Gujarat High Court
Datang Technologies And Engineering ... vs Gujarat State Electricity Corporation ... on 24 November, 2021
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
C/SCA/17338/2021 ORDER DATED: 24/11/2021
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 17338 of 2021
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DATANG TECHNOLOGIES AND ENGINEERING INDIA PVT. LTD.
Versus
GUJARAT STATE ELECTRICITY CORPORATION LTD.
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Appearance:
MR MIHIR THAKORE SENIOR ADVOCATE WITH MR JAIMIN DAVE,
ADVOCATE WITH MR S M DAVE(11268) for the Petitioner(s) No. 1
MR DIPAK R DAVE, ADVOCATE for the Respondent No.1
DS AFF.NOT FILED (N)(11) for the Respondent(s) No. 1,2,3
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CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
Date : 24/11/2021
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1 By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs:
"(a) Issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, direction restraining the respondent No.1 from invoking / encashing the Bank Guarantees bearing nos.
002BG01190590003 dated 28.02.2019 and valid up to 13.09.2023, 002BG01190590002 dated 28.02.2019 and valid up to 13.09 2023, 002BG01 192670006 dated 24.09.2019 and valid up to 30.11.2022, all issued by the Respondent No.2 and bank guarantee no. OGT0017200048462 dated 07.11.2020 and valid up to 31.12.2021 issued by the Respondent No.3 till the matter is decided by the Gujarat Public Work Contract Disputes Tribunal;
(b) issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, direction restraining the Respondent No. 2 from making any payment under the Bank Guarantees bearing nos. 002BG01190590003 dated 28.02.2019 and valid up to 13.09.2023; and 002BG01190590002 dated 28.02.2019 and valid up to 13.09.2023, and 002BG01192670006 dated 24.09.2019 and valid up to 30.11.2022 to Page 1 of 11 Downloaded on : Wed Jan 12 04:04:52 IST 2022 C/SCA/17338/2021 ORDER DATED: 24/11/2021 Respondent No.1 or otherwise till the matter is decided by the Gujarat Public Work Contract Disputes Tribunal;
(c) issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, direction restraining Respondent No. 3 from making any payment under the Bank Guarantee no.OGT0017200048462 dated 07.11.2020 and valid up to 31.12.2021 to Respondent No. 1 or otherwise till the matter is decided by the Gujarat Public Work Contract Disputes Tribunal;
(d) Pending hearing and final disposal of the present Petition, restrain the Respondent No. 1 from taking any action pursuant to the Show Cause Notice dated 10.11.2021 at Annexure - A to the Petitioner and further restrain the Respondent No.1 from invoking/encashing the Bank Guarantees bearing nos. 002BG01190590003 dated 28.02.2019 and valid up to 13.09.2023; 002BG01190590002 dated 28.02.2019 and valid up to 13.09.2023; 002BG01192670006 dated 24.09.2019 and valid up to 30.11.2022, all issued by the Respondent No. 2 and bank guarantee no. OGT0017200048462 dated 07.11.2020 and valid up to 31.12.2021 issued by the Respondent No. 3;
(e) Pending hearing and final disposal of this Petition, restrain the Respondent No.2 from making any payment under the Bank Guarantees bearing nos.002BG01190590003 dated 28.02.2019 and valid up to 13.09.2023; and 002BG01190590002 dated 28.02.2019 and valid up to 13.09.2023, and 002BG01192670006 dated 24.09.2019 and valid up to 30.11.2022 to Respondent No.1 or otherwise;
(f) Pending hearing and final disposal of this Petition, restrain the Respondent No.3 from making any payment under the Bank Guarantee no. OGT0017200048462 dated 07.11.2020 and valid up to 31.12.2021 to Respondent No. 1 or otherwise
(g) any other and further relief deemed just and proper be granted in the interest of justice.
(h) to provide for the cost of this petition"
2 The facts giving rise to this writ application may be summarized as under:
3 The writ applicant is a private limited company engaged in the business of an innovative technology expanding the value chain of electricity production, service electrical construction and environment-Page 2 of 11 Downloaded on : Wed Jan 12 04:04:52 IST 2022
C/SCA/17338/2021 ORDER DATED: 24/11/2021 friendly, resource-conserving social construction engineering enterprise.
4 The respondent No.1 namely the Gujarat Electricity Corporation Limited is a Public Sector Undertaking incorporated under the Laws of India and is engaged in the field of power generation and related activities in the State of Gujarat. It is not in dispute that the respondent No.1 herein is a "State" within the meaning of Article 12 of the Constitution of India.
5 It appears from the materials on record that the respondent No.1 intends to develop a 800 Megawatts Thermal Power Plant at Wanakbori, Gujarat. In this regard, the bid submitted by the writ applicant was accepted and finalized by the Corporation. In accordance with the Letter of Award (LOA), the Corporation was to undertake the work of design, engineering, manufacture, shop testing, packing and forwarding, modification, loading / unloading, storage at site, insurance, erection, completion of work with PG Tests including civil works, for supply, installation, commissioning and testing of FGD system for 800 Megawatts Unit No.8 of Wanakbori TPS within three years. The respondent - Corporation issued a Letter of Intent (LOI) dated 14 th February 2019 in favour of the writ applicant for an amount of Rs.412,26,00,000/- (Rupees Four Hundred Twenty One Crore and Twenty Six Lakh only).
6 In terms of the LOI, the following Bank Guarantees came to be furnished by the writ applicant;
"(a) 10% of total contract value of supply and installation of FGD system i.e. Rs.37,76,81,379/- (Rupees Thirty Seven Crore Seventy Six Lakh Eighty One Thousand Three Hundred Seventy Nine only) to be furnished by the Petitioner;Page 3 of 11 Downloaded on : Wed Jan 12 04:04:52 IST 2022
C/SCA/17338/2021 ORDER DATED: 24/11/2021
(b) 5% of total contract value of supply and installation of FGD system i.e. Rs.18,88,40,690/(Rupees Eighteen Crore Eighty Eight Lakh Forty Thousand Six Hundred Ninety only) to be furnished by the Petitioner's Flue Gas Desulphurization System Manufacturer, i.e, China Datang Technologies & Engineering Co. Ltd.;
(c) 10% of supply price (Supply of material + Mandatory spares) i.e. 18,84,42,971/- (Rupees Eighteen Crores Eighty Four Lakh Forty Two Thousand Nine Hundred Seventy One only) against disbursement of interest free advance to be furnished by the petitioner.
(d) 5% of total contract value for 03 years comprehensive O&M of FGD system i.e. Rs.2,17,89,310/- (Rupees Two Crore Seventeen Lakh Eighty Nine Thousand Three Hundred Ten only) to be furnished by the petitioner."
7 The facts recorded aforesaid are sufficient for this Court to dispose of this writ application with an appropriate order. The position as on date is that the writ applicant has not been in a position to adhere to the time period as prescribed in the agreement. It is the case of the writ applicant that it is a Chinese Company and on account of the COVID-19 pandemic, it had to face a lot of difficulties, on account of which, the work of contract could not be started and completed in accordance with the terms and conditions.
8 The aforesaid dispute led to issue of a show cause notice by the Corporation dated 10th November 2021 to the writ applicant. The writ applicant has been called upon to show cause as to why the contract / work order allotted vide LOA dated 16 th March 2019 for Supply, Installation, Commissioning and Testing of the the FGD system for 800 Megawatts Unit No.8 of Wanakbori TPS with three years comprehensive O&M contract - supply order thereof and the LOA for Erection, Testing and Commissioning thereof (work order) of the even date be not cancelled and the performance Bank Guarantee be not revoked and the further execution of the supply order and erection, testing and Page 4 of 11 Downloaded on : Wed Jan 12 04:04:52 IST 2022 C/SCA/17338/2021 ORDER DATED: 24/11/2021 commissioning work order shall not be carried out at the risk, cost and consequences of the writ applicant.
9 The writ applicant has a strong apprehension that the Corporation may, now at any point of time, revoke the Bank Guarantee and in such circumstances, has come to this Court with the present writ application praying for appropriate reliefs.
10 We have heard Mr. Mihir Thakore, the learned Senior Counsel assisted by Mr. Jaimin Dave, the learned counsel appearing for the writ applicant and Mr. Dipak R. Dave, the learned counsel appearing for the respondent No.1 - Corporation.
11 It is not in dispute that till this date, the writ applicant has not filed its reply to the show cause notice. Once an appropriate reply is filed, probably, the Corporation may be in a position to take the final call as to whether the contract should be terminated and the performance Bank Guarantee be revoked. Mr. Thakore, the learned Senior Counsel made himself very clear that at the earliest, an appropriate reply would be filed by his client. However, Mr. Thakore, tried his best to persuade us to grant relief as on date against encashment of Bank Guarantee till his client approaches the Gujarat Public Works Contracts Dispute Arbitration Tribunal and seeks appropriate reliefs under the provisions of the Gujarat Public Works Contract Disputes Arbitration and Tribunal Act, 1992 (for short, "the Act, 1992"). Mr. Thakore took us through the various provisions of the Act, 1992, more particularly, Section 8 of the Act. Section 8 of the Act reads thus:
"8. Reference to Tribunal and making of award. - (1) Where any dispute arises between the parties to the works contract, either party Page 5 of 11 Downloaded on : Wed Jan 12 04:04:52 IST 2022 C/SCA/17338/2021 ORDER DATED: 24/11/2021 shall, irrespective of whether such works contract contains an arbitration clause or not, refer, within one year from the date when the dispute has arisen, such dispute in writing to the Tribunal for arbitration in such form and accompanied by such documents or other evidence and by such fees, as may be prescribed.
(2) On receipt of a reference under sub-section (1), the Tribunal may, if satisfied after such inquiry as it may deem fit to make, that the requirements under this Act in relation to the reference are compiled with, admit such reference and where the Tribunal is not so satisfied, it may reject the reference summarily.
(3) Where the Tribunal admits the reference under sub-section (2), it shall, after recording evidence if necessary, and after perusal of the material on record and on affording an opportunity to the parties to submit their arguments, make an award or an interim award giving its reasons therefor .
(4) The Tribunal shall use all reasonable dispatch in entering on and proceeding with the reference admitted by it and making the award, and an endeavour shall be made to make an award within four months from the date on which the Tribunal had admitted the reference.
(5) The award including the interim award made by the Tribunal shall, subject to an order, if any, made under section 11 or 12 be final and binding on the parties to the dispute.
(6) An award including an interim award as confirmed or varied by an order, if any, made under section 11 or 12 shall be deemed to be a decree within the meaning of section 2 of the Code of Civil Procedure, 1908 of the principal Court of original jurisdiction within the local limits whereof the award or the interim award has been made and shall be executed accordingly."
12 Mr. Thakore would submit that the plain reading of the provisions of Section 8 would indicate that the Tribunal would have to first admit the reference and the admission would be subject to the satisfaction of the Tribunal. According to Mr. Thakore, if the Tribunal deems fit to admit the reference under Sub-section (2), it shall, thereafter, proceed to record the evidence if necessary, and then may pass an appropriate order. Although, Sub-section (3) talks about making an award or an interim award, but even an interim relief can be granted by the Tribunal Page 6 of 11 Downloaded on : Wed Jan 12 04:04:52 IST 2022 C/SCA/17338/2021 ORDER DATED: 24/11/2021 having regard to the urgency in the matter.
13 Mr. Thakore also invited our attention to the decision of the Supreme Court in the case of State of Gujarat through Chief Secretary and another vs. Amber Builders reported in (2020) 2 SCC 540, wherein, the Supreme Court has taken the view that the Gujarat Public Works Contracts Disputes Arbitration Tribunal has the jurisdiction to make an interim order in terms of Section 17 of the Arbitration and Conciliation Act, 1996 (for short, "the Act, 1996"). We may quote the relevant paragraphs of the Supreme Court judgement as under:
"15. Part I of the A&C Act i.e. from Section 2 to Section 43 deals with Arbitration and Section 2(2) clearly states that the said Part would apply to all Arbitrations which take place in India. Section 2(4) makes it absolutely clear that other than Section 40(1), 41 and 43, Part I of the A&C Act shall apply to all arbitrations even if they are carried out under any other enactment as if the arbitrations were pursuant to an arbitration agreement except insofar as the provisions of Part I are inconsistent with the other enactment or any rules made thereunder. A plain reading would show that the provisions of Part I of the A&C Act would apply to all arbitrations where the place of arbitration is within India. Even statutory arbitrations under other Acts would be governed by Part I. The only exception is that if there is any departure from Part I in the special enactment then the special enactment will prevail and the A&C Act will give way to the special enactment.
16. It is in this context that we have to examine the Gujarat Act. We have already referred to certain provision of the Gujarat Act. Reference and procedure of the Tribunal is governed by Chapter 3 of the Gujarat Act. Section 8 provides that where any dispute within the meaning of the said Act, arises between the parties, the said dispute shall be referred to arbitration under the said Act whether the agreement in question contained an arbitration clause or not. Basically, the intention of the Stage Legislature was that all disputes relating to works contract between the State Government and the persons executing the works defined as works contract would be compulsorily referred to the Arbitral Tribunal constituted under Section 3 of the Gujarat Act. Section 8(3) clearly provides that where the Tribunal admits a reference under subsection (2) it will make an award or an interim award giving its reasons thereof. This Section recognizes the power of the Tribunal to make interim awards. However, as pointed above, the Tribunal took a Page 7 of 11 Downloaded on : Wed Jan 12 04:04:52 IST 2022 C/SCA/17338/2021 ORDER DATED: 24/11/2021 view that an interim award could not be in the nature of an injunction.
17. The practice and procedure of the Tribunal is governed by Section 9 of the Act. Section 12 of the Act vests revisional powers in the High Court of Gujarat where an award or any interim award can be challenged on the grounds set out therein. The High Court also has suo motu powers in this regard. Section 13 which is relevant for our purpose reads as follows:-
"13. Bar of jurisdiction of Courts.:-(1) Save as otherwise provided by section 12, no Civil Court shall have jurisdiction to deal with or decide any question which the Tribunal is empowered to deal with and decide by or under this Act and no injunction shall be granted by any Civil Court in respect of any action taken or to be taken in pursuance of any power by or under this Act. (2) No award or interim award or order made or proceedings taken under this Act by the Tribunal shall be called in question in any Civil Court."
Section 13 specifically bars the jurisdiction of the Civil Courts. This clearly means that powers vested in a Civil Court under the A&C Act, such as the powers to grant interim relief in terms of Section 9 of the A&C Act and the powers for setting aside an award under Section 34 of the Act cannot be exercised by Civil Courts insofar as the awards made under the Gujarat Act are concerned. As far as Gujarat Act is concerned, the power to set aside/modify an award is vested in the High Court under Section 12. Section 21 of the Gujarat Act reads as follows:-
"21. Arbitration Act to cease to apply.- The provisions of the Arbitration Act, shall in so far as they are inconsistent with the provisions of this 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."
22. On a conjoint reading and a careful analysis of the Acts together, we are of the view that insofar as the powers vested in the Arbitral Tribunal in terms of the Section 17 of the A&C Act are concerned, such powers can be exercised by the Tribunal constituted under the Gujarat Act because there is no inconsistency in these two Acts as far as the grant of interim relief is concerned. This power is already vested in the tribunal under the Gujarat Act and Section 17 of the A&C Act compliments these powers and therefore it cannot be said that the provisions of Section 17 of the A&C Act are inconsistent with the Gujarat Act."
14 According to Mr. Thakore, his client may be protected for a Page 8 of 11 Downloaded on : Wed Jan 12 04:04:52 IST 2022 C/SCA/17338/2021 ORDER DATED: 24/11/2021
limited period i.e. the period during which his client is able to file an appropriate reference before the Tribunal and seek an appropriate interim relief.
15 On the other hand, this writ application has been vehemently opposed by Mr. Dipak R. Dave, the learned counsel appearing for the Corporation. Mr. Dave would submit that this writ application, at this point of time, more particularly, when the matter is at the stage of show cause notice, should not be entertained and may be rejected only on this short ground. According to Mr. Dave, the Corporation has issued a show cause notice to the writ applicant with a view to give an opportunity to make good its case, and by now, it was expected of the writ applicant to file an appropriate reply. According to Mr. Dave, no reply has been filed till this date. However, Mr. Dave, with his usual fairness, submitted that the writ applicant may file an appropriate reply at the earliest so that such reply may be considered by the Corporation to enable it to take an appropriate decision whether to terminate the contract and revoke the Bank Guarantee or not. According to Mr. Dave, the Agreement / Letter of Award itself provides for an arbitration in accordance with Clause 29. Clause 29 reads thus:
"29. Arbitration:
All questions, disputes or differences whatever which may at any time arise between the parties to this contract in connection with the contract or any matter arising out of or in relation thereto shall be reported to Gujarat Public Works Contract Dispute Arbitration Tribunal and provision of Gujarat Public Work Contract Disputes Arbitration and Tribunal Act 1992 shall be applied as updates time to time."
16 Mr. Dave would submit that it is always open for the writ applicant to invoke the arbitration clause and go before the Tribunal.
17 In such circumstances referred to above, Mr. Dave prays that there Page 9 of 11 Downloaded on : Wed Jan 12 04:04:52 IST 2022 C/SCA/17338/2021 ORDER DATED: 24/11/2021
being no merit in the present writ application, the same be rejected.
18 Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether we should protect or grant relief as prayed for in favour of the writ applicant till the writ applicant files an appropriate reference before the Tribunal under the provisions of the Act, 1992.
19 We are of the view that upon receipt of the show cause notice dated 10th November 2021, the writ applicant should have immediately filed an appropriate reply making good its case that on account of the circumstances beyond its control, it has not been able to adhere to the terms and conditions of the Letter of Award. However, still, it is not late for the writ applicant to file an appropriate reply. Although the time period to file reply expires tomorrow i.e. on 25 th November 2021, we grant indulgence to the writ applicant to file its reply on or before 30 th November 2021. Once the reply comes on record, the Corporation shall look into the same and take an appropriate decision in accordance with law. If the Corporation needs any clarification on any issue, it may call upon the writ applicant to appear in person through any authorized officer.
20 The aforesaid arrangement shall not preclude the writ applicant to invoke the provisions of the Act, 1992 and raise a reference before the Tribunal. If any such reference is raised, the Tribunal shall look into the same in accordance with law and take an appropriate decision expeditiously. We make it clear that there shall not be any unnecessary delay on the part of the Tribunal. The same will not be appreciated by the Court. We clarify that we have otherwise not gone into the merits of Page 10 of 11 Downloaded on : Wed Jan 12 04:04:52 IST 2022 C/SCA/17338/2021 ORDER DATED: 24/11/2021 the matter. We are not inclined to entertain this writ application on the short ground that the matter is still at the stage of show cause notice.
21 With the aforesaid, this writ application stands disposed of.
(J. B. PARDIWALA, J) (NIRAL R. MEHTA,J) CHANDRESH Page 11 of 11 Downloaded on : Wed Jan 12 04:04:52 IST 2022