Vidyawati Construction Company (M/s. ) v. Municipal Corporation
2022-12-19
AMAR NATH KESHARWANI, VIVEK RUSIA
body2022
DigiLaw.ai
ORDER 1. Petitioner has filed this Arbitration Revision under section 19 of Madhyastam Adhikaran Adhiniyam, 1983 (Adhiniyam, 1983) whereby the Reference Case No.71/20098 has been dismissed in view of the judgment passed in the State of M.P. v. Kamal Kishore Sharma, 2006 (2) Arb. L.R. 305. 2. The facts of the case in short are as under: 2.1 The respondent Municipal Corporation, Ujjain invited tender for the construction of a Wrestling Arena in Sheer Sagar Stadium, Ujjain. The petitioner submitted a bid which was accepted on 11.3.2003. An agreement was executed between the parties on 22.4.2003 for the total amount of the contract of Rs.90,00,000/-. The petitioner was served with the work order dated 19.5.2003 with the direction to complete the work within 11 months. Vide letter dated 10.3.2006, the petitioner informed the respondent that it will not be possible to make any progress in the work for want of payment/running bill. The respondent vide letter dated 24.3.2006 directed the petitioner to complete the work otherwise same would be completed by some other agency at the risk and cost of the petitioner. The petitioner replied to the aforesaid letter by submitting that he is ready to start the work if outstanding payments are made. 2.2 Vide letter dated 8.8.2006, the Executing Engineer of the respondent terminated the agreement of the petitioner which was served upon the petitioner on 7.9.2006. The petitioner submitted a reply to the notice vide letter dated 8.9.2006 but the respondent issued a tender for the rest of the work to some other agency without making a final measurement of the work done by the petitioner. Being aggrieved by the aforesaid action the petitioner approached the Madhya Pradesh Arbitration Tribunal by filing a reference case on 7.3.2008 claiming the amount of Rs.35,37,945/- along with an interest at the rate of 18% per annum from the date of presentation of reference till payment. The aforesaid amount was claimed on the following counts: Claim No. 1 Remaining amount of 4th running bill and full amount of 5th running bill Rs. 10,31,862/- Claim No. 2 Disallowed amount of 5th running bill and amount of work of which measurement was not taken Rs. 4,82,310/- Claim No. 3 Loss because of idle labour, machinery and other material for about 16 months Rs.
10,31,862/- Claim No. 2 Disallowed amount of 5th running bill and amount of work of which measurement was not taken Rs. 4,82,310/- Claim No. 3 Loss because of idle labour, machinery and other material for about 16 months Rs. 10,00,000/- Claim No. 4 Loss of interest @ 10% p.a. On amount of remaining work which the petitioner could not execute as the contract was rescinded Rs. 4,51,657/- Claim No. 5 Amount of labour cess illegally deducted from the bills Rs. 40,011/- Claim No. 6(A) Interest on the amount paid belatedly Rs. 42,000/- Claim No. 6(B) Interest @ 12% p.a. For 32 months on Rs. 10,31,862/- (Amount of Claim No. 1) Rs. 3,30,196/- Claim No. 6(C) Interest @ 12% p.a. On Rs. 4,82,310/- (Amount of final bill) for 30.5 months Rs. 1,47,105/- Claim No. 6(D) Interest @ 12% p.a. On Rs. 40,011/- (Amount of illegally deducted labour cess) for 32 months Rs. 12,804/- Total Rs. 35,37,945/- 2.3 After notice respondent filed a written statement denying all the claims of the petitioner alleging breach of terms and conditions of the agreement. According to the respondent, the petitioner himself abandoned the work on 25.6.2004 and the balance of work got to be executed by a debitable agency. It has further been alleged that the petitioner did not submit a bank guarantee for three years as per Clause 67(2) and 67(10) of the agreement. The bank guarantee so submitted by the petitioner was valid for one year which came to an end on 27.10.2004, therefore, the amount payable vide the fourth bill, running bill has been adjusted against the bank guarantee. However, the respondent did not submit any counterclaim before the tribunal. The respondent has raised an objection that the reference is time-barred as it is filed after more than 3 years, 8 months and 10 days from 25.6.2004 i.e. the date when the petitioner abandoned the work and also prayed for rejection of the claim in light of the law laid down in the case of Kamal Kishore Sharma (supra). 2.4 According to the respondent, Clause 64 of the agreement provides the submission of a claim within 15 days from the cause of action to the City Engineer and against the order of the City Engineer further remedy is provided to the Commissioner under Clause 65.
2.4 According to the respondent, Clause 64 of the agreement provides the submission of a claim within 15 days from the cause of action to the City Engineer and against the order of the City Engineer further remedy is provided to the Commissioner under Clause 65. Since the petitioner did not approach the City Engineer as per Clause 65 and thereafter appeal, therefore, under section 7-B(1)(a) of the Adhiniyam, 1983, the reference petition is not maintainable. 2.5 The learned Tribunal has framed three issues for adjudication which are as follows: 1. Whether the petition is not maintainable in view of Section 7-B(1)(a) of the Adhiniyam, 1983. 2. Whether the petition is time barred. 3. Whether the petitioner is entitled for award as per his claims. 2.6 So far as the issue of limitation is concerned, the said issue has been answered in favour of the petitioner and hence need not examine in this revision. The reference has been held to be not maintainable under section 7-B(1)(a) of the Adhiniyam, 1983, The Tribunal has also decided on issue No.3 in respect of entitlement of the claims of the petitioner. Claim No. 1 of Rs.10,31,862/- has been allowed in favour of the petitioner, but the claim No. 2 of Rs.4,82,310/- has been rejected, and claim No.3 of Rs. 10,00,000/- for loss of idle establishment has also been rejected That the claim No.4 for the loss of anticipated profit of Rs.4,51,657/- has been allowed to the extent of Rs.2,25,830/-. Claim No.5 for the amount of labour cess has been rejected and the refund of labour cess deducted by the respondent has been rejected. Claim No.6 for Interest pre-litigation, Rs.1,92,614.24 has been allowed. Despite the above findings entire reference has been rejected under section 7-B(1) (a) of the Adhiniyam, 1983. in view of the case of Kamal Kishore Sharma (supra) hence, this arbitration revision before this Court. We have heard learned counsel for both parties. 3. Shri Anuj Bhargav, learned counsel for the petitioner submits that the petitioner is pressing this revision only on two issues firstly whether the reference has rightly been dismissed in light of the judgment passed by this Court in the case of Kamal Kishore Sharma (supra) and secondly the Tribunal was justified in denying the prereference, pendente lite and future reference to the petitioner.
The claims which have been accepted by the Tribunal are not being challenged by the respondent by filing a revision or cross-revision and the petitioner is not challenging the claims which have been rejected. 4. During the pendency of the reference case before the Tribunal and thereafter during pendency of this Arbitration Revision before this Court, the law laid down in the case of Kamal Kishore Sharma (supra) was doubted by another Full Bench of this Court and thereafter the case of Sanjay Dubey v. State of Madhya Pradesh and others were referred to the five Judges' Special Bench. In the case of Sanjay Dubey v. State of M.P. and another reported in (2012) 4 MPLJ 212 the Full Bench has answered the issue as under: 13. In view of the preceding analysis, we proceed to state our conclusions as under :- (i) Where the works contract contains a clause like Clause 29, the jurisdiction of the Tribunal can be invoked only after approaching the Authority as provided under the terms of the works contract. (ii) However, subject to final adjudication of the issue by the Supreme Court as to whether Tribunal under the Act is a Court or not, in case where the dispute has arisen under an agreement prior to coming into force of section 7-B(2-A) of the Act which does not contain a clause like Clause 29, an aggrieved person has to approach the Tribunal within a period of three years from the date of accrual of cause of action. (iii) Where the works contract does not contain any provision like Clause 29 and the dispute has arisen after coming into force of section 7- B(2-A) of the Act, in such a case, sub-section (2-A) of section 7-B of the Act will apply and an aggrieved person can approach the Tribunal within a period of three years from the date on which the works contract is terminated, foreclosed, abandoned or comes to an end in any other manner or when a dispute arises during the pendency of the works contract. (iv) In a case where the agreement is rescinded, two questions may arise for consideration. Firstly, which party to the agreement is at fault and consequently, claim for damages for breach of contract.
(iv) In a case where the agreement is rescinded, two questions may arise for consideration. Firstly, which party to the agreement is at fault and consequently, claim for damages for breach of contract. Secondly, the claim with regard to payment of amount of the final bill before rescission of the contract in accordance with the rates prescribed in the agreement. In the first case, the limitation would commence from the date when the agreement is rescinded whereas in the second case, the limitation would commence from the date when the final bill is prepared. (v) The dispute under Clause 29 has to be submitted within the time limit which has been prescribed in the clause. The dispute cannot be submitted to the Authorities mentioned in Clause 29 of the Agreement within a period of three years as the provisions of Limitation Act do not apply to the Authorities under the Agreement as they are not the Courts. (vi) Clause 29 of the Agreement is not violative of section 28(b) of the Indian Contract Act, 1872. 5. It is correct that the Full Bench has held that the Works Contract contains the clause like Clause 29 of PWD manual that the jurisdiction of the Tribunal can be invoked only after approaching the authorities as provided under the terms of the Works Contract but the Full Bench has also held that where the works contract does not contain any provision like Clause 29 and the dispute has arisen after coming into force of section 7- B(2-A) of the Act, in such a case, sub-section (2-A) of section 7-B of the Act will apply and an aggrieved person can approach the Tribunal within a period of three years from the date on which the works contract is terminated, foreclosed, abandoned or comes to an end. 6. Learned Tribunal has held that Clause 64 and 65 are similar to Clause 29 of the Works Contract and before approaching the reference Court, the petitioner was required to approach the City Engineer as well as the Appellate Authority, only then reference would be maintainable in view of Section 7-B(1)(a) of the Adhiniyam, 1983 for the ready reference section 7B(1)(a) and is reproduced below: 7 B. Limitation.
- (1) The Tribunal shall not admit a reference petition unless- (a) the dispute is first referred for the decision of the final authority under the terms of the works contract. 7. As per section 7B(1)(a), the Tribunal shall not admit a reference petition unless the dispute is first referred for the decision of the final authority under the terms of the Works Contract and the petition is made within one year from the date of communication of the decision of the final authority. Sub-section (2-A) of section 7-B of the Adhiniyam, 1983 has been inserted with effect from 29.04.2003 i.e. prior to the execution of an agreement with the petitioner according to which notwithstanding anything contained under sub-Section (1), the Tribunal shall not admit a reference petition unless it is made within three years from the date on which the Works Contract is terminated, foreclosed, abandoned or come to an end in any other manner. The Section 7-B(2-A) is a non-obstante clause according to which despite the dispute not being referred for the final decision of the authority under the terms and conditions of the contract, it can be filed within three years before the Tribunal from the date on which the work is either terminated or foreclosed or abandoned or comes to an end. The Section 7-B(2-A) overrides sections 7-B (1) and (2) of the Adhiniyam,1993 . In the case of T.R. Thandur v. Union of India, reported in (1996) 3 SCC 690 at page 704 the apex Court has considered the scope of non obstante clause and has held as under:- 8. We would first construe section 20 of the Act to ascertain its meaning. It is obvious that there being no question of the constitutional validity of the provision, an attempt has to be made to ascertain the true meaning of every part of section 20. Section 20 contains the power to exempt. It has two sub-sections. Sub-section (1) begins with the non obstante clause “Notwithstanding anything contained in any of the foregoing provisions of this Chapter”, after which occur clauses (a) and (b) therein which provide for exemption, “subject to such conditions, if any, as may be specified in the order”, of “such vacant land from the provisions of this Chapter”.
It has two sub-sections. Sub-section (1) begins with the non obstante clause “Notwithstanding anything contained in any of the foregoing provisions of this Chapter”, after which occur clauses (a) and (b) therein which provide for exemption, “subject to such conditions, if any, as may be specified in the order”, of “such vacant land from the provisions of this Chapter”. The non obstante clause clearly indicates that Section 20 overrides the foregoing provisions of Chapter III, that is, sections 3 to 19 of the Act. This is reaffirmed in clauses (a) and (b) wherein the concluding part in each is “Government may, by order, exempt, subject to such conditions, if any, as may be specified in the order, such vacant land from the provisions of this Chapter”. The effect of the non obstante clause at the beginning of sub-section (1) and the concluding words in clauses (a) and (b) undoubtedly is that on exemption being granted subject to the conditions specified in the order granting the exemption, such vacant land is exempted from the provisions of Chapter III which contains sections 3 to 24, in spite of the provisions in sections 3 to 19. There is no ambiguity in this behalf in sub-section (1). The plain language of the provision leaves no room for any ambiguity. Thus, if the logical outcome of the exemption granted subject to the specified conditions, is to lift the restriction on transfer of the exempted land, then it has to be accepted. However, the imposition of conditions attached to the exemption and the power of withdrawal of the exemption under sub-section (2) is intended to control the transfer in such cases. It has to be seen whether this plain construction of section 20 must be abandoned on any settled rule of construction.