Gangotri Sarangpur Shujalpur Tollway Pvt. Ltd. v. M. P. Road Development Corporation
2019-03-07
SUJOY PAUL
body2019
DigiLaw.ai
ORDER 1. This is an application under section 11 (6) of the Arbitration and Conciliation Act, 1996 seeking a direction to appoint an arbitrator to resolve the dispute between the parties. 2. This is not in dispute between the parties that between them there exists an agreement dated 30.7.2011, a living dispute and necessity to resolve the same by appropriate forum/authority. The only question is, as to which forum is competent to decide the said dispute. The applicant submits that agreement dated 30.7.2011 contains an arbitration clause. The 'change of scope' and amount arising thereto is not ascertainable and therefore in the light of judgment of full bench in the case of Viva Highways Ltd. v. Madhya Pradesh Road Development Corporation Ltd. [ 2017 (3) JLJ 66 = 2017 (2) MPLJ 681 ], an arbitrator as per Arbitration and Concilation Act, 1996 (for short, 'Act of 1996) may be appointed in the present application. 3. Per contra, Shri Khandekar, learned counsel for the respondent urged that amount is ascertainable and quantifiable. If the applicant has not undertaken the said exercise to quantify the amount, it cannot be said that the said amount is not ascertainable. 4. Shri Khandekar, learned counsel also placed reliance on the full bench judgment in the case of Viva Highways (supra) In addition, he placed reliance on another full bench judgment reported in 2018 (2) JLJ 393 = 2018 (3) MPLJ 163 Shri Gauri Ganesh Shri Balaji Constructions "C" Class Contractor v. Executive Engineer, PWD. To elaborate, Shri Khandekar, learned counsel urged that this subsequent full bench judgment makes it clear that the amount which is arising even during the proceedings before the tribunal also falls within the ambit of 'dispute'. The present 'concession agreement' is in infact 'works contract' under the provisions of M.P. Madhyastham Adhikaran Adhiniyam, 1983 and hence, the appropriate remedy for the applicant is to approach the Tribunal constituted under the Adhiniyam of 1983. 5. No other point is pressed by counsel for the parties. 6. The spinal issue in this case is whether the amount arising out of 'change of scope' order is ascertainable or not. Shri Ishaan Soni, learned counsel for the applicant fairly submits that if said amount is ascertainable, in the teeth of Full Bench judgment in the case of Viva Highways Ltd.(supra), the applicant needs to approach Madhyastham Tribunal. 7.
6. The spinal issue in this case is whether the amount arising out of 'change of scope' order is ascertainable or not. Shri Ishaan Soni, learned counsel for the applicant fairly submits that if said amount is ascertainable, in the teeth of Full Bench judgment in the case of Viva Highways Ltd.(supra), the applicant needs to approach Madhyastham Tribunal. 7. Putting it differently, the only quarrel between the parties is regarding the point whether any amount based on 'change of scope' order is ascertainable or not. The parties fairly submits that agreement falls within the ambit of 'works contract', in the teeth of section 7 of Adhiniyam, 1983, even if, there exists an arbitration Clause in the contract, the appropriate remedy is to approach the tribunal. 8. Article 16 of agreement provides the methodology of 'change of scope', its procedure and consequential payment needs to be made. The relevant portion reads as under : "16.1 Change of Scope 16.1.1 The Government may, notwithstanding anything to the contrary contained in this Agreement, require the provision of additional works and services which are not included in the Scope of the Project as contemplated by this Agreement (the "Change of Scope"). Any such Change of Scope shall be made in accordance with the provisions of this Article 16 and the costs thereof shall be expended by the Concessionaire and reimbursed to it by the Government in accordance with Clause 16.3. 16.1.2 If the Concessionaire determines at any time that a Change of Scope is necessary for providing safer and improved services to the Users, it shall by notice in writing require the Government to consider such Change of Scope. The Government shall, within 15 (fifteen) days of receipt of such notice, either accept such Change of Scope with modifications, if any, and initiate proceedings therefor in accordance with this Article 16 or inform the Concessionaire in writing of its reasons for not accepting such Change of Scope. 16.1.3 Any works or services which are provided under and in accordance with this Article 16 shall form part of the Project Highway and the provisions of this Agreement shall apply mutatis mutandis to such works or services.
16.1.3 Any works or services which are provided under and in accordance with this Article 16 shall form part of the Project Highway and the provisions of this Agreement shall apply mutatis mutandis to such works or services. 16.2 Procedure for Change of Scope 16.2.1 In the event of the Government determining that a Change of Scope is necessary, it shall issue to the Concessionaire a notice specifying in reasonable detail the works and services contemplated thereunder (the "Change of Scope Notice"). 16.2.2 Upon receipt of a Change of Scope Notice, the Concessionaire shall, with due diligence, provide to the Government such information as is necessary, together with preliminary Documentation in support of : (a) the impact, if any, which the Change of Scope is likely to have on the Project Completion Schedule if the works or services are required to be carried out during the Construction Period; and (b) the options for implementing the proposed Change of Scope and the effect, if any, each such option would have on the costs and time thereof, including a detailed breakdown by work classifications specifying the material and labor costs calculated in accordance with the schedule of rates applicable to the works assigned by the Government to its contractors, along with the proposed premium/discount on such rates; provided that the cost incurred by the Concessionaire in providing such information shall be reimbursed by the Government to the extent such cost is certified by the Independent Engineer as reasonable. 16.2.3 Upon receipt of information set forth in Clause 16.2.2, if the Government decides to proceed with the Change of Scope, it shall convey its preferred option to the Concessionaire, and the Parties shall, with assistance of the Independent Engineer, thereupon make good faith efforts to agree upon the time and costs for implementation thereof. Upon reaching an agreement, the Government shall issue an order (the "Change of Scope Order") requiring the Concessionaire to proceed with the performance thereof. In the event that the Parties are unable to agree, the Government may, by issuing a Change of Scope Order, require the Concessionaire to proceed with the performance thereof pending resolution of the Dispute, or carry out the works in accordance with Clause 16.5. 16.2.4 The provisions of this Agreement, insofar as they relate to Construction Works and Tests, shall apply mutatis mutandis to the works undertaken by the Concessionaire under this Article 16.
16.2.4 The provisions of this Agreement, insofar as they relate to Construction Works and Tests, shall apply mutatis mutandis to the works undertaken by the Concessionaire under this Article 16. 16.3 Payment for Change of Scope 16.3.1 Within 7 (seven) days of issuing a Change of Scope Order, the Government shall make an advance payment to the Concessionaire in a sum equal to 20% (twenty per cent) of the cost of Change of Scope as agreed hereunder, and in the event of a Dispute, 20% (twenty per cent) of the cost assessed by the Independent Engineer. The Concessionaire shall, after commencement of work, present to the Government bills for payment in respect of the works in progress or completed works, as the case may be, supported by such Documentation as is reasonably sufficient for the Government to determine the accuracy thereof. Within 30 (thirty) days of receipt of such bills, the Government shall disburse to the Concessionaire such amounts as are certified by the Independence Engineer as reasonable and after making a proportionate deduction for the advance payment made hereunder, and in the event of any Dispute, final adjustments thereto shall be made under and in accordance with the Dispute Resolution Procedure. 16.3.2 Notwithstanding anything to the contrary contained in Clause 16.3.1, all costs arising out of any Change of Scope Order issued during the Construction Period shall be borne by the Concessionaire, subject to an aggregate ceiling of 0.25% (zero point two five per cent) of the Total Project Cost. Any costs in excess of the ceiling shall be reimbursed by the Government in accordance with Clause 16.3.1. In the event that the total cost arising out of Change of Scope Orders (if any) issued prior to the Project Completion Date is less than 0.25% (zero point two five percent) of the Total Project Cost, the difference thereof shall be credited by the Concessionaire to the Safety Fund within a period of 180 (one hundred and eighty) days of the Project Completion date. For the avoidance of doubt, it is agreed that the aforesaid 0.25% (zero point two five per cent) of the Total Project Cost shall, to the extent borne by the Concessionaire, be deemed to form part of the actual capital cost of the Project." (Emphasis Supplied) 9.
For the avoidance of doubt, it is agreed that the aforesaid 0.25% (zero point two five per cent) of the Total Project Cost shall, to the extent borne by the Concessionaire, be deemed to form part of the actual capital cost of the Project." (Emphasis Supplied) 9. A bare perusal of these aforesaid provisions makes it clear that it provides the methodology of calculation of amount/dues pursuant to 'change of scope'. If any 'change of scope' has taken place in consonance with the aforesaid clauses and the applicant is fully aware about the nature and details of the work undertaken, I find no reason to hold that the amount arising out of the said 'change of scope' is not ascertainable. Pertinently, in Viva Highways Ltd. (supra), this Court clearly held that there is a difference in the meaning of the words "ascertained" and "ascertainable''. If the amount is 'ascertainable' and yet not 'ascertained', the applicant cannot wriggle out of the clutches of Adhiniyam, 1983. In Viva Highways Ltd. (supra), this Court opined as under : "76. Shri Amit Seth submitted that money can be ascertained on the basis of average toll collection for a specified period or on the basis of cash flow chart, financial identical rate of return (FIRR) and yearly cash flow statement (YCFS). We do not see much merit in the said contention. As the applicants have based their claim to operate the project for a specified period, if they succeed in their claim, they will get extra days for operating the project. For example, if a Concessionaire who is operating a toll plaza succeeds, what he will get will be in terms of extension of days and not in terms of money which is ascertainable or ascertained. During extended period of operation of projects, how much will be the vehicular movement and how much toll will be collected cannot be ascertained at this point of time by any process of reasoning. Similarly, while operating a sports complex, how much the Concessionaire will earn cannot be determined/ascertained by any guess work. For this reason, the claim of the applicants is in terms of extension of days to operate the project and they are unable to putforth a claim of ascertained money.
Similarly, while operating a sports complex, how much the Concessionaire will earn cannot be determined/ascertained by any guess work. For this reason, the claim of the applicants is in terms of extension of days to operate the project and they are unable to putforth a claim of ascertained money. However, at this stage, it must be made clear that when a claim is ascertainable and yet the concessionaire has not ascertained the claim in order to wriggle out of definition of "dispute", the matter would be different and in such cases the forum for adjudication would be the Tribunal under the Adhiniyam of 1983. Hence, each case needs to be examined in this regard." (Emphasis Supplied) 10. This judgment was quoted with profit in subsequent full bench judgment in Shri Gauri Ganesh Shri Balaji Constructions "C" Class Contractor (supra). In addition, in paragraph 46, it was held that "ascertained money" used in section 2(1) (d) of Adhiniyam will include not only the amount already ascertained but the amount which may be ascertained during the proceedings on the basis of claims/counter claims of the parties. Thus, the word 'ascertainable' is very wide and the present applicant is unable to show that work undertaken by him subsequently is not 'ascertainable'. Thus, in a case of 'works contract', this application is not maintainable. The applicant can avail the appropriate remedy by approaching the forum constituted under the Adhiniyam, 1983. The application is disposed of.