Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992 – Issue as to whether the Gujarat Public Works Contract Disputes Arbitration Tribunal constituted u/s. 3 of the said Act has jurisdiction to make interim orders in terms of s.17 of the 1996 Act – Respondent-contractor was awarded contract for strengthening a section of National Highway under work order dtd. 31.07.07, which contained an arbitration clause – According to the contractor, he completed the work on 30.04.08 and final bill was paid – Road was damaged and the State called upon the contractor to repair the damaged portion and according to the contractor, this repair was completed – Case of the contractor is that in terms of the contract, the contractor was only liable to remove defects for period of 3 years which period ended on 30.04.11 – State issued letter dtd. 11.11.14 calling upon the contractor to pay Rs.1,09,00,092/- on the premise that the contractor had not carried out the road repair work in accordance with the contract – Challenged – Writ petition allowed by the High Court – Held: Appropriate remedy for the contractor was to approach the arbitral tribunal constituted under the 1992 Act, since that would have jurisdiction to decide whether the notice issued by the Government was legal notice and whether the Government was, in fact, entitled to recover any amount from the contractor – It would also be within the jurisdiction of the Tribunal to decide whether the contractor made out prima facie case for grant of interim relief – Insofar as the powers vested in the Arbitral Tribunal in terms of s.17 of the 1996 Act are concerned, such powers can be exercised by the Tribunal constituted under the 1992 Act because there is no inconsistency in these two Acts as far as the grant of interim relief is concerned – Merits of the case purposely not gone into – Judgments of the High Court set aside – Liberty given to the contractor to approach the Gujarat Public Works Contract Disputes Arbitration Tribunal – If the Tribunal is approached within 2 months from today, tribunal not to dismiss the claim on the issue of limitation and to decide the same on merits – Arbitration and Conciliation Act, 1996 – ss.2-43 and ss.9, 17 – Arbitration Act, 1940.
Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992 – ss.2(a), 3, 8(3), 9, 12, 13, 21 – Scheme of the Act – Discussed.
Arbitration and Conciliation Act, 1996 – ss.9, 17 – Held: s.9 empowers the Court to grant interim measures – However, s.9(3) clearly provides that once an arbitral tribunal is constituted, the Court shall not entertain an application u/s.9(1) unless the Court comes to the conclusion that such circumstances exist which would make the remedy u/s.17, which provides for interim measures to be granted by the arbitral tribunal, not efficacious. Arbitration and Conciliation Act, 1996 – Applicability of Part I of the Act to arbitrations carried out under any other enactment – Held: Part I of the Act i.e. from s.2 to s.43 deals with Arbitration and s.2(2) clearly states that the said Part would apply to all Arbitrations which take place in India – s.2(4) makes it clear that other than ss.40(1), 41 and 43, Part I of the Act shall apply to all arbitrations even if they are carried out under any other enactment as if the arbitrations were pursuant to an arbitration agreement except insofar as the provisions of Part I are inconsistent with the other enactment or any rules made thereunder.
Disposing of the appeals, the Court
HELD: 1.1 Section 9 of the Arbitration and Conciliation Act, 1996 empowers the Court to grant interim measures. However, Section 9(3) clearly provides that once an arbitral tribunal is constituted, the Court shall not entertain an application under Section 9(1) unless the Court comes to the conclusion that such circumstances exist which would make the remedy under Section 17 not efficacious. Section 17 of the A&C Act provides for interim measures to be granted by the arbitral tribunal. Part I of the A&C Act i.e. from Section 2 to Section 43 deals with Arbitration and Section 2(2) clearly states that the said Part would apply to all Arbitrations which take place in India. Section 2(4) makes it absolutely clear that other than Section 40(1), 41 and 43, Part I of the A&C Act shall apply to all arbitrations even if they are carried out under any other enactment as if the arbitrations were pursuant to an arbitration agreement except insofar as the provisions of Part I are inconsistent with the other enactment or any rules made thereunder. A plain reading would show that the provisions of Part I of the A&C Act would apply to all arbitrations where the place of arbitration is within India. Even statutory arbitrations under other Acts would be governed by Part I. The only exception is that if there is any departure from Part I in the special enactment then the special enactment will prevail and the A&C Act will give way to the special enactment. [Paras 12, 13 and 15][787-D-E; 788-F-H; 789-A]
1.2 Reference and procedure of the Tribunal is governed by Chapter 3 of the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992. Section 8 provides that where any dispute within the meaning of the said Act, arises between the parties, the said dispute shall be referred to arbitration under the said Act whether the agreement in question contained an arbitration clause or not. Basically, the intention of the State Legislature was that all disputes relating to works contract between the State Government and the persons executing the works defined as works contract would be compulsorily referred to the Arbitral Tribunal constituted under Section 3 of the Gujarat Act. Section 8(3) clearly provides that where the Tribunal admits a reference under sub-section (2) it will make an award or an interim award giving its reasons thereof. This Section recognizes the power of the Tribunal to make interim awards. However, the Tribunal took a view that an interim award could not be in the nature of an injunction. The practice and procedure of the Tribunal is governed by Section 9 of the Act. Section 12 of the Act vests revisional powers in the High Court of Gujarat where an award or any interim award can be challenged on the grounds set out therein. The High Court also has suo motu powers in this regard. Section 13 specifically bars the jurisdiction of the Civil Courts. This clearly means that powers vested in a Civil Court under the A&C Act, such as the powers to grant interim relief in terms of Section 9 of the A&C Act and the powers for setting aside an award under Section 34 of the Act cannot be exercised by Civil Courts insofar as the awards made under the Gujarat Act are concerned. As far as Gujarat Act is concerned, the power to set aside/modify an award is vested in the High Court under Section
12. The appropriate remedy for the contractor was to approach the arbitral tribunal constituted under the Gujarat Act since that would have jurisdiction to decide whether the notice issued by the Government was a legal notice and whether the Government was, in fact, entitled to recover any amount from the contractor. It would also be within the jurisdiction of the Tribunal to decide whether the contractor has made out a prima facie case for grant of interim relief. The Court is purposely not going into the merits of the case because once it is held that the Tribunal has the jurisdiction to entertain and adjudicate upon the dispute it would not be proper to make any comments on the merits. [Paras 1618][789-B-E, H; 790-A, C-E]
1.3 On a conjoint reading and a careful analysis of the Acts together, the Court is of the view that insofar as the powers vested in the Arbitral Tribunal in terms of the Section 17 of the A&C Act are concerned, such powers can be exercised by the Tribunal constituted under the Gujarat Act because there is no inconsistency in these two Acts as far as the grant of interim relief is concerned. This power is already vested in the tribunal under the Gujarat Act and Section 17 of the A&C Act compliments these powers and therefore it cannot be said that the provisions of Section 17 of the A&C Act are inconsistent with the Gujarat Act. The judgments of the High Court of Gujarat are set aside. However, liberty is given to the contractor(s) to approach the Gujarat Public Works Contract Disputes Arbitration Tribunal and if the Tribunal is approached within 2 months from today, the tribunal shall not dismiss the claim on the issue of limitation. It shall decide the same on merits. [Paras 21, 22][793-D-G] Gangotri Enterprises Limited v. Union of India and Others (2016) 11 SCC 720 : [2016] 2 SCR 1074 – held per incuriam.
State of Karnataka vs. Shree Rameshwara Rice Mills, Thirthahalli (1987) 2 SCC 160 : [1987] 2 SCR 398; Union of India v. Raman Iron Foundry (1974) 2 SCC
231 : [1974] 3 SCR 556; H.M. Kamaluddin Ansari & Co. v. Union of India (1983) 4 SCC 417 : [1983] 3 SCR 607 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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