Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Plaintiff Enoch Infra build LLP, carries on the business of construction and infrastructure development. Archon, Archon Power infra India Pvt. Ltd. is a company

The Plaintiff Enoch Infra build LLP, carries on the business of construction and infrastructure development. Archon, Archon Power infra India Pvt. Ltd. is a company registered under the Companies Act, 1956

Sometime in or around July 2016, Archon was awarded a tender by BPCL to

construct anew plant shed and also complete allied civil, structural and enabling works at BPCL's bottling plant situated at Budge Budge, West Bengal. Mr. Kapil Sharma represented that the total value of the contract was approximately Rs. 17.73 crores.

Mr. Sharma of Archon represented that it needed a sub-contractor for executing the various works which the Plaintiff expressed its willingness to do. Subsequently, parties entered in a Sub-Contract Agreement dated 07th March, 2017.

A few relevant clauses of the Sub-contract Agreement dated 7th March, 2017 are

as follows:

Clause 1 stipulated that Archon shall be the main contractor and the Plaintiff shall be the sub-contractor.

Clause 4 stipulated that all payments from BPCL shall be received in the Dena Bank

account of Archon. Archon undertook to release 50% of the payments immediately

upon receipt from BPCL.

Clause 6 inter alia stated that all charges, materials, labour and overheads shall be borne by both the Plaintiff and Archon equally.

On 24thAugust, 2017 the Plaintiff and Archon entered into a Supplementary Agreement to modify the earlier Sub-contract Agreement. The Supplementary Agreement modified the profit-sharing ratio from the earlier 50:50 ratio to 32:68. Another relevant clause of the Supplementary Agreement stated that all remaining

financial arrangements shall be arranged by the Plaintiff from its own funds and

the future revenue receipts generated from the said project. Clause 4 of the

Agreement inter alia stated that the new HDFC Bank current account of Archon

shall be operated by an authorized person from Enoch.

During the subsistence of the agreements a few disputes pertaining to the

management of receipts from BPCL cropped up. It was the Plaintiff's case that

Archon was diverting funds from the accounts instead of paying the Plaintiff and

or utilizing the amounts to ward the said project.

During the subsistence of the Agreement, Enoch made numerous payments to the various vendors, workers etc. for both projects. A majority of these payments were form Enoch's own bank account. However, none of the moneys received by BPCL were being credited to Enoch. These shall be elaborated subsequently. Sometime in or around May2018 Enoch discovered that it no longer was authorized to operate the HDFC Bank account of Archon contrary to Clause 4 of the Supplementary Agreement of 24th August 2017.

On 16th July, 2018 Enoch addressed a letter to BPCL stating that Archon had been diverting funds from its account without paying Enoch sub-contractor its share as

determined by the three agreements entered into between the parties. The Letter

called upon BPCL to make all the payments pertaining to the project into Enoch's

account. The letter inter alia also stated that despite a payment of Rs. 2.41 crores

to Archon, Archon had not paid any amounts to Enoch but had diverted the said

funds. Similarly, amounts vide RA Bills No. 8 to 13 totaling Rs, 2.22 crores were

utilized by Enoch in the project itself. The letter called upon BPCL to withhold any

further payments to Archon and called upon it to make payments to the new

account wherein Enoch was the sole signatory.

Archon became aware of the aforementioned communication and addressed a

letter to Enoch requesting it to not make any communications with BPCL. It is pertinent to note that by the letter dated 24th July, 2018 Archon did not deny any

of the contents of the aforementioned letter.

By a letter dated 3rd August, 2018 the Archon blatantly denied the contents of the

letter and to the shock and surprise of Enoch, stated that the Agreement mentioned in Enoch's letter were never termed as sub-contract agreement but

merely as profit sharing work jointly agreed by both parties to carry out

construction work for the said project.

Ultimately it was discovered that Archon did not inform BPCL of Enoch's role as a sub-contractor. This is because the agreement with BPCL stipulated that Archon cannot appoint any sub-contractor without its permission. BPCL initiated proceedings against Archon for failing to disclose BPCL as a sub-contractor and has sought to blacklist Archon for breach of its agreement with BPCL by appointing a subcontractor. Archon denied that Enoch was a sub-contractor but has stated that Enoch was merely a financial partner.

1.What remedy does Enoch have? On what ground do you suggest it file a case against Archon? What can it claim?

2.Can Enoch recover anything from BPCL directly?

3.Is Archon in breach of Contract by appointing a sub-contractor? Can Archon be blacklisted for this?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Bluebook A Uniform System Of Citation

Authors: Harvard Law Review, Columbia Law Review, Yale Law Review

21st Edition

0578666154, 978-0578666150

More Books

Students also viewed these Law questions

Question

How do the Chapman brothers measure job performance?

Answered: 1 week ago

Question

8. What values do you want others to associate you with?

Answered: 1 week ago