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Allahabad High Court
M/S B. Agarwal Stone Products … vs U.P. Rajya Vidyut Utpadan Nigam … on 28 January, 2010

                                                                    Court No. 1

Writ Petition No. 456 (MB) of 2010
M/s B. Agarwal Stone Products Limited
U.P. Rajya Vidyut Utpadan Nigam Limited
and another.

Hon'ble Pradeep Kant, J.

Hon’ble Ritu Raj Awasthi, J.

Heard the counsel for the petitioner Sri S.M.K. Chaudhary, learned
Senior Advocate, assisted by Sri Rahul Srivastava and Sri Anil Saran for the

A preliminary objection has been raised by Sri Anil Saran that
cancellation of the contract is covered by the arbitration clause under the
agreement and, therefore, the writ petition straightaway is not maintainable.

He further says that the petitioner has already approached for
arbitration in respect of certain claims.

Sri S.M.K. Chaudhary says that the appointment of Arbitrator has been
made with respect to certain claims, where the order of cancellation of
agreement is not in dispute. Meeting the objection of the respondents, learned
counsel submitted that the petitioner was granted contract for rock blasting in a
particular area, which belonged to U.P. Rajya Vidyut Utpadan Nigam Limited
itself, for which agreement was entered into on 9.11.08.

The work was to be completed within six months i.e. upto 19.5.09. On
2.7.09, ‘no objection certificate’ was given by the District Magistrate but that
was subject to removal of huts and residents of that place.

Leaving other facts, suffice it would be to mention that the work could
not be completed within time provided under the agreement and, therefore, by
means of the impugned order dated 4.1.2010, the contract has been cancelled.

The petitioner’s case is that it cannot be held responsible or guilty in
delay of the project for the simple reason that the area in question was occupied
by the huts and residents of that place and unless ‘no objection certificate’ was
granted by the District Magistrate, the petitioner could not have undertaken the
work, a factor which was very well known to the Nigam also and, therefore,
firstly the period of six months could have been granted with effect from 2.1.09
and thereafter consideration should also have been made to the order passed by
the Executive Engineer, restraining the petitioner from undertaking the work.
The prayer for extension of time was also not considered by the respondents.

In nutshell, the sum and substance of the petitioner’s argument is that it

was not the fault of the petitioner, because of which the work could not be
completed within the time prescribed but, as a matter of fact, Nigam was
responsible for the delay and that for such default, their agreement of contract
could not have been cancelled.

The pleas aforesaid, may be the pleas, which can be taken before the
appropriate forum but we are of the considered opinion that in a matter of
contract, which is private in nature and not statutory, where the breach of any
of the terms of the contract, is alleged or pleaded by either parties, if there is a
provision for arbitration under the agreement, the parties are to be relegated to
the remedy of arbitration, unless, of course, there are some exceptional reasons
for entertaining the petition under Article 226.

What were the terms of the contract under the agreement, how the
contract was to be executed, which parties are at default and for whose default
work could not be completed within time, are such questions which require
evidence to be led and can be more appropriately be looked into by the
Arbitrator. The High Court under Article 226 cannot allow the parties to lead
evidence in this regard, particularly when the matter arises out of contract.

We, under the circumstances, do not find any reason to bye-pass the
remedy of Arbitration under the terms of the contract, as otherwise also, parties
are bound by the terms of the agreement and if there any such dispute,
approach can be made for appointment of Arbitrator.

Sri S.M.K. Chaudhary in the alternative, also argued and greatly
emphasized that removal of the huts and the residents was not part of the
contract/agreement and, therefore, this matter cannot be seen in Arbitration.

We have gone through the agreement and we find that Clause 3 deals
with ‘scope of work’, which reads as under:

“The work to be performed under this contract consists in
providing all labour, materials plants equipments temporary
work, constructional plant, fuel supplies, transportation,
compressed air and all incidental items not shown or
specified, but reasonably implied or necessary for the proper
completion of the work (except items specified to be furnished
by the purchaser or others) all in strict accordance with the
drawings. Schedules and specifications and including
revisions and amendments there to and such detailed
drawings as may be provided by the Engineer during the
Execution of work in explanation contract drawings.

This clause besides other works includes all incidental items nor shown
or specified and if the petitioner’s assertion is to be accepted that removal of the
huts/residents from the area in question was a must, then it would be an
incidental item for the purpose of contract and, therefore, prima facie, it does

look like that the matter does not fall within the terms of the agreement.

Even otherwise, Clause 12, which deals with Arbitration, clearly
provides as under:

“If any dispute, difference or controversy shall at any time arise
between the contractor on the one hand and the U.P. Rajya
Vidyut Utpadan Nigam Ltd. and the Engineer of the contract on
the other touching the contract or as to the true construction,
meaning and intent of any part of condition of the same or as to
the manner of execution or as to the quality or description or
payment for the same or as the true intent, meaning,
interpretation, construction or effect of the clauses of the
contract specifications or drawings or any of them or as to any
thing to be done committed or suffered in pursuance of the
contract or specifications or as to the mode of carrying the
contract into or as to the breach or alleged breach of contract or
as to obviating or compensating for the commission of any such
breach, or as to any other matter or thing whatsoever connected
with or arising of the contract and whether before or during the
progress or after the completion of the contract. Such question
difference or dispute shall be referred for adjudication to the
chairman U.P. Rajya Vidyut Utpadan Nigam Ltd. or to any other
person nominated by firm in this behalf and his decision in
writing shall be final binding and conclusive, the submission
shall be deemed to be a submission to arbitration within the
meaning of the Indian Arbitration Act, 1940 or any statutory
modification thereof. The arbitrator may from time to time with
consent of the parties enlarge the time for making in publishing
the award.”

It cannot be disputed that dispute had arisen with respect to the terms of
contract, for which the contract has been cancelled for not completing the work
within the time prescribed. All such disputes or questions which may be
relevant for the purpose from both the sides can very well adjudicated upon by
the Arbitrator.

The petition is dismissed, with liberty to the petitioner to approach the
Arbitrator, in case it has not already approached the Arbitrator for the purpose.

Dated: 28.1.2010

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