M S Khurana Engineering Limited vs Gandhinagar Urban Development ... on 30 August, 2019

[Cites 19, Cited by 0]

Gujarat High Court

M S Khurana Engineering Limited vs Gandhinagar Urban Development ... on 30 August, 2019

Bench: S.R.Brahmbhatt

        C/IAAP/111/2018                                    ORDER




         IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

         R/PETN. UNDER ARBITRATION ACT NO. 111 of 2018

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            M S KHURANA ENGINEERING LIMITED
                         Versus
   GANDHINAGAR URBAN DEVELOPMENT AUTHORITY & 1 other(s)
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Appearance:
PARAS K SUKHWANI(8284) for the Petitioner(s) No. 1
NOTICE SERVED BY DS(5) for the Respondent(s) No. 2
VINAY B VISHEN(7425) for the Respondent(s) No. 1
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 CORAM: HONOURABLE MR.JUSTICE S.R.BRAHMBHATT

                           Date : 30/08/2019

                            ORAL ORDER

1. On 02.08.2019, the Court passed the following order :

"1. The present petition is takenout under Section 11 of the Arbitration and Conciliation Act, 1996 praying for appointment of arbitrator to adjudicate dispute between the petitioner and respondents with regard to the Contract Agreement between them. The petitioner prays as under : "A. Your Lordships will be pleased to appoint the arbitrator to resolve the disputes between the parties.

B. Your Lordships will be pleased to grant any other and further relief as may be deemed just and proper under the facts and circumstances of the case.

2. The facts in brief as could be gathered from the memo of the petitioner deserves to be setout as under :

2.1 The petitioner, an Engineers & Infrastructure Developers registered company, was awarded the contract for Construction of 2016 dwelling Unit under SEWS Housing Scheme in various T.P. Scheme in the Jurisdiction of GUDA Area by acceptance letter no.GUDA/Infrastructure/5155/2013 dated 3rd January 2013 for an amount of Rs.83,26,80,818.53 which was Page 1 of 22 Downloaded on : Sat Aug 31 04:27:56 IST 2019 C/IAAP/111/2018 ORDER 4.50% above the estimated cost of Rs.79,68,23,749.79. The contract period for completion of work was 18 months and thus, the date for completion of work was 1st August 2014. However, the work could not be completed within stipulated period due to few reasons, and extension was sought upto 31st March 2016 without imposing any compensation for delay by letters dated 1st July 2014, 1st October 2015 and 1st February 2016. The reasons for delay, as stated by the petitioner are as under :

(i) The petitioner submits that the work was issued to petitioner on 18th January 2013 with the stipulated time limit of 18 months, start from 15th day of issue of work order i.e. upto 2 nd August 2014.

(ii) The petitioner submits that the layout drawing with 576 units for plot no.3561 & 352 were issued to the petitioner on 30th January 2013.

(iii) The petitioner submits that the layout drawing for 128 units at Chiloda site were given to the petitioner on 12th March 2013 i.e. after 55 days from the issue of work order.

(iv) The petitioner submits that layout drawing for 288 units at Plot No.368 were given to the petitioner on 4th April 2013 after final demarcation of plot boundary i.e. after 78 days from the issue of work order.

(v) The petitioner submits that excavation depth for plot no.351 & 352 were finalized on 13th February 2013 and 5th March 2013 initial delay of almost one month.

(vi) The petitioner submits that the work was standstill from 7th May 2013 to 8th June 2013 due to revision in reinforcement design. The petitioner submits that the progress was affected at least two months on this account.

(vii) The petitioner submits that there was a discrepancy to provide ground beam or plinth beam but the final design to provide both were decided on 18th March 2013 almost after 60 days from the issue of work order.

(viii) The petitioner submits that final decision to provide one way or two way slabs were decided on 1st May 2013 after 105 days from the date of work order.

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(ix) The petitioner submits that the layout drawing with 256 units for Adalaj site were provided to the petitioner on 7th September 2013 with the instruction to take up the work only of 128 units. The petitioner submits that the slab work was held up for want of clearance of sunk depth. The same was cleared on 7 th February 2014 i.e. almost 180 days from the issue of layout drawings and almost one year delay from the start of the project.

(x) The petitioner submits that you are well aware that even as on date the site clearance for only 1120 unit are given to the petitioner which is only 56% of awarded units i.e. 2016.

(xi) The petitioner submits various samples of finishing material was procured and the same was approved on 13th August 2013 during the visit of Hon'ble Chairman & CEO.

(xii) The petitioner submits that the sample house as per contract items as well as with the approved sample was prepared at site and the same was seen by all the officials on 5th October 2013 during the visit of Hon'ble CEO.

(xiii) The petitioner submits that a meeting was organized at GUDA office on 18th October 2013 for various discussions for modification/changes in prepared sample house.

(xiv) The petitioner submits that the new sample house with all suggestion/changes along with furniture was made at site immediately and same was finally approved on 2nd November 2013 during the visit of Hon'ble CEO.

(xv) The petitioner submits that the drawing of water supply & drainage system was issued to the petitioner on 15th May 2014 but they are unable to take up any finishing activity due to non availability / clearance of detailed drawings.

(xvi) The approval of acceptance of all finishing items were conveyed to us verbally on 21st July 2014 i.e. after 530 days from the start of the work till such time all finishing activity such as internal electrification, doors, windows, ventilators, flooring, painting, chinamosic on terrace etc., was standstill which is having almost 32% value of work.

(xvii) The details of staircase finishing, fiber roofing shed and water proofing in sunken area were conveyed to us on 14 th Page 3 of 22 Downloaded on : Sat Aug 31 04:27:56 IST 2019 C/IAAP/111/2018 ORDER October 2014 i.e. after 21 months from the award of the work.

In addition thereto, petitioner further submitted that they carriedout additional quantity of work compared to BOQ quantity and for that they required additional time. They have not received any payment for work executed beyond the BOQ quantity which had affected the cash flow of the project. Due to non timely payment of R. A. Bills and nonpayment of price variation, not only the progress of work affected very badly which was brought to the notice of the department from time to time.

2.2 As per the say of the petitioner the drawings, details and decisions were given in piecemeal within the stipulated period of 18 months, even thereafter many details were not finalized and in spite of various holds/hindrances, which were totally beyond the control of petitioner, petitioner has been always keeping the pace of work with expectations of department. The extension was granted unilaterally upto 30th October 2014 instead of 31st March 2016.

2.3 The factors considered by the department for extending the time limit upto 30th October 2014 was not known to the petitioner. However, there was delay of almost 7 months in submitting the request for extension of time on 1st July 2014. The petitioner had requested for extension of time upto 30th April 2015. Apart from providing sites in piecemeal, drawings, details, nonpayment of price various as per arrangement, the delay in bill payments and delay in extra excess item rates were the factors for delaying the project. The petitioner submits that finishing activities require more time in comparison with the activities of frame work, the clearance for the same were given on 29th July 2014 during the site visit of Executive Engineer which was just before two days of expiry of stipulated period that too after repeated requests and reminders. The petitioner submits that simultaneous progress of work was hampered which was resulted delay in overall completion and in view of this, again the petitioner requested to extend the time limit upto 31st March 2016 without any liquidated damages.

2.4 The copy of the agreement was not supplied to the petitioner for quite some time. The petitioner submitted that almost after passing of 14 months from the award of the work, after continuous reminders xerox copy of the agreement was Page 4 of 22 Downloaded on : Sat Aug 31 04:27:56 IST 2019 C/IAAP/111/2018 ORDER provided in the month of March 2014. The petitioner submits that against Clause30 it is mentioned that "as Separate sheet attached(1) Disputes to be referred to Tribunal", however no separate sheet is attached in the copy provided to the petitioner. As the GUDA being local authority the disputes can't be adjudicated by the Gujarat Public Works Contracts Arbitration Tribunal as specified in the Clause30 and the disputes are required to be adjudicated by domestic arbitration.

2.5 Though all the works were completed on 31st March 2016, the GUDA not recorded the completion of work. However, by notice dated 13th November 2017, the respondents were called upon for the time being to make the payment of above amounts together with interest @ 18% p.a. from the due date till its realization OR appoint the Arbitrator to resolve the disputes between the parties within a period of 30 days from the date of receipt of the notice. The petitioner submits that though the notice is received by the respondents on 14th November 2017 neither the requirements of the notice are complied with nor any reply is given.

3. Hence, the present petition.

4. Shri Chirag Sukhwani, learned counsel appearing for the petitioner invited Court's attention to the arbitration clause in the agreement at page no.91 in the compilation. Clause30 indicates that the dispute to be referred to tribunal as per separate sheet attached. Part of the clause30 is scored off but the title remains clearly indicating that the dispute is required to be referred to the arbitration. It is pertinent to note that the tender documentcontract starts from page no.74 in the compilation and in that document clause30 figures at page91 bearing the title the rest of the clause is scored off without any signature. Learned counsel for the petitioner submitted that the scoring off could be said to be only not applicable part as if the scored of clause is read then, it was in respect of referring the dispute to the Arbitration Tribunal, Gujarat State, which is in fact constituted under the provision of Gujarat Public Works Contract Dispute Arbitration Tribunal Act, 1992. The provisions of Section2 of the Gujarat Public Works Contract Dispute Arbitration Tribunal Act, 1992 confines the work contract as define in clauseK of Section1 of Subsection2. The arbitration contract means a contract between the State of Gujarat with any other person for execution of any of its work relating to Page 5 of 22 Downloaded on : Sat Aug 31 04:27:56 IST 2019 C/IAAP/111/2018 ORDER construction, work etc., as the State may by notification of Official Gazette specify. The respondent being a local authority and not notified as per the provisions of Public Works Contract Dispute Arbitration Tribunal Act, 1992, the disputes between the petitioner and the respondents were required to be adjudicated by domestic arbitrator and it would not be covered by the disputes that is to be adjudicated by arbitration under the tribunal as per the Act.

5. Learned counsel for the petitioner relied on the decision rendered by the Supreme Court in case of Om Construction Co. Vs. Ahmedabad Municipal Corporation reported in (2009) 2 SCC 486 and submitted that the said decision would clearly indicate that even if there is an arbitration clause and as per that clause, the arbitration tribunal is not available, the intention of the parties for referring to the arbitration cannot be ruledout. Hence, the Court in that matter referred the matter to the arbitration. The following paragraphs from that decision deserves to be setout as under :

6. It appears that under General Conditions of Contract of the Engineering Department of the Ahmedabad Municipal Corporation, under its General Specifications it is provided that certain conditions are required to be followed which includes the condition that Form BI would be applicable to the contract and clause 30 of Form BI is relevant for this case. The relevant portions of clause 30 of Form BI reads as follows : "Clause 30(1) Disputes to be referred to Tribunal: The disputes relating to this contract, so far as they relate to any of the following matters, whether such disputes arise during the progress of the work or after the completion or abandonment thereof, shall be referred to the Arbitration Tribunal, Gujarat State;

(2) ...............

(3) The provision of Arbitration Act, shall in so far as they are inconsistent with the provision 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, Court or authority shall stand transferred to the Tribunal."

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7. The appellant filed a petition before the Gujarat High Court on 9th July, 2007, being Arbitration Petition No. 35 of 2007, under Section 11 of the Arbitration and Conciliation Act, 1996, hereinafter referred to as "the 1996 Act", inter alia, praying for the appointment of an Arbitrator to resolve the disputes between the parties. The High Court by its order dated 20th November, 2007, rejected the said petition. While doing so, the High Court took note of Section 2(1)(k) of the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992, hereinafter referred to as the "Gujarat Tribunal Act", which defines "works contract" to mean a contract made by the State Government or Public Undertaking which is notified in the Official Gazette by the State Government.

8. The High Court also noticed Section 2(1) (l) of the aforesaid Act, which defines "Public Undertaking" to, inter alia, mean such class of local authorities as the State Government specifies by Notification in the Official Gazette. It was further noticed that in the absence of such Notification, the Ahmedabad Municipal Corporation was not a "Public Undertaking" and the contract entered into by it with the appellant could not, therefore, be termed as a "Works Contract" as defined in Section 2(1)(k) of the aforesaid Act. The High Court, therefore, held that the Arbitration Tribunal, Gujarat State, would have no jurisdiction to entertain the disputes between the parties emanating from the Work Order in question.

9. The High Court then went on to consider the applicability of the Arbitration and Conciliation Act, 1996, to the facts of the case. The High Court took note of the fact that the Agreement between the parties, and more particularly the Arbitration Agreement, did not lay down any procedure for appointing an Arbitrator or Arbitrators. Accordingly, in the absence of such procedure, the Designated Court could not invoke its jurisdiction under Subsection (6) of Section 11 of the 1996 Act, which contemplates a situation, where the appointment procedure as agreed to by the parties under Sub section (2) of Section 11 is not followed. The High Court, therefore, while rejecting the applicability of the Gujarat Tribunal Act, also closed the doors for relief under the provisions of the 1996 Act.

10. The said order of the High Court, which has been Page 7 of 22 Downloaded on : Sat Aug 31 04:27:56 IST 2019 C/IAAP/111/2018 ORDER challenged in this appeal, therefore, gives rise to the question as to whether in the absence of any procedure in the Arbitration clause for the appointment of an Arbitrator, can the Chief Justice of the High Court or the Designated Court appoint an Arbitrator under Section 11(6) of the 1996 Act in 7 terms of the Agreement between the parties to have their disputes settled by arbitration.

19. We have carefully considered the submissions made on behalf of the respective parties and it appears that we are called upon to decide two questions in order to decide this appeal. The first and possibly basic question is whether in the absence of a Notification in the Official Gazette, the Municipal Corporation can at all be considered as a Public Authority for the purpose of Section 2(1)(k) of the Gujarat Tribunal Act, 1992. The other question is whether the absence of a procedure for appointment of an Arbitrator in the Arbitration Agreement itself, would constitute a bar for the appointment of an Arbitrator under Section 11(6) or any other provision of the 1996 Act, when not only the parties to these proceedings, but the High Court as well, had arrived at a conclusion that the provisions of the Gujarat Tribunal Act, 1992, would not be applicable in the instant case.

20. In this regard, we are inclined to accept the submissions of Mr. Gambhir notwithstanding the fact that the Ahmedabad Municipal Corporation had not been notified to be a "Public Undertaking" as defined in Section 2(1)(iii) of the Gujarat Tribunal Act, 1992. There is no dispute that the Ahmedabad Municipal Corporation is a local authority and it could assume the garb of a "Public Undertaking" only pursuant to a Notification published in that regard in the Official Gazette. On the other hand, even if Form BI loses its relevance as far as the present contract is concerned, since the parties have agreed to resolution of their disputes by arbitration, the provisions of Sub section (5) of the 1996 Act can be pressed into service to enable the parties to invoke the powers of the Chief Justice to appoint an Arbitrator. The stand taken by Mr. Divan is highly technical and is not in aid of resolution of the disputes between the parties by an Arbitral Tribunal.

21. While recognizing the right of the appellant to approach the Chief Justice or the Designated Court under Section 11(6) of Page 8 of 22 Downloaded on : Sat Aug 31 04:27:56 IST 2019 C/IAAP/111/2018 ORDER the 1996 Act, the stand of the respondent Corporation has been that the party should be relegated to suit, which is quite contrary to the stand taken by it in the case of other employees.

22. Section 11 of the 1996 Act deals exclusively with the appointment of Arbitrators. Subsection (2) provides that the parties are free to agree on a procedure for appointing the Arbitrator or Arbitrators but subject to Subsection (6) which provides that if an agreed procedure had not been acted upon, the parties could approach the Chief Justice or his Designate for appointment of an Arbitrator. Subsections (3), (4) and (5) contemplate different situations in which the Chief Justice or his Designate could be requested to appoint an Arbitrator. In our view, in the facts of this case, the answer to the question thrown up in this appeal lies in Subclause (5) of Section 11 of the 1996 Act, which reads as follows : "11 (5) Failing any agreement referred to in subsection (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him."

23. Having arrived at the aforesaid conclusion, the only question that remains to be decided is whether this matter should be remitted to the High Court for appointment of an Arbitrator or whether we should ourselves appoint an Arbitrator in terms of the Arbitration Agreement. Remitting the matter to the High Court would only mean another round of litigation, whereas if the appointment is made by us, the matter will achieve finality, which would ultimately be beneficial for all concerned.

24. We, accordingly, allow the appeal and appoint Hon'ble Mr. Justice C.K. Thakker, a former Judge of the Supreme Court, presently settled at D64, Akash Towers, Judges' Bungalow Road, Vastrapur, Ahmedabad to be the Arbitrator for settlement of the disputes which have arisen between the parties. The learned Arbitrator shall fix his own fees and shall also formulate the procedure to be adopted by him during the arbitration Page 9 of 22 Downloaded on : Sat Aug 31 04:27:56 IST 2019 C/IAAP/111/2018 ORDER proceedings. The Arbitrator shall try and publish his Award as expeditiously as possible, but positively within six months from the date of entering upon the Reference. The Arbitrator will also decide the venue and sittings of the Arbitral Tribunal in consultation with the parties. The judgment and order of the High Court impugned in this appeal is, accordingly, set aside. The costs of this appeal shall be the costs in the arbitration proceedings.

6. Learned counsel for the petitioner further relied upon the decision of this Court dated 20th January 2012 in Petition Under Arbitration Act No.91 of 2011 in case of Rajkamal Builders Infrastructure Pvt Ltd., Vs. Ahmedabad Urban Development Authority & 1. Relevant paragraphs whereof are setout as under : "19. To bring the dispute within the said term therefore, it would be necessary that the undertaking should have been notified by the State Government in the official gazette. In the present case, the AUDA has not been notified by the State Government and the proceedings under the said provision, therefore, would not be maintainable. Reference in this regard may be made to the decision of Apex Court in case of Om Construction Co. v. Ahmedabad Municipal Corporation, reported in Ar. W.L.J 2010 SC 116 in which it was observed as under :

"19. We have carefully considered the submissions made on behalf of the respective parties and it appears that we are called upon to decide two questions in order to decide this appeal. The first and possibly basic question is whether in the absence of a Notification in the Official Gazette, the Municipal Corporation can at all be considered as a Public Authority for the purpose of Sec. 2(1)(k) of the Gujarat Tribunal Act, 1992. The other question is whether the absence of a procedure for appointment of an Arbitrator in the Arbitration Agreement itself, would constitute a bar for the appointment of an Arbitrator u/s. 11(6) or any other provision of the 1996 Act, when not only the parties to these proceedings, but the High Court as well, had arrived at a conclusion that the provisions of the Gujarat Tribunal Act, 1992, would not be applicable in the instant case.

20. In this regard, we are inclined to accept the submissions of Mr. Gambhir notwithstanding the fact that the Ahmedabad Page 10 of 22 Downloaded on : Sat Aug 31 04:27:56 IST 2019 C/IAAP/111/2018 ORDER Municipal Corporation had not been notified to be a "Public Undertaking" as defined in Sec. 2(1)(iii) of the Gujarat Tribunal Act, 1992. There is no dispute that the Ahmedabad Municipal Corporation is a local authority and it could assume the garb of a "Public Undertaking" only pursuant to a Notification published in that regard in the Official Gazette. On the other hand, even if Form BI loses its relevance as far as the present contract is concerned, since the parties have agreed to resolution of their disputes by arbitration, the provisions of Subsec. (5) of the 1996 Act can be pressed into service to enable the parties to involve the powers of the Chief Justice to appoint an Arbitrator. The stand taken by Mr. Divan is highly technical and is not in aid of resolution of the disputes between the parties by an Arbitral Tribunal."

20. In any case, the parties have in uncertain terms agreed that the reference would be made to an arbitrator under the provisions of the Arbitration and Conciliation Act,1996, which being a Central Act would override the requirement for approaching the Tribunal under the local Act as held by the Apex Court in case of VA Tech Escher Wyass Flovel Ltd. vs. MPSI Board and Anr. In which it is observed as under :

"It appears that the appellant was awarded a work contract by the respondents. There was some dispute between the parties and there is an arbitration clause in the agreement. Appellant filed an application under Section 9 of the Arbitration & Conciliation Act, 1996 (for short 'the 1996 Act') which was rejected by the learned Additional District Judge and that order has been upheld by the High Court. Hence, this appeal.

Section 7(1) of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam,1983 (for short ' the 1983 Act') provides as follows :

'7. Reference to Tribunal (1) Either party to a works contract shall irrespective of the fact whether the agreement contains an arbitration clause or not, refer in writing the dispute to the Tribunal.' Subsequently, the Parliament enacted the 1996 Act.

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The 1996 Act only applies where there is an arbitration clause but it does not apply where there is none. The 1996 Act covers all kinds of disputes including the dispute relating to work contracts.

In our opinion, the 1983 Act and the 1996 Act can be harmonised by holding that the 1983 Act only applies where there is no arbitration clause but it stands impliedly repealed by the 1996 Act where there is an arbitration clause. We hold accordingly.

Hence, the impugned judgment cannot be sustained and we hold that the application under section 9 of the 1996 Act was maintainable."

21. In the result, this petition is allowed. Hon'ble Mr.Justice C.K. Thakkar (Retd.), is requested to act as sole arbitrator to resolve the disputes between the parties arising out of the work contract dated 22.12.2006. Petition is disposed of."

7. Learned counsel for the petitioner also relied upon the decision of this Court dated 22th January 2016 in Petition Under Arbitration Act No.64 of 2015 in case of Chitra Construction Company Vs. District Panchayat. Relevant paragraphs whereof are setout as under :

2. This request for appointment of arbitrator is opposed by the Panchayat on two grounds. Firstly, that the work order was issued by Panchayat at the instance of the Government and that therefore, in terms of the said arbitration clause, the disputes must be referred to Arbitration Tribunal constituted under the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992. Second ground of opposition is that if it is held that such dispute would not be maintainable before the Tribunal, it must be treated that there is no arbitration clause and therefore, also request to appoint arbitrator cannot be made.

3. Both the grounds of opposition cannot be accepted. Firstly, respondent Amreli District Panchayat is admittedly not a notified authority in terms of clause(k) of subsection(1) of section 2 of the Gujarat Public Works Contracts Disputes Arbitration Page 12 of 22 Downloaded on : Sat Aug 31 04:27:56 IST 2019 C/IAAP/111/2018 ORDER Tribunal Act, 1992 , which defines the term work contract as under :

"(k) Works contract means a contract made by the State Government or the public undertaking with any other person for the execution of any of its works relating to construction, repairs or maintenance of any building or superstructure, dam, weir, canal, reservoir, tank, lake, road, well, bridge, culvert, factory or workshop or of such other work of the State Government or, as the case may be, of the public undertaking, as the State Government may, by notification in the official Gazete specify and includes

(i) a contract made for the supply of goods relating to the execution of any of such works,

(ii) a contract made by the Central Stores Purchase Organisation of the State Government for purchase or sale of goods.

(iii) Words and expressions used and not defined in this Act but defined in the Arbitration Act, shall have the meanings assigned to them in the Arbitration Act."

4. In terms of such provision, thus the arbitration contract means a contract made by the State Government or the public undertaking with any other person for execution of any of its works relating to construction repair etc. as the State Government may by notification in official gazette specify.

5. The contract in the nature of work order is admittedly issued by respondent District Panchayat and not by the State Government. There is thus no privity of contract between the petitioner and the Government. Coming to the question of existence of arbitration agreement, issue is squarely covered by the judgment of the Supreme Court in case of Om Construction Company v. Ahmedabad Municipal Corporation and another reported in (2009) 2 Supreme Court Cases 486, which is followed consistently by this Court, particularly in case of Rajkamal Builders Infrastructure Limited v. Ahmedabad Urban Development Authority (Petn. Under Arbitration Act No.91/2011 order dated 20.1.2012).

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8. Shri Kamal Trivedi, learned Advocate General appeared for the respondent no.1 and places on record the chronology of important events, which in verbatim produced as under : Sr. No. Date Particulars

1. 11.09.2012 Gandhinagar Urban Development Authority ('GUDA' for short) floated a Notice inviting Tender No.19/201213 for construction of 2016 dwelling units and SEWS Housing Scheme in various T.P. Schemes within the jurisdiction of GUDA area.

Note:

(i) The tender document carries carries a note, reading as under:

'Strike out whichever is not applicable' and in vernacular 'laagu na padtu hoy te cheki nakho'

(ii) Clause 30 of the tender document entitles "as per separate sheet attached (1) Disputes to be referred to Tribunal:"

(iii) In view of the aforesaid note, text below the aforesaid Clause 30 has been deleted and that it was agreed between the parties not to retain any arbitration clause in the tender document.

2. 18.01.2013 GUDA issued Work Order in favour of the petitioner for construction of 2016 dwelling units under SEWS Housing Scheme and the time limit for completion of the work in question was 18 months, i.e. upto 2.8.2014.

3. 01.07.2014 The petitioner addressed a letter to GUDA requesting to extend the time limit for a period of 9 months, i.e. upto 30.04.2015 with a request not to impose liquidated damages for the delay.

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4. 01.08.2014 As per the tender condition, the work in question was to be completed on or before 01.08.2014. However, owing to delay caused due to genuine problems occurring during the execution, upon request being made by the petitioner, time to complete the work in question was extended upto 30.10.2014.

5. 30.12.2014 GUDA addressed a letter indicating that the work in question at the site is not progressing and that there is a slow progress at the site.

6. 06.01.2015 The petitioner addressed a letter to GUDA justifying the slow progress at site citing the reasons about delay in providing the drawings and details, withholding the amount for executed work beyond BOQ etc.

7. 20.01.2015 The petitioner addressed a letter to GUDA reiterating its earlier request.

8. 06.02.2015 Since the petitioner could not complete the work in question during the extended period, GUDA addressed a letter calling upon the petitioner as to why penalty should not be imposed against it.

9. 01.02.2016 The petitioner citing various reasons, requested to extend the time limit for completing the construction work of 2016 dwelling units under SEWS Housing Scheme upto 30.03.2016 with a request not to impose liquidated damages.

10. 13.11.2017 The advocate on behalf of the petitioner issued a notice under the purported Clause 30 of the Tender Document to provide decision within a period of 30 days from Page 15 of 22 Downloaded on : Sat Aug 31 04:27:56 IST 2019 C/IAAP/111/2018 ORDER the date of receipt of the notice, failing which dispute will be referred to arbitration as per provisions of Clause 30 of the General Conditions of the Contract.

11. 09.01.2018 The petitioner preferred a writ petition being SCA No.1310 of 2018 before this Hon'ble Court from amongst other reliefs praying for direction directing the respondents to finalise the contract for construction of 2016 dwelling units under SEWS Housing Scheme.

12. 30.01.2018 This Hon'ble Court passed an order disposing of the above writ petition by giving liberty to the petitioner to make representation to the respondents with respect to its grievance and further direction to the respondents to consider the said grievance.

13. 14.02.2018 The petitioner submitted a representation to GUDA to make the payment towards the alleged outstanding dues arising out of the work in question.

14. 04.04.2018 GUDA, after considering the representation dated 14.02.2018 of the petitioner, informed that the dwelling units under SEWS Housing Scheme are taken up for the facilities of Low Income Group Citizens and both the employer and the contractor are expected to satisfy the expectations of the beneficiaries as the prestige of the Government is at stake. It also urged to the petitioner to rectify and reduce the complaints of the beneficiaries at the earliest.

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15. July 2018 The petitioner almost after period of 5 months from the date of the letter dated 04.04.2018, preferred the captioned application under sub section (6) of Section 11 requesting this Hon'ble Court to appoint the Arbitrator to resolve the disputes between the parties.

9. Shri Kamal Trivedi, learned Advocate General relied on the decision of Supreme Court in case of State of Orissa Vs. Bhagyadhar Dash reported in (2011) 7 SCC 406. The relevant paragraphs relied on by the learned AG are reproduced as under :

1. Leave granted. These appeals by special leave are by the State of Orissa aggrieved by the orders of the Chief Justice of Orissa High Court allowing the applications filed under Section 11 of the Arbitration and Conciliation Act 1996 (`Act' for short) filed by contractors and appointing arbitrators to decide the disputes raised by them against the State Government. The learned Chief Justice held that the last sentence of the proviso to clause 10 of the conditions of contract (forming part of the agreements between the state and the contractors) is an arbitration agreement. The appellants challenge the said orders on the ground that there is no arbitration agreement and therefore the applications under Section 11 of the Act filed by the contractors ought to have been dismissed. Therefore the short question that arises for our consideration in these appeals is whether the said clause is an arbitration agreement.

23. That clause 10 was never intended to be an arbitration agreement is evident from the contract itself. It is relevant to note the Standard Conditions of Contract of the state government, as originally formulated consisted a provision (Clause 23) relating to settlement of disputes by arbitration, which is extracted below :

"Except where otherwise provided in the contract, all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions herein before mentioned and as to the quality of workmanship, or materials used on the work, or as to any other question, claim, right, matter or thing whatsoever, in any way arising out of or relating to the Page 17 of 22 Downloaded on : Sat Aug 31 04:27:56 IST 2019 C/IAAP/111/2018 ORDER contract, designs, drawing, specifications, estimates, instructions, orders 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 shall be referred to the sole arbitration of a Superintending Engineer of the State Public Works Department unconnected with the work at any stage nominated by the Chief Engineer concerned. If there be no such Superintending Engineer, it should be refereed to the sole arbitration of Chief Engineer concerned. It will be no objection to any such appointment that the arbitrator so appointed is a government servant. The award of the arbitrator so appointed shall be final, conclusive and binding on all parties to this Contract."

24. The abovesaid clause was deleted by the State Government from the Standard Conditions of Contract by official Memorandum dated 24.12.1981. Contracts entered by the State Government thereafter did not have the said arbitration clause, though the other Conditions of Contract remained the same. The contracts in all these cases are of a period subsequent to 24.12.1981 and the Conditions of Contract forming part of these contracts do not contain the arbitration clause. When the State Government has consciously and intentionally deleted the provision for arbitration from its contracts, it will be a travesty of justice to read another clause in the contract providing for execution of nontendered items and the method of determination of the rates therefor, as a provision for arbitration.

25. In fact, in Executive Engineer RCO vs. Suresh Chandra Panda [1999 (9) SCC 92], this Court considered the effect of the said clause relating to execution of nontendered items, vis `vis clause 23 in a pre1981 contract. This court held that the said clause (then numbered as clause 11, numbered as clause 10 in subsequent contracts) was a provision which excluded the issue relating to finality of rates, from the scope of arbitration agreement contained in clause 23 on the following reasoning :

(SCC p.94, para4) "4. Under Clause 11 of the contract, there is an elaborate provision dealing with the power of the Engineerin Charge to make any alterations or additions to the original specifications, drawings, designs and instructions. It, inter alia, provides that if for such alterations or additions no rate is specified in the contract, then the Page 18 of 22 Downloaded on : Sat Aug 31 04:27:56 IST 2019 C/IAAP/111/2018 ORDER rates which are entered in the sanctioned schedule of rates of the locality during the period when the work is being carried out, would be paid. However, if this class of work, not provided for in the sanctioned schedule of rates then the contractor has the right, in the manner specified in that clause, to inform the EngineerinCharge of the rate at which he intends to carry out that work. If the Engineerin Charge does not agree to this rate he is given the liberty to cancel his order and arrange to carry out such class of work in such manner as he may consider advisable. The clause further provides that if the contractor commences such additional work or incurs any expenditure in respect of it before the rate are determined as specified in that clause, then the rate or rates shall be as fixed by the EngineerinCharge. In the event of a dispute, the decision of the Superintendent Engineer of the circle will be final. Under Clause 23, except as otherwise provided in the contract, all disputes are arbitrable as set out in that clause. The finality of rates, therefore, under Clause 11 is a provision to the contrary in the contract which is excluded from Clause 23."

Thus, even when the Standard Conditions of Contract contained a provision for arbitration (vide clause 23), clause 10 was considered to be a provision dealing with a matter excepted from arbitration. Be that as it may. The proviso to clause 10, which provides that the decision of the Superintending Engineer is `final', merely discloses an intention to exclude the rates for extra items decided by the Superintending Engineer from the scope of arbitration, as an excepted matter, when there was an arbitration agreement (clause 23) in the contract. When the arbitration agreement was deleted, provision dealing with non tendered items can not be described as an arbitration agreement. Be that as it may.

10. Learned Advocate General further relied upon the decision of Supreme Court in case of M/s. System For International Agencies Vs. M/s. Rahul Coach Builders Pvt. Ltd., reported in (2015) 13 SCC 436.

11. The factum of existence of dispute cannot be denied by anyone as could be seen from the submission made by the counsel for the petitioner and incorporated hereinabove in paragraph nos.1 to 2.5. therefore, the existence of dispute is not in question. The fact remains to be noted that the respondent though is a Government organization but not notified as public undertaking under the provision of the Gujarat Public Works Contracts Disputes Arbitration Tribunal act, 1992 hereinafter referred to as the Gujarat Act, for the sake of brevity. The fact Page 19 of 22 Downloaded on : Sat Aug 31 04:27:56 IST 2019 C/IAAP/111/2018 ORDER also requires to be borne in mind that all the Government agencies and public sector undertakings are under obligation to incorporate the arbitration clause and absence thereof is always treated as an aberration and deviation. The contract, work order, and agreement with the governmental bodies or public authorities and public undertaking is essentially required to carry forward the policy accepted by not only the Government of India but the State of Gujarat and other states that there has to be an effective dispute resolution mechanism and arbitration being one of them, it has been generally observed that in all such contracts there is always an arbitration clause. The standard contract forms therefore, are prepared and picking up any one such standard contract or terms and condition of contract would invariably contain arbitration clause providing for dispute to be resolved by arbitration under the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Arbitration Act, 1996 for the sake of brevity). In the instant case, the tender document and agreement was one such standard contract in which the Clause30 as it stood had figured, but as the respondent being not a notified public undertaking under the provision of the Gujarat Arbitration Tribunal Act, the same procedure could not be attracted nor the tribunal's jurisdiction would be available for resolving the dispute under the contract. The procedure being not available under the Gujarat Tribunal Act, it appears that there was mentioning that the inapplicable would be scored off. However, the Clause30 has not been scored off and the captioned clearly indicative of the parties' intention to refer the dispute to the tribunal also not scored off. What has been scored off is only procedure. A fine question arises therefore, as to whether can respondent be justified in contending that in this contract alone there was an intention on the part of the parties not to resort to arbitration proceedings at all for resolving the dispute. It is required to be noted that, it is never a case of the respondent that they are at liberty to make a deviation from the avowed policy of the state of referring the dispute to arbitration. The Court hastened to add here that the provision of law is unequivocally clear that the parties' agreement for arbitration as per the contract is sine quo none for invoking arbitration. Therefore, if one looks at the contract paper produced on record one would come to know that wherever the intention to delete a clause found to be unwarranted in the contract indicating deviation from the standard format of contract, the word delete is mentioned against the clause. The learned counsel for the petitioner is therefore justified in inviting Court's attention to the Page 20 of 22 Downloaded on : Sat Aug 31 04:27:56 IST 2019 C/IAAP/111/2018 ORDER various clauses indicating that at many a places the clause contain the word deleted. Meaning thereby the standard format was not adhered to and there were some deviation. The Court's attention was invited to the Clause no.24 against which the word 'deleted' mentioned, Clause no.25 against which the word 'deleted' mentioned. Clause no.31 against which the word 'deleted' mentioned. Clause no.45 the word 'deleted' mentioned. Clause no.47 the word 'deleted' mentioned, Clause nos.73, 74 and 75 the words 'deleted' mentioned and there are clauses where either the entire clause is scored off or a part thereof is scored off. The Clause 60 in respect of price variation is scored off entirely along with the caption and 60A is inserted. Similarly, Clauses 72, 73 and 77 have been scored off along with their captions. As against this, Clause no.30 clearly indicate that the said clause is partly retained as the scoring off is only qua the procedure as could be seen from page no.97 where the clause 30 the arbitration is figuring. The learned counsel for the petitioner's reliance upon the observation of Om Construction (supra) would therefore, clearly indicate that the lack of procedure or prescription of the procedure cannot permit parties to wriggle out of their initial agreement to submit to the arbitration. The decision cited at the bar on behalf of the respondent so far as, their ratio and proposition of law concerned, cannot be disputed, but they proceed on the premise with regard to the arbitration clause and its existence, whereas in the instant case, the scoring off of part of the clause and leaving the clause 30 with its caption intact with an assurance to supply a separate sheet would conclusively be indicative of the fact that there existed a clear intention of parties to submit to the arbitration tribunal in case of the dispute.

12. For the aforesaid reasons, this Court is of the view that Clause 30 and its partial scoring off and leaving the Clause 30 and its caption intact with assurance of supply a separate sheet for the procedure which have been established by the petitioner would clearly suggest that the parties were in agreement to refer the dispute to the arbitration and 30 being the clause for arbitration, the lack of providing procedure or omission to provide procedure would not nullify the intention of the parties to refer the matter to the arbitration tribunal. In this view of the mater, this Court is of the view that the petitioner made out a case for invoking arbitration between the parties for the disputes and it is needless to say that the arbitrator has to be appointed for resolution of the dispute and this order and Page 21 of 22 Downloaded on : Sat Aug 31 04:27:56 IST 2019 C/IAAP/111/2018 ORDER observations would not preclude the parties to in urging the contentions as permissible under law before the arbitrator.

13. In view of whatever stated hereinabove, as this Court is satisfied qua existence of dispute and the arbitration clause, the Court needs to exercise power under Section11 of the Act for appointing the arbitrator for resolving the dispute. The matter be posted on any Friday so that the parties may arrive at a consensual name agreed by both the parties for acting as an arbitrator.

14. At this stage, Shri Vinay Vishen, learned advocate for the respondent urges the Court to stay the order for the period of 6 weeks, and if not possible, then at least for 4 weeks. The request of Shri Visen is strongly objected. I am of the view that 2 weeks, if urged for challenging the order, deserves to be granted. Hence, the order may have effect only after 23rd August 2019. Put up the matter on 30th August 2019. "

2. Today, Shri Sukhwani, learned counsel for the petitioner and Shri Vishen, learned advocate for respondent, under the instructions of their respective parties, submitted that parties have arrived at consensus for suggesting the name of Mr. J. C. Upadhyaya, Former Judge, High Court of Gujarat, to undertake the arbitration proceedings and urged that they will obtain necessary declaration in terms of Sixth Schedule, under Section 12 (1)(b) read with Section 11(8) of the Arbitration & Conciliation Act (As amended), to act as a sole Arbitrator and same is placed on record. S.O to 6.9.2019.

3. At this stage, Shri Vishen, learned advocate appearing for the respondent submitted that this order be without prejudice to the challenge that may be led against the order dated 2.8.2019.

(S.R.BRAHMBHATT, J) P.S. JOSHI Page 22 of 22 Downloaded on : Sat Aug 31 04:27:56 IST 2019

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