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2017 DIGILAW 890 (GUJ)

Sardar Sarovar Narmada Nigam Limited v. Vijay Construction Co. -Consulting Engineers & Contractors

2017-04-26

MOHINDER PAL

body2017
JUDGMENT : Mohinder Pal, J. 1. This petition under Article 226 and 227 of the Constitution of India has been moved by Sardar Sarovar Narmada Nigam Ltd., etc. seeking writ of mandamus and/or certiorari or any other appropriate writ, order or direction declaring the order passed by the Tribunal on 30th November, 2010 in A.R. No. 16/2002 (Annexure-A) was against the provisions of Gujarat Public Works Contract Dispute Arbitration Tribunal Act and further to hold that Arbitration Reference No. 16 of 2002 was maintainable before the Gujarat Public Works Contract Arbitration Tribunal and further seeking directions to the Tribunal to decide the arbitration reference on merits. 2. Facts leading to filing of this petition are that on 25th May, 1993, the petitioner- Sardar Sarovar Narmada Nigam Ltd. ("Petitioner" for short) awarded a contract to respondent No. 1-Vijay Construction Company (herein after referred to as original petitioner - respondent No. 1) for constructing Dis-tributaries and Minors for Block - 3B of Mandava Branch Cannel ("Work" for short). The said work was completed by respondent No. 1 (original petitioner) on 15th June, 1999. On completion of the work, a dispute arose by and between the petitioner and respondent No. 1 inasmuch as, certain claims raised by respondent No. 1 were declined to be accepted by the petitioner (Sardar Sarovar Narmada Nigam Ltd.). In view of this, since the contract for the said work by and between the petitioner and respondent No. 1 was qualifying as "Works Contract" under the Gujarat Public Works Contract Dispute Arbitration Tribunal Act, 1992 ("Act" for short), respondent No. 1 moved an application before the Tribunal constituted under the Act by invoking application under section 8 of the Act. The said application of respondent No. 1 raising various claims against the petitioner for adjudication by the Tribunal was registered as Arbitration Reference No. 16 of 2002 on the file of the Tribunal. 3. While the aforesaid application of respondent No. 1 was pending before the Tribunal for adjudication, the Hon'ble Supreme Court, on 14th January, 2010, delivered a judgment in the matter of Va Teach Escher Wyass Flovel Limited v. Madhya Pradesh State Electricity Board and another. 3. While the aforesaid application of respondent No. 1 was pending before the Tribunal for adjudication, the Hon'ble Supreme Court, on 14th January, 2010, delivered a judgment in the matter of Va Teach Escher Wyass Flovel Limited v. Madhya Pradesh State Electricity Board and another. In the said judgment, on interpretation of a legislation governing the field of disputes in respect of Works Contract with Public Undertakings prevalent in the State of Madhya Pradesh under the nomenclature of Madhya Pradesh Madhyasthan Adhikaran Adhiniyam, 1983, which came to be ruled that if the Works Contract contained an Arbitration clause, a dispute concerning such Works Contract by and between the parties thereto was not required to be referred to the concerned Tribunal constituted under the said legislation of the State of Madhya Pradesh, but the same was required to be referred to the Arbitration Tribunal to be constituted under the Arbitration and Conciliation Act, 1996 by following the provisions for the same made under the Works Contract. The said decision of the Hon'ble Supreme Court came to be later on reported in (2011) 13 SCC 261. 4. In view of this decision of the Hon'ble Supreme Court, respondent No. 1 requested the Tribunal to dispose off its aforesaid application as not maintainable so that thereafter, based upon the same, by following provisions of Arbitration contained in the Works Contract by and between the petitioner and respondent No. 1, an Arbitration Tribunal could be constituted under the Arbitration and Conciliation Act, 1996 for adjudication of the claims of respondent No. 1 against the petitioner. In view of this, on 30th November, 2010, the Tribunal passed an order vide which the aforesaid application of respondent No. 1 came to be disposed off as not maintainable in terms of the judgment of Hon'ble Supreme Court of India. 5. Thereafter, respondent No. 1 addressed a communication dated 12.1.2011, calling upon the petitioner to suggest a panel of three Arbitrators so that therefrom respondent No. 1 could select one panelist as the sole Arbitrator. Accordingly, Mr. K.G. More was chosen and appointed as sole Arbitrator to settle the dispute between the parties. He assumed the office as sole Arbitrator and commenced arbitral proceedings. Accordingly, Mr. K.G. More was chosen and appointed as sole Arbitrator to settle the dispute between the parties. He assumed the office as sole Arbitrator and commenced arbitral proceedings. However, before these proceedings could be concluded, the petitioner presented this petition on 28.1.2013 challenging the aforesaid order dated 30th November, 2011 by which, the aforesaid application of respondent No. 1 came to be disposed of by the Tribunal as not maintainable in view of judgment of Hon'ble Supreme Court in the matter of Va Tech (supra). 6. Petitioner has based his petition on the ground that aforesaid judgment of Hon'ble Supreme Court in the matter of Va Tech (supra) came to be later on reversed by the Hon'ble Supreme Court in the matter of Madhya Pradesh Rural Development Authority and another v. L.G. Chaudhary Engineers and Contractors reported in (2012) 3 SCC 495 by holding its earlier decision in the matter of Va Tech (supra) as per incuriam, Shri K.G. More would not have jurisdiction to continue with the arbitration, and the Tribunal alone would have jurisdiction to adjudicate the claims of respondent No. 1 against the petitioner and hence, the aforesaid order of the Tribunal dated 30th November, 2010 deserves to be quashed and set aside. 7. While arguing on behalf of the petitioner - (Sardar Sarovar Narmada Nigam Ltd.), it has been contended that Arbitration Act, 1996, does not apply to the State of Gujarat as special Act prevails over the general Act. Over and above the provisions under Section 21 of the Arbitration Tribunal Act, Arbitration Act, 1996 ceases to apply i.e. not applicable. As such, invocation of Arbitration Act and appointment of Arbitrator was illegal and nullity. Further, as per Section 21, even Arbitration proceedings in relation to such disputes before an Arbitrator, Umpire, Court or Authority shall stand transferred to the Tribunal. Thus, dispute between Contractor and Government/Government undertaking can be decided only by Arbitration Tribunal and none else. 8. In view of these provisions, the reference for decision by Arbitrator was against the law. 9. Further, as per Section 21, even Arbitration proceedings in relation to such disputes before an Arbitrator, Umpire, Court or Authority shall stand transferred to the Tribunal. Thus, dispute between Contractor and Government/Government undertaking can be decided only by Arbitration Tribunal and none else. 8. In view of these provisions, the reference for decision by Arbitrator was against the law. 9. It has been argued that similar orders were passed by the Arbitration Tribunal in Arbitration References pending before the Tribunal and such orders were challenged by preferring a Special Civil Applications in the High Court and Hon'ble High Court has disposed of several such matters considering the judgments reported in 2011 (13) SCC 261 (Va Tech....), (2008) 7 SCC 487 (M.P. Madhyastham Adhikaran Adhiniyam) and 2012 (3) SCC 495 . Similarly, in other matters Special Civil Application No. 838 of 2013, Special Civil Application No. 8318 of 2014 and Special Civil Application No. 864 of 2013, it has been clarified that the functioning of the Tribunal under Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, will be decided by the Tribunal and not by the Arbitrator appointed by the High Court as per these orders. It has been further argued that Hon'ble Supreme Court has held in (2012) 3 SCC 495 , in the case of Madhya Pradesh Rural Road Development Authority and another v. L.G. Chaudhary Engineers and Contractors that a special law providing mandatory statutory arbitration in the State of M.P. irrespective of Arbitration Agreement in respect of Works contracts with State of M.P. or its instrumentality. 10. Finally, it has been argued that Gujarat Public Works Contract Dispute Arbitration Tribunal Act, 1992 holds the field and not Arbitration and Conciliation Act, 1996, because 1992 Act was submitted to the President for consideration and the President accorded "Assent" to the same on 23.1.1992. As held by the Apex Court in the matter of Madhya Pradesh Rural Road Development Authority v. L.G. Chaudhary Engineers & Contractors reported in [ (2012) 3 SCC 495 ], the Act of 1992 will hold the field. 11. These arguments have been controverted by Mr. D.C. Dave, learned senior advocate with Mr. K.G. Sukhwani, learned advocate appearing for the respondent (Vijay Construction Company) that impugned order was passed according to the position of law prevailing at that point of time in view of judgment of Supreme Court in the matter of Ve Tech (supra). 11. These arguments have been controverted by Mr. D.C. Dave, learned senior advocate with Mr. K.G. Sukhwani, learned advocate appearing for the respondent (Vijay Construction Company) that impugned order was passed according to the position of law prevailing at that point of time in view of judgment of Supreme Court in the matter of Ve Tech (supra). According to Mr. Dave, position of law was so crystal clear at that time that even the petitioner concurred with a view taken by the Tribunal that it would have no jurisdiction. Thus, the said order of Tribunal impugned in the present petition was an order invitum based upon the position of law prevailing at that time. The said order of Tribunal was fully acted upon and as a result thereof, following the same, Shri K.G. More, came to be appointed as sole Arbitrator with the concurrence of petitioner. Thereafter, with concurrence of the petitioner, Shri K.G. More entered upon the reference and the proceedings reached the stage of conclusion as aforesaid. 12. It has been argued that decision of Supreme Court in the matter of Union of India v. Madras Telephone SC & ST Social Welfare Association reported in (2006) 8 SCC 662; in para No. 19 and 21, it has been held that subsequent change in the position of law on account of judgment of the Supreme Court would not affect on the rights which attained finality based upon the position of law as reflected from earlier judgment of the Supreme Court. It has been contended that aforesaid dictum of law laid down by Supreme Court squarely applies to the case in hand as it was not disputed the order dated 30th November, 2011 passed by the Tribunal declining to entertain the aforesaid application of respondent No. 1, was absolutely inconformity with the position of law at that point of time as reflected from the decision of Hon'ble Supreme Court in the matter of Ve Tech (Supra). 13. It has been further argued that if this petition is allowed, it would have the virtual effect of permitting indirectly which is not permissible directly under Scheme of Arbitration and Conciliation Act, 1996. The plea with regard to the lack of jurisdiction of the Arbitral Tribunal is to be raised before the Arbitral Tribunal only and that too, before filing of the Statement of Defense unless a permission is granted. The plea with regard to the lack of jurisdiction of the Arbitral Tribunal is to be raised before the Arbitral Tribunal only and that too, before filing of the Statement of Defense unless a permission is granted. As petitioner has failed to raise the plea of lack of jurisdiction before the Arbitral Tribunal comprising Shri K.G. More as sole Arbitrator at any point of time, allowing this petition, at this stage, will amount to act contrary to the scheme of Arbitration and Conciliation Act, 1996. 14. Finally, it has been contended that in view of the fact that arbitral proceedings are about to be completed, the present petition was liable to be dismissed. 15. This Court has considered the submissions of both the sides. Petitioner has filed this petition praying to set aside order dated 30th November, 2010 passed in the Arbitration Reference No. 16 of 2002 by the Gujarat Public Works Contract Dispute Arbitration Tribunal, whereby, the Tribunal disposed off said reference in view of the decision of Hon'ble the Supreme Court in case of Va. Tech Eschavr Ways Flovel Ltd. v. Madhya Pradesh State Electricity Board and another (supra). According to this decision, arbitration reference was not maintainable before the Tribunals constituted by the State. 16. On the other hand, prime question raised by Mr. Dave, learned senior advocate is centered round the point that later judgment of Supreme Court would not effect the position as position of law prevailing at particular point of time would prevail. So, the proportion posed before this Court for consideration in this petition can be described as under:- "Can an order passed by the Tribunal which was inconformity with the position of law prevailing at a point of time when the Tribunal passed the said order be permitted to be upset on account of subsequent change in the position of law particularly when the said order of the Tribunal was fully acted upon and that too, with the concurrence of the party seeking to challenge the same at present?" 17. Learned advocate for the petitioner has referred to the provisions under Section 21 of the Gujarat Public Works Contract Dispute Arbitration Tribunal and according to which, the only Arbitration Tribunal was legal forum and Arbitration Act, 1996 ceases to apply. Learned advocate for the petitioner has referred to the provisions under Section 21 of the Gujarat Public Works Contract Dispute Arbitration Tribunal and according to which, the only Arbitration Tribunal was legal forum and Arbitration Act, 1996 ceases to apply. He relied upon the decision of Hon'ble Supreme Court reported in [ (2012) 3 SCC 495 ]; wherein, it was held that earlier decision in case of Va. Tech (supra) incuriam and held that Arbitration Tribunal has jurisdiction. Learned counsel has further relied upon decisions of this Court in Special Civil Application No. 12031 of 2012 and Special Civil Application No. 13618 of 2012 (Group Matters), Special Civil Application No. 838 of 2013 and Special Civil Application No. 8314 of 2014; wherein, similar orders passed by the Arbitration Tribunal regarding non maintainability were set aside by the Co-ordinate Bench of this High Court. He has also relied upon the decision of Division Bench of this High Court in the case of Executive Engineer, Sardar Sarovar Narmada Nigam v. Bhaven Construction and another reported in 2013 (1) GLR 580 ; wherein, the Division Bench held that dispute arising out of public works contract can be adjudicated by the Arbitration Tribunal under the Act of 1992 and not under the Arbitration and Conciliation Act, 1996, and sole Arbitrator has no jurisdiction in the matter. 18. Mr. Mazmudar, has further referred to the decision reported in 2013 (10) SCC 136 Jagmittor v. Director, Health Services; wherein, Hon'ble Supreme Court has held that indisputably it is a settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by Superior Court and if the Court passes the decree having no jurisdiction over the matter, it would amount to nullity as the matter goes to root of the cause. 19. On the other hand, learned senior counsel, Mr. Dave, for the respondent No. 1 has mainly argued that Arbitration proceedings can be challenged only under Section 34 of the Arbitration and Conciliation Act, 1996. In support of this submission, he has referred to judgments of the Apex Court, namely, (i) in the case of SBP & Co. v. Patel Engineering Ltd. and another reported in (2005) 8 SCC 618 and (ii) in the case of MSP Infrastructure Ltd. v. M.P. Road Development Corporation Ltd. reported in (2015) 13 SCC 713 . 20. In support of this submission, he has referred to judgments of the Apex Court, namely, (i) in the case of SBP & Co. v. Patel Engineering Ltd. and another reported in (2005) 8 SCC 618 and (ii) in the case of MSP Infrastructure Ltd. v. M.P. Road Development Corporation Ltd. reported in (2015) 13 SCC 713 . 20. Proposition of law contained in these judgments passed by the Apex Court and relied upon by Mr. Dave cannot be disputed. However all such judgments relates to the cases where arbitration proceedings has been concluded by the Arbitration Tribunal under Section 34 of the Arbitration Tribunal Act. However, in the case in hand, the arbitration proceedings have not yet concluded and are still pending and in progress when the impugned order dated 30th November, 2010 has been passed. 21. This Court is of the considered opinion that an order passed though with conformity at the relevant time but against the provisions and without jurisdiction will be void ab-initio. This is particularly so when Supreme Court in subsequent decision has reversed its earlier decision and Division Bench of this High Court has set aside similar orders vide which the proceedings were withdrawn from the Tribunal and referred to the Arbitrators under Section 34 of the Arbitration and Conciliation Act, 1996. Still further, the Co-ordinate Bench of this Court in number of petitions as referred by Mr. Mazmudar, has been decided in favour of the petitioner-Sardar Sarovar Narmada Nigam Ltd. 22. In the circumstances, the Arbitration Tribunal was not justified in rejecting the reference. Accordingly, order dated 30.11.2010 passed in Arbitration Reference No. 16 of 2002 is quashed and set aside. Arbitration Reference No. 16 of 2002 is restored back to the Arbitration Tribunal and the Tribunal shall proceed and decide the reference in accordance with law. Petition is allowed as per para 13(A) of the petition. Rule is made absolute. No order as to cost. Order in Civil Application In view of the disposal of the main petition, no order in Civil application and this Civil Application stands disposed of accordingly. Petition Allowed