Madhya Pradesh High Court
Public Works Department vs Ashokainfraways Limited on 21 September, 2017
Author: S.C. Sharma
Bench: Alok Verma, S.C. Sharma
1
HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE
DIVISION BENCH :-HON'BLE SHRI JUSTICE S.C. SHARMA
HON'BLE SHRI JUSTICE ALOK VERMA
WP No.6088/2017
State of Madhya Pradesh
vs.
Ashoka Infraways Limited & Another
----------------------------------------------------------------------------------------
Mr Manoj Munshi, learned counsel counsel for the petitioner.
Mr Paresh Joshi, learned counsel for the respondents
JUDGMENT
( Delivered on this 21st day of September, 2017 ) PER.. S.C. SHARMA, J The petitioner State of Madhya Pradesh through its Executive Engineer, Public Works Department has filed this present petition being aggrieved by the order dated 03-08-2017 passed by Justice Shri I.S. Shrivastava (Retd.) Sole Arbitrator in Arbitration Case No. 01 (HC)/2016.
02. The facts of the case reveal that N.I.T (Notice Inviting Tender) was issued on 18-07-2000 for construction of Dewas By-pass road under the Built Operate and Transfer (B.O.T) Scheme and the bid of the respondent was accepted being the lowest. The respondent was permitted to collect toll for the period of 3922 days and dispute arouse on account of demand on behalf of the contractor to collect toll for additional days i.e. for more than 3922 days. The respondent on account of the dispute took a shelter of the Arbitration & Conciliation Act, 1996 hereinafter referred as ('the Act of 1996') by preferring an application under Section 9 of the Act of 1996 and a prayer was made to permit him to collect toll for additional period of 1374 days. The writ petition was also filed i.e. Writ Petition No. 1122/2015 and this court by order dated 09-07-2015 passed in Writ Petition No. 1122/2015 has dismissed the writ petition. However, it was observed that the application for appointment of Arbitrator preferred u/s 11 of the Act of 1996 is pending. A review petition was also preferred i.e. RP No. 191/2015 by the respondent Ashoka Infraways Ltd., and this court after 2 hearing the parties at length in Review Petition has held that the contract in question is Works Contract as defined under the provision of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983. The order passed by this court dated 31-07-2015 reads as under :-
"Heard.
This is an application for review, reviewing the order dated 09.07.2015 passed in Writ Petition No.1122/2015.
Shri S.C. Bagadiya, learned Senior Counsel for the applicants submits that the question whether dispute between the parties pertained to the works-contract is a debatable question and this was raised by the learned Deputy Advocate General, at the time of hearing of the writ petition on 09.07.2015. He submitted that the provisions of Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 will not be applicable in the present facts and circumstances of the case and submitted that the order dated 09.07.2015 be modified accordingly.
Per contra, Shri Pushyamitra Bhargava, learned Deputy Advocate General for the respondents submits that non- applicant No.1 vide its Bid Notice No.13/2000- 2001/SAC/Dewas dated 18.07.2001 invited bids for the construction, replacement, periodical renewal and maintenance of Dewas Bypass Road starting from Km. 159/4 of Bhopal-Ujjain Road (SH-18) and joining Km. 577/6 of Agra-Bombay Road (NH-3) intersecting NH-3 in Km. 567/8 and SH-18 in KM. 151/8 (total length of 19.8 Kms.) including construction of one medium bridge, 27 culverts, junctions and rotaries, protection works, toll tax barriers and booth, plantation, fencing, truck parking lay-bye and longitudinal drains etc. under its Build, Operate and Transfer (BOT) Scheme with right to the Contractor to collect toll and other revenue from the vehicles and users of the said project during the concession period.
As per the terms and conditions of the concession agreement, the dispute comes within the purview of 'works contract', as defined under the provisions of Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983. Section 2 (d) and 2
(i) of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 are relevant, which read, as under: -
"2. Definitions, (d) "dispute" means claim of ascertained money valued at Rs.50,000/- or more relating to any difference arising out of the execution or non-execution of a works contract or part thereof.
2 (i) "works-contract" means an agreement in writing for the execution of any work relating to construction, repair or maintenance of any building or superstructure, dam, weir, canal, reservoir, tank, lake, road, well, bridge, culvert, factory, work-shop, powerhouse, transformers or such other works of the Government may, by notification, specify in this behalf at any of its stages, entered into by the State Government or by an official of the State Government or Public Undertaking or its official for and on behalf of such Public Undertaking and includes an agreement for the supply of goods or material and all other matters relating to the execution of any of the said works."3
Considering the nature of work, which was awarded to the petitioners and the definition of the "works-contract", we are of the view that the dispute in question comes within the purview of "works-contract" as defined under the provisions of Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983.
No case for review / modification of the order dated 09.07.2015 passed in Writ Petition No.1122/2015, as prayed for is made out.
Accordingly, Review Petition No.191/2015 is dismissed."
03. Thereafter, the matter went before the Hon'ble Supreme Court and the apex court by an order dated 02-09-2015 passed in S.L.P. No. (C) 22890-22891/2015 has passed the following order :-
"Taken on Board.
The petition filed under Section 11 of the Arbitration & Conciliation Act, 1996 (Arbitration Case No. 5 of 2015) shall be heard and decide by the learned Single Judge of Madhya Pradesh High Court, Indore on its own merits without being influenced by the earlier order (s) passed by the High Court, dated 09-07-2015 read with Order dated 31-07-2015.
IA Nos.5-6 of 2015 are disposed of accordingly."
04. The apex court has directed this court to decide the petition preferred u/s 11 of the Arbitration & Conciliation Act, 1996, without being influenced by the earlier order passed by the High Court dated 09-07-2015 and order dated 31-07-2015.
05. This court has finally appointed Justice Shri I.S. Shrivastava (Retd.) as Arbitrator and the order dated 03-05-2016 passed in A.C No.5/2015 appointing Justice Shri I.S. Shrivastava (Retd.) as Arbitrator reads as under :-
"Parties through their counsel.
This Court on 08/03/2016 has passed the following order:-
Heard.
This application under Section 11 of the Arbitration and Conciliation Act, 1996 has been filed by the applicant for appointment of the arbitrator/panel of arbitrator for deciding the dispute between the parties.
In brief, the case of the applicant is that the NIT was published on 31.8.2001 for the construction of Dewas Bypass road starting from k.m. 159/4 of Bhopal-Ujjain Road (SH-18) and joining k.m. 577/6 of Agra-Bombay Road (NH-3). The applicant's tender was accepted and the work order was issued. The applicant had completed the work on 14.5.2004 and vide toll notification the applicant was permitted to collect the toll for a period of 3922 days w.e.f. 24.5.2004. The applicant was 4 thereafter on 9.3.2004 was granted 77 additional days for collection of toll and since the work was completed early, therefore, as a bonus on 24.1.2006 additional 103 days were granted. The applicant has done the additional construction work to the tune of Rs.10,26,22,740/- and therefore, he had raised the claim for the additional 1542 days. The Executive Engineer had recommended for the additional 1194 days and the matter was placed before the committee which had recommended for the 1176 days but contrary to the said recommendation, the Executive Engineer on 7.8.2014 had sought the consent of the applicant only for 186 days. Hence the applicant had filed an application before the District Judge under Section 9 of the Act which was dismissed and the matter had travelled in appeal before this Court which has now been decided. Since the dispute has arisen between the parties in respect of the additional toll collection days, therefore,the applicant had given the notice dated 2.3.2015 for appointment of arbitrator and thereafter he has filed the present application.
Learned counsel appearing for the applicant submits that as per the arbitration agreement the arbitrator/panel is required to be appointed for resolving the dispute between the parties and that all the disputed issues in the present case are already decided by the Division Bench in the Arbitration Appeal.
Learned counsel for the respondent has raised an objection that since it is a works contract, therefore, the applicant is required to approach the Madhyastham Tribunal and that in terms of Clause 26(2) of the agreement, the applicant does not have a remedy under the Act of 1996.
Having heard the learned counsel for the parties and on the perusal of the record, it is noticed that the arbitration agreement between the parties is not in dispute. The Clause 26 of the arbitration agreement which relates to the settlement of dispute through arbitration is reproduced below for ready reference:-
26.TTLEMENT
SE OF DISPUTES:
26.1 Any dues or loss under this agreement shall in case of default be recoverable from enterpreneur as if it was as arrear of land revenue.
26.2 If a dispute arising out of and/or in connection with and/or in relation to this agreement or breach or termination thereof exists between the parties and the same cannot be settled within 30 (Thirty) days by mutual discussions, such disputes or differences shall be referred to arbitration under the provisions of Arbitration and Conciliation Act, 1996. The arbitration panel decision shall be final and binding on the parties.
Provided that the disputes which comes under the provision the clause (d) of the section (d) of section 2 of Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 shall be referred to the arbitration tribunal constituted under section-3 of the said act. The dispute between the parties is in respect of the additional toll collection days, which the applicant is claiming on account of the additional work done by him. So far as the objection of the respondents that the contract of the applicant was in the nature of works contract, the said issue between the same parties in the same matter has been examined by Division Bench of this Court in Arbitration Appeal No.11/2015 and vide order dated 4.2.2016 the Division Bench of this Court has held that the present agreement between the parties is in the nature 5 of the concessioniar agreement. The Division Bench has held that the application under Section 9 of the Act of 1996 is maintainable, hence it is not open to the respondents to contend at this stage that the agreement in question is in the nature of works contract and the provisions of the Act of 1996 is not available. The same reasoning applies to the objection of the respondents in respect of Clause 26(2) of the agreement. That apart, in view of the amendment which has been incorporated in the Arbitration Act on 1.1.2016, at this stage only the existence of the arbitration agreement is required to be seen which in the present case is not in dispute.
Hence, I am of the opinion that to resolve the dispute between the parties an independent arbitration to the status of Retired High Court Judge is required to be appointed. Hence I propose to appoint Hon'ble Shri Justice I.S. Shrivastava (Retd. Judge of M.P. High Court) to be the learned Arbitrator for resolving the dispute between the parties. Let the declaration in terms of amended Section 12 in the prescribed form as contained in the 6th Schedule of the Act be obtained from the proposed Arbitrator by the Principal Registrar of this Court within three weeks.
It has been submitted by learned counsel for the applicant that considering the nature of dispute the assistance of the expert will be required and for that purpose both the parties should be permitted to suggest the name of one expert each to assist the arbitrator. They are permitted to obtain instructions in this regard and make their submissions on the next date of hearing.
List on 3.5.2016.
This Court on 08/03/2016 after hearing the parties at length has appointed Hon'ble Shri Justice I.S. Shrivastava (Retd. Judge of M.P. High Court to be the learned Arbitrator for resolving the dispute between the parties. A declaration was sought in terms of Section 12 in the prescribed format as contained in the Sixth schedule of the act.
Learned Arbitrator has submitted a declaration in the prescribed format. The same is on record. In light of the declaration submitted by the learned Arbitrator appointed by this Court, the parties are directed to appear before the Arbitrator on 09/05/2016 and the Arbitrator shall be free to issue notice to any other person in case need so arises. He shall do the arbitration in terms of the arbitration and conciliation act 1996.
The parties shall also be free to submit the name of expert to the Arbitrator, keeping in view the order passed by this Court dated 08/03/2016 and the Arbitrator shall be free to appoint an expert in the matter.
The present order shall be read conjointly with the order dated 08/03/2016.
The present petition stands disposed of accordingly. Certified copy as per rules."
06. The State of Madhya Pradesh being aggrieved by the appointment of Justice Shri I.S. Shrivastava (Retd.) as sole Arbitrator preferred appeal before the Hon'ble Apex Court and the apex court by order dated 6 22-08-2016 has dismissed the S.L.P. preferred by the State Government and the same reads as under :-
"Heard learned counsel for the petitioners. We see no reason to entertain this petition under Article 136 of the Constitution of India. The special leave petition is accordingly dismissed."
07. Meaning thereby in the present case the Arbitrator has been appointed on 03-05-2-016 and the arbitration proceedings are pending before the learned Arbitrator. The petitioner State Government has preferred an application before the learned Arbitrator on 12-05-2017 and it was stated that the learned Arbitrator does not have jurisdiction to decide the dispute in light of the Full Bench judgment delivered by this court in the case of M/s Viva Highways Ltd., Vs. M.P. Road Development Corporation and two other connected matters, in AA No. 14/2017 decided on 05-05-2017. During arbitration proceedings after the arbitration proceedings have commenced, the application was preferred by the State of Madhya Pradesh and the learned arbitrator has dismissed the application preferred by the State Government vide order dated 03-08-2017, which is impugned in the present writ petition.
08. Mr Manoj Munshi, learned counsel for the petitioner State has vehemently argued before this court that in light of the Full Bench judgment, the Arbitrator does not have the jurisdiction to decide the dispute as its a 'work contract' and the matter has to be adjudicated by the Madhyastham Adhikaran.
09. This court has carefully gone through the impugned order and has given patient hearing to the learned counsel for the petitioner and has also heard learned counsel for the respondent, who is on caveat. The so-called judgment over which heavy reliance has been placed upon is dated 05-05-2017, whereas in the present case the arbitrator was appointed by this court on an application preferred u/s 11 of the Arbitration & Conciliation Act, 1996 on 03-05-2016. Not only this, the order appointing Arbitrator dated 03-05-2016 has been affirmed by the Hon'ble Supreme Court and the S.L.P. of the State Government was dismissed. Thus, in short, based upon the subsequent judgment the State Government's contention is that the arbitration proceedings 7 before the sole arbitrator are not maintainable. The apex court in the case of SBP & Co. Vs. Patel Engineering Ltd. and another reported in (2005) 8 SCC 618 has held that the Arbitral Tribunal has the power and jurisdiction to rule on its own jurisdiction and when the Arbitral Tribunal hold that it has the jurisdiction it shall continue with the arbitration proceedings and shall deliver an Arbitral award. The apex court has further held that the remedy available to the party aggrieved is to challenge the award in accordance with section 34 or section 37 of the Act. Meaning thereby, once arbitration has started, this court does not have the power to stay the arbitration proceedings or to give a finding that the arbitrator does not have the jurisdiction in the matter. This court has taken a similar view in the case of Indore Development Authority Vs. Arbitral Tribunal in Writ Petition No. 7290/2016 dated 22-11-2016.
10. This court is of the considered opinion that the order passed by the learned Arbitrator dated 03-08-2017 in light of the judgment delivered by the apex court does not warrant any interference.
11. Resultantly, the admission is declined. The Arbitrator is free to proceed ahead with the arbitration proceedings.
No order as to costs.
Certified copy as per rules.
(S.C. SHARMA) (ALOK VERMA)
JUDGE JUDGE
Rashmi