Disposed

Supreme Infrastructure India Limited Through Its Deputy General Manager Cum Authorized Signatory v. The Union Of India Through Its Secretary Ministry Of Road Transport And Highways And Ors.

Jharkhand HC4 Aug 2016WPC/2272/2016

Case brief

AI extract

What is this about?

Two writ petitions challenging termination of road construction contracts were referred to arbitration based on agreed clauses. The Court vacated interim stay orders on e-tender processes, allowing parties to pursue arbitration before a mutually appointed arbitrator.

What did the court decide?

Matter referred to arbitration before Hon'ble Mr. Justice Loknath Prasad; interim stay orders vacated.

Supreme Infrastructure India Limited Through Its… — Company and Corporate | Jharkhand HC (2016)

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IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P. (C) No. 2272 of 2016 with

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W.P.(C) No. 2852 of 2016

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Supreme Infrastructure India Limited -------Petitioner in both cases Versus

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The Union of India through its Secretary, Ministry of

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Road, Transport and Highways, New Delhi

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The Coordinator (II), Ministry of

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Road, Transport and Highways, New Delhi

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The Superintending Engineer, LWE, Ministry of

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Road, Transport and Highways, New Delhi

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The State of Jharkhand through the Principal

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Secretary, Road Construction Department

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The Chief Engineer (Communication), Road

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Construction Department, Ranchi

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The Executive Engineer, Road Division, Gumla,

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Road Construction Department, Gumla --- Respondents in WPC 2272/2016

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The State of Jharkhand through the Principal Secretary, Road Construction Department, Government of Jharkhand

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The Chief Engineer (Communication), Road

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Construction Department, Ranchi

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Executive Engineer, Road Construction Department,

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Road Division, Jamshedpur

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Union of India through its Secretary, Ministry of Road, Transport and Highways, New Delhi --- Respondents in WPC 2852/2016

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CORAM: The Hon’ble Mr. Justice Aparesh Kumar Singh

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For the Petitioner: Mr. Sumeet Gadodia, Advocate For the Resp – UOI: Mr. Rajiv Sinha, ASGI, Mr. Niraj Kumar, JC to ASGI For the Resp – State: M/s Ajit Kumar, A.A.G., Aparajita Bharadwaj, JC to A.A.G.

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WPC No. 2272/2016

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09/ 04.08.2016 This writ petition has been preferred to challenge the termination of the

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contract (Agreement No. 01-NCB/2012-13 dated 20.07.2012) for the work of widening to intermediate lane and improvement of Sisai-Basia Road from Km 0.0 to 37.775 issued by the Chief Engineer (Communication), Road Construction Department, Jharkhand (Annexure-16). Pursuant thereto, security deposit also stood forfeited to the Government. The impugned letter also refers to the communication of Superintending Engineer (LWE), MoRTH & H, New Delhi vide letter no. NH12014/411/2010/JH/LWE dated 18.04.2016 and Secretary, Road Construction Department, Jharkhand, Ranchi Letter No. 2586(S) dated 25.04.2016. Annexure-15 is communication of the Superintending Engineer (LWE), Ministry of Road

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Transport and Highways, Government of India requesting the Principal Secretary, Road Construction Department, Government of India to take necessary action in the matter of proposal for termination of the Contract Agreement of the petitioner in relation to the same work. This has also been challenged by the petitioner as admittedly, the work in question is sponsored by the Ministry of Road Transport and Highways, Government of India.

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However, it is pertinent to notice here that the Agreement itself has been executed between the petitioner and the Respondent No. 6 - Executive Engineer, Road Division, Gumla, Road Construction Department, Gumla. It is further pertinent to notice here that on 03.05.2016 when the matter was taken up for the first time, while granting time to the Respondent State and Union of India, it was observed that pendency of the writ application would not preclude the parties from going to an alternative resolution of the dispute. It was also observed that any forfeiture made pursuant to the impugned order, would be subject to the outcome of the writ petition.

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Incidentally, during pendency of the writ application, the Respondent Department issued a e-tender bearing Reference No. RCD/Gumla (LWE)/448 dated 20.05.2016 for award of “Remaining Work of Strengthening and Widening of SisaiBasia Road from K.M. 0.00 to 37.775 (under LWE Scheme) and also (Widening to Intermediate Lane and Improvement of Sisai-Basia Road from K.M. 0.000 to 37.775 K.M.)”. This was assailed by the petitioner in I.A. No. 3442/2016. By order dated 03.06.2016 passed by a Coordinate Bench of this Court, further process of e-tender Reference was stayed. During course of the proceedings thereafter, parties were directed to explore the possibilities for referring the matter for arbitration and suggest choice of the names of the Learned Arbitrator. The Respondent-Union of India was asked to furnish its response as well.

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WPC 2852/2016

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This writ petition has been preferred to challenge the termination of the

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contract (Agreement No. 07-SBD/2012-13 dated 18.07.2012) for the work of widening to intermediate land and improvement of Chakulia-Matihani Road from Km 0.0 to 27.60 issued by the Chief Engineer (Communication), Road Construction Department, Jharkhand (Annexure-15). Pursuant thereto, security deposit also stood forfeited to the Government. The impugned letter also refers to the communication of the Secretary, Road Construction Department, Jharkhand, Ranchi vide Letter No. 3036(S) dated 13.05.2016 and MoRTH & H, New Delhi vide letter no. 2154(S) dated 30.03.2016. Annexure-16 letter dated 1071 dated 21.05.2016 issued by the Respondent No. 3 - Executive Engineer, Road Construction Department, Road Division, Jamshedpur pursuant to the termination of the contract dated 20.05.2016, has also been challenged, whereunder petitioner has been directed to be present for final measurement of the works undertaken.

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It is to be taken note of that when the matter was taken up on 28.05.2016 before a Coordinate Bench of this Court, while granting time to the Respondents to file counter affidavit, an order of status quo, as on that date, was directed to be maintained. It is also pertinent to mention here that on 29.06.2016 when the matter was taken up, on noticing the availability of an alternative dispute resolution mechanism under the contract entered into between the parties, counsel for the parties were allowed time to come forth with their intent and proposal to go for it. Again on 13.07.2016, parties were directed to explore the possibilities for referring the matter for arbitration and choice of names of at least three Learned Arbitrators. 6. Union of India was formally impleaded as a Respondent in the instant case also, whereafter learned ASGI Mr. Rajiv Sinha has appeared on their behalf and also filed an affidavit on 22.07.2016. 7. Both the Agreements provide for a arbitration clause at Clause no. 25.3 under the General Conditions of Contract which are quoted hereunder:

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“25.3(a) In case of Dispute or difference arising between the Employer and a domestic contractor relating to any matter arising out of or connected with his agreement, such disputes or difference shall be settled in accordance with the Arbitration

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and Conciliation Act, 1996. The parties shall make efforts to agree on a sole arbitrator and only if such an attempt does not succeed and the Arbitral Tribunal consisting of 3 arbitrators one each to be appointed by the Parties to act as Presiding Arbitrators shall be considered. In case of failure of the two arbitrators appointed by the parties to reach upon a consensus within a period of 30 days from the appointment of the arbitrator appointed subsequently, the Presiding Arbitrator shall be appointed by the Council, India Roads Congress.

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(b) The Arbitral Tribunal shall consist of three Arbitrators one each to be appointed by the Employer and the Contractor. The third Arbitrator shall be chosen by the two Arbitrators so appointed by the parties, and shall act as a Presiding arbitrator. In case of failure of the two Arbitrators appointed by the parties to reach upon a consensus within a period of 30 days from the appointment of the arbitrator appointed subsequently, the Presiding arbitrator shall by appointed by the Council, Indian Roads Congress.

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(c) If one of the parties fails to appoint its arbitrator in pursuance of sub clause (a) and (b) above within 30 days after receipt of the notice of the appointment of its arbitrator by the other party, then the Council, Indian Roads Congress shall appoint the arbitrator. A certified copy of the order of the Council, Indian Roads Congress, making such an appointment shall be furnished to each of the parties.

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(d) Arbitration Proceedings shall be held in India and the language of the arbitration proceedings and that of all documents and communication between the parties shall be in English.

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(e) The decision of majority of arbitrators shall be final and binding upon both parties. The cost and expenses of Arbitration Proceedings will be paid as determined by the arbitral tribunal. However, the expenses incurred by each party in connection with the preparation, presentation, etc. of its proceedings as also the fees and expenses paid to the arbitrator appointed by each party or on its behalf shall be borne by each party itself.

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(f) Performance under the contract shall continue during the arbitration proceedings and payments due to the contractor by the owners shall not be withheld, unless they are the subject matter of the arbitration proceedings.”

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Counsel for the petitioner as well as the Respondent State have thereafter filed supplementary affidavits suggesting names of the Learned Arbitrators. On the basis of the respective affidavits of the parties, it transpires that both the parties have suggested one common name of the Learned Arbitrator i.e. Hon'ble Mr. Justice Loknath Prasad, former Judge of Patna High Court. Learned counsel for the parties submit on instruction that the matter can be referred to the sole Arbitrator jointly agreed by the parties and as per the terms of the arbitration clause also.

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Respondents in their affidavit have however sought to reserve their rights to raise the claims relating to penalty on the issue of fundamental breach of contract alleged on their part; liability of the contractor for extra cost for execution of the works in question and liability for forfeiture of the security deposit and earnest money and any other statutory liability. They have also made a prayer for vacation of stay of e-tender process, referred to herein-above, in question.

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Government of India in its affidavit have though referred to their stand on the merits of the matter, but also conveyed at the same time that the Ministry of Road Transport and Highways, Government of India is the sanctioning and funding authority of this project whereas Contract Agreement for execution of this project has been entered into between the State Government and the Contractor petitioner. In substance, Government of India has not opposed the specific terms of invocation of the arbitration clause for adjudication of the instant dispute arising out of termination of the contract between the parties.

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The resort to the mechanism of alternative dispute resolution in such a matter where questions of fact and construction of terms and conditions of the Agreement are involved, is a welcome step on the part of the parties in furtherance of the ADR mechanism provided under the Agreement itself. In that spirit, the parties have come forward to seek reference of the matter before the Learned Arbitrator jointly agreed amongst them.

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Accordingly, the matter arising from termination of both the Agreements in question are referred for arbitration before the Hon'ble Mr. Justice Loknath Prasad, former Judge of Patna High Court. Parties shall appear before the Learned Arbitrator on 20.08.2016. On that date, on appearance of the parties or their legal representative, Learned Arbitrator would decide upon the procedure and remuneration, etc. and other incidental matters, whereafter the arbitration proceedings are to commence. It is expected that the arbitration proceedings would be concluded in an expeditious manner, preferably within a period of six months,

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keeping in line with the provisions contained in the Arbitration and Conciliation (Amendment) Act, 2015.

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Needless to say, parties are at liberty to raise their claims and counter claims before the Learned Arbitrator arising out of execution of the Agreement in question. Interim order dated 03.06.2016 passed in WPC No. 2272/2016 granting stay on e- tender bearing Reference No. RCD/Gumla (LWE)/448 dated 20.05.2016, stands vacated. Interim order dated 28.05.2016 passed in WPC 2852/2016 also stands vacated. Parties are at liberty to pursue their remedies as per the provisions of Arbitration and Conciliation Act, 1996 before the Learned Arbitrator.

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Both the writ petitions stand disposed of. Pending I.As are accordingly closed.

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( Aparesh Kumar Singh, J )

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Ranjeet/

Supreme Infrastructure India Limited Through Its Deputy General Manager Cum Authorized Signatory v. The Union Of India Through Its Secretary Ministry Of Road Transport And Highways And Ors.

Case brief

What is this about?

What did the court decide?

Supreme Infrastructure India Limited Through Its Deputy General Manager Cum Authorized Signatory v. The Union Of India Through Its Secretary Ministry Of Road Transport And Highways And Ors.

Case brief

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What did the court decide?

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