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2020 DIGILAW 381 (GAU)

GSR Venture Private Limited v. State Of Mizoram

2020-03-12

NELSON SAILO

body2020
JUDGMENT Nelson Sailo, J. - Heard Mr. B. Pathak, learned counsel appearing for the petitioner. Also heard Mrs. Linda L. Fambawl, learned Govt. Advocate appearing for the respondents. 2. By filing this application under Section 11 of the Arbitration & Conciliation Act, 1996, herein after referred to as the "Act of 1996", the petitioner seeks the appointment of a sole Arbitrator to adjudicate the dispute in connection with Agreement No. 1/MiRRDA/2014-2015 dated 25.09.2014, which was for construction and maintenance of Rawkbuk - Lungtian Road, 0.00 kmp - 14.00 kmp. 3. The petitioner claims to be a Private Limited Company registered under the Companies Act, 1956. The Government of Mizoram in the Public Works Department floated a tender under the Pradhan Mantri Gram Sadak Yojana (PMGSY) for construction of the aforesaid stretch of road and the petitioner participated in the tender process. Being the most eligible bidder, the petitioner was awarded the work and a Letter of Acceptance was issued on 10.09.2014, whereafter, an agreement was signed on 25.09.2014 between the petitioner and the Mizoram PWD. 4. According to the petitioner, during the execution of the work, the petitioner faced many hindrances, which were beyond its control resulting in delay of the completion of the work. A show Cause Notice was issued to the petitioner on 20.06.2018, by the respondents and the same was replied to by the petitioner on 18.09.2018, explaining the reasons for the delay and the difficulty faced in the execution of the contract work. The petitioner also stated that they have started taking up the balance work and they intend to complete the same within the month of March, 2018. According to the petitioner, despite non-payment of their legitimate dues, they completed the work. Therefore, the monetary dues in their favor is yet to be considered and paid by the respondents. The further contention is that the General Conditions of Contract (GCC) between the petitioner and the respondents is a standard format adopted across the country for execution of work under the PMGSY. Clause 24 of the GCC provides for Dispute Redressal System. Therefore, in terms of Clause 24.1 of the GCC, the petitioner submitted their dispute and claims for settlement before the Superintending Engineer, PWD, Lunglei Circle on 17.03.2019 but the same was not replied to. As such, the petitioner approached this Court by filing Arbitration Petition No. 2/2019, seeking for the appointment of an Arbitrator. Therefore, in terms of Clause 24.1 of the GCC, the petitioner submitted their dispute and claims for settlement before the Superintending Engineer, PWD, Lunglei Circle on 17.03.2019 but the same was not replied to. As such, the petitioner approached this Court by filing Arbitration Petition No. 2/2019, seeking for the appointment of an Arbitrator. Against the Arbitration Petition, the respondents filed their affidavit-in-opposition on 26.08.2019 contending inter-alia that the "Competent Authority" as mentioned in the Standard Bidding Document is not the Superintending Engineer but the Chief Executive Officer. In view of such stand, the petitioner withdrew the Arbitration Petition on 03.10.2019 with liberty to approach the Court afresh, if so warranted. 5. The petitioner then approached the Competent Authority i.e., the Chief Executive Officer with their grievance by submitting a detailed representation on 09.09.2019. The petitioner also submitted a similar representation before the Chief Engineer (Roads), PWD on the same day. Both the representations were received by the 2 (two) authorities on 09.09.2019 itself. As per the GCC, the competent authority is required to redress the grievance within 45 days. Despite the period having lapsed on 23.10.2019, the respondents have not given any consideration to the dispute and claims raised by the petitioner. Thus, being aggrieved, the petitioner is again before this Court through the present petition. 6. Mr. B. Pathak, the learned counsel submits that as per the Dispute Redressal System, the competent authority on receiving the representation or the complaint is required to convey its decision to the Contractor concerned within 45 days. However since no such disposal or reply was forthcoming from the competent authority, the petitioner has filed the instant Arbitration Petition. He submits that no doubt Clause 25.1 of the GCC mentions that in view of the Dispute Redressal System provided in Clause 24, there will be no Arbitrator for settlement of dispute between the parties but the same cannot be construed as a bar for the petitioner to seek for appointment of an Arbitrator since the Dispute Redressal System stipulated in Clause 24 has failed. He further submits that even there is no objection on the part of the respondents about the appointment of an Arbitrator, the same can be one of the consideration before the Arbitral Tribunal or the Arbitrator in terms of Section 16 of the Act of 1996. He further submits that even there is no objection on the part of the respondents about the appointment of an Arbitrator, the same can be one of the consideration before the Arbitral Tribunal or the Arbitrator in terms of Section 16 of the Act of 1996. The respondents by not responding to the complaint or representation submitted by the petitioner in the light of Clause 24 of the GCC cannot take the advantage of their fault to deny the petitioner from the claim of adjudication of the case by way of Arbitration. 7. The learned counsel in support of his submission relied upon the following authorities: wxyz (1) Surya Construction Company Vs. State of Rajasthan & Anr,2013 SCCOnLineRaj 4257 zyxw wxyz (2) Konkan Railway Corporation LTD. & Anr v. Rani Construction Pvt. Ltd, (2002) 2 SCC 388 zyxw wxyz (3) Food Corporation of India Vs. Indian Council of Arbitration & Ors, (2003) 6 SCC 564 zyxw wxyz (4) Demerara Distilleries Private Limited & Anr Vs. Demerara Distillers Ltd, (2015) 13 SCC 610 zyxw 8. The learned counsel has further drawn the attention of this Court to the PMGSY Manual, more particularly to Clause 9.17, which is regarding dispute resolution. He submits that as per the PMGSY Manual in States where mandatory provisions of arbitration are applicable, the provisions of Clause 24 and 25 of the GCC under the Standard Bidding Document for PMGSY will not be applicable. 9. The learned counsel, Mr. B. Pathak has also drawn the attention of this Court to the Arbitration and Conciliation (Amendment) Act, 2019, herein after referred to as "Amendment Act of 2019", which was published in the Gazette of India on 09.08.2019. The learned counsel submits that by the said Amendment, Sub-Section 6-A of Section 11 of the Act of 1996 has been omitted and as such, as held by the Constitution of the Apex Court in Rani Construction Pvt. Ltd (supra), the limited role of a Court is to refer the matter for arbitration and not to dwell upon the contentious issues raised. The decision of the Constitution Bench was again relied upon by the Apex Court in Food Corporation of India (supra). The decision of the Constitution Bench was again relied upon by the Apex Court in Food Corporation of India (supra). The Apex Court held that issue on the jurisdiction of the Arbitral Tribunal and the objection made can be canvassed before the Arbitral Tribunal itself under Section 16 of the Act of 1996 and therefore, the respondents can raise their objection before the appointed Arbitrator. The learned counsel also submits that as per the Amendment Act of 2019, application for appointment of Arbitrator is to be disposed of within a period of 30 days from the date of service of notice upon the opposite parties and therefore a prayer was made before the Hon''ble Chief Justice for the matter to be taken up expeditiously. Accordingly, permission was granted for the matter to be laid before any appropriate Bench. Under the circumstance, the learned counsel submits that the prayer made by the petitioner may be considered and allowed. 10. Mrs. Linda L. Fambawl, learned Govt. Advocate appearing for the State respondents on the other hand submits that Clause 24 of the GCC provides for Dispute Redressal System and the petitioner in terms of this relevant provision had submitted representation or complaint before the competent authority. Although the stipulation for conveying a decision on the complaint is 45 days but due to the geographical location of the project being in one of the most remote place in the State, there was some delay in communicating the petitioner the outcome of the representation. She submits that the respondents had to conduct spot verification at the site and scrutinize all the essential documents. Thereafter, after all such exercise was completed, the petitioner was given a reply on 06.02.2020 and the delay is beyond the control of the respondents. Having received a reply, the petitioner would be required to avail further remedy under the Dispute Redressal System by filing an appeal before the Empowered Standing Committee as prescribed in Clause 24.02 of the GCC. Instead of doing so, the petitioner has approached this Court under Section 11 of the Act of 1996 for appointment of an Arbitrator. Therefore, the Arbitration Petition is not maintainable. 11. Mrs. Linda L. Fambawl, learned Govt. Instead of doing so, the petitioner has approached this Court under Section 11 of the Act of 1996 for appointment of an Arbitrator. Therefore, the Arbitration Petition is not maintainable. 11. Mrs. Linda L. Fambawl, learned Govt. Advocate further submits that the prayer of the petitioner cannot be accepted inasmuch as, Clause 25.1 of the GCC provides for a specific bar for settlement of any dispute between the parties by way of arbitration. The same being accepted by the parties before signing the agreement, the petitioner cannot be allowed to raise such a plea at this stage. She submits that the fact that the petitioner has filed a representation before the competent authority goes to show that the petitioner itself has accepted the Dispute Redressal Mechanism under the GCC and therefore, there being a specific bar of arbitration under the GCC, the petition should be rejected. The learned State Counsel submits that if there is an alternative remedy available or provided such as in the instant case, the petitioner will have to avail such remedy. In support of her submission, she relied upon the following authorities: wxyz (1) Union of India & Anr Vs. Guwahati Carbon Ltd, (2012) 11 SCC 651 . zyxw wxyz (2) Jatya Pal Singh & Ors Vs. Union of India & Ors, (2013) 6 SCC 452 zyxw 12. I have considered the submissions made by the learned counsels for the parties and I have perused the materials available on record, including the authorities relied upon. 13. As may be noticed, Clause 24 of the GCC provides for Dispute Redressal System. Clause 24.1 provides that if any dispute or difference of any kind whatsoever should arise in connection with or arising out of contract or the execution of works or maintenance of the works thereunder, whether before its commencement or during the progress of the works or after the termination, abandonment or breach of the contract, it shall in the first instance be referred for settlement to the competent authority, described along with their powers in the contract data above the rank the Engineer. The competent authority shall within 45 days, after being requested in writing by the contractor to do so, convey his decision to the contractor. 14. The competent authority shall within 45 days, after being requested in writing by the contractor to do so, convey his decision to the contractor. 14. In the present case, although the petitioner submitted its dispute and claims for settlement before the Superintending Engineer, PWD, Lunglei Circle vide letter dated 17.03.2019, but the same was not redressed or replied to. Thereafter, the petitioner approached this Court for appointment of Arbitrator vide Arbitration Petition No. 2/2019, but the same was withdrawn with a liberty to file a fresh one since the competent authority according to the respondents was the ''Chief Executive Officer'' and not the ''Superintending Engineer''. Thereafter, a representation was addressed to the Chief Engineer (Roads), PWD vide letter dated 09.09.2019 by the petitioner, which was received on the same day but despite the same, no reply was received even after a lapse of 45 days as prescribed by the GCC. After the filing of the present Arbitration Petition, the respondents have now made a reply to the representation of the petitioner on 06.02.2020 rejecting the claim of the petitioner. The said document is annexed as "Annexure - 1" to the affidavit-in-opposition of the respondents. Clause 25.1 of the GCC provides that in view of the Dispute Redressal System provided under Clause 24, there will be no arbitration for settlement of any dispute between the parties. Therefore, the issue to be decided is as to whether the dispute raised by the petitioner can be settled by way of an arbitration. 15. The learned Single Bench of the High Court of Rajasthan in Surya Construction Company (supra), dealt with a similar issue. It was urged before the High Court that there was a Clause in the Dispute Redressal System, by which an appeal could be filed before the empowered standing committee and as such, the prayer for appointing an Arbitrator should be rejected. The High Court by relying upon the Apex Court decision in M.K. Shah Engineers & Contractors Vs. State of Madhya Pradesh, (1999) 2 SCC 594 held that Cause 24.1 of the GCC having not been complied with by the non-applicants, the applicants cannot be allowed to take advantage of their own wrong and therefore, the bar incorporated in Clause 25 will not be applicable. Accordingly, the prayer for appointing an Arbitrator was allowed for resolving the dispute between the parties. Accordingly, the prayer for appointing an Arbitrator was allowed for resolving the dispute between the parties. In Konkan Railway Corporation Ltd. & Anr (supra), the Apex Court held that under Section 16 of the Act of 1996, the Arbitral Tribunal may rule on its own jurisdiction. In other words, the Arbitral Tribunal may rule on any objections with respect to the existence or validity of the arbitration agreement and the same is not confined to the width of its jurisdiction but goes to the very root of its jurisdiction. Therefore, there would be no impediment in contending before the Arbitral Tribunal that it had been wrongly constituted by reason of the fact that the Chief Justice or his designate had nominated an Arbitrator although the period of 30 days had not expired and that it therefore had no jurisdiction. The Apex Court further held that the order of the Chief Justice or his designate under Section 11 of the Act of 1996 nominating an arbitrator is not an adjudicatory order and the Chief Justice or his designate is not a tribunal. This decision of the Constitution Bench was also relied upon by the Apex Court in Food Corporation of India (supra). It was also observed that the legislative intent underlying the 1996 Act is to minimize the supervisory role of Courts in the arbitral process and nominate/appoint the Arbitrator without wasting time, leaving all contentious issues to be urged and agitated before the Arbitral Tribunal itself. 16. Coming to the decision relied upon by the learned Govt. Advocate, the Apex Court in Guwahati Carbon Ltd. (supra), which was with regard to the duty levied under the Central Excise Act, 1944, where the customs, Excise and Service Tax Appellate Tribunal, East Zonal Bench, Kolkata, passed an order holding that the respondents were not entitled to include freight and insurance charges in the assessable value and therefore the duty levied required to be re-calculated. The Apex Court itself held that the Excise Law is a complete code in order to redressed any excise matters and hence may not be appropriate for the writ court to entertain a petition under Article 226 of the Constitution of India. The Apex Court itself held that the Excise Law is a complete code in order to redressed any excise matters and hence may not be appropriate for the writ court to entertain a petition under Article 226 of the Constitution of India. As such, the order of the Single Judge of the High Court that the alternative remedy should be availed was upheld and the decision of the Division Bench of the High Court, which was to the contrary was interfered with. However, the Apex Court also held that the powers under Article 226 or Article 32 of the Constitution are vast but such powers can only be exercised in those cases where the statutory authority has not acted in accordance with the provisions of the enactment in question amongst others. In the present case, as already noted hereinabove, the competent authority despite the stipulation in the GCC failed to convey its decision within the time frame of 45 days from the date of the representation. Besides this, the present petition is not a writ petition under Article 226 of the Constitution and therefore, I do not find the decision relied upon to be applicable to the instant case. 17. In respect of the case of Jatya Pal Singh & Ors (supra), the issue before the Apex Court was as to whether the termination order passed by the Videsh Sanchar Nigam Limited would invite the intervention of the Court under Article 226 or Article 32 of the Constitution of India by construing the said authority as a State as defined under Article 12 of the same Constitution. However, the issue in the present case as may be noticed is different. Therefore, I do not find the said decision to be applicable in the present case. 18. Upon due consideration of the case projected by the parties, I find merit in the Arbitration Petition and I am of the view that an Arbitrator be appointed to consider and resolve the issues between by the parties. After taking such a view, I have personally spoken to Hon''ble Mr. Justice B.P. Katakey, former Judge of this Court as to whether he would agree to be an Arbitrator and to which he has kindly consented to. 19. In view of the above, this Court appoints Hon''ble Mr. After taking such a view, I have personally spoken to Hon''ble Mr. Justice B.P. Katakey, former Judge of this Court as to whether he would agree to be an Arbitrator and to which he has kindly consented to. 19. In view of the above, this Court appoints Hon''ble Mr. Justice B.P Katakey, former Judge of the Gauhati High Court, R/o House No. 30, Kharguli Road, 2nd Bye Land (Left), Opposite Sitala Enclave, Guwahati, 781004, Assam, (E-mail address: katakey_bp@gmail.com, as arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 to resolve the dispute between the parties within a reasonable period. The conditions stipulated in Section 12 of the Act of 1996 may be fulfilled with by the appointed Arbitrator. 20. The Arbitration Petition is accordingly allowed. 21. The parties are directed to approach the Hon''ble Mr. Justice B.P. Katakey, former Judge of the Gauhati High Court within a period of 1 (one) month from the date of receipt of a copy of this Order. The Registry shall also send a copy of this Order to Hon''ble Mr. Justice B.P. Katakey, former Judge of the Gauhati High Court.