Madhya Pradesh High Court
M/S Concast Morena Road Projects Pvt. ... vs Madhya Pradesh Road Development ... on 27 October, 2016
1 AC 7/2016
M/s Concast Morena Road Projects Pvt. Ltd. Vs. M.P. Road Develop.
Corpn. & others
27/10/16
Shri Sanjay Bhaumik, Advocate for the petitioner.
Shri S.S.Chauhan, Advocate for the respondent.
1. The present petition filed under Section 11 of the Arbitration and Conciliation Act, 1996 (for brevity Act, 1996) seeks a direction to the respondent/Corporation to invoke the Arbitration Clause 44.3 contained in the Agreement vide Annexure-P/3 by directing that the Board of three Arbitrators as per Clause 44.3.2 of the Agreement be constituted comprising of three Arbitrators, one nominated by the petitioner, one by the respondent/Corporation while the third by the said two Arbitrators nominated by the rival parties.
2. The Concession Agreement vide Anneure-P/3 was executed between the rival parties on 15/10/2012 in respect of the work relating to development of Concast Morena road project on Morena-Sabalgarh road on BOT (Annuity) basis. The cost of work was 165.75 crores with appointed date as 26/8/2013 and 25/8/2015 as the stipulated date for completion. It is alleged that the work was abruptly stopped by the respondent/Corporation by issuance of show- cause notice to terminate the contract vide letter dated 5/3/2015. The petitioner responded and tried to reason with the respondent/Corporation by showing that due to non-availability of clear ROW and also change in design parameters, delay was caused to complete work in a time-bound schedule. It is alleged that these genuine reasons assigned to explain the delay in the progress of the work did not find favour with the respondent/Corporation, which terminated the contract vide letter dated 6/4/2015, Annexure-P/7. An appeal was preferred by the petitioner to the Principal Secretary of Public Works Department, Bhopal which was dismissed vide Annexure-P/9. Thereafter, the petitioner approached Shri S.K. Verma to act as petitioner's nominee Arbitrator vide letter dated 2/11/2015, Annexure-P/10. Shri S.K.Verma on 9/11/2015 gave his 2 AC 7/2016 M/s Concast Morena Road Projects Pvt. Ltd. Vs. M.P. Road Develop.
Corpn. & others consent. The appointment of Shri S.K.Verma as petitioner's nominee Arbitrator was communicated to the respondent/Corporation by letter dated 10/11/2015, vide Annexure-P/12 to enable the respondent/Corporation to appoint its nominee Arbitrator so that Board of Arbitrators could be constituted in terms of Clause 44.3 of the said Agreement. However, the respondent/Corporation vide letter dated 20/11/2015, Annxure-P/13 informed that in view of constitution of Madhya Pradesh Madhyastham Adhikaran which is a statutory Arbitration Tribunal constituted under M.P. Madhyastham Adhikaran Adhiniyam, 1983 (for short "the Adhiniyam, 1983") which came into force w.e.f. 01.03.1985, the applicability of arbitration Clause 44.3 gets excluded by virtue of Clause 44.4. Clause 44.4 for ready reference and convenience is reproduced below:-
"44.4 Adjudication by Regulatory Authority or Commission.
In the invent of constitution of a statutory Regulatory Authority or Commission with powers to adjudicate upon disputes between the concessionaire and MPRDC, all Disputes arising after such constitution shall, instead of reference to arbitration under Clause 44.3 be adjudicated upon by such Regularly Authority or Commission in accordance with the Applicable Law and all references to Dispute Resolution Procedure shall be construed accordingly. For the avoidance of doubt, the Parties hereto agree that the adjudication hereunder shall not be final and binding until an appeal against such adjudication has been decided by an appellate tribunal or High Court, as the case may be, or no such appeal has been preferred within the time specified in the Applicable Law."3 AC 7/2016
M/s Concast Morena Road Projects Pvt. Ltd. Vs. M.P. Road Develop.
Corpn. & others
3. The learned counsel for the petitioner in the aforesaid background contends that in view of the decisions of the Apex court in the cases of A.P.Kushwaha (SSI UNIT) Vs. Municipal Corporation, Gwalior & Another (2011) 123 SCC 258, Madhya Pradesh Rural Road Development Authority & Another Vs. L.G.Chaudhary Engineers & Contractors 2012 (3) SCC 495 and the two decisions of coordinate benches of this court in the cases of Makhija Construction Co. Indore Vs. Madhya Pradesh Rural & Development Authority, Bhopal, [2011(3) MPLJ 584] and Mamta Awasthy & others Vs. Ajay Kumar Shrivastava [2011(3) MPLJ 588], it was incumbent upon the respondent/Corporation to have invoked Clause 44.3 of the Agreement and appoint its nominee Arbitrator to enable the appointment of all the three Arbitrators leading to constitution of the Board of Arbitrators as contemplated by Clause 44.3.2. of the said Agreement. The petitioner has already appointed its nominee Arbitrator as aforesaid, with due intimation to the respondent/Corporation which has failed to appoint its nominee Arbitrator, giving cause of action to the petitioner herein to invoke the provisions of Section 11 of the Act 1996 seeking direction to appoint appropriate Arbitrator so that proceedings of the arbitration case can be adjudicated in terms of arbitral clause 44.3.
4. Per contra, learned counsel for the respondents/Corporation inviting attention of this court to Clause 44.3 of the Arbitration submits that vide response dated 10/8/2016, the Corporation has made its stand clear to the effect that application of Clause 44.3 of the Arbitration shall stand excluded in the event of constitution of a Statutory regulatory body/commission with a power to adjudicate dispute between the rival parties. It is submitted that in the above said position, whether both the parties have agreed to submit to the regulatory body/commission, the appropriate remedy for adjudication of any disputes arising out of the 4 AC 7/2016 M/s Concast Morena Road Projects Pvt. Ltd. Vs. M.P. Road Develop.
Corpn. & others said Agreement lies before Madhya Pradesh Madhyastham Adhikaran, Bhopal, which is a Statutory Arbitration Tribunal constituted by Act No. 29 of 1983.
5. Thus, the singular and seminal question that emerges herein is as to whether in the given facts and circumstances attending the instant case, Clause 44.3 or Clause 44.4 would apply for adjudication of disputes arising under or out of or in relation to the Agreement in question ?.
6. For ready reference and convenience, Clause 44.3 is reproduced below :-
"44.3 Arbitration.
44.3.1 Any Dispute which is not resolved amicably by conciliation, as provided in Clause 44.2, shall be finally decided by reference to arbitration by a Board of Arbitrators appointed in accordance with Clause 44.3.2. Such arbitration shall be held in accordance with the Rules of Arbitration of the International Centre for Alternative Dispute resolution, New Delhi (the "Rules"), or such other rules as may be mutually agreed by the Parties, and shall be subject to the provisions of the Arbitration Act. The venue of such arbitration shall be [Bhopal] , and the language of arbitration proceedings shall be English.
44.3.2 There shall be a Board of three arbitrators, of whom each Party shall select one, and the third arbitrator shall be appointed by the two arbitrators so selected, and in the event of disagreement between the two arbitrators, the appointment shall be made in accordance with the Rules.
44.3.3 The arbitrators shall make a reasoned 5 AC 7/2016 M/s Concast Morena Road Projects Pvt. Ltd. Vs. M.P. Road Develop.
Corpn. & others award (the "Award"). Any Award made in any arbitration held pursuant to this Article 44 shall be final and binding on the Parties as from the date it is made, and the concessionaire and MPRDC agree and undertake to carry out such Award without delay.
44.3.4 The concessionaire and MPRDC agree that an Award may be enforced against the Concessionaire and/or MPRDC, as the case may be, and their respective assets wherever situated.
44.3.5 This Agreement and the rights and obligation of the Parties shall remain in full force and effect, pending the Award in an arbitration proceedings hereunder. "
7. Comparative analysis of Clause 44.3 which relates to Arbitration and Clause 44.4 which relates to adjudication by the Regulatory Statutory body, elicits that remedy of appeal under Clause 44.3 can be availed only in the event there is no Statutory body constituted to adjudicate the dispute between the rival parties. In case of constitution and functioning of the said Statutory body, the parties have expressly agreed for taking recourse before the Statutory Tribunal under Clause 44.4 for adjudication of disputes arising out of the Agreement in question to the exclusion of Clause 44.3.
8. The Madhya Pradesh Arbitration Tribunal is constituted as per Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 by Act No. 29 of 1983 and is functional since long, having power to adjudicate reference made to it in shape of disputes relating to work contract awarded by the State or any of its functionaries. The respondents/Corporation undoubtedly is a functionary of the State of M.P. and the contract in question pertains to work for development of Concast Morena road project on Morena-Sabalgarh road on BOT 6 AC 7/2016 M/s Concast Morena Road Projects Pvt. Ltd. Vs. M.P. Road Develop.
Corpn. & others (Annuity) basis and therefore squarely falls within the expression "work contract" as defined in section 2(d) of the Adhiniyam, 1983.
9. In view of the above analysis, it becomes amply clear that the remedy available before the petitioner is to approach Madhya Pradesh Madhyastham Adhikaran which is a Statutory Arbitration Tribunal by filing Reference under Section 7-A of the Adhiniyham, 1983.
10. The citations relied upon by the learned counsel for the rival parties, which are mentioned in para 3 of this order are not being dealt with in view of the clear provision of Clause 44.4 which excludes remedy of arbitration under Clause 44.3.
11. This court trusts that if reference is filed by the petitioner before Madhya Pradesh Madhyastham Adhikaran, Bhopal by assigning reason for delay in filing the same, then the same shall be considered in accordance with law.
12. Consequently, the remedy of Arbitration under Clause 44.3 is not available to the petitioner owing to which the present petition filed under Section 11 of the Act is not maintainable and is dismissed as such.
(Sheel Nagu) Judge 27/10/2016 (Bu)