LARSEN & TOUBRO LIMITED v. NATIONAL HIGHWAYS AUTHORITY OF INDIA.
2009-04-24
CHITRA VENKATARAMAN
body2009
DigiLaw.ai
Judgment Chitra Venkataraman, J. Application Nos. 5746 of 2008 and 1229 of 2009. Application No. 5746 of 2008 is filed under Section 9 of the Arbitration and Conciliation Act, 1996 for an interim protection to direct the respondent to refrain from levying any liquidated damages on the applicant herein and/or appropriating any amount towards liquidated damages from the bills of the applicant. Application No. 1229 of 2009 is filed by the respondent to vacate the order of interim injunction granted by this court on 17.12.2008 and dismiss the Application No. 5746 of 2008 with exemplary costs. For the sake of convenience, the parties herein are arrayed as per their rank in Application No. 5746 of 2008. Before going into the main contentions, a brief reference to the facts is as follows : The applicant was awarded a contract under agreement dated 06.06.2001 for the work, construction and completion of widening to 4/6 lanes and upgrading of the existing 2 lane carriageway of NH-5 in the State of Tamil Nadu from Km. 11.0 to Km. 52.80 (Chennai to TN/AP Border) - construction package - TN 1. Admittedly, there had been a delay in the execution, resulting in the extension of the work. The contract period was stated to be 31 months. The completion date was 07.01.2004. The overall completion date was 29.10.2007. The applicant states that problem relating to land acquisition proceedings, relocation of utilities, among other causes, delayed the progress of the work, thus the applicant could not complete the works within the sectional completion dates. Clause 44.1 of the General Conditions of the Contract (hereinafter referred to as 'GCC') provides for an extension of time under the stated condition therein. By letter dated 14.02.2003, addressed to the Engineer, the applicant sought for extension of time, since the sites were handed over with encumbrances; that even after the lapse of 20 months, physical possession of the site could not be taken over fully. After a series of exchange of letters between the parties, by letter dated 11.07.2003, the Engineer made his recommendation to the respondent recommending three different dates for Sections A, B and C. By letter dated 21.06.2004, the respondent recommended extension of time up to 20.09.2004 without liquidated damages.
After a series of exchange of letters between the parties, by letter dated 11.07.2003, the Engineer made his recommendation to the respondent recommending three different dates for Sections A, B and C. By letter dated 21.06.2004, the respondent recommended extension of time up to 20.09.2004 without liquidated damages. As the applicant still had difficulties in getting the site free of encumbrances, it addressed a letter on 06.11.2004 seeking suitable extension to make up for the loss of time. The Engineer made a recommendation and sought for approval of the same from the respondent. It is stated that in the meantime, the applicant completed the work - Section A on 12.04.2005; Section B on 20.01.2005 and Section C on 18.12.2004, leaving a small work alone to be completed. Consequently, after the completion of the work, the Engineer, by his letter dated 03.01.2006, once again addressed the respondent recommending extension of time till the aforementioned dates without liquidated damages. The defect liability period commenced on 12.04.2005 and was over by 30.04.2006. By letter dated 03.11.2008, the respondent intimated that for the period of extension from 17.03.2005 to 12.04.2005, liquidated damages per day at Rs. 0.30 million amounting Rs. 81 lakhs in respect of Section A and a sum of Rs. 75 lakhs in respect of Section B for the period up to 21.05.2005 was leviable. The applicant addressed a letter to the respondent dated 02.12.2008 requesting them to reverse the decision on liquidated damages within 14 days, failing which, the same could be referred to arbitration directly in terms of Clause 67.3 of the agreement. At this stage, apprehending that the respondent would deduct the amount claimed in the final bill which were in the process of finalisation, the applicant has approached this court for an order of interim injunction and submitted that even though the contract contemplates a Dispute Review Board for resolution of the disputes, yet, for want of Chairman in the Dispute Review Board, they could not invoke the provisions under Clause 67.1. By order dated 17.12.2008, this court granted an order of interim injunction for a period of four weeks and notice returnable in four weeks' time. Thereupon, the respondent has entered appearance to file their application to vacate the injunction granted.
By order dated 17.12.2008, this court granted an order of interim injunction for a period of four weeks and notice returnable in four weeks' time. Thereupon, the respondent has entered appearance to file their application to vacate the injunction granted. In the meantime, since the Chairman has assumed charge, the applicant has also moved the Dispute Review Board by placing its areas of disputes for its recommendations. In the background of these facts, the respondent made a preliminary objection on the very maintainability of the application under Section 9 of the Arbitration and Conciliation Act, 1996, apart from countering the merits of the claims of the applicant for an injunction in the application. The respondent contends that invoking of the provision under Section 9 of the Arbitration and Conciliation Act is too premature and that the situation for invoking the same has not yet risen for this court to assume jurisdiction. Consequently, the application has to be rejected. Countering the above submission, learned counsel appearing for the applicant took me through the various clauses in the agreement, particularly with reference to the dispute resolution mechanism. He submitted that going by the efficacy of the order that the dispute review mechanism would pass and further, going by the scheme of the provisions on the dispute resolution, no exception could be taken to the applicant coming before this court seeking protection under Section 9 of the Act. He pointed out that the jurisdiction of this court under Section 9 of the Act is not restricted only to a case where the party invoked the arbitration clause. Learned counsel pointed out that the provisions of Section 9 of the Act, as interpreted by the Supreme Court in the decision in Firm Ashok Traders v. Gurumukh Das Saluja, AIR 2004 SC 1433 = (2004) 3 SCC 155 = 2004 (1) Arb. LR 141 (SC), are aimed at safeguarding the interests of the parties as an interim measure awaiting any arbitration proceedings. He pointed out particularly to the interpretation placed on the phrase 'before' as in Section 9 of the Act, that going by the scheme of the contractual provisions and having regard to the efficacy attached to the recommendation of the Dispute Review Board, this court has jurisdiction to entertain the application under Section 9 of the Act.
He pointed out particularly to the interpretation placed on the phrase 'before' as in Section 9 of the Act, that going by the scheme of the contractual provisions and having regard to the efficacy attached to the recommendation of the Dispute Review Board, this court has jurisdiction to entertain the application under Section 9 of the Act. He further pointed out that such invoking of jurisdiction had not been frowned upon and in fact had been entertained, as evident from the decisions in National Highways Authority of India and another v. Bumihiway DDB Ltd. (JV) and others, (2006) 10 SCC 763 = 2006 SCACTC 588 (SC) = 2006 (4) Arb. LR 1 (SC); and Jaiprakash Hyundai Consortium v. Satluj Jal Vidyut Nigam Ltd., 2005 (1) Arb. LR 443 (Del.). Per contra, Mr. P. Wilson, learned Additional Advocate General appearing for the respondent, pointed out that Section 9 of the Act has to be seen in the context of Sections 7 and 2(1)(b) of the Act. In the absence of an arbitration agreement, at this stage, the applicant cannot invoke this court's jurisdiction and that in anticipation of exercising his right under Clause 67.3 of the GCC, he cannot bypass the procedure under Clause 67.1 of the GCC to invoke this court's jurisdiction. He emphasized that the stage for invoking Section 9 of the Act is yet to come, since, as of today, admittedly, there is no step taken to invoke the arbitration clause, more so in the wake of Clause 67.1 of the GCC. Disputing the analogy drawn by placing reliance on Section 77 of the Act, he pointed out that the scheme of dispute resolution is not akin to a conciliation; consequently, the reliance placed on Section 77 of the Act is totally misplaced. Placing reliance on the decision in Firm Ashok Traders v. Gurumukh Das Saluja (supra), he pointed out that unless and until the petitioner has reached the stage of invoking the arbitration clause, Section 9 of the Act, at this stage, cannot be invoked and this court has no jurisdiction to grant any relief.
Placing reliance on the decision in Firm Ashok Traders v. Gurumukh Das Saluja (supra), he pointed out that unless and until the petitioner has reached the stage of invoking the arbitration clause, Section 9 of the Act, at this stage, cannot be invoked and this court has no jurisdiction to grant any relief. Countering the said submission, learned counsel for the applicant pointed out that going by the words in Section 7 as well as in Section 9 of the Act, as interpreted by the Supreme Court in the context of the contract provisions in Clauses 67.1, 67.3 and 67.4 of the GCC, an application can be moved under Section 9 of the Act even in respect of any dispute in future, which includes a dispute that may go for arbitration. Hence, going by the very scheme of Clause 67.1 of the agreement, no exception could be taken to the applicant approaching this court under Section 9 of the Act for an interim measure. Heard the learned counsel appearing for the applicant and the learned Additional Advocate General appearing for the respondent. Although at the first blush, the contention of the applicant may appear unacceptable, going by the scheme of the dispute resolution, I have no hesitation in accepting the stand of the applicant. It is an admitted fact that, after filing application under Section 9 of the Act before this court the applicant has moved the Dispute Review Board. Before going into the various contentions of the parties herein, it is necessary that one has to see the provisions relating to dispute resolution as given in the contract. Clause 67 of the General Conditions of Contract deals with settlement of disputes. Clause 67.1 of the GCC relates to reference of disputes to the Dispute Review Board after its constitution. Either the employer or the contractor may refer a dispute to the Board in accordance with the provisions of Annexure A to these conditions of particular application.
Clause 67 of the General Conditions of Contract deals with settlement of disputes. Clause 67.1 of the GCC relates to reference of disputes to the Dispute Review Board after its constitution. Either the employer or the contractor may refer a dispute to the Board in accordance with the provisions of Annexure A to these conditions of particular application. Since the provisions relating to the constitution of the Dispute Review Board and the reconstitution of the Board if any one of the members or Chairman is not there to sit in the tribunal are not of relevance for the purposes of deciding the issue, the relevant portion of the said clause on the invoking of jurisdiction of the Dispute Review Board alone is extracted herein, which reads as follows : "If any dispute arises between the employer and the contractor in connection with, or arising out of, the contract or the execution of the works, whether during the execution of the works or after their completion and whether before or after the repudiation or other termination of the contract, including any disagreement by either party with any action, inaction, opinion, instruction, determination, certificate or valuation of the Engineer, the matter in dispute shall, in the first place, be referred to the Dispute Review Board ("the Board")." As to the result of the recommendations, the said clause further reads that if either the employer or the contractor is dissatisfied with any recommendation of the Board, or if the Board fails to issue its recommendation within 56 days after the receipt of the written request by the Chairman of the Board for recommendation, within 14 days after the receipt of the recommendation, or within 14 days after the expiry of the said 56 days period, as the case may be, then either the employer or the contractor may give notice to the other party with a copy for information to the Engineer, of its intention to commence arbitration as to the matter in dispute. No arbitration in respect thereof may be commenced unless such notice is given. This shall establish the entitlement of the party giving the notice to commence arbitration.
No arbitration in respect thereof may be commenced unless such notice is given. This shall establish the entitlement of the party giving the notice to commence arbitration. If the Board has issued a recommendation to the employer and the contractor within the said 56 days and no notice of intention to commence arbitration as to such dispute has been given by either the employer or the contractor within 14 days after the parties received such recommendation from the Board, the recommendation shall become final and binding upon the employer and the contractor. Whether or not it has become final and binding upon the employer and the contractor, a recommendation shall be admissible as evidence in any subsequent dispute resolution procedure, including any arbitration or litigation having any relation to the dispute to which the recommendation relates. All recommendations which have become final and binding shall be implemented by the parties forthwith. Clause 67.3 of the GCC contains the provision on arbitration. It states that any dispute in respect of which the recommendations have not become final and binding pursuant to Clause 67.1, shall be finally decided by arbitration. The arbitral tribunal is given full power "to open up, review and revise any decision, opinion/instruction, determination, certificate or valuation of the Engineer and any recommendations of the Board related to the dispute." The arbitral tribunal is to consist of three arbitrators, one each to be appointed by the employer and the contractor and the third one chosen by the two arbitrators to act as presiding arbitrator. Under sub-clause 3, it is stated that neither party shall be limited in the proceedings before the tribunal to the arguments or evidence before the Dispute Review Board for the purpose of obtaining the recommendations pursuant to Clause 67.1. Clause 67.4 of the GCC states that when the parties had not given notice of the intention to commence arbitration of a dispute within the period of 14 days since the expiry of 56th day of making the recommendation or not making the recommendation and when the recommendation had become final, as the case may be, and when the parties failed to comply with such recommendation, it is open to the parties to take recourse to arbitration in accordance with Clause 67.3.
The sum and substance of these provisions shows that while the contract provides for approaching the Dispute Review Board as a first step under Clause 67 of the GCC as an institution for settlement of disputes, yet at the same time, given the efficacy of the recommendation, the contract looks upon the institution of an arbitral tribunal to bring about an enforceability to the recommendation made by the Dispute Review Board through an award which need not reflect the same in toto. The entire exercise before the Dispute Review Board appears as though it is a trial run for the parties before approaching the tribunal for their disputes resolution. As evident from Clause 67.4 of the GCC, even when the recommendations attain finality and is stated to be binding on the parties, yet the enforceability always has to rest at the hands of the tribunal. Technically, although the Dispute Review Board has been projected as a venue for resolving the disputes between the parties, yet its recommendation has no teeth for its enforceability; the recommendation carries no impression on the parties; that failure to comply with the terms and recommendation practically does not bring about any change in their position. On the other hand, unless further steps are taken by the parties to move forward to the arbitral tribunal, which is endowed with enormous powers to open up, review, revise any decision, opinion, instruction, determination, certificate or valuation of the Engineer and any recommendation of the Board related to the dispute, parties would continue to stay in the same position as before. In the background of these contractual clauses, one has to look at Section 9 of the Arbitration and Conciliation Act, 1996. The arguments on either side centre on the provisions of the GCC and the availability of Section 9 of the Act at the stage when the applicant has approached the Dispute Review Board. The contention of respondent herein is that going by the terms of Section 9 of the Act, there being no arbitration as of today, Section 9 along with Section 2(1)(b) of the Act, have to be read into this provision to see the Sustainability of the claim of the applicant. Learned counsel on either side placed heavy reliance on the decision of the Supreme Court in Finn Ashok Traders v. Gurumukh Das Saluja (supra).
Learned counsel on either side placed heavy reliance on the decision of the Supreme Court in Finn Ashok Traders v. Gurumukh Das Saluja (supra). The issue therein related to the maintainability of an application under Section 9 of the Arbitration and Conciliation Act in the background of Section 69 of the Indian Partnership Act, 1932. The dispute therein related to a partnership business between two groups of partners. While the original partnership deed dated 27.02.2002 was a registered deed, on the retirement of some of the partners, a new partnership deed was executed on 05.03.2002, not being registered before the Registrar of Firms. When Group 'A' approached the court under Section 9 of the Act, the other contesting group questioned the maintainability of the same basing their objection under Section 69(3) of the Indian Partnership Act. The High Court allowed the objection based on Section 69(3) of the Indian Partnership Act. On appeal, the Hon'ble Supreme Court considered the said provisions and pointed out that sub-sections (1) and (2) of Section 69 of the Indian Partnership Act relating to effect of non-registration strike at the very root of the jurisdiction of the court to entertain a suit to enforce right arising from a contract. The bar under Section 69 of the Indian Partnership Act, however, did not affect the maintainability of the application under Section 9 of the Arbitration and Conciliation Act. The Supreme Court further pointed out that the right conferred under Section 9 of the Act cannot be said to be one to arise out of a contract. While Section 69(1) & (2) of the Indian Partnership Act strikes at the root of the jurisdiction of the court to entertain a suit to enforce right arising from a contract, an application under Section 9 of the Act is not suit. It pointed out that "undoubtedly such application results in initiation of civil proceedings but can it be said that a party filing an application under Section 9 of the Act is enforcing a right arising from a contract ? "Party" is defined in clause (h) of sub-section (1) of Section 2 of the A & C Act to mean 'a party to an arbitration agreement'. So, the right conferred by Section 9 is on a party to an arbitration agreement.
"Party" is defined in clause (h) of sub-section (1) of Section 2 of the A & C Act to mean 'a party to an arbitration agreement'. So, the right conferred by Section 9 is on a party to an arbitration agreement. The time or the stage for invoking the jurisdiction of court under Section 9 can be - (i) before or (ii) during arbitral proceedings or (iii) at any time after the making of the arbitral award but before it is enforced in accordance with Section 36. The Supreme Court pointed out that the qualification which a person invoking jurisdiction of the court under Section 9 must possess is of being a party to an arbitration agreement. A person not a party to an arbitration agreement cannot enter the court for protection under Section 9. The Supreme Court pointed out - "This has relevance only to his locus standi as an applicant. This has nothing to do with the relief which is sought for from the court or the right which is sought to be canvassed in support of the relief". The court merely formulates an interim measure under Section 9 of the Act so as to protect the right under adjudication before the arbitral tribunal from being frustrated. In short, filing of an application by a party by virtue of its being a party to an arbitration agreement is for securing a relief which the court has power to grant before, during or after arbitral proceedings by virtue of Section 9 of the A & C Act. The relief sought for in an application under Section 9 of A & C Act is neither in a suit nor a right arising from a contract. The right arising from the partnership deed or conferred by the Partnership Act is being enforced in the arbitral tribunal; the court under Section 9 is only formulating interim measure so as to protect the right under adjudication before the arbitral tribunal from being frustrated. Section 69 of the Partnership Act has no bearing on the right of a party to an arbitration clause to file an application under Section 9 of A & C Act". The Apex Court referred to the decision in the case of Sundaram Finance Limited v. NEPC India Ltd., AIR 1999 SC 565 = (1999) 2 SCC 479 = 1999 (1) Arb.
The Apex Court referred to the decision in the case of Sundaram Finance Limited v. NEPC India Ltd., AIR 1999 SC 565 = (1999) 2 SCC 479 = 1999 (1) Arb. LR 305 (SC) and held that Section 9 permits application being filed in the court before the commencement of the arbitral proceedings but the provision does not give any indication of how much "before". Interpreting the word 'before', the Apex Court pointed out as follows : "The word "before" means, inter alia, "ahead of; in presence of, sight of; under the consideration or cognizance of". The two events sought to be interconnected by use of the term "before" must have proximity of relationship by reference to occurrence; the later event proximately following the preceding event as a foreseeable or "within sight" certainty. The party invoking Section 9 may not have actually commenced the arbitral proceedings but must be able to satisfy the court that the arbitral proceedings are actually contemplated or manifestly intended (as Sundaram Finance Ltd. puts it) and are positively going to commence within a reasonable time. What is a reasonable time will depend on the facts and circumstances of each case and the nature of interim relief sought for would itself give an indication thereof. The distance of time must not be such as would destroy the proximity of relationship of the two events between which it exists and elapses. The purpose of enacting Section 9, read in the light of the Model Law and UNCITRAL Rules, is to provide "interim measures of protection". The order passed by the court should fall within the meaning of the expression "an interim measure of protection" as distinguished from an all-time or permanent protection." The Supreme Court pointed out that the party having succeeded in securing an interim measure of protection before the court cannot afford to sit and sleep over the relief, conveniently forgetting the "proximately contemplated" or "manifestly intended" arbitral proceedings itself. Hence, while passing an order under Section 9 of the Act, the court can put the party on terms and recall the order if the party committed breach of the terms. In the decision in Sundaram Finance Limited v. NEPC India Ltd. (supra) the Apex Court pointed out that a party to an arbitration agreement can approach the court for an interim relief not only during arbitral proceedings, but even before the arbitral proceedings.
In the decision in Sundaram Finance Limited v. NEPC India Ltd. (supra) the Apex Court pointed out that a party to an arbitration agreement can approach the court for an interim relief not only during arbitral proceedings, but even before the arbitral proceedings. It held thus : "14. Under the 1996 Act, the court can pass interim orders under Section 9. Arbitral proceedings, as we have seen, commence only when the request to refer the dispute is received by the respondent as per Section 21 of the Act. The material words occurring in Section 9 are "before or during the arbitral proceedings." This clearly contemplates two stages when the court can pass interim orders, i.e. during the arbitral proceedings or before the arbitral proceedings. There is no reason as to why Section 9 of the 1996 Act should not be literally construed. Meaning has to be given to the word "before" occurring in the said section. The only interpretation that can be given is that the court can pass interim orders before the commencement of arbitral proceedings. Any other interpretation, like the one given by the High Court, will have the effect of rendering the word "before" in Section 9 as redundant. This is clearly not permissible. Not only does the language warrants such an interpretation but it was necessary to have such a provision in the interest of justice. But for such a provision, no party would have a right to apply for interim measure before notice under Section 21 is received by the respondent. It is not unknown when it becomes difficult to serve the respondents. It was, therefore, necessary that provision was made in the Act which could enable a party to get interim relief urgently in order to protect its interest. Reading the section as a whole, it appears to us that the court has jurisdiction to entertain an application under Section 9 either before arbitral proceedings or during arbitral proceedings or after the making of the arbitral award but before it is enforced in accordance with Section 36 of the Act." Pointing out that Section 9 of the Act is similar to Article 9 of the UNCITRAL Model Law, the Supreme Court held that the court is not debarred from dealing with an application under Section 9 of the Act merely because no notice has been issued under Section 21 of the 1996 Act.
All that is required for the purposes of invoking Section 9 of the Act is that there must be a manifest intention on the part of the applicant to take recourse to arbitral proceedings; however, to give full effect to the words 'before or during arbitral proceedings' occurring in Section 9 of the Act, it would not be necessary that a notice invoking arbitration clause must be issued to the opposite party before an application under Section 9 of the Act can be filed. Ultimately, the clauses in the agreement between the parties, the facts and circumstances of each case and the nature of interim relief sought for have to be looked into to understand the scope of the phrase "before" in Section 9 of the Act. In a recent decision in Transmission Corpn. of A.P. Ltd. v. Lanco Kondapalli Power (P.) Ltd., (2006) 1 SCC 540 = 2006 (1) Arb. LR 1 (SC), referring to the decision in Firm Ashok Traders v. Gurumukh Das Saluja (supra), the Supreme Court held that Section 9 of the Act should be applied so that status quo may be directed to be maintained having regard to the fact that the parties understood the workability of the agreement in a particular manner. Applying the principles laid down in the above said three decisions, in the context of the provisions of the agreement relating to the dispute resolution mechanism as seen above, I have no hesitation in accepting the stand of the applicant as to the maintainability of the application under Section 9 of the Act before this court pending a request before the Dispute Review Board. As seen from the various clauses in the GCC, given the fact that the recommendation of the Dispute Review Board ultimately need to go further by taking recourse to Clause 67.3 as well as Clause 67.4 of the GCC, necessarily the rights of the applicant herein to approach this court under Section 9 of the Act cannot, in any manner, be minimised or ignored. Mr.
Mr. P. Wilson, learned Additional Advocate General appearing for the respondent, however, submitted that when the applicant has not even come to the stage of invoking Clause 67.3 of the GCC relating to arbitration, it is now too premature to come before this court, since Clause 67.3 of the GCC necessarily rests on the existence of an arbitration agreement and the intention to invoke the said clause for settling the dispute. He emphasized that in understanding the scope of Section 9, one cannot lose sight of Section 2(1)(b) and Section 7 of the Act. As of today, there is no arbitration agreement to refer the dispute to the arbitral tribunal. Hence, any exercise under Section 9 of the Act before this court would be too premature. Further, Clause 67.3 of the GCC is subject to Clause 67.1 of the GCC. When admittedly, the application under Section 9 of the Act is filed even before Clause 67.1 of the GCC was invoked and that only after filing the petition before this court, the applicant has moved the Dispute Review Board, this court has no jurisdiction to entertain the application under Section 9 of the Act. I do not agree with this line of reasoning by the respondent. It is not denied by the respondent that Clause 67.1 of the GCC does not, in any manner, go to preserve the status quo of the parties as of today, pending the recommendation by Dispute Review Board. It is not denied by the respondent that on the Dispute Review Board passing a recommendation, the rights of the parties do not get crystallized, to speak on the enforceability of the recommendation. Given the fact that the positive action by the Dispute Review Board or a passive action by the Board has to ultimately end only by the invoking of the arbitration proceedings under Clause 67.4 of the GCC, the plea of the respondent that it is too premature cannot be accepted. More so, in the light of the decisions of the Supreme Court, which categorically held that Section 9 of the Act can be invoked either before or during or after the arbitral proceedings and to invoke Section 9 of the Act, the rights of the parties herein have to be understood in the background of the terms of the agreement.
More so, in the light of the decisions of the Supreme Court, which categorically held that Section 9 of the Act can be invoked either before or during or after the arbitral proceedings and to invoke Section 9 of the Act, the rights of the parties herein have to be understood in the background of the terms of the agreement. Hence, I have no hesitation in accepting the plea of the applicant as to the maintainability of the application under Section 9 of the Act. Learned counsel for the applicant also referred to the decisions in National Highways Authority of India and another v. Bumihiway DDB Ltd. (JV) and others (supra) and Jaiprakash Hyundai Consortium v. Satluj Jal Vidyut Nigam Ltd. (supra) only to emphasize the fact that the invoking of the jurisdiction under Section 9 of the Act even during the pendency of the matter before the Dispute Review Board and without waiting for a final settlement of the disputes by the Dispute Review Board is not an uncommon phenomenon and going by these decisions, the contentions of the applicant merited to be accepted. A reading of these decisions relied on by the applicant clearly shows that the intention after all in enacting Section 9 of the Act is a means by which the rights of the parties are safeguarded, pending adjudication of the disputes before a chosen forum. In that, as held by the Supreme Court, one has to be guided by the contract terms. If the contract specifies a dispute resolution mechanism in tiers ultimately to lead to arbitration, the fact that a party cannot immediately invoke the arbitration clause without going before the Dispute Review Board cannot take away the parties' rights to seek protection under Section 9 of the Act. When the scheme of the agreement on arbitration contemplates first an exercise before the Dispute Review Board as a step-in-aid to go before the arbitral tribunal, the ingredients of "before or during arbitration proceedings" in Section 9 of the Act is fully satisfied. Consequently, I agree with the contention of the applicant as to the maintainability of the application under Section 9 of the Act for this court to pass an order. It is not necessary for this court to wait till the applicant invokes Clause 67.3 of the GCC.
Consequently, I agree with the contention of the applicant as to the maintainability of the application under Section 9 of the Act for this court to pass an order. It is not necessary for this court to wait till the applicant invokes Clause 67.3 of the GCC. The contention that Clause 67.3 of the GCC, is subject to Clause 67.1 of the GCC and hence Section 9 of the Act cannot be invoked at this stage, overlooks the very purpose of keeping a clause like 67.4 of the GCC, thus, pointing out a definite venue for settlement of the disputes, namely, the arbitral tribunal. Learned counsel for the respondent submitted that if the view of the applicant is to be accepted in this regard, serious prejudice would be caused to the respondent as regards its rights in several of the contracts with several other persons in the country. Hence, the contention of the applicant merits to be rejected. I do not agree with this line of reasoning. This court cannot shut its eyes to the scheme relating to the dispute resolution in the contract, merely because any decision in favour of the applicant as regards the jurisdiction would have serious impact in respect of other contracts. Although the counter had touched on the merits of the application, yet serious arguments were made by the respondent only as regards the jurisdiction of this court under Section 9 of the Act. However, going by the contention in the counter and the merits projected by the applicant, satisfied of the prima facie case made out by the applicant, I am inclined to continue the injunction order granted by this court already under order dated 17.12.2008. I had already recorded my prima facie satisfaction of the applicant's case to grant the benefit of interim injunction to the applicant. The circumstances have not changed in any manner to tilt the scale in favour of the respondent. It is seen that the final bills of the applicant are yet to be reckoned. In these circumstances, there are sufficient safeguards available for the respondent. Consequently, I have no hesitation in making the injunction absolute. Accordingly, the order of interim injunction granted on 17.12.2008 in A. No. 5746 of 2008 is made absolute, thereby, prohibiting the respondent from levying liquidated damages or recovering the same from the bills due to the applicant.
In these circumstances, there are sufficient safeguards available for the respondent. Consequently, I have no hesitation in making the injunction absolute. Accordingly, the order of interim injunction granted on 17.12.2008 in A. No. 5746 of 2008 is made absolute, thereby, prohibiting the respondent from levying liquidated damages or recovering the same from the bills due to the applicant. Accordingly, A. No. 5746 of 2008 is allowed and A. No. 1229 of 2009 is dismissed.