{"id":260181,"date":"2011-01-24T00:00:00","date_gmt":"2011-01-23T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-ivrcl-infrastructures-and-vs-ms-national-highways-authority-on-24-january-2011"},"modified":"2014-02-11T01:09:37","modified_gmt":"2014-02-10T19:39:37","slug":"ms-ivrcl-infrastructures-and-vs-ms-national-highways-authority-on-24-january-2011","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-ivrcl-infrastructures-and-vs-ms-national-highways-authority-on-24-january-2011","title":{"rendered":"M\/S.Ivrcl Infrastructures And … vs M\/S.National Highways Authority … on 24 January, 2011"},"content":{"rendered":"
Madras High Court<\/div>\n
M\/S.Ivrcl Infrastructures And … vs M\/S.National Highways Authority … on 24 January, 2011<\/div>\n
       \n\n  \n\n  \n\n \n \n BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT\n\nDATED: 24\/01\/2011\n\nCORAM\nTHE HONOURABLE MR. JUSTICE N.KIRUBAKARAN\n\nCMA.(MD).No.669 of 2009\n\nM\/s.IVRCL Infrastructures and Projects Ltd.,\nHaving Registered Office at M22\/3RT,\nVijayanagar Colony,\nHyderabad-500057,\nAndhrapradesh\t\t \t\t\t\t          ... Appellant\n\nVersus\n\n1.M\/s.National Highways Authority of India Ltd.,\n  Represented by its Project Director,\n  H.No.831\/1, SBI First Colony Extension,\n  Bye Pass Road, Madurai-625 016.\n2.The Chief Vigilance Officer,\n   M\/s.National Highways Authority of India\n   Ministry of Shipping, Road Transport and Highways,\n  G-5 & 6, Sector 10, Awarks,\n  New Delhi-110 075.\n3.Scott Wilson India Private Limited,\n  Represented by its Resident Engineer,\n  Having their office at\n  A-41, Ramabardan Street,\n  Madurai-625 006.  \t\t\t\t         \t ... Respondents\n\n\n\tThis Civil Miscellaneous Appeal is filed under Section 37(1) (a) of the\nArbitration and Conciliation Act<\/a>, 1996 against the fair and decreetal order\ndated 7.7.2009 made in Arbitration O.P.No.3 of 2009 on the file of the Principal\nDistrict Judge, Madurai.\n\n!For Appellant   ...   Mr.Murari\n\t\t       for M\/s.Sarvabhuman Associates\t\n^For Respondents ...   Dr.R.Rajagopal\n\n:ORDER\n<\/pre>\n
\tThis appeal has been preferred against the common order passed Ar.O.P.No.3
\nof 2009 and I.A.Nos.937 and 938 of 2009.\n<\/p>\n
\t2.\tThe facts of the case are as follows:\n<\/p>\n
The appellant was awarded a contract for laying four lane road  between Madurai
\nand Kanyakumari KM-80 to KM-120. The letter of acceptance was issued on
\n20.4.2005. The agreement was entered into between the  appellant and the first
\nrespondent on 12.8.2005. Pursuant to that the appellant proceeded to execute the
\nwork and is stated to have completed about 80% of the total value of the work as
\nper the instructions given by the third respondent. There was a surprise visit
\nof the site by the second respondent between 10th October and 13, October 2007
\nand collected samples from Bitumen were collected for testing. After 8 months, a
\nshow-cause notice dated 10.6.2008 was issued by the second respondent relating
\nto the issue of process of bitumen and use of sub-standard bitumen.  A reply was
\nissued on 10.7.2008 and it was stated that the bitumen used in the execution of
\ncontract were not substandard. Subsequently, the third respondent through letter
\ndated 11.7.2008 recommended to the first respondent to withhold a sum of Rs.3.09
\ncrores from the appellants bill for the alleged use of substandard bitumen in
\nthe execution of contract. Therefore the first respondent withheld
\nRs.4,27,65,826\/- from the appellants bill amount. In view of the that, the
\nappellants moved the court under Section 9<\/a> of the Arbitration Act to safeguard
\nits interest.\n<\/p>\n
\t3.\tThe respondent contested the matter stating  that:\n<\/p>\n
1) There is no jurisdiction for the court to entertain an application in view of
\nprohibition under National Highways Authorities of India Act<\/a> 1988.\n<\/p>\n
2) NHAI Act is a special Act and a special machinery is provided for the relief
\nunder the Act.\n<\/p>\n
3) In terms of Section 28 of the NHAI Act, 1988 no suit or proceedings can be
\nallowed against the authority;\n<\/p>\n
4) Any contravention of terms and conditions has to be brought out and redressed
\nonly as per the provisions of contract.\n<\/p>\n
5) The vigilance cell, NHAI inspected site and found  substandard bitumen of
\n80\/100 was used instead of bitumen  60\/70 as per the agreement.\n<\/p>\n
6) The converted bitumen, when tested in the M\/s. IOC’s lab from where original
\nbitumen was procured, failed in all the parameters.\n<\/p>\n
7) The appellant neither objected for the recovery nor referred the matter under
\narbitration for Dispute Review Board under clause 67.1 of the contract agreement
\nin the month of July 2008 and August 2008.\n<\/p>\n
\t4.\tThe civil court after hearing both the parties, held that:\n<\/p>\n
a) Section 28(2) of the NHAI Act bars jurisdiction of the Civil Court and that
\nthe dispute with regard to use of substandard materials by the appellant cannot
\nbe decided by the civil court as the civil court has got no jurisdiction to
\nentertain the same.\n<\/p>\n
b) Under Section 2(i)<\/a> ( e) of the Arbitration Act<\/a>, the High Court alone has got
\njurisdiction.\n<\/p>\n
c) Section 9<\/a> of the Arbitration and Conciliation Act<\/a> would not confer
\njurisdiction on the civil court.\n<\/p>\n
d) The intention of the government is to vest the jurisdiction on the higher
\nforums, since the amount involved in the transaction is high.\n<\/p>\n
Hence the civil court, on the ground of jurisdiction, returned the O.P. papers
\nto be presented before the appropriate forum. The said order the civil court is
\nbeing challenged before this court.\n<\/p>\n
\t5.\tLearned counsel for the appellant submitted that the civil court
\ncommitted error in returning the papers on the question of jurisdiction,
\nespecially when the court is clothed with powers under Section 9<\/a> of the
\nArbitration Act. Secondly he submitted that Section 28 of the NHAI Act cannot be
\na bar for the appellant to maintain Section “9” application under Arbitration
\nAct<\/a>. Thirdly, the civil court wrongly concluded that only the High Court has got
\njurisdiction. Fourthly, there is no bar for the civil court to entertain the
\napplication. Therefore he seeks for setting aside the order of the civil court.\n<\/p>\n
\t6.\tOn the other hand, learned counsel for the respondent supported the
\norder of the civil court stating that:\n<\/p>\n
1) The contractor used substandard quality bitumen,\n<\/p>\n
2) the appellant did not object the recovery of money or refer the matter for
\nDispute Review Board under clause 67.1 of the contract agreement.\n<\/p>\n
3) The appellant failed to avail alternative remedy by way of reference to
\nDispute Review Board.\n<\/p>\n
4) The first respondent already appointed DRE and therefore the  proceedings
\nunder Section 9<\/a> of the Arbitration Act are premature.\n<\/p>\n
5)\tThe bank guarantee of Rs.8.65 crores is only the guarantee for any lapse
\nfound at the time of completion of project and the present recovery is only for
\nthe amount already paid by the NHAI for the work done in which substandard
\nbitumen was used.\n<\/p>\n
6)  The appeal proceedings are intended to bypass or override the provisions of
\nthe agreement.\n<\/p>\n
\t7.\tHeard the rival contentions and perused the records. The only
\nquestion before this Court is whether the civil court was right in returning the
\npapers for want of jurisdiction.\n<\/p>\n
\t8.\tThe allegation against the appellant is that it used substandard
\nbitumen for laying the road which was denied by the appellant. As stated above
\nif the dispute arises, what is the course open to the appellant to get
\nredressal? As per clause 67.1 of contract agreement, the party has to approach
\nthe Dispute Review Board which will give its recommendations. In case of
\ndissatisfaction about the recommendations, arbitration proceedings are provided
\nunder clause 67.3 of the contract agreement.\n<\/p>\n
\t9.\tAs the amount was sought to be withheld for the alleged use of sub-
\nstandard bitumen the appellant approached the civil court seeking interim
\nmeasures under Section “9” of the Arbitration and Conciliation Act<\/a>, which reads
\nas follows:\n<\/p>\n
\t“Section-9. Interim measures, etc., by Court– A party may, before or
\nduring arbitral proceedings or at any time after the making of the arbitral
\naward but before it is enforced in accordance with Section 36<\/a>, apply to a
\nCourt:–\n<\/p>\n
\t(i) for appointment of a guardian for a minor or a person of unsound mind
\nfor the purposes of arbitral proceedings; or\n<\/p>\n
\t(ii) for an interim measure of protection in respect of any of the
\nfollowing matters, namely–\n<\/p>\n
\t(a) the preservation, interim custody or sale of any goods which are the
\nsubject-matter of the arbitration-agreement;\n<\/p>\n
\t(b) securing the amount in dispute in the arbitration;
\n\t( c) the detention, preservation or inspection of anyl property or thing
\nwhich is the subject-matter of the dispute in arbitration, or as to which any
\nquestion may arise therein and authorising for any of the aforesaid purposes any
\nperson to enter upon any land or building in the possession of any party, or
\nauthorizing any samples to be taken or any observation to be made, or experiment
\nto be tried, which may be necessary or expedient for the purpose of obtaining
\nfull information or evidence;\n<\/p>\n
\t(d) interim injunction or the appointment of a receiver;\n<\/p>\n
\t(e) such other interim measure of protection as may appear to the court to
\nbe just and convenient,
\nand the Court shall have the same power for making orders as it has for the
\npurpose of, and in relation to, any proceedings before it.\n<\/p>\n
\t10.\tIt is evident from the above Section that any party can approach the
\ncivil court before or prior to arbitration proceeding and the same has been
\nrecognized by the Hon’ble Supreme Court in Sundaram Finance Limited NEPC India
\nLimited reported in AIR 1999 Supreme Court 565. In this case there is an
\nagreement, in which there is a provision for arbitration. According to the
\nappellant, the dispute has already  arisen. Section 9<\/a> application before the
\nCivil Court  is to safeguard its interest only. However, the Civil Court
\nreturned the papers on the question of jurisdiction holding that the arbitration
\nand Conciliation Act<\/a> confers  jurisdiction only on the High Court and not on the
\nSubordinate Civil Court.\n<\/p>\n
\t11.\tTo test the correctness of the Trial Court order regarding
\njurisdiction, this court has to consider Section 2(1)<\/a> (e) of the Act.
\nSection 2(1)<\/a> ( e) of the Arbitration and Conciliation Act<\/a> 1996 reads as follows:
\n\t“(e) “Court” means the principal civil Court of original jurisdiction in a
\ndistrict, and includes the High Court in exercise of its ordinary original civil
\njurisdiction, having jurisdiction to decide the questions forming the subject
\nmatter of the arbitration if the same had been the subject-matter of a suit, but
\ndoes not include any civil court of a grade inferior to such principal civil
\nCourt, or any Court of Small Causes”\n<\/p>\n
The above Section specifically states that the  Principal Civil Court of
\noriginal jurisdiction in a District includes the high court in exercise of its
\noriginal civil jurisdiction. The Trial Court which is the District Court, the
\nPrincipal Civil Court  of a particular district. A Division Bench of this Court
\nin The State of Tamil Nadu rep. By the Superintending Engineer, Madurai and
\nanother vs. R.Sundaram and another<\/a> reported in 2006 (1) CTC 178 held that under
\nthe provisions of The Arbitration and Conciliation Act<\/a> 1996, “Court” means the
\nDistrict Court which is the Principal Civil Court in a District.  When such is
\nthe position of law, there is no basis for the conclusion of the trial court
\nthat it has no jurisdiction to decide the issue. Therefore  the conclusion
\nreached by the civil court that Section 9<\/a> of the Arbitration and Conciliation
\nAct<\/a> will not confer jurisdiction on the civil court is fundamentally wrong and
\nthe said finding is liable to be set aside.\n<\/p>\n
\t12.\tIt was further held by the court below that civil court’s
\njurisdiction is barred under Section 28(2) of the NHAI Act, 1988. Section 28 of
\nthe NHAI Act is extracted as follows:\n<\/p>\n
\t” 28. Protection of action taken in good faith -(1) No suit, prosecution
\nor other legal proceeding shall lie against the Authority or any member or
\nofficer or employee of the Authority for anything which is in good faith done or
\nintended to be done under this Act or the Rules or regulations made thereunder.\n<\/p>\n
(2)No suit, prosecution or other legal proceeding shall lie against the
\nAuthority or any member or officer or employee of the Authority for any damage
\ncaused
\n(3) or likely to be caused by anything which is in good faith done or intended
\nto be done under this Act or the rules or regulations made thereunder”\n<\/p>\n
\t13.\tThe said section is only to give protection of action taken in good
\nfaith. Therefore the said Section cannot extended to bar the civil court’s
\njurisdiction under Section 9<\/a> of the Arbitration and Conciliation Act<\/a>. The
\nNational High Ways Authorities of India Act,1988 never overlapped with the
\narbitration and conciliation Act and therefore there is no question of any
\nconflict or overriding of the other Act. When clause 67.3 of the agreement
\nitself speaks about the  resolution of dispute by way of arbitration as per the
\nArbitration and Conciliation Act<\/a> 1996, the conclusion of the Trial Court that
\nthe civil court’s jurisdiction under Section 28 of the NHAI Act is erroneous and
\nthe same is liable to be set aside.  The other finding of the court that the
\nintention of the government is to confer jurisdiction of the higher forum, since
\nthe dispute involves higher value has no basis.\n<\/p>\n
\t14.\tIn view of that, this court holds that:\n<\/p>\n
 1) Section 28 of the National High Ways Authorities of India Act 1988 does not
\nbar the jurisdiction of the Civil Court to entertain Section 9<\/a> application under
\nthe Arbitration and Conciliation Act<\/a>, 1996.\n<\/p>\n
2) As per Sections 2(1)<\/a> (e), 9, 34 and 36 of the Arbitration and Conciliation
\nAct<\/a> 1996, the Trial court has got jurisdiction to entertain an application under
\nSection ” 9 ” of the Act.\n<\/p>\n
3) The conclusion of the Civil Court that the High Court alone has got
\njurisdiction under Section 2<\/a> (1) (e) of the Act is erroneous. Therefore return
\nof petition for presentation before appropriate forum is set aside. In view of
\nthe above reasoning, the civil court should not have returned the papers without
\ndeciding the matter on merits. In this case, the dispute has already arisen. As
\nper clause 67.1 of the contract agreement, the parties have approached the
\nDispute Review Board. Irrespective of the out come of the Board proceedings, the
\nout come would only be recommendatary in nature as seen in Clause 67.1 of the
\ncontract. Moreover the Board has got no power to grant interim orders.
\nTherefore, the appellant rightly approached the civil court under Section ” 9 ”
\nof the Act for interim relief As per Section 9<\/a>, the civil court has to entertain
\nthe application and decide the matter on merits. The Civil Court after
\nconsidering prima facie case, balance of convenience granted interim order and
\ntherefore the same order is required to be continued till the disposal of
\nSection 9<\/a> application.\n<\/p>\n
\t15.\tIn view of the above reasonings, the Civil Court should not have
\nreturned the papers without deciding the matter. In this case, the dispute has
\nalready arisen. As per clause 67.1 of the contract agreement it is stated that
\nthe parties have approached the Dispute Review Board for settlement irrespective
\nof the out come of the Board proceedings, it is seen from the contract that the
\nout come would only be recommendatory in nature as seen in Clause 67.1 of the
\ncontract. After Review Board proceedings, the parties are liberty to go for
\narbitration. Moreover the Board has got no power to grant interim orders. Till
\nthat time the parties’ rights are to be safeguarded as per law. Therefore the
\nappellant rightly approached the civil court under Section “9” of the Act for
\ninterim relif, as the 1st  respondent recommended withholding of Rs.3.07 crores
\nfrom the appellant’s bill through letter dated 11.6.2008. The Civil Court after
\nconsidering prima facie case, balance of convenience granted interim order in
\nthis matter. The interim order granted by the Civil Court is as follows:
\n“1. The 1st respondent is a liberty to work out the amount to be      recovered.\n<\/p>\n
\t2. Such amount is to be intimated to the petitioner.\n<\/p>\n
\t3. The 1st  respondent is injuncted from recovering such amount from the
\nbill to be forwarded by the petitioner for the period ending 30th April 2009.\n<\/p>\n
\t4. The petitioner is also directed to approach the Dispute Review Board or
\nArbitration Tribunal on or before 15.6.2009 with repect to the amount quantified
\nas recoverable or with respect to any other dispute.\n<\/p>\n
\t5. The 1st  respondent is also injuncted from recovering such amount for
\nthe period ending 31st May 2009 without further notice to the petitioner.”
\nTherefore the same order is required to be continued till the disposal of
\nSection 9<\/a> application.\n<\/p>\n
\t16.\tTherefore without going into merits of the case, this court directs
\nthe Trial Court to entertain the application and decide the matter on merits as
\nper law as expeditiously as possible. Till the matter is decided the interim
\norder as granted by the trial court will be in force.\n<\/p>\n
\t17.\tWith the above, the appeal is allowed. No costs.\n<\/p>\n
vk\/gsr<\/p>\n
To
\nPrincipal District Judge, Madurai.<\/p>\n","protected":false},"excerpt":{"rendered":"
Madras High Court M\/S.Ivrcl Infrastructures And … vs M\/S.National Highways Authority … on 24 January, 2011 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 24\/01\/2011 CORAM THE HONOURABLE MR. JUSTICE N.KIRUBAKARAN CMA.(MD).No.669 of 2009 M\/s.IVRCL Infrastructures and Projects Ltd., Having Registered Office at M22\/3RT, Vijayanagar Colony, Hyderabad-500057, Andhrapradesh … Appellant Versus 1.M\/s.National Highways Authority […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,13],"tags":[],"class_list":["post-260181","post","type-post","status-publish","format-standard","hentry","category-high-court","category-madras-high-court"],"yoast_head":"\nM\/S.Ivrcl Infrastructures And ... vs M\/S.National Highways Authority ... on 24 January, 2011 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/ms-ivrcl-infrastructures-and-vs-ms-national-highways-authority-on-24-january-2011\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"M\/S.Ivrcl Infrastructures And ... vs M\/S.National Highways Authority ... on 24 January, 2011 - 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