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IAAP/92/2009 12/ 12 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
PETN.
UNDER ARBITRATION ACT No. 92 of 2009
For
Approval and Signature:
HONOURABLE
MR.JUSTICE M.R. SHAH
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1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To
be referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge?
===========================================
SAI
CONSULTING ENGINEERS PVT LTD - Petitioner(s)
Versus
GUJARAT
WATER INFRASTRUCTURE LTD & 1 - Respondent(s)
===========================================
Appearance :
MR
PARESH M DAVE for
Petitioner(s) : 1,
MR HS MUNSHAW for Respondent(s) : 1 -
2.
===========================================
CORAM
:
HONOURABLE
MR.JUSTICE M.R. SHAH
Date
: 05/02/2010
ORAL
JUDGMENT
1. Present
Petition under Section 11(6) of the Arbitration and Conciliation Act,
1996 has been preferred by the petitioner for an appropriate order to
appoint sole Arbitrator or Arbitrators for deciding the disputes and
differences that have arisen between the parties as regards Work
Order / Contract dated 05.09.2002.
2. That
the Government of Gujarat decided to implement an ambitious project
estimated to cost Rs.4700 Crores for supply of drinking water to
Saurashtra, Kachchh, North Gujarat and Panchmahals covering 8215
villages and 135 urban centers. That as it was major project
requiring hi-tech engineering and management inputs in the field of
water supply, civil engineering, mechanical engineering, electrical
and electronic engineering, project finance, project management,
operational management etc., it was resolved by Government of Gujarat
to create and establish a company to be named as ‘Gujarat State
Drinking Water Infrastructure Company Limited’ under the provisions
of the Companies Act, 1956. That said Company was registered as
Government company with the Registrar of Companies at Ahmedabad under
the provisions of the Companies Act, 1956. That said Company had
ownership pattern by way of equity participation initially to the
extent of 49.5% from the Government of Gujarat, 49.5% from the
Gujarat Water Supply and Sewerage Board. That respondent Company to
achieve ultimate goal of implementing the said project for supply of
drinking water was in need of consultant / consultancy services for
obtaining Right of User (ROU) under the Gujarat Water and Gas
Pipeline Act, 2000. Therefore, contract / agreement was entered into
between the petitioner and respondent no.1 for consultancy services
for undertaking work ROU under the aforesaid Act for laying
transmission pipelines. Scope of services to be rendered by the
petitioner was :
To
collect village records 7/12, record of rights form no.6 and village
form 8A.
To
obtain sales statistics of concerned villages for last 5 years &
other related information.
To
prepare detailed map after completion of fieldwork and mark on the
map survey number, record measurements and design in ROU strip of 30
meters.
(a) To
prepare notice u/s. 3(1) and serve them as per Rules and Act.
(b) To
prepare and serve notices to persons who have taken objections
against notification of section 3(1).
To
prepare notice u/s. 6(1) and serve them as per Rules and Act.
To
prepare Compensation Award u/s. 10 and serve them to every person
and before issuing cheques (payment) notice is to be served to
concerned persons i.e. legal owner or occupier of land as per
concerned village revenue record and to maintain records there of.
All
notices to be prepared and served to the land owners / concerned
persons as per Act and Rules.
All
correspondence to be done as per instruction of CA.
To
obtain ROU under Gujarat Water and Gas Pipelines (Acquisition of
Right of User in land) Act 2000.
To
assist CA in all formalities under the Act & Rules, CA will be
provided with a jeep with a good driver.
To
prepare estimates for properties, crops & other damages incurred
based on measurements supplied by owner.
To
prepare all relevant papers on behalf of GWIL.
To
ensure legal status of ROU in relevant revenue records after
notification u/s. 6(1).
3. It
is the case on behalf of the petitioner that pursuant to the above
contract and works, the petitioner started the works immediately and
the petitioner has completed the works also. However, during the
course of execution of the works, a lot of delay intervened because
of numerous reasons attributable to the respondents herein and
consequently the time for completing execution of these works had to
be extended from time to time. That above work has been completed by
the petitioner by 05.03.2008 and final bill for the work was also
submitted by the petitioner on 28.09.2006 and 28.10.2007 and final
bill has also been paid by respondent Company on 02.04.2008. It is
the case on behalf of the petitioner that during the above period
when extension had to be allowed by the respondent Company and
execution of the works by the petitioner was going on, the petitioner
had brought to the notice of the respondents that huge losses and
financial damage was suffered by the petitioner in view of escalation
in overhead expenses, compensation for bank guarantee commission,
loss of profit since the petitioner’s resource were held up for the
works in question, unproductive expenses like salaries paid to the
idling staff etc. and the petitioner had also referred to such
factors while writing letters for extension in time for executing the
works. It is the case on behalf of the petitioner that even after
completion of the work, the petitioner had requested the respondents
to bear the burden of loss and damages caused by them to the
petitioner and it was also brought to the notice of the respondents
that loss and damages to the tune of Rs.1.20 Crores were caused to
the petitioner and the amount would be over Rs.1.70 Crores when
interest on such loss and damages was also considered. It is the
case on behalf of the petitioner that by letter dated 23.04.2008,
19.05.2008, 05.06.2008 and 04.07.2008 aforesaid subject was discussed
by the petitioner and requests were made to the respondents for
paying the above amounts. It is the case on behalf of the petitioner
that though all the above letters were received by respondents but
there was no response from them. It is the case on behalf of the
petitioner that even thereafter, as there was no response and in view
of persistent follow-up by the petitioner, ultimately the respondent
invited the petitioner for discussion on 24.07.2008 and the
petitioner attended the said meeting held on 24.07.2008 but
responsible officers of the respondent Company did not attend the
meeting, therefore, another meeting was decided to be held for the
said purpose. Meeting thereafter fixed for 02.08.2008 was postponed
by the respondents and thereafter, no further attempt was made by the
respondents to resolve petitioner’s grievance. It is the case on
behalf of the petitioner that thereafter petitioner served upon
respondent specific notice dated 14.08.2008 invoking section 11 of
the Arbitration and Conciliation Act, 1996 with regard to the works
in question nominating their Arbitrator. However, neither there was
any reply to the said notice nor respondents nominated any person as
their Arbitrator and therefore, petitioner has preferred present
petition under Section 11(6) of the Arbitration and Conciliation Act,
1996 to appoint sole Arbitrator to resolve dispute between the
parties arising out of aforesaid contract.
4. A
preliminary objection is raised by the respondents with respect to
remedy available to the petitioner to approach Arbitration Tribunal
constituted under the Gujarat Public Works Contracts Disputes
Arbitration Tribunal Act, 1992 (herein after referred to as ‘the
Act’ for short).
5. Mr.Paresh
Dave, learned Advocate appearing on behalf of the petitioner has
vehemently submitted that as such looking to services to be provided
by the petitioner for which contract was executed between the
petitioner and respondent, it does not come within the definition of
‘ Works Contract’. Therefore, Tribunal constituted under
the aforesaid Act would not have jurisdiction to adjudicate and
resolve the dispute between the parties. It is submitted that ‘ works
contract’ is defined under section 2(1)(k) of the Act and as
per the Act for any dispute arising out of works contract ,
Tribunal constituted under the aforesaid Act would have jurisdiction.
It is submitted that as per section 2(1)(k) of the Act, ‘ Works
Contract’ means a contract made by the State Government or
the Public Undertaking with any other person for the execution of any
of its works relating to construction, repairs or maintenance
of any building or superstructure, dam, weir, canal, reservoir, tank,
lake, road, well, bridge, factory or workshop or of such other work
of the State Government, as the case may be, of the Public
Undertaking, as the State Government may, by Notification in the
Official Gazette specify. It is submitted that contract executed
by the petitioner and respondent and services rendered by the
petitioner does not fall within any of the work specified in the
definition of Works contract . It is submitted
that contract executed between the petitioner and respondent no.1 was
not for execution of works relating to construction, repairs or
maintenance etc. Therefore, it is submitted that this Court
would have jurisdiction to appoint sole Arbitrator / Arbitrators to
resolve the disputes arising out of the aforesaid contract and
Tribunal constituted under the aforesaid Act would not have any
jurisdiction.
6. Mr.Paresh
Dave, learned Advocate for the petitioner has heavily relied upon
decision of Madhya Pradesh High Court in the case of Bhilai
Castings and Forgings (P) Limited v/s. M.P.Electricity Board
reported in Manu/MP/1120/2006. It is submitted that in the case
before the Madhya Pradesh High Court when contract was for
manufacture and supply of steel with the Madhya Pradesh Electricity
Board and dispute arose between them for payment of money, Contractor
approached Arbitral Tribunal constituted under the Madhyastham
Adhikaran Adhiniyam, 1983 (similar act), the said Tribunal dismissed
said application on the ground of lack of jurisdiction holding that
contract in question was not relating to works contract defined under
the aforesaid Act and when said order was challenged before the
Madhya Pradesh High Court, the Madhya Pradesh High Court dismissed
said Revision Application confirming the view taken by the Tribunal
that it had no jurisdiction as contract for manufacture and supply of
steel does not come within the definition of works contract
defined under section 2(1)(i) of the said Act. Relying upon
aforesaid decision, it is submitted that in the present case also
looking to the services rendered by the petitioner under the contract
in question i.e. to collect village records 7/12, record of rights
form no.6 and village form 8A and other services as provided and
referred herein above, it cannot said that aforesaid consultancy
services is/was relates to construction, repair and maintenance etc.
as per section 2(1)(k) of the Act. Therefore, it is requested to
overrule preliminary objection raised by the respondent and to refer
parties to arbitration to resolve dispute between the parties.
7. Mr.H.S.Munshaw,
learned Advocate for the respondents has submitted that words defined
in Works Contract provided under section 2(1)(k) is required to be
given widest meaning and same is of widest amplitude. It is
submitted that purpose and object to enact the aforesaid Act is to
see that for any dispute between the contractor and the State
Government and/or Government Undertaking when contract has been
entered into for any other work relating to contraction, repair,
maintenance etc., Tribunal constituted under the aforesaid Act
would have jurisdiction. It is submitted that any service to be
provided by any person / contractor to achieve ultimate goal of
construction, repair, maintenance etc. is to be considered as ‘works
contract’ within the meaning of section 2(1)(k) of the Act and
restricted meaning to consider contract only for construction,
repair, maintenance etc. should not be given while considering works
contract. It is submitted that ultimate goal is to lay down
pipelines for transmission of water and for that purpose respondent
company was required to obtain ROU under the Gujarat Water and Gas
Pipeline Act, 2000 and for that purpose contract was executed in
favour of petitioner for consultancy service for undertaking work ROU
under the aforesaid Gujarat Water and Gas Pipeline Act, 2000 for
laying transmission pipelines. Therefore, it is submitted that any
contract to provide any service for achieving ultimate result of
laying pipelines is to be considered as Works Contract
executed by Government / Government Undertaking in favour of
contractor as same can be said to be relating to laying transmission
of pipelines for supply of water. Therefore, it is requested to
dismiss present petition.
8. Heard
learned Advocate appearing on behalf of the respective parties at
length.
9. It
is to be noted that to overcome the acute scarcity of water in the
highly drought prone areas of Sautrashtra, Kutch, North Gujarat and
Panchmahal District of the State, the Government of Gujarat has
initiated action to supply water to these areas through several
pipeline projects for transmission of water from Sardar Sarovar based
Canal System and Mahi Pipeline system. The Government of Gujarat has
setup a Special Purpose Vehicle (SPV) named Gujarat Water
Infrastructure Limited to plan, execute and maintain bulk water
transmission system. Said Company identified various corridors for
laying of these transmission system and as a first step, initiated
actions for completing formalities to obtain Right of User (ROU)
under Gujarat Water and Gas Pipeline Act, 2000 for laying
transmission pipelines. Under the aforesaid contract, petitioner was
required to provide work / services as stated herein above. It cannot
be disputed that ultimate goal was to supply water through pipelines
project and for achieving the same, respondent Company was required
to either acquire land for laying down pipeline or to obtain ROU
under Gujarat Water and Gas Pipeline Act, 2000. Therefore, it can be
said that contract between the petitioner and respondent Company was
for execution of works relating to construction, repair,
maintenance etc. and the word has to be given widest amplitude
and restricting the meaning with respect to actual work of
construction, repair, maintenance etc. as sought to be canvassed by
the petitioner cannot be accepted. Any contract for any of the work
which is for achieving ultimate goal of construction, repair and
maintenance such as repairing building, designs to acquire land to
have survey etc. is to be considered as works contract
within the meaning of section 2(1)(k) of the Act i.e. for execution
of its work relating to construction, repair, maintenance etc..
Therefore, contract between the petitioner and respondent no.1 of
consultancy service for obtaining ROU under Gujarat Water and Gas
Pipeline Act, 2000 which is to acquire Right of User of land for the
purpose of laying pipelines for supply of water, can be said to be
works contract between the petitioner and
respondent as per section 2(1)(k) of the Act. Therefore, Tribunal
constituted under the Gujarat Public Works Contracts Disputes
Arbitration Tribunal Act, 1992, would have jurisdiction to resolve
dispute between the parties arising out of aforesaid contract.
Therefore, contention on behalf of the petitioner that contract
entered into between the petitioner and respondent no.1 cannot be
said to be works contract as per section 2(1)(k)
of the Act, cannot be accepted.
10. Now
so far as reliance placed upon decision of the Madhya Pradesh in the
case of Bhilai Castings and Forgings (P) Ltd. (supra)
is concerned it is to be noted that on facts said decision would not
be applicable to the present case. In the case before Madhya Pradesh
High Court contract was awarded for manufacture and supply of steel
with Madhya Pradesh Electricity Board and it was specifically found
by Madhya Pradesh High Court that contractor failed to show that
goods were supplied in connection to work order issued by the
M.P.Electricity Board and therefore, there was no ‘work contract’
between them as defined in section 2(1)(i) of the Madhyastham
Adhikaran Adhiniyam, 1983 (Act). Therefore, considering above, Madhya
Pradesh High Court confirmed the order passed by the Tribunal
rejecting Reference submitted by the Contractor holding that Tribunal
constituted under the aforesaid Act would not have jurisdiction. In
the present case, admittedly, contract is between petitioner and
respondent no.1 and as stated above, same can be said to be Works
Contract as defined under section 2(1)(k) of the Act.
11. In
view of above, Tribunal constituted under the Gujarat Public Works
Contracts Disputes Arbitration Tribunal Act, 1992 would have
jurisdiction to resolve dispute and differences arising out of
contract in question and therefore, without further entering into
merits of the case and /or other aspect, present petition deserves to
be dismissed and accordingly it is dismissed by relegating the
petitioner to approach Tribunal constituted under Gujarat Public
Works Contracts Disputes Arbitration Tribunal Act, 1992.
With
these, present petition is dismissed. No costs.
[M.R.SHAH,J.]
satish
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