1. Heard Mr. Yagnik, learned A.G.P. for petitioners and Mr. Soparkar, learned Senior Counsel with Mr. Amar Bhatt, learned advocate for respondent.
2. In present petition, the petitioner has prayed, inter alia, that:
"8(B) Your Lordships be pleased to issue a writ of mandamus or any other appropriate writ or writ in the nature of certiorari or any other appropriate writ, order or direction, quashing and setting aside the impugned order dated 20.09.2010 passed in Arbitration Reference No.8 of 1998 passed by the learned Gujarat Public Works Contracts Disputes Arbitration Tribunal as well the order dated 03.08.2012 passed by the Learned Arbitral Tribunal;
(C) Pending the hearing, admission and final disposal of the present petition, Your Lordships may be pleased to stay of execution, implementation and operation of the impugned order dated 20.09.2010 passed in Arbitration Reference no.8 of 1998 passed by the Learned Gujarat Public Works Contracts Disputes Arbitration Tribunal, as well as the order dated 03.08.2012 passed by the Learned Arbitral Tribunal, in the interest of justice;
(D) Pending the hearing and final disposal of the present petition, Your Lordship may be pleased to stay SCA/12152/2012 2/15 ORDER the proceeding pending before the Learned Arbitral Tribunal, in the interest of justice;"
3. The relevant facts involved in and leading to submission of present petition are that the petitioner, a Department of State Government is engaged in development and control of irrigation and storage of water resources in the State.
4. The respondent is a Government Approved Contractor, who is engaged in the activities of executing Government Contracts including contract for Civil Construction work of dams, canals and structures of canals, etc. 4.1. Somewhere in January 1981, the respondent No.1 herein was awarded contract for construction of Earthen Dam, Masonry Dam, Spillway and Head Regulator for Jhuj Irrigation Scheme under agreement No.B2/1 of 1980-81. Pursuant to the execution of the said contract, work order was issued somewhere on or around 15.01.1981.
4.2. The contract period for conclusion of work was, as prescribed under the contract, was of 40 months and the estimated cost for the aforesaid work was Rs.3,53,24,194/-.
4.3. After some delay, the contract work is said to have been executed and completed somewhere in 1989. Upon completion of the work the contractor raised final bill for an amount of Rs.9,22,82,854/-.
submitted by the contractor, dispute and difference had arisen between the parties to the contract.
4.5. Therefore, proceedings under Section 8 of Arbitration Act, 1940 were initiated somewhere in 1986. At the relevant time, since the provisions in the contract provided for appointment of Arbitrator under agreement between the parties as to the name of the arbitrator, one Shri K.S.Chandrashekhar was nominated as the arbitrator.
4.6. According to the parties to present petition the proceedings Arbitration commenced somewhere in 1986. While the proceedings were pending before the above named arbitrator, he retired from service and since he believed that his appointment was by reason of his post, he also vacated the office as arbitrator.
4.7. Thereafter, the petitioners did not nominate any other person as the arbitrator and that therefore claimant i.e. present respondent moved an application before the Court for appointment of arbitrator in place of said Mr. Chandrashekhar. After hearing the parties, the Court appointed Hon'ble Mr. Justice P.M.Chauhan (Retd.) as the arbitrator for the said proceedings.
4.8. While the proceedings before the arbitrator were pending, the State Government promulgated ordinance of 1992. Thereafter the Gujarat Public Works Contracts SCA/12152/2012 4/15 ORDER Disputes Arbitration Tribunal Act, 1992 (hereinafter referred to as 'the Act') came to be passed and Gujarat Public Works Contracts Disputes Arbitration Tribunal came to be constituted for adjudication of the disputes related to the works contracts.
4.9. The details for the period from 1992 (when the Tribunal came to be constituted) until 1996, are not available on record and are not clear from the record. It, however, emerges from the submission of learned counsel for the parties that after about 4 months somewhere in July 1996 the learned arbitrators referred the matter to the learned Tribunal constituted under the Act.
4.10.The parties have submitted that the proceedings remained pending before the learned Tribunal from July 1996 to 19th September 2010.
4.11.Thereafter, in view of the decision by the Apex Court in case of V.A.Tech Escher Wyas Floval Ltd. v. Madhya Pradesh State Electricity Board [2010 Arb. W.L.J.- 116 (SC)], the parties to the aforesaid dispute jointly submitted a Pursis requesting the Court that in view of the said decision, the arbitration case (which was registered as Reference No.8/1998) may be disposed of and the proceedings may be closed/terminated as the proceedings would not be maintainable before the learned Tribunal constituted under the Act.
4.12.In view of the said joint request/Pursis jointly SCA/12152/2012 5/15 ORDER submitted by the parties, the learned Tribunal passed order dated 20.9.2010 whereby the said reference case came to be disposed of as not maintainable in light of the aforesaid judgment by the Apex Court. The said order dated 20.09.2010 reads thus:
"The Learned advocate for the parties sbmitted that this case is squarely covered by the judgment of the Hon'ble Supreme Court in case of V.A.Tech Escher Wyas Floval Ltd. v. M.P.S.E. Board & Anr. Reported in 2010 Arb. W.L.J. 116 (SC), and agreed that this case be disposed of in terms of the aforesaid judgment of the Hon'ble Supreme Court as the present Reference is not maintainable before this Tribunal. In view of the above, this Reference is disposed of in terms of aforesaid judgment. Parties are at liberty to avail any other alternative remedies available to them under any provisions of other Acts or laws."
4.13.Thereafter, the claimant i.e. present respondent nominated one Shri A.B.Desai as arbitrator and under its communication dated 3rd June 2011 and 10th June 2011 present petitioner nominated Hon'ble Mr. Justice H.H.Mehta (Retd.) as Nominee Arbitrator.
4.14.On 14th June 2011 or there about the learned Arbitrators appointed Hon'ble Mr. Justice G.T.Nanavati (Former Judge, Supreme Court of India) as Presiding Arbitrator.
4.15.It was somewhere on or around 8th July 2011 that the learned Arbitrators entered into reference and the first Preliminary meeting was held on 8th July 2011. The proceedings appear to have been adjourned from time to time inasmuch as 2nd meeting was held on 26th November, 3rd meeting was held on 9th March 2012, 4th Meeting was held on 23rd March 2012. While 5th and 6th SCA/12152/2012 6/15 ORDER meetings were held on 24th March 2012 and 9th June 2012.
4.16.Subsequently, in view of the judgment in case of Madhya Pradesh Rural Development Authority and Another v. M/s. L.G.Chaudhary Engineer and Const. (2012(3) SCC
495) the petitioners herein submitted an application before the learned Arbitrators that in view of the judgment in case of Madhya Pradesh Rural Development Authority (supra) and requested that the hearing/proceedings may be adjourned. In the said application the petitioner stated, inter alia, that:
"3. I am informed by Executive Engineer, Jhuj Project Canal Division, Vansda by his letter No.JPCD/A.B./Amar-Co dated 04.07.2012, referring the letter of Government of Gujarat, that it was decided by the Government of Gujarat, that until the final decision is taken by the Hon'ble Supreme Court of India regarding the some divergence of decision of M.R.R.D.A. (supra) it was informed all concern Officers/Department to request the Hon'ble Tribunal not to proceed further in the matter and also informed the concern Officers/Department to apply to the concern Arbitral Tribunal to adjourn the hearing of the matter.
4. In view of above circumstances, the Reference No.8 of 1998 filed before the Tribunal was disposed of in view of order passed in Va Tech (supra). However, the decision of Va Tech (supra) has been rendered in "per incurim" in the case of M.P.R.R.D.A.(supra). The decision of M.P.R.R.D.A. Is referred to Larger Bench of Hon'ble Supreme Court of India and it is pending for final decision."
4.17.After considering the said application, the learned Arbitrators passed order dated 3rd August 2012 holding, inter alia, that the proceedings are maintainable before the learned Arbitrators and the Tribunal would not have jurisdiction to entertain and adjudicate the dispute which was pending by way of reference before them.
SCA/12152/2012 7/15 ORDER 4.18.Aggrieved by the said order dated 3rd August 2012, petitioners have taken up present petition.
5. The learned A.G.P. appearing for petitioners has, at the time of hearing of present petition, relied on order dated 21.08.2012 passed by the Division Bench in Letters Patent Appeal No.953 of 2012. The said order reads thus:
"Leave to add Shri N.Ramaswamy, sole arbitrator as party respondent.
Learned Advocate General Mr. Trivedi relies upon the decision of the Apex Court in the case of Madhya Pradesh Rural Road Development Authority and Another Vs. L.G. Chaudhary Engineers and Contractors, reported in (2012)3 SCC 495, whereby the earlier decision of the Apex Court in the case of Vatech Escher Wyass Flovel Limited Vs. Madhya Pradesh State Electricity Board and Another reported in (2011)13 SCC 261 is held to be per incuriam. But, on the another point, about works contract, since there was dissenting view, the matter is referred to the larger bench. As per the view expressed by the Apex Court in the case of Madhya Pradesh Rural Road Development Authority (supra), for which there was no different view amongst the Hon'ble Judges who were on the bench, such disputes can be tried by the statutory Tribunal.
Hence, Appeal admitted. To be placed for final hearing on 12th September 2012.
ORDER IN CIVIL APPLICATION NO.9316 OF 2012:
Draft amendment granted.
Leave to add Shri N. Ramaswamy, sole arbitrator as party respondent.
RULE returnable on 12th September 2012.
By ad-interim order, the proceedings before the sole arbitrator- newly added party shall remain stayed and suspended."
5.1. In view of the said order, the learned A.G.P. has submitted that the facts of present case are similar to the facts involved in the said L.P.A., inasmuch as SCA/12152/2012 8/15 ORDER in the said matter also the proceedings before the learned statutory Tribunal under the Act were terminated at the joint request-application by the parties and thereafter the proceedings were placed before the Arbitrators nominated by the parties. Relying on the said order the learned A.G.P. has submitted that the petition may be admitted and further proceedings may be stayed.
5.2. Mr. Soparkar, learned Senior Counsel with Mr. Bhatt, learned advocate for respondents has opposed the request for interim relief. He has submitted that since 1986 the dispute is pending between the parties and both parties have been relegated from one forum to another inasmuch as initially the parties were before the Arbitrators nominated in accordance with the arbitration clause in the contract (i.e. before the arbitrators nominated by the parties) and thereafter on constitution of the learned Tribunal, under the Act after proceeding of almost 10 years before the Arbitrators, the proceedings came to be transferred to the learned Tribunal in 1996. He also submitted that from 1996 until 20.09.2010 the proceedings remained pending before the learned Tribunal constituted under the Act. There also the proceedings were not concluded and subsequently in view of the decision in V.A.Tech Escher (supra) the proceedings came to be terminated and now since October 2010 onwards the parties are before the learned Arbitrators nominated by the parties. Mr. Soparkar also submitted that almost 8 meetings by the learned Arbitrators have been held and the proceedings have now reached the stage of SCA/12152/2012 9/15 ORDER conclusion, inasmuch as the arguments from the side of claimants i.e. present respondent are concluded and the proceedings before the arbitrators are pending only for hearing the arguments on part of the petitioners and for rendition of award.
6. Having considered the factual details in which the proceedings are placed before this Court, at this stage, it is clear that some of the facts are very peculiar to the case inasmuch as the proceedings are pending since last about 24 years and the parties to the proceedings have been relegated from one forum to another.
6.1. The learned A.G.P. has contended that under Section 16 of Arbitration Act, 1996 the learned Arbitrators could not have pronounced decision about the jurisdiction of the learned Tribunal constituted under the Act of 1992.
6.2. In view of said contention and also in view of the judgment by the Hon'ble Apex Court in case of Madhya Pradesh Rural Development Authority (supra) and in view of the fact that an appeal involving similar issue is pending before the Hon'ble Division Bench, the petition deserves to be admitted.
7. However, the question as regards interim relief arises.
8. The said aspect is required to be considered in light of aforesaid peculiar facts, more particularly, the aspects related to the time consumed in SCA/12152/2012 10/15 ORDER proceedings until now and the fact that at the relevant time the learned Tribunal terminated the proceedings in light of the decision by the Apex Court in V.A.Tech Escher (supra) and thereafter the parties nominated learned Arbitrators for conducting the proceedings and the parties have proceeded before the learned Arbitrators and the proceedings have progressed substantially.
9. The learned A.G.P. has also submitted that the learned Arbitrators are proceeding with the hearing and the further hearing is scheduled to be fixed on 22nd October 2012, 23rd October 2012 and 27th October 2012 and that therefore appropriate order staying the said proceedings may be passed.
9.1. So as to justify the said request he also submitted that the petitioners have to incur cost to the extent of about Rs.70,000/- to Rs.1,00,000/- per hearing and that therefore also the proceedings may be stayed until the Larger Bench of the Apex Court passes order upon reference made pursuant to the judgment in case of Madhya Pradesh Rural Development Authority (supra).
10. It is pertinent that after the decision in case of V.A.Tech Escher (supra) the parties to the dispute had submitted joint application/request to the learned Tribunal to terminate the proceedings. It was in view of the joint request by both the parties that the proceedings came to be terminated.
SCA/12152/2012 11/15 ORDER 10.1.It is also pertinent that thereafter the
petitioners also nominated its own nominee arbitrator and participated in the proceedings and continued to do so until the decision in case of Madhya Pradesh Rural Development Authority (supra) came to be passed.
10.2.The said judgment is passed by the Hon'ble Apex Court in January 2012 and present petitioners submitted the adjournment application to the learned Arbitrators on or around 11th July 2012. The learned Arbitrators passed the order on the said application on 3rd August 2012 and present petition came to be filed on or around 27th August 2012. The petition was circulated for fresh/first hearing on 11th September, 2012.
10.3.In the interregnum, almost 8 meetings have been held by learned Arbitrators and, as jointly submitted by the parties, the proceedings are on verge of conclusion, inasmuch as the claimant has already concluded their arguments.
11. Ordinarily, while considering the issue regarding interim relief the Court would take into account the well recognized principles viz. strong prima facie case, balance of convenience and irreparable injury.
11.1.In present case, the respondent would contend that balance of convenience and irreparable injury is overwhelmingly in its favour.
12. However, the matter on hand is required to be SCA/12152/2012 12/15 ORDER considered in light of the subsequent decision by the Hon'ble Apex Court and also in view of the fact that one of the points arising from the judgment is referred to Larger Bench of the Apex Court. In such circumstances, the said three well recognized principles alone cannot be the criterion for determining the issue of interim relief but the decision by the Hon'ble Apex Court has also to be taken into consideration.
12.1.At the same time, in view of peculiar facts, equities have to be balanced and maintained.
12.2.It is also necessary to ensure that irreversible situation may not arise.
13. On this count, the learned Senior Counsel for the respondent i.e. claimant would submit that so far as the petitioners' anxiety of the cost is concerned, for the forthcoming meetings the claimant will bear the expenses and at the end of the proceedings the claimant will abide by the directions as regards the cost that may be finally passed.
13.1.The learned Senior Counsel also submitted that the learned Arbitrators may proceed further to conduct the meetings and parties may conclude the arguments and the proceedings may also be concluded and the learned Arbitrators may be directed to submit, without disclosing to the parties, the final award in a sealed cover on the record of present petition and it may be made subject to the final orders that may be passed by SCA/12152/2012 13/15 ORDER the Court.
14. After considering the relevant aspects it appears to this Court that so far as the principal and substantial issue is concerned, since Letters Patent Appeal being L.P.A.No.953 of 2012 is pending, present petition may also be placed before the Hon'ble Division Bench and present petition also may be considered along with the said L.P.A.No.953 of 2012 since similar facts and issues are involved in present matter as well.
14.1.Therefore, the Court inquired with learned advocates for the contesting parties and Mr. Yagnik, learned A.G.P. for petitioners and Mr. Bhatt, learned advocate for respondent - claimant submitted that they do not have any objection if the Court considers it appropriate to place the matter before the Hon'ble Division Bench for final hearing along with pending L.P.A.No.953 of 2012.
15. In this factual backdrop, and on overall consideration of the above mentioned aspects including the fact that:-
(a) almost 24 years have passed since the dispute and difference arose between the parties and the proceedings are pending; and
(b) the proceedings and the parties have travelled from one forum to another during said 24 years; and SCA/12152/2012 14/15 ORDER
(c)the proceedings before the learned Tribunal came to be terminated in September 2010 pursuant to joint request made by both parties to terminate the proceedings in view of the decision by the Hon'ble Apex Court in case of V.A.Tech (supra); and
(d) since 2010 the proceedings are pending and have continued before the learned Arbitrators and now the proceedings are on verge of conclusion, it appears appropriate that the further proceedings which are scheduled to take place on 22nd October 2012, 23rd October 2012 and 27th October 2012 may not be stayed and may be allowed to continue with a rider and condition that after conclusion of the hearing/proceedings the learned Arbitrators will not proceed to prepare, complete, pass and sign and declare/pronounce the award in respect of the subject proceedings until any other and further order including interim direction, is passed by the Hon'ble Division Bench so that if ultimately the Court comes to the conclusion that the proceedings before the learned Arbitrators are maintainable and it can continue then further delay may not be caused and, on the other hand, if the Court comes to the conclusion that the proceedings should be placed before the learned Tribunal constituted under the Act and learned Arbitrators do not have any jurisdiction in the matter then the decision of the learned Arbitrators may not stand in way of the parties to the proceedings and any equities, rights etc. may not be created.
16. Therefore below mentioned order is passed.
SCA/12152/2012 15/15 ORDER 17. Rule returnable on 7th November 2012. Mr.Amar
Bhatt, learned advocate for respondent waives service of notice of rule.
18. Subject to the order by the Hon'ble the Chief Justice, the petition may be placed before the Hon'ble Division Bench where Letters Patent Appeal No.935 of 2012 wherein similar issue is being considered by the Hon'ble Division Bench.
18.1.Until the Hon'ble Division Bench passes any other and further order, learned Arbitrators will not proceed to prepare, complete, finalize, pass and sign and declare/pronounce the interim and/or final award in respect of the subject proceedings.
18.2.However, as per present schedule the meetings for further hearing which are to be held on 22nd October 2012, 23rd October 2012 and 27th October 2012 may be held, but subject to aforesaid condition.
18.3.If the hearing is not concluded on 27th October 2012 then in that event further dates of hearing will not be fixed by the learned Arbitrators until the further orders by the Hon'ble Division Bench.
(K.M.THAKER, J.) jani