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2002 DIGILAW 153 (JK)

Bhushan Kumar And Brothers v. Union Of India

2002-05-16

S.K.GUPTA

body2002
1. This is an appeal directed against the judgment and order dated 19-3-2002 passed by learned District Judge, Jammu in File No. 15/Arbitration Act. By the aforesaid order, petition of the appellant under Section 9 of the Arbitration and Conciliation Act for the grant of interim order has been dismissed. 2. Facts of the case relevant for the disposal of this case in a nutshell are that, that a contract CE (P) SAMPARK/ 11/2001-2002 for the supply of Stone Metal and Screening between KM 118 to 128 Road Tain Bridge-Rajouri was allotted to the appellant by the respondent. There was an agreement executed between the parties in respect of this allotment of contract work. In pursuance of letter of acceptance issued by respondent, work order was issued to the appellant for execution of the contract work on 29-11 -2001. For the purpose of reference, the relevant extract of the word order is reproduced here: "3. Time effect: (1) Date of handing: - 29 Nov 2001 over of site (ii) Date of comm-: - 29 Nov1 2001 encement of work (iii) Date of Completion: - Phase. -l :-28Feb2002 Phase-ll: - 28 May 2002" 3. After the issuance of the work order, petitioner/appellant started the execution of the work, utilized all the resources, employed sizeable number of labour and arranged vehicles for sending stone boulders at site, and procured and dumped raw-material at the site to complete the work in time. It is further the case of the petitioner/appellant that due to militants attack on Indian parliament on 13th December, 2001, the situation in the State of Jammu And Kashmir in particular worsened. The site of work being located near the Indo-Pak Border in District Rajouri, the deployment of Indian Army on the Indo-Pak Border and large scale migration of the population from the area virtually stalled the further progress of the work. It is further contended that for about four weeks, the petitioner/appellant could not continue with his work due to war like situation at the site. He, however, approached the respondent many times, held meetings with them and apprised them about the genuine difficulties faced by him due to which more than a month had been wasted in order to seek extension of period for completion of the work. He, however, approached the respondent many times, held meetings with them and apprised them about the genuine difficulties faced by him due to which more than a month had been wasted in order to seek extension of period for completion of the work. That the respondent, however, reminded the petitioner/appellant through communication dated 13th February, 2002 for the completion of the contract work Phase-l by 28th February, 2002 and also threatened that in case of non-completion within the scheduled time, the balance work could be got completed through other agency at the risk and cost of the appellant. Petitioner/appellant further stated to have replied the aforesaid communication on 15-2-2002, but the respondents declined the extension of the period of contract and remained adamant to get the work executed through other agency at the risk and-cost of the petitioner/appellant. 4. The stand of the respondents-Union of India, on the other hand, reflected in their demurrer filed before the Trial Court that the contract was an operational defence work and the site had a strategic significance, as the road was to be used by the Army for transporting the troops deployed in the Border area. This contract was required to be completed in two phases with one phase to be completed within three months and other in six months. It is also maintained by the respondents that time was the essence of the contract and the petitioner/appellant had a knowledge of the fact. But despite that the petitioner/appellant did not mobilize the full resources so as to complete the work within the time frame specified in the work order. Several letters, annexed with the record, were issued to remind the petitioner/appellant about the slow progress of the work on site calling upon him to gear up the work considering the urgency being operation defence work required to be used for Army for deployment of forces on the Border area. That the matter, however, did not end up here, the petitioner/ appellant was further reminded by telegram and called upon to report for discussion and at that point of time was also told to complete 70% of the contract work by the end of February, 2002 with a note of caution that in case will be constrained the cancellation of contract. This, however, did not have any desired effect on the petitioner/appellant. This, however, did not have any desired effect on the petitioner/appellant. The respondents also denied that the militancy or cross-border firing has any effect on the work site which was about 30 kilometres away from the Border. There was also no problem for the labour to work in area. The work allotted at site of the road was, infact, meant for the Army for movement of the troops. The contention raised by the petitioner about the non-availability of the labour due to turmoil in the site on account of onslaught of militancy and cross-border firing. Letter dated 15th February, 2002 through which the petitioner/appellant stated to have applied for extension of time for execution of the work was received by the respondents in 1st March, 2002. That the malafide intention of the petitioner/appellant is clearly gatherable from the fact that the said application back dated 15-2-2002 from the respondent, time is the essence of the contract under Condition 7 of the Contract and in case the work is delayed, it was incumbent upon the petitioner/appellant to give a notice with regard to the happening of any event resulting in delay of the work within 30 days of the OC contract. The failure on the part of the petitioner/appellant to notify to the result of any event is acquiescing of his right to ask for extension of time to complete the work, which has been delayed by such event. That the petitioner/appellant having failed to make the requisite arrangements for deployment of resources and accelerating the pace of work at site as required under the provisions of Condition 29 of General Conditions of Contract IAFW 1815 (z), which required the contract to be cancelled at the risk and cost of the petitioner/appellant. It was further pleaded by the respondent that Section 9 of the Arbitration and Conciliation Act, 1997 can be invoked for the grant of interim order only when some proceedings before the Arbitrator or in a suit are pending, if any. His further contention is that the application of the petitioner is not covered within the amplitude of the Arbitration and Conciliation Act and, thus, so as to grant interim relief of injuction. His further contention is that the application of the petitioner is not covered within the amplitude of the Arbitration and Conciliation Act and, thus, so as to grant interim relief of injuction. The Trial Court after hearing the parties and going through the documents on record held that the petitioner/appellant has not succeeded in making out a prima facie case to grant interim relief under Section 9 of the Arbitration and Conciliation Act and dismissed the petition vide order dated 19-3-2002. It is how the petitioner/appellant aggrieved by the aforesaid order is before this court to impugn its correctness. 5 The admitted facts emerging from the record are that, the appellant was alloted the contract work on 29-11-2001. As per he work the work order issued in this behalf, Phase-l work was to be completed by 28 February, 2002. The work at site could not be completed within period provided under the contract agreement. The existence of agreement between the parties containing an Arbitration Clause ordained under Clause 7 of the Contract Act is not denied. Clause 7 of the General Conditions of Contract IAFW 1815 (z) read as under. 6 "7 TIME DELAY AND EXTENSION (a) Time is of the essence of the contract and is specified in each individual supply order. If the delivery of the supplies be delay: - (i) By force majeure, or (ii) By reason of abnormally bad weather, or (iii) By reason of serious loss or damage by fire, or (iv) by reason of civil commotion, local combination of workmen, strike or lockout, affecting any of the trade employed on the works, or (v) by reason of delay on the part of the nominated subcontractors or nominated suppliers which the contractor has, in suppliers which the contractor has, in the opinion of G.E./O.C takes all practicable steps to avoid or reduce or (vi) by reason of delay on the part of the contractor or tradesman engaged by Government in executing work not forming part of this contract, or (vii) by reason of any other cause, which, in the absolute discretion of the Accepting officer is beyond contractors control; 7. Then, in any such case the Accepting Officer may make fair and reasonable extension in the completion dates of individual items of supplies or groups of items of supplies for which separate periods of completion are mentioned in the supply order. 8. Then, in any such case the Accepting Officer may make fair and reasonable extension in the completion dates of individual items of supplies or groups of items of supplies for which separate periods of completion are mentioned in the supply order. 8. Upon the happening of any such event causing delay the contractor shall immediately but not later than 30 days of the happening of the event give notice thereof in writing to G.E./C.O. but shall nevertheless use constantly his best endeavour to prevent or make good the delay and shall do all that may reasonably be required to the satisfaction of the G.E./C.O. to proceed with the delivery of the supplies. 9. In case the contractor fails to notify the G: E./O.C. of happening of an event(s) causing delay within the period of 30 days stipulated in sub-para 3 above, he shall forfeit his right to claim extension of time for the delay caused due to such events. 10. Extension of time, as approved by the Accepting Officer, shall be communicated to the contractor by G.E./O.C. in writing and shall be final and binding except in the case of contracts accepted by the G E./O.C when, in the event of the contractor not agreeing to the extension granted by the G.E./O.C the matter shall be referred to the CWE/TFC whose decision shall be final and binding. 11. (b) "If the delivery of the supplies be delay by reason of non availability of Government stores mentioned in Schedule B then, in such event, not withstanding the provisions herein before contained, the Accepting Officer may in his discretion grant such extension of time as may appear reasonable to him and the same shall be communicated to the contractor by the GE in writing. The decision so communicated shall be final and binding and the contractor shall be bound to complete the delivery of the supplies within such extended time." 12 (c) No claim in respect of compensation or otherwise, howsoever arising as a result of extensions granted under conditions (a) and (b) above shall be admitted." 13. The decision so communicated shall be final and binding and the contractor shall be bound to complete the delivery of the supplies within such extended time." 12 (c) No claim in respect of compensation or otherwise, howsoever arising as a result of extensions granted under conditions (a) and (b) above shall be admitted." 13. It is also borne out from the record that when the petitioner/appellant did not utilize the adequate resources by deployment of labour to accelerate the pace of work so as to complete within stipulated period undertaken and accepted under the agreement, several notices were issued calling upon the petitioner/appellant to accelerate the work in considering the strategic position of the road and the operational defence work, but without any positive response. The petition was also reminded through the aforesaid communication that time is essence of the contract with a further warning that in case working is not completed within the scheduled time, the balance work would be got executed through another agency at his risk and cost. Even during discussion after communication from the respondent Union of India, dated 13th February, 2002, in which the petitioner was advised to mobilize more resources to make up the period and complete at least 70% of the work of Phase-l by the end of February, 2002, but that too did not invite the serious attention of the petitioner. The petitioner, however, did not accelerate the progress of the work by deploying more resources and making adequate arrangements in performing of the obligation under the agreed conditions of the contract to complete it within the time scheduled 14. Mr. R.K Gupta, learned counsel appearing for the appellant, however, vehemently urged that the execution of the work virtually came to an halt due to militants attack on Parliament and heavy deployment of the forces on the Border and the cause of delay attributed to force sheerly by "force majeure" under Clause 7(i) of the contract and claimed the extension of the time for the completion of the work. It is not understandable as to why the petitioner/appellant remained silent. Had he, infact, faced the difficulty genuinely in the execution of the work on account of the reasons delineated hereinabove and did not notify to the respondents within a period of 30 days of such event as envisaged under Clause 7 of the General Conditions of Contract agreement. It is not understandable as to why the petitioner/appellant remained silent. Had he, infact, faced the difficulty genuinely in the execution of the work on account of the reasons delineated hereinabove and did not notify to the respondents within a period of 30 days of such event as envisaged under Clause 7 of the General Conditions of Contract agreement. There is only one communication, letter, dated 15th February, 2002 alleged to have been addressed to the respondents and was, infact, received in the latters office on 1st March, 2002. In fact, the respondents had informed the petitioner vide communication dated 20th February, 2002 in regard to his failure to complete 70% of the work and this fact to be considered for cancellation of the contract. In such circumstances, the letter dated 15th of February, 2002 allegedly written by the petitioner without accompanying any supporting postal receipt of that date, which stood received on 1st March, 2002, to show bonafine of the petitioner/appellant. The petitioner/ appellant fully knew about Conditions under Clause 7 of the contract agreement that the time was essence of the contract and the date specified for the completion of Phase-1 by 28th February, 2002 and further completion of Phase-11 by 28th May. 2002, but the execution of the work on the appointed dates could not be completed, despite advice from the respondents from time to time and reminding him and giving a warning of the on-completion of the work within time to be considered for cancellation of the contract. When the petitioner has neither completed the contract within the stipulated perior nor applied, nor has notified within the period of 30 days from the happening of event, for reasonable extension of time nor his contract determined or terminated at the relevant time under Clause 37 of the contract agreement, no prima facie case for the grant of interim injuction under Section 9 of the Arbitration Act is made out. This is so particularly when the delay and laches in completion of the contract manifestly appear to be due to his own conduct in completing the work of Phase-1 within the period fixed in the work order for time being the essence of the contract under Clause 7 of the contract agreement. It was further contended by Mr. This is so particularly when the delay and laches in completion of the contract manifestly appear to be due to his own conduct in completing the work of Phase-1 within the period fixed in the work order for time being the essence of the contract under Clause 7 of the contract agreement. It was further contended by Mr. R.K. Gupta that the Trial Court could not go into the merits of the case while considering the application under Section 9 of the Arbitration Act for the grant of interim injuction. His further contention is that these are the aspects, which are required to be placed before and considered by the Arbitrator and has, thus, seriously prejudiced the case of the petitioner., I am afraid, this contention of the petitioner/appellant is also without any foundation, legally or factually. The Court while considering the existence of a prima facie case, which is prerequisite for the grant of interim injuction, can look into the merits of the case for such determination. The argument advance by Mr. R.K. Gupta is an argument, which cannot be accepted. The original power of the Court to issue interim order and the power of the Arbitrator operates in distinct fields. The principles governing the grant of ad-interim injuction in case of arbitral matters are the same as in the other civil matters. The petitioner/appellant must show that he has a prima facie case and that the balance of convenience lies in his favour and in the absence of injuction, he is likely to suffer an irreparable injury. Where the party is itself is responsible for the creation of a situation necessitating a warning of cancellation of the contract, in case the pace of work is not accelerated so as to be completed within the time scheduled, he cannot seek injuction against the other party. 15. As regards the jurisdiction of the Court to entertain an application under Section 9 of the 1996 Arbitration Act, it is either before arbitral proceedings or during arbitral proceedings or after making of the arbitral award, but before it is enforced under Section 36 of the Act. However, when a party applies under Section 9 of the Arbitration Act, it is implicit that it accepts that there is a final and binding arbitration in agreement in existence. However, when a party applies under Section 9 of the Arbitration Act, it is implicit that it accepts that there is a final and binding arbitration in agreement in existence. Arbitral proceedings commence only when request to refer a dispute is received by the respondents under Section 21 of the Arbitration Act. Mr. Nirmal Kotwal, learned advocate appearing for the respondents, however, expressed readiness to appoint an Arbitrator. 16. Respondents being dis-satisfied with the progress of work executed by petitioner/appellant, despite notices issued vide Annexures R-4 to R-12 on record, further afforded an opportunity vide Annexures R-14 and 15 to complete at least 70% of the work of Phase-l by the end of February, 2002, to that also petitioner failed to execute. The equity in such circumstances does not lean in favour of the petitioner/appellant so as to grant interim relief under Section 9 of the Arbitration Act. In this view of the matter, the order impugned drawn by the District Judge, in my opinion, cannot be faulted. 17. Having considered the facts and circumstances discussed above, there is, in my view, no merit in this appeal and is accordingly dismissed.