Hindustan Construction Company Limited v. Kolkata Metropolitan Development Authority
2022-01-18
PRAKASH SHRIVASTAVA
body2022
DigiLaw.ai
JUDGMENT Prakash Shrivastava, CJ. - This application has been filed under Section 11 of the arbitration and Conciliation act, 1996 for appointment of arbitrator to resolve the dispute between the parties. 2. The plea of the applicant is that initially the tender of the applicant was accepted for sum of Rs. 317,97,91,652/- (Rupees Three Hundred Seventeen Crores Ninety Seven Lakhs Ninety One Thousand Six Hundred Fifty Two) for construction of elevated road corridor from Park Circus to EM Bypass near Parama Island on Turnkey Contract basis. But, subsequently, the respondent deleted a portion of the work from the scope of the contract and issued fresh tender notice in which the applicant had quoted a sum of Rs. 293 Crores. The applicant's bid was lowest but the respondent cancelled the tender and had issued the fresh E Tender mentioning Rs. 257 Crores as the estimated cost of the work. aggrieved with the same, the applicant had filed WP 7104 (W) of 2014. During the pendency of the proceedings, the applicant had agreed before Writ Court to execute and complete the work conferred by the said fresh tender for the reduced estimated cost of Rs. 257 Crores subject to certain conditions. Hence, the agreement in this regard was recorded by the Writ Court and in pursuance there to, respondent had issued letter of acceptance dated 11.04.2014. The stipulated date of completion of this contract was 31.05.2016. But there was a delay and defaults on the part of the respondent which resulted into under utilisation and loss of productivity of resources mobilise for work by the applicant. The applicant, in terms of the dispute settlement clause, had sent the notice dated 17th of May 2019 to the Engineering-in-Charge for amicable settlement. Since no response was received, therefore, he had sent the notice dated 29th of May 2919 to the respondent in terms of Clause 41.2 with a request to the employer to settle the dispute amicably within 56 days but there was no positive response. Hence the applicant had given the notice dated 23.10.2020 invoking the arbitration clause and proposing the name of four persons for appointment of sole arbitrator. Vide communication dated 04.01.2021, respondent had taken the stand that the dispute was not arbitrable and had declined the prayer for arbitration. 3.
Hence the applicant had given the notice dated 23.10.2020 invoking the arbitration clause and proposing the name of four persons for appointment of sole arbitrator. Vide communication dated 04.01.2021, respondent had taken the stand that the dispute was not arbitrable and had declined the prayer for arbitration. 3. Submission of the learned Counsel for the applicant is that in terms of the arbitration clause, dispute is arbitrable that in terms of the order of High Court in the writ petition also there is no bar for referring the dispute to arbitrator as it does not relate to escalation charges. 4. The objection of learned Counsel for the respondent is that in terms of order of High Court in the writ petition, it was a lump sum contract for a sum of Rs. 257 Crores. Hence, there was no scope for arbitration and that escalation was expressly denied by this Court. Hence, the applicant has no right to invoke Section 11. 5. Having heard the learned Counsel for the parties and on perusal of the record, it is noticed that the following arbitration clause is not in dispute. 'SETTLEMENT OF DISPUTES. 41.1. Employer's Decision: If a dispute of any kind whatsoever arises between the Employer and the Contractor in connection with or arising out of the Project of the execution of the Construction Works, whether during the execution of the Works or after their completion and whether before or after repudiation or other termination of the Contract agreement, including any dispute as to any opinion, instruction, determination, certificate or valuation of the Engineer Incharge, the matter in dispute shall, in the first place, be referred in writing to the Engineer Incharge with a copy to the other party. all the disputes will be settled by the Employer with the help of Engineer Incharge and Employer's decision will be final and binding to all. 4.2. amicable Settlement: Where notice of intention to commence arbitration as to a dispute has been given in accordance with above Sub-Clause the parties shall attempt to settle such dispute amicably before the commencement of arbitration. Provided that, unless the parties otherwise agree arbitration may be commenced on or after the fifty-sixth (56th) day after the day on which notice of intention to commence arbitration of such dispute was given even if no attempt at amicable settlement thereof has been made.
Provided that, unless the parties otherwise agree arbitration may be commenced on or after the fifty-sixth (56th) day after the day on which notice of intention to commence arbitration of such dispute was given even if no attempt at amicable settlement thereof has been made. 4.3 arbitration: any dispute in respect of which: (a) the decision, if any, of the Engineer Incharge/ Employer has not become final and binding pursuant to Sub-Clause 41.1 and (b) amicable settlement has not been reached within the period stated in Sub-Clause 41.2 Shall be finally settled, unless otherwise specified in the Contract, under the Rules of Indian arbitration act 1996 by one or more arbitrators appointed under such Rules. The said arbitrator/s shall have full power to open up review and revise any decision, opinion, instruction, determination, certificate or valuation of the Engineer Incharge/ Employer related to the dispute. The arbitral Tribunal shall conduct the arbitration proceedings in accordance with the provisions of arbitration and Conciliation act, 1996 or any statutory modification or enactment thereof and the rules framed thereunder. It is term of the contract that the party invoking arbitration shall specify the dispute or disputes to be referred to arbitration under this clause together with the amount or amounts to be claimed in the contract. The awards so made by the arbitral Tribunal shall be final and binding on the parties and shall be enforced under the provisions of Code of Civil Procedure, 1908 in the same manner as if it were a decree of the Court. The arbitration proceedings shall be conducted in Kolkata only. The arbitration under this clause shall be condition precedent to any right of the action under this contract.' 6. By the order dated 02.04.2014 passed in WP 7104 (W) of 2014, this Court had directed that under no circumstances, escalation for whatever item or under whatever head will be allowed. Subsequently, applicant had sought modification of the order dated 02.04.2014 in respect of further cost escalation with the plea that the process of construction was unduly delayed because the State Machinery had failed to provide access. The learned Single Judge on 17.08.2016 in WP 7104 (W) of 2014 had directed that this prayer will be considered in the next week.
Subsequently, applicant had sought modification of the order dated 02.04.2014 in respect of further cost escalation with the plea that the process of construction was unduly delayed because the State Machinery had failed to provide access. The learned Single Judge on 17.08.2016 in WP 7104 (W) of 2014 had directed that this prayer will be considered in the next week. Thereafter, the proceedings continued in the writ petition and by order dated 22.02.2019, the writ petition was disposed of by observing as under: 'In view thereof, nothing substantial survives for decision on this writ petition. It is disposed of recording the assurance of Mr. Datta, learned advocate General appearing for the Kolkata Metropolitan Development authority that whatever bills raised by the petitioners are outstanding and future bills, shall be cleared in due course. Should there be any other dispute/difference between the parties, it is observed that they shall be at liberty to seek their remedy before the appropriate forum in accordance with law.' 7. The above order clearly reveals that the liberty was given to the parties to avail the remedy before appropriate forum in respect of their disputes and differences. That apart, while passing the initial order dated 02.04.2014, the Writ Court had put an embargo upon the claim for escalation cost but submission of learned Counsel for the applicant is that there was delay in handing over the site and the claim does not relate to the escalation of cost but it relates to compensation for losses/damages suffered by the contractor due to the delays/disruptions not attributable to the applicant and the losses on account of under-utilisation and loss of productivity of resources mobilised for the work, to complete the same within the stipulated period. Hence, the objection of the respondent that the claim is not arbitrable cannot be accepted and is hereby rejected. 8. The arbitration clause provides for three stage settlement of dispute and the applicant has duly followed the procedure prescribed therein without any success. The dispute exists between the parties. Hence, I am of the opinion that an independent arbitrator is required to be appointed to resolve the dispute. Hence, the name of Justice Debi Prosad Dey, retired Judge of High Court at Calcutta, resident of 263, G.T. Road, Shibpur, Opposite Shibpur Police Line, Block - 2, 2nd Floor, Howrah (Mobile No. 8336932296) is proposed for appointment as arbitrator.
Hence, I am of the opinion that an independent arbitrator is required to be appointed to resolve the dispute. Hence, the name of Justice Debi Prosad Dey, retired Judge of High Court at Calcutta, resident of 263, G.T. Road, Shibpur, Opposite Shibpur Police Line, Block - 2, 2nd Floor, Howrah (Mobile No. 8336932296) is proposed for appointment as arbitrator. Concerned Registrar is directed to obtain his declaration in terms of Section 12 (1) in the Form prescribed in the 6th Schedule of the act. 9. List on 7th of February, 2022.