknowledges - Both the High Court dismissed 
the appellant's petition and allowed the respondent's 
applications - On appeal, held: Orders passed by the 
arbitrator and courts below do not call for interference - On 
I 
H facts, it cannot be said that contractor's contract with the 
938 
ZONAL G. M., M/S IRCON INTERNATIONAL LTD. v. M/S 939 
VINAY HEAVY EQUIPMENTS 
appellant provided for "back to back" subcontracts whereby A 
main contractor would be directly answerable for the claims 
raised by contractors - Subletting was provided for by the 
main contract - However, it cannot be said that main 
contractor contractually (in the main agreement) assumed 
primary liability for the subcontractor's claims in respect of B 
agreements made with the appellant - Appellant conceded 
before the Arbitrator that it would countenance an Award in 
favour of the respondent as long as it was indemnified for 
the payment made to the respondent by an equal offsetting 
payment by way of an Award in its favour in its arbitration C 
with main contractor-Appellant was granted such an Award 
- Concession could be called a conditional one, however, 
the admission itself, taken alone, was not conditional -
Appellant was bound and bonded by the legal consequences D 
of the initial admission made by it before the arbitrator. 
Oil and Natural Gas Corporation Ltd. Vs. Western Geco 
International Ltd. (2014) 9 SCC 263 - referred to. 
Case Law Reference 
(2014) 9 sec 263 
Referred to. 
Para 12 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 
4211 of2015. 
From the Judgment and Order dated 07 .12.2006 of 
the High Court of Judicature at Madras in OSA No. 313/ 
2005. 
WITH 
Civil Appeal Nos. 4213 and 4212 of 2015. 
E 
F 
G 
Arun Khosla, Sudhir Kumar Gupta, Abhinav Gupta, 
Manish Gupta, R. K. Gupta, Satish Kumar for the Appellant. 
H 
940 
SUPREME COURT REPORTS 
[2015) 6 S.C.R. 
A 
Subramonium Prasad, AAG, C. A. Sundaram, Mohini 
8 
Giri, Mukesh K. Giri, 8. Balaji, Rajeev Dalal, Sudarsh Menon 
for the Respondent. 
The Judgment of the Court was delivered by 
VIKRAMAJIT SEN, J. 1. Leave granted. 
2. The Appellant, IRCON International, is impugning 
the Judgment of the Learned Division Bench of the Madras 
High Court, which had dismissed two Original Second 
C Appeals preferred by the Appellant. Recapitulating the facts 
of this litigation, the Appellant was the successful tenderer 
in respect of a contract awarded to it by SIPCOT (not a party 
to the present dispute/ Appeal), for the construction of an 
D Internal Road for the Industrial Complex at lrungattukotta', 
Sriperumbpudur Taluk, Kanchipuram District, Tamil Nadu. 
The contract between these parties was made on 10. 07 .1997 
and was valued at Rs.13,06,60,587/-. In furtherance of the 
execution of this contract, the Appellant entered into two 
E subcontracts (hereinafter, "the subcontracts") with the 
Respondent herein, in respect of two Packages, namely "C1" 
and "C2", for the laying of roads valued at Rs.3,20,64,752/-
and Rs.1,67,01,821/- respectively. The cumulati

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