(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) Heard learned counsel Shri Mihir Thakore for the appellant and Shri J.R. Nanavati for the respondent on caveat. We would prefer to give brief reasons for the ultimate order that we propose to pass.
The appellant was awarded a contract for construction of earthen canal work by the respondent Sardar Sarovar Narmada Nigam Ltd.(here-in-after referred to as "SSNL") under work order dated 20.4.2011. Period for completion of work was 18 months. After awarding of the contract since the progress of the work was not satisfactory, series of letters were exchanged between the parties. It is the case of the appellant that slow progress of work was due to reasons beyond the control of the appellant and in fact such reasons included non availability of land for construction of the canal as well as non availability of borrow area from where soil had to be brought for construction of the canal. On the other hand case of the SSNL is that the appellant contractor achieved little progress despite availability of land.
On 10.2.2012, SSNL wrote to the appellant indicating that the performance of the appellant was very poor. During the review meeting with SSNL officials, representative of the appellant company had assured to gear up the work within 15 days. Appellant was therefore, instructed to increase the man power and make proper planing to achieve required progress to complete work in time limit. Appellant wrote to SSNL on 11.2.2012 and insisted on being handed over encumbrance free borrow area as well as land for construction of canal.
Eventually on 27.2.2012, SSNL wrote a detailed letter to the appellant giving details of the slow progress in work. It was pointed out that 50% of the work was to be completed within 55% of the contract period. Till the date of the letter, the contractor had completed work worth Rs.1.41 crore as against the total contract amount of Rs.298 crores. Case of the SSNL thus was that the contractor had completed only 0.4% of the work. In the said letter therefore, SSNL called upon the contractor to show cause why the contract should not be terminated.
In response to such notice, appellant replied under letter dated 7.3.2012 and resisted the proposal on various grounds.
At that stage, the appellant approached the District Court under Section 9 of the Arbitration and Conciliation Act, 1996( 'the Act of 1996' for short) and prayed for interim injunction. The prayer in Civil Misc. Application No.28/2012 that the appellant filed was to restrain the respondent from acting upon or giving effect to the said letter dated 27.2.2012 until the dispute redressal mechanism provided under the contract was exhausted and for three months thereafter.
In response to such Civil Misc. Application filed by the appellant, respondent appeared before the District Court and raised preliminary objection with respect to the jurisdiction of the District Court to entertain such an application. SSNL filed an application at exh.7 and contended that the appellant can file arbitral proceedings before the Tribunal constituted under the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992("the Gujarat Act of 1992" for short). SSNL relied on clauses 59, 60 and 61 of the contract as also the provisions of the Gujarat Act of 1992 to contend that Section 9 of the Act of 1996 would not apply since the arbitral proceedings which the contractor can institute are not those envisaged under Section 9 of the said Act.
This objection of the SSNL was upheld by the learned District Judge. He therefore, dismissed the Civil Misc. Application No.28/2012 filed by the appellant by impugned order dated 23.3.2012. It is this order that the appellant has challenged in the present appeal.
Counsel for the appellant Shri Mihir Thakore submitted that the parties having agreed under the contract to approach the tribunal constituted under the Gujarat Act of 1992, any such proceedings would have to be considered as those instituted under the Gujarat Act of 1992. He therefore, submitted that section 9 would apply in the present case.
Counsel pointed out that even before approaching the tribunal under the Gujarat Act of 1992, the parties have to resort to dispute redressal mechanism envisaged under the contract which provides for a minimum period of 150 days before the parties can approach the tribunal.
It was additionally contended that by virtue of section 2(4) of the Gujarat Act of 1992, section 9 which is contained in part-I, would apply since there is nothing inconsistent in the Gujarat Act of 1992 with such provision contained in section 9.
Counsel further submitted that irreparable damage would be caused to the appellant, if injunction as prayed for is not granted. He submitted that progress was slow due to the reasons attributable to SSNL. Possession of land was not made available either for construction of canal or for bringing earth from the borrow area.
Counsel further submitted that the appellant has given huge amount of guarantee which would be encashed, if the contract is allowed to be terminated. He stated that there is further possibility of the appellant being blacklisted. He therefore, submitted that in terms of section 14 of the Specific Relief Act, 1963, the Court should grant injunction as prayed for.
On the other hand learned counsel Shri J.R. Nanavati for the respondent SSNL submitted that arbitral proceedings referred to in section 9 are only those which arise under the Act of 1996. He referred to several statutory provisions to support such a contention.
He further submitted that parties having agreed to approach the tribunal constituted under the Gujarat Act of 1992, any such arbitral proceedings would not be those arising under the Act of 1996.
Shri Nanavati further submitted that no case for granting interim injunction is made out. Progress achieved by the contractor was dreadfully slow despite full cooperation from SSNL. Land was acquired and were made available. In any case such issues cannot be gone into at this interim stage.
We are of the opinion that First Appeal is required to be admitted. Primarily, the question would be whether by virtue of clauses 59, 60 and 61 and the dispute redressal mechanism provided under the contract, even if the appellants were to approach the tribunal constituted under the Gujarat Act of 1992, would such arbitral proceedings not be those instituted under the Act of 1996?
With respect to the interim injunction, however, we are of the opinion that no case for grant of such injunction is made out.
Prima facie, we are of the opinion that SSNL has only issued show cause notice and called upon the appellant to respond to the proposal of termination of the contract. The appellant is yet to be heard. The competent authority of SSNL is yet to take a final decision with respect to such a proposal. Even otherwise, normally Courts would not grant specific performance of the contract for construction work. It is of-course true that Section 14(3) of the Specific Relief Act carves out exception to this general rule and provides that Court may enforce specific performance for enforcement of a contract for the construction of any building or the execution of any other work on land. However, same is hedged with three conditions provided in proviso to clause(c) of sub-section(3) of section 14 which read as under :
"Provided that the following conditions are fulfilled, namely:-
(i) the building or other work is described in the contract in terms sufficiently precise to enable the court to determine the exact nature of the building or work;
(ii) the plaintiff has a substantial interest in the performance of the contract and the interest is of such a nature that compensation in money for non-performance of the contract is not an adequate relief; and
(iii) the defendant has, in pursuance of the contract, obtained possession of the whole or any part of the land on which the building is to be constructed or other work is to be executed."
In the present case, it cannot be stated that if no injunction is granted, irreparable loss would be caused to the appellant which cannot be compensated in terms of money. If ultimately the contract is terminated, the appellant is prevented from executing the work and if it results into damage or loss, surely, proceedings as may be available under the law can be instituted for recovery of such damage or loss. Equally question would arise with respect to irreparable injury that may be caused to the respondent if such injunction is granted. After granting injunction ultimately, if it is found that the appellant contractor was solely responsible for not completing the work despite full cooperation from SSNL, in the meantime, construction work of canal would suffer and execution of work would be further delayed. Loss resulting from such further delay would not be possible to be compensated in terms of money since the construction of canal is not for the benefit of SSNL but for providing water for drinking as well as irrigation to dry areas.
In the result, appeal is admitted. Civil Application for stay is dismissed.
(Akil Kureshi,J.) (C.L.Soni,J.) (raghu) Top