Gujarat High Court
Chairman - Sardar Sarovar Narmada Nigam ... vs V I Pandya on 11 March, 2020
Equivalent citations: AIR 2021 (NOC) 265 (GUJ.), AIRONLINE 2020 GUJ 701
Author: Harsha Devani
Bench: Harsha Devani
C/SCA/2673/2013 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 2673 of 2013
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CHAIRMAN - SARDAR SAROVAR NARMADA NIGAM LIMTED
Versus
V I PANDYA
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Appearance:
MR GC MAZMUDAR(1193) for the Petitioner(s) No. 1
MR HG MAZMUDAR(1194) for the Petitioner(s) No. 1
MR PARAS SUKHWANI for MR KG SUKHWANI(871) for the Respondent(s)
No. 1
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CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI
Date : 11/03/2020
ORAL ORDER
1. By this petition under articles 226 and 227 of the Constitution of India, the petitioner Sardar Sarovar Narmada Nigam Limited, has challenged the order dated 6.12.2010 passed by the Gujarat Public Works Contracts Disputes Arbitration Tribunal, Ahmedabad (hereinafter referred to as "the Arbitration Tribunal") in Arbitration Reference No.112 of 1998.
2. The petitioner, a Government of Gujarat undertaking company, invited tender for canal related works contract. The petitioner accepted the contract of the respondent M/s. V.I. Pandya for the works contract for distributaries for Block No.9- A/6 for earth work, brick lining and structure work estimated at Rs.3,48,28,105/-.
2.1 After the works contract was over, the respondent herein Page 1 of 14 Downloaded on : Sun Jun 14 06:10:27 IST 2020 C/SCA/2673/2013 ORDER raised a dispute and filed Arbitration Reference No.112 of 1998 before the Tribunal claiming Rs.50,24,473/-. It is the case of the petitioner that after admission of the arbitration reference, it remained pending sine die before the Arbitration Tribunal. During the pendency of the arbitration reference, the Supreme Court decided Civil Appeal No.3746 of 2005 in the case of V.A. Tech Esher Wyass Flovel Ltd. v. M.P.S.E. Board and another, (2011) 13 SCC 261, wherein it was held that the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Arbitration Act") covers all kinds of disputes relating to works contract and that the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992 (hereinafter referred to as "the Gujarat Act") and the Arbitration Act can be harmonised by holding that the said Act only applies where there is no arbitration clause and it stands impliedly repealed by the Arbitration Act.
2.2 Thereafter, the present Arbitration Reference No.112 of 1998 was taken on board on 6.12.2010, and by an order of the same date, the Arbitration Tribunal held that the reference was squarely covered by the judgment of the Supreme Court in the case of V.A. Tech Esher Wyass Flovel Ltd. v. M.P.S.E. Board (supra) and that the arbitration reference was not maintainable.
2.3 Since the Arbitration Tribunal had held that the reference was not maintainable before it, the respondent invoked the arbitration clause of the tender for appointment of sole arbitrator for deciding the disputes between the parties. By an order dated 24.6.2011 passed by this court in the petition under Arbitration Act No.25 of 2011, Hon'ble Mr. Justice C.K. Page 2 of 14 Downloaded on : Sun Jun 14 06:10:27 IST 2020 C/SCA/2673/2013 ORDER Buch (Retired) was appointed as the sole arbitrator, who passed an award on 11.9.2012.
2.4 In the meanwhile, the Supreme Court, in the case of Madhya Pradesh Rural Road Development Authority v. L.G. Chaudhary Engineers and Contractors, (2012) 3 SCC 495, held that its earlier decision in the case of V.A. Tech Esher Wyass Flovel Ltd. v. M.P.S.E. Board to be per incuriam. It is in the light of the above decision of the Supreme Court, that the petitioner has filed the present petition challenging the order dated 6.12.2010 passed by the Arbitration Tribunal.
3. Mr. H.G. Mazmudar, learned advocate for the petitioner, submitted that it is only the Arbitration Tribunal under the Gujarat Act which has the jurisdiction to decide the disputes raised before the learned Arbitrator. It was submitted that, therefore, the award passed by the learned Arbitrator is without jurisdiction. In support of his submissions, the learned advocate placed reliance upon the decision of a Division Bench of this court in Vijay Construction Co. v. Sardar Sarovar Narmada Nigam Limited rendered on 9.2.2018 in Letters Patent Appeal No.882 of 2017 wherein, it was held thus:-
"[13] Having regard to issue involved in the present case viz. whether in view of Tribunal constituted under State Act for resolution of disputes relating to works contract, the Tribunal constituted under the Act of 1996 can be allowed to handle the disputes relating to works contract, is a matter which arise for consideration. In that view of the matter, by placing reliance on the judgments referred above and by referring to provisions under Section 5 and 16 of the Arbitration and Conciliation Act, 1996, we are not convinced to accept submission made by learned Counsel for the appellant that learned Single Judge has Page 3 of 14 Downloaded on : Sun Jun 14 06:10:27 IST 2020 C/SCA/2673/2013 ORDER committed error by entertaining the petition at this stage. Further, it is to be noticed that order impugned dated 30.11.2010 in the petition is passed only in view of judgment in the case of Va Tech (supra) and same is held to be per incuriam in the subsequent judgment in the case of L.G.Chaudhary Engineers and Contractors (supra).
[14] In the case of M.A.Murthy (supra) relied by learned Senior Counsel Mr. Trivedi for the respondents, it is categorically held by the Hon'ble Supreme Court that normally, decision of the Court enunciating a principle of law is applicable to all cases irrespective of stage of pendency from inception. In the aforesaid judgment, it is held that doctrine of prospective overruling which is a feature of American jurisprudence is an exception to the normal principle of law. Further, in the case of Jagmittar Sain Bhagat and Ors. (supra) relied by learned Senior Counsel Mr. Trivedi for the respondents, the Hon'ble Supreme Court has held that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court, and if the court passes a decree holding no jurisdiction over the matter, it would amount to nullity as the matter goes to the root of the matter. Both the judgments referred above, supports the case of the respondents.
[15] Further, in the case of Executive Engineer, Sardar Sarovar Narmada Nigam v/s. Bhaven Construction and Anr. reported in 2013(1) GLR 580, the Division Bench of this Court has held that dispute arising out of public works contract is to be adjudicated by Arbitration Tribunal under the Act, 1992 and not under the Arbitration and Conciliation Act, 1996."
3.1 It was further submitted that the decision of the Supreme Court in the case of Madhya Pradesh Rural Road Development Authority v. L.G. Chaudhary Engineers and Contractors (supra) was rendered in the context of the Madhya Pradesh Madhyastham Adhikaran Andhiniyam, 1983, wherein there is no provision similar to section 21 of the Gujarat Act which provides that the provisions of the Page 4 of 14 Downloaded on : Sun Jun 14 06:10:27 IST 2020 C/SCA/2673/2013 ORDER Arbitration Act, shall insofar as they are inconsistent with the provisions of the Act, cease to apply, to any dispute arising from a works contract and all arbitration proceedings in relation to such dispute before an arbitrator, umpire, court or authority shall stand transferred to the Tribunal. It was submitted that in the present case, the Tribunal has not framed any issue on the question of jurisdiction and that the impugned order passed by the Tribunal being contrary to the law laid down by the Supreme Court in the case of Madhya Pradesh Rural Road Development Authority v. L.G. Chaudhary Engineers and Contractors (supra), is required to be quashed and set aside.
3.2 Reliance was also placed upon various decisions of learned Single Judges of this court whereby the orders passed by the Arbitration Tribunal were set aside and the reference was ordered to be restored to the file of the Arbitration Tribunal for its decision on merits and in accordance with law.
4. Opposing the petition, Mr. Paras Sukhwani, learned advocate for the respondent, invited the attention of the court to the events that have taken place. It was submitted that the Arbitration Tribunal disposed of the arbitration reference by an order dated 6.12.2010, whereafter the petitioner and the Executive Engineer were served with a notice dated 4.1.2011 for appointment of the Arbitrator. Though the notice was duly served, the petitioner neither replied nor complied with the requirements of the said notice. Therefore, Arbitration Petition No.25 of 2011 was filed before this court under section 11 of the Arbitration Act. By an order dated 24.6.2011, this court constituted the Arbitration Tribunal by appointing Justice C. K. Page 5 of 14 Downloaded on : Sun Jun 14 06:10:27 IST 2020 C/SCA/2673/2013 ORDER Buch, a former Judge of this court, as Arbitrator. Thereafter, the learned Arbitrator has adjudicated the disputes between the parties and passed an award on 11.9.2012. It was submitted that the present petition has been filed after the award came to be passed by the learned Arbitrator, and hence, the above referred decision of the Supreme Court in the case of Madhya Pradesh Rural Road Development Authority v. L.G. Chaudhary Engineers and Contractors (supra) would have no applicability to the facts of the present case. The attention of the court was invited to the said decision, to point out that the Supreme Court in the cases where the award was already made, has not expressed any opinion on the applicability of the said Act and has held that in such cases if no objection to the jurisdiction of the Arbitrator was taken at the relevant stage, the award may not be annulled only on this ground. It was submitted that in the facts of the present case, if the petitioner was of the view that the learned Arbitrator has no jurisdiction to decide the controversy in issue, it was open for the petitioner to file an application under section 16 of the Arbitration Act before the Arbitration Tribunal. However, the petitioner, at the relevant time having not raised any objection to the jurisdiction of the learned Arbitrator to adjudicate upon the disputes in question, is now precluded from challenging the same. It was, accordingly, urged that the petition being devoid of any merit, deserves to be dismissed.
5. The facts are not in dispute. The Arbitration Tribunal by an order dated 16.12.2010 disposed of the reference in the following terms:-
"The learned advocates for the parties submitted that this case is squarely covered by the judgment of the Page 6 of 14 Downloaded on : Sun Jun 14 06:10:27 IST 2020 C/SCA/2673/2013 ORDER Hon'ble Supreme Court in case of V.A. Tech. Escher Wyas Floval Ltd. v. M.P.S.E. Board & Anr. reported in 2010 Arb. W.L.J. 116 (SC), and agreed that this case be disposed of in terms of the aforesaid judgment of the Hon'ble Supreme Court as the present Reference is not maintainable before this Tribunal.
In view of the above, this Reference is disposed of in terms of aforesaid judgment."
6. Thereafter, the Supreme Court in the case of Madhya Pradesh Rural Road Development Authority v. L.G. Chaudhary Engineers and Contractors, (supra) held that its earlier decision in the case of V.A. Tech Esher Wyass Flovel Ltd. v. M.P.S.E. Board (supra) has been rendered per incuriam. Prior thereto, by an order dated 24.6.2011, this court passed the following order in the Petition under the Arbitration Act No.25 of 2011:-
"1. For the disputes between the petitioner and respondents, petitioner seeks appointment of Arbitrator to resolve such disputes. Disputes flow from execution of work pursuant to agreement dated 28.10.1992. It is pointed out that previously, the petitioner had filed proceedings before the Gujarat Public Works Contracts Disputes Arbitration Tribunal, Ahmedabad in Arbitration Reference No.112 of 1998 which came to be disposed of by an order dated 6.12.2010 holding that in view of the decision of the Apex Court in case of V.A.Tech.Escher Wyas Floval Ltd. VS M.P.S.E. Board & Anr. reported in 2010 Arb.W.L.J.116(SC), such reference is not maintainable before the Tribunal. Petitioner has, therefore, approached this Court seeking appointment of Arbitrator.
2. Considering the submissions made and upon perusal of the record, I am of the opinion that petitioner's request for appointment of Arbitrator is required to be granted.
3. Under the circumstances, Justice C.K.Buch, (Retd.) is appointed as Arbitrator and requested to arbitrate between the parties and render his award.Page 7 of 14 Downloaded on : Sun Jun 14 06:10:27 IST 2020 C/SCA/2673/2013 ORDER
4. With above directions, petition is disposed of."
7. The dispute raised before the learned Arbitrator came to be decided by an award dated 11.9.2012. Thereafter, the petitioner has filed the present petition on or about 28.2.2013. It may be noted that the award passed by the learned Arbitrator has not been challenged in the petition nor has a copy of such award been annexed along therewith the. The petitioner has merely challenged the order dated 16.12.2010 passed by the Arbitration Tribunal after a delay of more than two years, solely on the ground that the learned Arbitrator has no jurisdiction to decide the dispute referred to him as it is the Tribunal alone which has such jurisdiction under the Gujarat Act.
8. In this regard it may be noted that the legal position as on the date when the Arbitration Tribunal passed the order dated 16.12.2010 was governed by the decision of the Supreme Court in the case of V.A. Tech Esher Wyass Flovel Ltd. v. M.P.S.E. Board (supra). Accordingly, the disputes were referred by this court to the learned Arbitrator to adjudicate the disputes and pass an award. It is thereafter that the petitioner has sought to challenge the order dated 16.12.2010 without challenging the award passed by the learned Arbitrator. Once the learned Arbitrator has adjudicated the disputes, in the opinion of this court, the order dated 16.12.2010 has run its course and there is nothing remaining to be done in those proceedings. Therefore, even if the order passed by the Arbitration Tribunal is set aside, it would not nullify the subsequent proceedings, which have attained finality in the light of the award passed by the learned Page 8 of 14 Downloaded on : Sun Jun 14 06:10:27 IST 2020 C/SCA/2673/2013 ORDER Arbitrator, in the absence of any challenge to the same. Thus, even if the order passed by the Arbitration Tribunal were to be set aside, the award would still subsist and be enforceable in law.
9. Besides, in view of the provisions of section 16 of the Arbitration Act, the Arbitral Tribunal has the competence to rule on its own jurisdiction and, therefore, in the light of the provisions of section 16 of the Arbitration Act, it was open for the petitioner to question the Arbitrator's jurisdiction to adjudicate the dispute. However, the petitioner failed to do so and on the contrary, participated in the proceedings without any demur. The petition is, therefore, barred by delay and acquiescence.
10. Since consent of the parties would not confer jurisdiction where there is none, reference may be made at this stage, to the decision of the Supreme Court in Madhya Pradesh Rural Road Development Authority v. L.G. Choudhary Engineers and Contractors (supra), wherein the court has held thus:-
"14. In view of the above, we are of the view that the State law will prevail in terms of Section 2(4) of the Central Act. The reference under the State law was valid and could be decided in accordance with the State. Accordingly, we set aside the impugned order and restore the proceedings before the Tribunal. The appeal is, accordingly, allowed in above terms.
16. However, since it is stated that proceedings are pending before the Arbitrator in pursuance of the impugned order, the same will stand transferred to the State Tribunal and the State Tribunal may proceed further taking into account the proceedings which have Page 9 of 14 Downloaded on : Sun Jun 14 06:10:27 IST 2020 C/SCA/2673/2013 ORDER already been taken. Learned counsel for the respondent(s) pointed out that in view of Section 16(2), the objection to the jurisdiction could not be raised after statement of defence was filed. This contention cannot be accepted in view of the fact that the SLP was filed prior to the filing of statement of defence wherein this objection was raised.
17. We do not express any opinion on the applicability of the State Act where award has already been made. In such cases if no objection to the jurisdiction of the arbitration was taken at relevant stage, the award may not be annulled only on that ground.
C.A. No.2616 arising out of SLP(C) No. 35641 of 2011:
19. Leave granted. In view of order passed in C.A. No.2751 of 2018 arising out of SLP(C) No.16615 of 2012, no objection having been raised by the respondents in terms of Section 16(2) of the Arbitration and Conciliation Act, 1996 at appropriate stage within the time stipulated, the award could not have been annulled.
20, Accordingly, this appeal is allowed, the impugned judgment is set aside and the award is restored. It is, however make it clear that this order will not debar proceedings under Section 34 of the Arbitration and Conciliation Act, 1996.
ORDER dated 22-3-2018 SLP (C) No.15059 of 2011
28. It is not disputed that for purposes of decision of the question arising in the present case the provisions of the Gujarat Public Works Contracts Disputes Arbitration Tribunal are in pari materia with the provisions of the M.P. Madhyastham Adhikaran Adhiniyam, 1983 which have been considered by this Court vide order dated 8-3- 2018 in Civil Appeal No.974 of 2012 titled M.P. Rural Development Authority v. L.G. Chaudhary Engineers and Contractors.
Page 10 of 14 Downloaded on : Sun Jun 14 06:10:27 IST 2020 C/SCA/2673/2013 ORDER29. In view of the above, this petition is dismissed.
ORDER dated 18-4-2018 Civil Appeal No.4261 of 2018
32. Delay condoned. Leave granted. We have heard the learned counsel for the parties and perused the record.
33. An agreement was executed between the parties on 11-5-1984 for construction of Assembly building in the State of Madhya Pradesh. Dispute arose from the agreement. The High Court of Delhi appointed an arbitrator vide order dated 13-12-1988. The arbitrator gave the award on 21-6-1989 which was made rule of the court by the Delhi High Court on 28-9-1989. Execution proceedings were taken by the appellant. The learned Single Judge allowed the execution vide order dated 6-9- 1991 against which an appeal was filed before the Division Bench of the High Court.
34. The Division Bench vide order dated 5-7-2012 directed that the enforceability of the decree will depend upon the fate of another appeal which was pending between the parties. The said appeal, FAO (OS) No.23 of 1998, is still pending but the High Court has deferred the same pending decision of the larger Bench of this Court in pursuance of the judgment of this Court in M.P. Rural Road Development Authority v. L.G. Chaudhary Engineers and Contractors. It may be noted that the larger Bench has decided the matter on 8-3-2018. In terms of the said decision, the dispute between the parties has to be settled in accordance with the provisions of the M.P. Madhyastham Adhikaran Adhiniyam, 1983 (the M.P. Act). However, since in the present case the award has been rendered long back which was not challenged by the respondents and the matter is pending at the stage of execution, we directed that the award to be treated to have been rendered under the M.P. Act.
Page 11 of 14 Downloaded on : Sun Jun 14 06:10:27 IST 2020 C/SCA/2673/2013 ORDER35. In view of the above, we transfer pending proceedings before the Delhi High Court being FAO (OS) No.23 of 1998 and connected matters to the High Court of Madhya Pradesh at Jabalpur to be treated as revision petition under the M.P. Act."
11. Thus, the Supreme Court, in a case where no objection was raised in terms of section 16(2) of the Arbitration Act at the appropriate stage within the time stipulated, has held that the award could not have been annulled and has restored the award. In the case arising under the M.P. Act, since a larger Bench of that court had held that the disputes between the parties have to be settled in accordance with the M.P. Act, the Supreme Court held that since the award was rendered long back and was not challenged by the respondents, such award be treated as having been rendered under the M.P. Act.
12. In the opinion of this court, in the absence of any objection having been raised at the relevant time and the award passed by the learned Arbitrator not having been challenged, the said award cannot be annulled and at best can be treated as an award rendered under the Gujarat Act.
13. The Division Bench of this court in the case of Vijay Construction Co. (supra) has placed reliance upon the above decision of the Supreme Court in the case of Madhya Pradesh Rural Road Development Authority v. L.G. Chaudhary Engineers and Contractors (supra). In the case before the Division Bench, the proceedings were still pending before the learned Arbitrator and, therefore, the Division Bench had upheld the order passed by the learned Single Judge in setting aside the order of the Tribunal and restored the arbitration proceedings before it. However, in the facts of this case, as Page 12 of 14 Downloaded on : Sun Jun 14 06:10:27 IST 2020 C/SCA/2673/2013 ORDER noted hereinabove, the proceedings before the learned Arbitrator had culminated into an award and it is thereafter the petitioner has approached this court. Therefore, in the light of what is held by the Supreme Court in the case of Madhya Pradesh Rural Road Development Authority v. L.G. Chaudhary Engineers and Contractors (supra), no objection having been raised by the petitioner in terms of section 16(2) of the Arbitration Act at the appropriate stage within the time stipulated, the award cannot be annulled.
14. The learned advocate for the petitioner has sought to draw a distinction between the provisions of the M.P. Act and the Gujarat Act on the ground that the M.P. Act does not have a provision similar to section 21 of the Gujarat Act, which provides that the provisions of the Arbitration Act shall, insofar as they are inconsistent with the provisions of that Act, cease to apply to any dispute arising from a works contract and all arbitration proceedings in relation to such dispute before an arbitrator, umpire, court or authority shall stand transferred to the Tribunal.
15. In the opinion of this court, the above contention does not carry the case of the petitioner any further. Firstly, for the reason that the Supreme Court in SLP (C) No.15059 of 2011 (supra) has observed that it was not disputed that for the purpose of the decision on the question arising in the said case, the provisions of the Gujarat Act are in pari materia with the provisions of the M.P. Act which has been considered by the court in the case of Madhya Pradesh Rural Road Development Authority v. L.G. Chaudhary Engineers and Contractors (supra); and secondly, for the reason that Page 13 of 14 Downloaded on : Sun Jun 14 06:10:27 IST 2020 C/SCA/2673/2013 ORDER section 21 of the Gujarat Act says that all proceedings in relation to dispute arising from a works contract shall stand transferred to the Tribunal, which prima facie contemplates pending proceedings. In the present case, no proceedings are pending before the learned Arbitrator and hence, the question of transferring such proceedings does not arise.
16. In the above view of the matter, no case is made out for setting aside the order passed by the Arbitration Tribunal at this stage, when the learned Arbitrator has already passed an award pursuant to the order dated 24.6.2011 passed by this court appointing him as the sole Arbitrator and requesting him to arbitrate between the parties.
17. The petition, therefore, fails and is, accordingly, dismissed. Notice is discharged with no order as to costs. The ad-interim relief granted earlier stands vacated.
(HARSHA DEVANI, J) Z.G. SHAIKH Page 14 of 14 Downloaded on : Sun Jun 14 06:10:27 IST 2020