Jharkhand High Court
The State Of Jharkhand vs M/S Modern Construction Company on 6 December, 2018
Author: Aparesh Kumar Singh
Bench: Aparesh Kumar Singh
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Arbitration Appeal No. 15 of 2018
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The State of Jharkhand --- --- Appellant
Versus
M/s Modern Construction Company --- --- Respondent
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CORAM: Hon'ble Mr. Justice Aparesh Kumar Singh For the Appellant:Mrs. Manjushri Patra, Advocate
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04/ 06.12.2018 Two weeks' time is allowed to the counsel for the appellant State to remove the surviving defects, failing which this appeal shall stand dismissed without further reference to the Bench.
(Aparesh Kumar Singh, J) Ranjeet/ IN THE HIGH COURT OF JHARKHAND AT RANCHI Arbitration Application No. 20 of 2014
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Reinforced Earth India Private Limited (REIPL) --- --- Petitioner Versus M/s Modi Projects Limited --- --- Respondent
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CORAM: The Hon'ble Mr. Justice Aparesh Kumar Singh For the Petitioner: Ms. Shruti Shrestha, Advocate For the Respondent: Mr. Shresth Gautam, Advocate
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08/ 06.12.2018 Learned counsel Ms. Shruti Shrestha, appearing on behalf of the petitioner Company, submits that the dispute with the Respondent Company has been settled by virtue of an Agreement whereunder the Respondent Company has agreed to make payment of the outstanding dues of the petitioner Company. As such, the grievances of the petitioner have been redressed. Therefore, permission may be accorded to withdraw this application.
2. Learned counsel for the Respondent does not oppose or dispute the contention.
3. In view of the prayer made, instant application is dismissed as withdrawn.
(Aparesh Kumar Singh, J) Ranjeet/ IN THE HIGH COURT OF JHARKHAND AT RANCHI Arbitration Application No. 25 of 2017
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Electronic India represented by its one of the Partner Shri Satish Kumar Singh --- --- Petitioner Versus Electrosteel Steels Ltd. & others --- --- Respondents
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CORAM: The Hon'ble Mr. Justice Aparesh Kumar Singh For the Petitioner:
Mr. Shrestha Gautam Advocate
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09/ 06.12.2018 Learned counsel for the petitioner, on instruction, seeks permission to withdraw this application as the cause is no longer available to be prosecuted against the Respondent since the Respondent Company has been taken over in insolvency proceeding before N.C.L.T.
2. In view of the prayer made, instant application is dismissed as withdrawn.
(Aparesh Kumar Singh, J) Ranjeet/ IN THE HIGH COURT OF JHARKHAND AT RANCHI Company Petition No. 03 of 2003
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M/s Ravi Hi-Tech Ltd. --- --- Petitioner
Versus
B.I.F.R. & others --- --- Respondents
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CORAM: Hon'ble Mr. Justice Aparesh Kumar Singh For the Official Liquidator: Mr. Sachin Kumar, Advocate For the Resp - AIADA: Mr. C.A. Bardhan, Advocate For the Resp - BSFC: Mr. Ashok Kr. Yadav, Advocate For the Resp - Pegasus Assets M/s P.A.S. Pati, Rohit Kashyap, Advocates Reconstruction Pvt. Ltd.
For the Allahabad Bank: Mr. Gautam Rakesh, Advocate
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126/ 06.12.2018 The Official Liquidator has filed a report on 10.09.2018 at Flag '74', contents thereof are being briefly discussed hereinafter for consideration on the prayer made therein.
2. Learned counsel for the Official Liquidator has taken the court through the chronology of events in the lifecycle of this petitioner where the winding up order was passed on 06.11.2009 on the assets and properties of this Company at two places, (i) at its registered office-cum factory situate at plot no. NS-6, Phase- V, Adityapur Industrial Area, Gamharia, Jamshedpur, Jharkhand and (ii) at Survey Plot No. 30/1 Alindra, Taluka-Kalol, District Panchmahal, Gujarat. Pursuant to the winding up order, possession and properties of the Company were taken over by the Official Liquidator. Both the properties were sold, as per orders of this court dated 25.03.2011 and 29.07.2011. The Gujarat Unit of the Company had two secured creditors namely Gujarat Industrial Investment Corporation and Allahabad Bank being 1st and 2nd Charge Holders respectively. The Gujarat Unit was sold for Rs. 50,00,000/- and Jamshedpur Unit was sold for Rs. 1,62,00,000/-. Notice inviting claims against the Company were published in newspapers on 17.06.2011. Claims of three secured creditors Gujarat Industrial Investment Corporation in respect of Gujarat Unit of the Company and Bihar State Financial Corporation and Allahabad Bank in respect of Jamshedpur Unit of the Company amounting to Rs. 81,33,80,853/- were received and admitted by the Official Liquidator. Details of the claims received, settled and admitted by the Official Liquidator contained in chart under para-5, is also extracted hereunder for better appreciation:
2.Sl. Name, Address Particulars of Amount claimed Amount Whether No. and description debt or claim (in Rs.) admitted (in Rs. admitted as of Creditor preferential I Bihar State Secured 2,59,34,335/- 2,59,34,335/ Preferential Financial Creditors (for U/s 529A Corporation, Jamshedpur Adityapur, unit of the Jamshedpur company) II Allahabad Secured 16,74,30,560/- 16,74,30,560/ -do-
Bank, Lalpur Creditor (for
Chowk, Jamshedpur
Circular Road, unit of the
Ranchi company)
(paripasu
charge with
BSFC)
III Gujarat Kalol, 34,14,29,449/ 34,14,29,449/ -do
Industrial Gujarat unit
Investment of the
Corporation company as
Ltd., 1st Charge
Sayajiganj, holder)
Baroda-
390005
IV Allahabad Secured 27,85,86,509.41 27,85,86,509.41 -do-
Bank, Lalpur Creditors (for
Chowk, the Kalol
Circular Road,Gujarat unit
Ranchi of the
company as
2nd Charge
holder)
V Total against As per 19,33,64,895/- 19,33,64,895/- -do-
Jamshedpur paripasu
unit (BSFC & agreement
Allahabad
Bank)
VI Total against GIIC 1st 62,00,15,958.41 62,00,15,958.41 -do-
Kalol unit Charge
Holder
Allahabad
Bank 2nd
charge
VII Grand Total Against the 81,33,80,853/- 81,33,80,853/-
two units
(Jamshedpur
and Gujarat)
3. Since the amount of claim against Gujarat Unit comprises
Rs. 34,14,29,449/- of Gujarat Industrial Investment Corporation Limited (1st Charge Holder) and Rs. 27,85,86,509.41 of Allahabad Bank (2nd Charge Holder), it was absolved by way of payment of Rs. 48,51,760/- to Gujarat Industrial Investment Corporation Limited out of Rs. 50,00,000/- received as sale proceeds from sale of Gujarat Unit after adjustment of due liquidation expenses pursuant 3 to the order dated 08.08.2014 passed by this court. Details of the account of realization, expenses and payment of dividend are also furnished in the form of a chart under para-6 which includes the amount deducted for the expenditure incurred under the heads of security expenses, cost of advertisement, professional fees, travel expenses, Official Liquidator's Establishment Fund, TDS and Central Government Fees.
4. As regards the Jamshedpur Unit of the Company, BSFC and Allahabad Bank are two secured creditors holding pari pasu charge against the assets of the Company. Particulars of the claims of BSFC and Allahabad Bank furnished in the form of a chart under para-7 show that the admitted claim of BSFC is to the tune of Rs. 2,59,34,335/- and that of Allahabad Bank of Rs. 16,74,30,560/-. Both taken together totaling 19,33,64,895/-.
5. Learned counsel for the Official Liquidator has brought to the notice of the court that Allahabad Bank had conducted a bidding for sale of the assets of the Company, as per BIFR's order dated 03.12.2003 prior to winding up order of this court in which it had received sum of Rs. 50,00,000 as initial payment from the bidder. However, the bidder failed to pay the remaining bid amount and Rs. 50,00,000/- was retained and kept in a no lien account by Allahabad Bank.
Pursuant to the orders of this court dated 03.08.2012 and 08.02.2013, bank submitted statement of account of Rs. 50,00,000/- and interest accrued thereupon. It is evident therefrom that interest of Rs. 8,30,137/- accrued on the amounts of Rs. 50,00,000/-. Thus, cumulative amount received by the bank is Rs. 58,30,137/-. It is submitted that this aspect has to be borne in mind in exercise of distribution of dividend to Allahabad Bank and BSFC. This amount of Rs. 58,30,137/- has to be deducted from dividend payable to Allahabad Bank. The fund position of the Company and the balance amount in Bank account with the Official Liquidator is furnished under para-11, which is extracted hereunder:
Amount invested in Fixed Deposits - Rs. 2,58,50,663/-
Balance in bank account -- Rs. 66,768/-
Amount likely to be received -- Rs. 11,00,000/- in case of premature withdrawal of Fixed Deposits (Approx)
6. In view of the fund position and subject to receipt on maturity / withdrawal of fixed deposits leaving aside the receipt of the amount of Rs. 50,00,000/- by Allahabad Bank, the Official Liquidator has computed the dividend payayble @14% to both the secured creditors having pari-pasu charge which is 4 commensurate to the fund available on the date of declaration of dividend. If such course is permitted keeping an amount of Rs. 53,654/- for pending incidental liquidator expenses, the total amount to be disbursed to both the secured creditors out of the sale proceeds of the Unit at Jamshedpur would be as under:
Sl. Name of the Secured Admitted claim Amount payable @ 14% No. Creditor amount (Approx) of Admitted Claim (Amount in Rs.)
1. Bihar State Financial 2,59,34,335/- 36,30,806.90 Rounded to Corporation 36,30,807/-
2. Allahabad Bank 16,74,30,560/- 2,34,40,278.40 Rounded to 2,34,40,278/-
Total 2,70,71,085/-
7. In these circumstances, Official Liquidator has sought permission to declare and disburse the full and final dividend payable to the secured creditors of the Company BSFC and Allahabad Bank, as per the amount computed at para-
12, extracted herein above. Thereafter, process for dissolution of the Company under section 481 of the Companies Act, 1956 would be undertaken.
8. Learned counsel Mr. P.A.S. Pati submits that securitization Company viz. Pegasus Assets Reconstruction Private Limited incorporated under the Companies Act, 1956 and registered as a Securitization and Asset Reconstruction Company pursuant to section 3 of SARFASI Act has stepped into the shoes of secured creditor Allahabad Bank. Learned counsel submits that the securitization Company has been allowed to step into the shoes of the secured creditor Allahabad Bank and join as a party Respondent in the present proceedings by order dated 16.01.2015 passed on I.A. No. 3861/2014. As such, dividend would be payable to the Securitization Company.
9. Learned counsel for the BSFC Mr. Ashok Kumar Yadav does not have any opposition to the prayer made by the Official Liquidator. He submits that whatever is available out of the sale proceeds of Jamshedpur Unit of the Company under liquidation, is to be apportioned pari-pasu between two secured creditors BSFC and Allahabad Bank, as per the charge created against such property. As such, orders may be passed for disbursement of the dividend as proposed by the Official Liquidator.
10. Learned counsel for AIADA Mr. C.A. Bardhan submits that the Unit at Jamshedpur had certain outstanding dues against AIADA which AIADA is entitled to claim. However, there is no claim made by AIADA before the Official 5 Liquidator earlier when notice for adjudication of claim were invited and as on date also, there are no such claim through any application on behalf of AIADA. As such, no effective order can be passed on such an oral prayer.
11. In view of the aforesaid facts and circumstances, taken note above, Official Liquidator is permitted to declare and disburse the full and final dividend payable to the secured creditors BSFC and Allahabad Bank or its assignee M/s Pegasus Assets Reconstruction Private Limited, as indicated in the last chart, hereinabove. Official Liquidator is permitted to adjust the amount of Rs. 58,30,137/- from the dividend payable to the secured creditor Allahabad Bank, as per the computation made above. Let a report be submitted about the compliance by the next date.
12. Let the case appear after four weeks on 10.01.2019 as unfixed case.
13. Let a copy of the order be handed over to the learned counsel for Official Liquidator.
(Aparesh Kumar Singh, J) Ranjeet/ IN THE HIGH COURT OF JHARKHAND AT RANCHI Arbitration Appeal No. 36 of 2017
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CORAM: Hon'ble Mr. Justice Aparesh Kumar Singh
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04/ 06.12.2018 Four weeks' time is allowed to the learned counsel for the Respondent Railways to file counter affidavit in the matter positively.
2. List it accordingly.
(Aparesh Kumar Singh, J) Ranjeet/ IN THE HIGH COURT OF JHARKHAND AT RANCHI Arbitration Application No. 34 of 2017
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Jaishiv Construction Pvt. Ltd. --- --- Petitioner Versus The Union of India & others --- --- Respondents
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CORAM: Hon'ble Mr. Justice Aparesh Kumar Singh For the Petitioner: Mr. Gulam Mustafa, Advocate For the Resp - Railways: Mr. Gautam Rakesh, Advocate
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06/ 06.12.2018 Counter affidavit has not been filed as yet despite sufficient time granted.
However, on the request of the counsel for the Railways, further two weeks' time is allowed to do so, failing which Respondent shall have to pay cost of Rs. 3,000/- on the next date.
2. Let the case appear after winter vacation on the appointed day.
(Aparesh Kumar Singh, J) Ranjeet/ IN THE HIGH COURT OF JHARKHAND AT RANCHI Arbitration Application No. 38 of 2017
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Vijeta Projects and Infrastructure Ltd. through one of Its Director Sri Ravindra Bharti --- --- Petitioner Versus
1. The State of Jharkhand through the Secretary, Water Resource Department, Govt. of Jharkhand
2. Engineer-in-Chief, Water Resources Department, Govt. of Jharkhand
3. Chief Engineer, Water Resources Department, Hazaribagh
4. Superintending Engineer, Water Ways Circle, Water Resources Department, Hazaribagh
5. Executive Engineer, Water Ways Division, Barhi, Hazaribagh--- Respondents
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CORAM: The Hon'ble Mr. Justice Aparesh Kumar Singh For the Petitioner: Mr. Rohitashya Roy, Advocate For the Respondents: Mr. Vikash Kr. Sinha, AC to AG
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04/ 06.12.2018 Heard counsel for the parties.
2. Petitioner sought appointment of an Arbitrator under section 11(6)(c) of Arbitration and Conciliation Act, 1996. Upon hearing the counsel for the parties, this Court by order dated 20.07.2018 allowed the Respondents to file counter affidavit in the matter, which reads as under:
Learned counsel for the petitioner submits that the Agreement No. 15F2 of 2006-07 was executed on 23.03.2007 between the petitioner and the Executive Engineer, Water Ways Division, Barhi, Hazaribagh for construction of Residual work of Keso Reservoir Scheme at Jainagar Block in Koderma District on Turn Key basis after the petitioner turned out to be the successful bidder in NIT No. 01/2006- 07 issued by the Water Resource Department. Petitioner faced issue of land acquisition which kept its entire infrastructure idle causing severe financial loss to him. In between, there were disturbances by the local villagers. Petitioner requested for proper security arrangement through letter dated 14.05.2007. Petitioner renewed his request through letter dated 14.07.2007 (Annexure-4) and again through letter dated 07.09.2007 (Annexure-5) for resolution of the dispute raised by the land losers and to provide protection at the site. There were abnormal delay in approval of the drawing and designs by the Respondent Department which was also brought to their notice through letter dated 08.02.2008 (Annexure-6). The Secretary, Water Resource Department also made a request to the Secretary, Home Department through letter dated 26.02.2008 to depute at least one platoon at the worksite to maintain law and order for smooth execution of the work. Disruption by the local person however continued. Petitioner communicated this disruption to the department through its letters dated 26.03.2008, 10.04.2008 and 08.05.2008. A report of the Superintending Engineer contained in letter no. 727 dated 05.05.2008 (Annexure-9) affirmed the issue raised by the petitioner relating to non-acquisition of the land and prevailing unrest in the locality. All this entailed severe loss to the petitioner.
2. Petitioner made an application for extension of time vide Annexure-
10. Meanwhile, full infrastructure was deployed at the site with the hope that the working condition would improve for execution of the work. The matter remained silent for quite some time. Thereafter, petitioner raised a dispute invoking Clause 23 of the Agreement 2 through letter dated 10.09.2016 addressed to the Engineer Incharge (Superintending Engineer, Water Ways Circle, Hazaribagh) dated 10.09.2016 (Annexure-12). He also served notice upon the Chief Engineer of the Department at Hazaribagh on 24.04.2017 (Annexure-
13). In between, meetings were held by the Engineer-in-Chief of the Department on 20.12.2014 (Annexure-14) and subsequently under the Chairmanship of the Principal Secretary of the Department on 05.02.2016 (Annexure-15). However, instead of facilitating the work through removal of encumbrances, petitioner was served with show- cause notice dated 19.05.2017 asking him to reply as to why he be not debarred from participating in future tenders of the Department on the grounds of non-completion of the work. Petitioner has furnished his reply on 16.06.2017 (Annexure-17). Department has proceeded to debar the petitioner from participating in future tenders by order 23.08.2017 (Annexure-18).
3. Arbitration Clause 23 under the Agreement entitles the petitioner to raise dispute for adjudication through Arbitration. However, Respondents have not replied to the request for arbitration to the notice dated 24.04.2017 (Annexure-13). Therefore, petitioner has been compelled to approach this court for appointment of an independent Arbitrator in terms of section 11 (6) of Arbitration and Conciliation Act, 1996.
4. Learned counsel for the Respondent prays for and is allowed four weeks' time to file counter affidavit.
5. List it accordingly.
3. In the counter affidavit filed thereafter, following stand, both on legal as well as merits, have been taken to contest the claim:
(i) Clause 23 in the F 2 agreement has already been deleted vide Gazette Notification dated 18th November, 1992 bearing no. 6113 during the period of Bihar. The same has been adopted on bifurcation of Parent State by State of Jharkhand. Clause 9 of the instant agreement provides that in case of contradiction between provisions of F2 system of contract and those provided in the tender document, provision of F2 system of contract shall prevail. Clause-23 is nonest in the eye of law, therefore, petitioner cannot take its shelter for the purposes of arbitration and
(ii) Reference is made to various clauses under NIT such as Clause 27 and 30.
As per clause 27, no claim shall be payable to the contractor in case site of the work either in part or in full is not provided to him either due to non completion of land acquisition proceedings or due to non clearance of scheme by the forest department, on any account whatsoever. However, suitable extension of time for completion of the work shall be entertained on its request.
4. Under Clause 30, no claim for idle labour, men and machinery will be entertained for any reason. According to the Respondents, petitioner was allotted construction of residual work of Keso Reservoir Scheme at Block Jainagar, District Koderma for an estimated cost of Rs. 66,93,99,000/- vide order no. 343 3 dated 21.03.2007 on negotiated rate. The Agreement bearing no. 15F2/2006-07 was executed on 23.03.2007 between the Executive Engineer, Water Ways Division, Barhi and the petitioner. A payment schedule was approved by the Chief Engineer, Water Resources Department through letter no. 1041 dated 23.03.2007. This Turnkey Agreement consists of 22 items of work such as construction of earthen dam length 2058 meters, maximum height of Dam 14.57 meters, construction of R.C.C. barrel type right and left dam outlet, Pucca ogee chute spillway, spill channel to pass excess flow of water from the reservoir, right and left main canal and its hydraulic structures like C.D., S.L.R. Bridges, D.L.R. Bridges, Railway Bridges one number of adequate over spill channel. Almost all land acquisition proceedings were completed before signing of the Agreement of the residual work.
5. They have referred to the detailed report dated 07.04.2015 of the Special Land Acquisition Officer, Tenughat Project (Annexure-C). However, raiyats demanding enhanced rate of land acquisition, as paid in Panchkhero Reservoir Scheme, stopped the work after last payment on 12.10.2009. This plea of enhance rate was decided in the First Appeal No. 127/2006 by order dated 24.03.2015. Thereafter, enhanced cost of Rs. 22,51,22,473/- was deposited in the Hon'ble High Court, Ranchi for payment of raiyats. Work was again started by the contractor for execution of the work within the schedule time and also provided protection of security force. Reference is made to the communication of the Deputy Commissioner, Koderma, Chief Engineer of the Department and Superintendent of Police at Annexures-D, E and F. It is contended that the petitioner did not cooperate and did not deploy adequate men and machinery required for execution of the work even after the repeated requests from the official site-in-charge. The contention that machinery and manpower stood idle, was a complete lie to justify the bogus claim. Upon execution of the work by the Company, payment up to 22nd On A/c bill was made, as per bills produced by the contractor from time to time, totaling Rs. 4474.816 lakhs. Details of payment are also furnished under paragraph-12. Respondents contended that the petitioner slowed down the execution of the work and unilaterally stopped work since October 2009. Thereafter, Nil work has been executed. Petitioner indulged in making correspondences thereafter and finally submitted a claim of Rs. 32,38,54,422/- vide letter no. 361 dated 10.09.2016. Claims under different items are furnished at paragraph-14 of the counter affidavit.
6. It is the case of the Respondents that these claims are frivolous and 4 fictitious and cannot be allowed in the interest of public exchequer. These claims have been scrutinized at the departmental level through the hierarchy of the Executive Engineer, Water Ways Division, Barhi, Superintending Engineer, Waterways Circle, Hazaribagh and also placed before the Chief Engineer of the Department vide letter no. 29 dated 13.01.2017 under the signature of Technical Advisor, Water Ways Circle, Hazaribagh. Respondents refuted the contention of the petitioner that the work site was in a naxal prone area. They have referred to NIT which require the tenderer to visit the site themselves for being apprised of the details and situation of the work site. It is further contended that the petitioner Company did not take care to complete construction for submission of design and drawing of main canal and hydraulic structures like C.D., S.L.R, and D.L.R. Bridge, as per the terms of the Agreement despite several notices. The matter of excess payment was revealed during the review meeting of Water Resources Department, Jharkhand leading to setting up of Technical Inquiry Committee vide department order no. 326 dated 13.05.2016. The committee on inquiry found the work done up to Rs. 1911.42 lakhs only as against the payment of Rs. 4474.816 lakhs made. There was a deposit of Rs. 2563.40 lakhs in terms of the work done. Office of the Principal Accountant General (Audit), Jharkhand has found excess payment amounting to Rs. 15.06 crore vide letter dated 07.07.2017, which was further enhanced vide letter no. 12 dated 10.04.2018 written to the Principal Secretary of the Department. Petitioner has been found prima facie guilty for fraudulent and excessive receipt of public money by the Committee which has been confirmed by the Technical Vigilance Cell under the Department of Cabinet Coordination, Govt. of Jharkhand. In these circumstances, a FIR was lodged against the petitioner by the Executive Engineer being ACB PS Case No. 04/2018 dated 01.02.2018 (Annexure-K).
7. These facts revealed that there is no dispute or differences in between the parties. It is the petitioner who has unilaterally stopped the work and removed all men and machinery from the site. Thereafter, it has taken the shelter of Arbitration and Conciliation Act, 1996. Petitioner have been debarred from taking part in construction under the State of Jharkhand with respect to Registration No. 01(5)-12/2002 for non-completion of different agreement work vide Memo No. 402 dated 23.08.2017 issued by the Department (Annexure-L). One more agreement bearing no. 06F2/2005-06 for construction of Ram Rekha Reservoir Scheme has been rescinded and the process for forfeiture of security deposits, etc. has been initiated against it vide Memo No. 277 dated 27.04.2018 5 (Annexure-M). These facts disclose prima facie misdeeds of the contractor by which, public exchequer has been defrauded.
8. On the basis of these averments, learned counsel for the State contends that the plea of appointment of Arbitrary is not entertainable. Rejoinder has been filed by the petitioner thereto as well. In reply, learned counsel for the Respondent categorically submits that the order of debarment has been set aside by this court in WPC No. 5230/2017 vide judgment dated 26.09.2018.
9. Learned counsel for the petitioner further submitted that the same plea of deletion of Clause 23 in the Agreement was raised by the Respondents in connection with the Arbitration Application No. 32/2017 preferred by the same petitioner for appointment of an independent Arbitrator to adjudicate the dispute arising out of the Agreement No. 1 F 2/2005-06 for construction of Bhairwa Reservoir Scheme (Residual Work) in Hazaribagh District (Now Ramgarh) on turnkey basis. Petitioner in his rejoinder, has reiterated the stand taken earlier. Counsel for the petitioner submits that it is the Respondent who have not cooperated in proper execution of the work. Execution of the work up to 2009 and payment up to 22nd On Account Bills, have been accepted by the Respondent as well. These issues are however matters of dispute which can be duly adjudicated in an arbitration proceeding only once the matter is referred to an independent Arbitrator. The existence of arbitration clause cannot be disputed on the same grounds in the present matter when this court in identical circumstances has been pleased to overrule the same objection in Arbitration Application No. 32/2017 by order dated 22.11.2018 passed in the same of the same party.
10. I have considered the submissions of learned counsel for the parties and taken note of the relevant material facts pleaded above. Agreement No. 15F2/2006-07 executed on 23.03.2007 between the parties for construction of residual work of Keso Reservoir Scheme at Jainagar Block in Koderma District contains Clause-23 which reads as under:
"Clause 23: In case any dispute or difference shall arise between the parties or either of them upon any question relating to the meaning of the specifications, designs, drawings and instructions here before mentioned or as to the quality of workmanship or materials used on the work or as to the construction of any of the conditions or any clause or things there in contained or as to any question, claim rights of parties or any matter, or things whatsoever in any way arising out of or relating to the contract designs, drawings specifications, estimates, instruction order or these conditions or otherwise concerning the work or the execution, or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof or as to the breach of this contract then either party shall forthwith give to the other notice of such dispute or 6 difference in writing and such dispute or difference shall be referred to the Engineer-in-Charge. The E/1 will take decision within 30 days. Even if the matter is not resolved it will be referred to Chief Engineer / Engineer in Chief where it will be resolved in 45 days. If the party is not satisfied with the decision the matter may be referred for arbitration on which request at per rule under "The Arbitration and Reconciliation Act 1996". No work under the contract shall unless otherwise directed by the Engineer-in-Charge discontinue during the arbitration proceedings."
11. I find that the Respondents have taken the same plea denying the existence of arbitration clause in the present Agreement also on the ground that by Gazette Notification dated 18.11.1992, the same was deleted. This plea was also raised in Arbitration Application No. 32/2017 in respect of the Agreement No. 1 F 2/2005- 06 between the same parties for construction of Bhairva Reservoir Scheme in the then Hazaribagh district. This court dealt with the plea in the following manner and rejected it.
"17. The contention of the respondent-Department is that Clause 23 of F-2 Contract was abolished vide Resolution dated 18.11.1992 and it was published in the gazette. A copy of the gazette notification has been annexed as Annexure-A to the counter affidavit. It transpires from the said notification dated 18.11.1992 that the Government of Bihar took a decision to abolish Clause 23 of the F-2 agreement, which is an arbitration clause. It does not appear from the said notification that it was issued in exercise of statutory power.
18. Notwithstanding, the aforesaid Gazette Notification for abolition of Clause 23 of F-2 Agreement, respondents entered into the instant agreement with the petitioner, which was duly signed by the Executive Engineer, Road Construction Department. The instant agreement contains Clause 23, which is an arbitration clause. In Clause 27 of the contract it is clearly mentioned that the terms and conditions of the agreement have been read over and explained to the executants who is the Managing Director of the petitioner-company and the Executive Engineer, Road Construction Department. It is not the case of the respondents that petitioner was made aware about the abolition of arbitration Clause 23 from the agreement by resolution of 1992 nor is the case of the respondents that before filing of the instant application, petitioner was intimated about the deletion of Clause 23 of F-2 agreement by gazette notification.
19. The legislature in its wisdom has enacted Arbitration and Conciliation Act, 1996 and the object of the enactment is to safeguard the effort of one party to scuttle contractual obligation which they have entered into an arbitration agreement. Admittedly clause 23 which is an arbitration clause has been incorporated in the F-2 contract. Learned counsel appearing for the State could not' show me any of the provisions of law which debar the authorities of the respondents forever from entering into an arbitration agreement on the ground of the alleged abolition of arbitration clause by Gazette notification.
20. It is well settled that arbitration agreement is a contract within the meaning of Section 91 of the Evidence Act and when the parties to an agreement refer a dispute which arises between them, they cannot lead evidence to vary or add to the terms of agreement by saying that arbitration agreement was not in existence.
21. In the case of Bomanji Ardeshir Wadia v. Secretary of State (A.I.R. 1929 Privy Council 34) their Lordships observed that when parties have entered into a formal contract that contract must be construed according to its own terms and not to be explained or interpreted by the antecedent communings which 7 laid up to it.
22. Considering the fact of the case, I am of the view that principle of "Expressio Unios Est Eselusia Alterius" shall apply, according to which where there is an express mention in the instrument of a certain thing, it will exclude any other thing of a similar nature. It is well settled principle of law that when an terms of a contract or of a grant, or of any other disposition of property, have been reduced to the form of a document or of a contract then no evidence shall be given in proof of the terms of the contract except the document itself. In my view if a particular clause, although incorporated but excluded from the contract, parties against whom it is to be operated must be given reasonable notice of its non-existence. Considering the entire facts of the case, in my considered opinion clause 23 has been incorporated in the agreement duly consented by the petitioner and the Executive Engineer of the respondent after reading and fully understanding the contents of the said agreement. Since clause 23 does exists in the contract in question, the petitioner has rightly invoked clause 23 of the contract. Consequently, the instant application under section 11(6) of the Arbitration and Conciliation Act for reference of dispute to arbitration as per Clause 23 is maintainable.
10. On account of the reasons discussed above and the opinion in the case of Lakeshwari Builders Pvt. Ltd. (Supra), this Court does not find any merit in the instant plea. So far as the grounds of merit are concerned, this Court in exercise of the powers under Section 11(6) of the Act is not required to dissect or analyse the merits of the dispute between the parties. It appears from the submissions of the parties that the agreement still survives and has not been terminated. There is admission of execution of work on the part of the respondent till 2008, whereafter the progress of execution of work has suffered. Both the parties have alleged blame for delayed execution of work against each other. It is evident that there exists arbitral dispute between the parties. Respondents have failed to respond to a request for appointment of an Arbitrator in terms of Clause 23 of the agreement despite notice dated 17 th August, 2017 (Annexure-21) issued by the petitioner within 30 days' time stipulated. Thereafter, petitioner has invoked the jurisdiction of this Court under Section 11(6) of the Act. As such, ingredients to seek appointment of an Arbitrator to adjudicate the dispute between the parties have been satisfied by the petitioner. I, therefore, propose to appoint Hon'ble Mr. Justice Permod Kohli (Retired) Former Judge of this Court, at present residing at 22, Sant Nagar, East of Kailash, New Delhi-110065 & "Prakash Villa", 30 Karan Nagar Jammu-180005 having mobile nos. 08826131111(M), 09622141111(M) as an Arbitrator to adjudicate the dispute between the parties. The proposed Arbitrator is required to submit a declaration in terms of Section 12 of Arbitration & Conciliation Act, 1996, as amended. Registry shall communicate the instant order to the proposed Arbitrator.
12. In the present Agreement also, Clause 23 does not stand deleted by striking it off while the agreement was entered. On account of the reasons discussed above and the ratio rendered in the case of Lakeshwari Builders Pvt. Ltd. (Supra), as followed in Arbitration Application No. 32/2017 in the case of the same parties, this court does not find merit in the instant plea. So far as the grounds of merits are concerned, this court in exercise of powers under section 11(6) of Arbitration and Conciliation Act, 1996 is not required to examine or analyze the merits of the dispute between the parties. From the pleadings on record and the submissions of the parties, it is evident that the Agreement still survives and has not been terminated. Respondents have accepted execution of 8 the work on the part of the petitioner till 2009, where-after progress of execution of the work has suffered. Both the parties have alleged blame for delayed execution of the work against each other. It is evident that arbitrable dispute exist between the parties. Respondents have failed to respond to a request for appointment of an Arbitrator in terms of clause 23 of the Agreement despite notice dated 10.09.2016 addressed to the Superintending Engineer, Water Ways Circle, Hazaribagh. He also served notice upon the Chief Engineer of the Department on Hazaribagh on 24.04.2017 (Annexure-13). Though counsel for the Respondent has pointed out to the averment made at para-41 of the counter affidavit furnished in reply to the statement made at para-4(v), 21 and 22 of the instant application that no such letters have been received in the office of Chief Engineer, Water Resources Department, Hazaribagh, but at para-15 of the same counter affidavit, Respondent have stated that such claim bearing letter no. 10.09.2016 was endorsed to the Executive Engineer, Water Ways Division, Barhi for examination with material facts of the execution of the said scheme vide letter no. 931 dated 21.09.2016 issued by the Superintending Engineer, Water Ways Circle, Hazaribagh. They further say that findings of the Executive Engineer, Water Ways Division, Barhi was submitted to the Superintending Engineer vide letter no. 02 dated 02.01.2017. The same has been forwarded to the Chief Engineer, Water Resources Department, Hazaribagh. These letters are annexed as Annexures-H, I and J and also taken note in the preceding paragraph. Thereafter, petitioner has invoked jurisdiction of this court under section 11(6) of the Act. As such, ingredients to seek appointment of an Arbitrator to adjudicate the dispute between the parties have been satisfied by the petitioner.
13. I, therefore, propose to appoint Hon'ble Mr. Justice Permod Kohli (Retired) Former Judge of this Court, at present residing at 22, Sant Nagar, East of Kailash, New Delhi-110065 & "Prakash Villa", 30 Karan Nagar Jammu- 180005 having mobile nos. 08826131111(M), 09622141111(M) as an Arbitrator to adjudicate the dispute between the parties. The proposed Arbitrator is required to submit a declaration in terms of Section 12 of Arbitration & Conciliation Act, 1996, as amended. Registry shall communicate the instant order to the proposed Arbitrator.
11. Let the matter be placed on 10.01.2019 along with declaration, if any furnished by the proposed Arbitrator.
(Aparesh Kumar Singh, J) Ranjeet/ IN THE HIGH COURT OF JHARKHAND AT RANCHI Arbitration Appeal No. of 2018
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