Payment Terms

Anti-mine boots: an arbitrator orders the army’s northern command to pay dues | Chandigarh News

CHANDIGARH: Udhampur-based Army Northern Command has been ordered to pay a compensatory amount of approximately Rs 17.63 crore to Gee Kay Industries, a supplier of Boot Anti Mine Infantry (known as BAMI), for breach of contract payment terms resulting in financial loss to the supplier due to withholding of payment due.
The arbitrator also ordered the military to pay pre-award interest at the rate of 18% per annum on the principal from the date the mine boots were provided to Northern Command in July 2018 until the date of delivery of the award and thereafter, 18% interest on the total amount awarded, which includes the principal sum, interest before the award, the cost, until its realization. With this, the Northern Command would be required to pay an amount of around Rs 29.53 crore to the supplier.
In this case, the army withheld payment from the supplier on the grounds that the boots supplied were of defective quality.
The sole arbitrator, Kartar Singh, a former district judge, made this award after hearing an arbitration case between claimant Gee Kay Engineering Industries (a company based in the Batala region of Punjab) and the Northern Command of the Indian Army, which is an operational command in Jammu and Kashmir.
The plaintiff, a defense force and paramilitary supplier since 2002, had submitted three pairs of BAMIs to the technical evaluation committee set up by the Army after the Northern Command had initiated a proposal to supply anti-mine boots.
After technical expertise and other compliances, the order for the supply of 6,250 pairs of anti-mine boots was placed with the requesting company, which supplied the boots on time. The army was to pay 100% upon delivery and acceptance of the goods. The firm submitted an invoice dated October 5, 2018, for the release of the amount of Rs 16,77,07,500 but the Army did not release the payment resulting in a dispute. Finally, on August 16, 2019, Kartar Singh was appointed sole arbitrator to resolve the dispute.
During the hearing, the army claimed that, in accordance with the quality requirements of the tender, the anti-mine boots did not provide protection for the soldiers who wore them and that it caused them injuries. .
The lawyer representing the claimant industry, Major Guneet Chaudhary (Retired), argued that the Northern Command Headquarters had breached all the terms of the RFP (Request for Proposals), Supply Order and DPM (Defence Procurement Manual) and denied payment to the vendor on frivolous grounds.
The claimant argued that out of the total of 6,250 pairs of boots provided, only five personnel who wore these boots were injured, but the military did not provide any documentation to support their injury or any medical documentation. . There was no court of inquiry or medical report regarding the injured personnel produced by the Northern Command during the arbitration proceedings. Plaintiff’s attorney also pointed to the unauthorized actions taken as part of the Northern Command’s one-man investigation into allegations of substandard footwear.
It was also pointed out that before their approval, the BAMI underwent rigorous field tests, blast tests, visual and physical inspections, conducted by the senior expert council of army officers. The claimants argued that only 0.0008% of injuries occurred in the entire batch of 6,250 pairs of boots and that all injuries were within the allowable limits of the General Staff’s qualitative requirement. (GSQR).
After hearing both parties, the arbitrator ordered Northern Command a total amount of Rs 17,63,37,500, which includes Rs 16,77,07,500 as the total cost of the boots, Rs 18,75,000 as fees paid to the arbitrator, Rs 55,000 miscellaneous costs and Rs 75,000,000 lawyers’ fees and litigation costs. The army was also ordered to pay this amount with 18% interest. After calculating the interest, the Northern Command would be required to pay a total amount of around Rs 29.53 crore.