Bombay High Court
A Company Incorporated And vs State Of Maharashtra on 16 November, 2013
Bench: S.S. Shinde
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
AURANGABAD BENCH, AURANGABAD
ARBITRATION APPEAL NO. 15 OF 2013
Ashoka Buildcon Ltd.,
Formerly M/s Ashoka Info Pvt. Ltd.
Merged vide Bombay High Court
Order w.e.f. 01.04.2003)
A Company incorporated and
registered under the provisions
of the Companies Act, 1956,
having registered office at
Ashoka House, Ashoka Marg,
Nashik-422011,
and unit office at E-28/29,
Ashoka Arch, Market Yard,
Gultekdi,
Pune-411 037. ...Appellant
[Orig. Applicant]
VERSUS
State of Maharashtra,
through,
The Executive Engineer,
Public Works Department,
Ahmednagar ...Respondent
[Orig. Opponent]
WITH
CIVIL APPLICATION NO. 11305 OF 2013
IN
ARBITRATION APPEAL NO. 15 OF 2013
Ashoka Buildcon Ltd.,
Formerly M/s Ashoka Info Pvt. Ltd.
Merged vide Bombay High Court
Order w.e.f. 01.04.2003)
A Company incorporated and
registered under the provisions
of the Companies Act, 1956,
having registered office at
::: Downloaded on - 27/11/2013 20:32:43 :::
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Ashoka House, Ashoka Marg,
Nashik-422011,
and unit office at E-28/29,
Ashoka Arch, Market Yard,
Gultekdi,
Pune-411 037,
through its authorized person
Mr. Popat s/o Bhimaji Nalawade,
Age 36 yerars, occ. Service ...Applicant
[Orig. Applicant]
VERSUS
State of Maharashtra,
through,
The Executive Engineer,
Public Works Department,
Ahmednagar ...Respondent
[Orig. Opponent]
.....
Shri R.N.Dhorde, Senior Counsel i/b
Smt. S.D.Tambat-Dhumal, advocate for appellant/original
applicant
Shri Rajendra S. Deshmukh, advocate for
respondent/original opponent
.....
CORAM : S.S.SHINDE, J.
DATED : 16th November,2013.
ORAL JUDGMENT :-
1] This Arbitration Appeal is arising out of the order, dated
25.7.2013, passed by the learned Principal District Judge, Ahmednagar, in
Arbitration Application No. 1 of 2013. Along with the Arbitration Appeal,
the appellant has also filed Civil Application for grant of interim relief
during the pendency of the appeal.
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2] The facts leading for filing application under Section 9 of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as, 'the said
Act' for short), as summarized by the District Court, are as follows :-
"(2) The Executive Engineer, Public Works
Division, Ahmednagar wanted to construct "improvements
to Ahmednagar-Karmala Road, S.H. No. 141 Km. 0/0 to
80/600 Ahmednagar to District Border under Building,
Operate and Transfer (in short "BOT") Scheme (with toll
rights). The scope of the work includes (1) improvements
to Ahmednagar-Karmala Road as aforesaid under BOT
Scheme under toll rights and (2) maintenance and renewal
of the road upto end of concession period.
(3) In response to the advertisement, the applicant
submitted tender and his tender was accepted as per letter
of acceptance dt. 8.7.1998 and the contract came to be
executed between applicant and State of Maharashtra on
19.02.1999. The work order was accordingly issued on
12.03.1999 in applicant's favour.
(4) The State of Maharashtra issued a notification
dt. 24.08.1999 and authorised the applicant to collect the
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toll in respect of the said facility for a period from
24.08.1999 to 04.11.2015. The concession period as per
cash flow began on 05.02.1999 and it was for 16 Years 9
Months, which was to come to an end on 04.11.2015.
(5) The applicant obtained loan and made huge
investment for the work. It obtained the loan at the interest
rate of 23% p.a. And also completed the work in stipulated
time. The Reserve Bank, vide letter dt. 03.07.2003
stopped prescribing lending rates for the loans beyond Rs.
2 Lakhs since 1994. The Government also adopted the
formula in the circular, dt. 07.04.2003 for reworking the
concession period. As per the provisions of contract
clause 3.7.11, which says that, in case of change of
lending interest rate by Reserve Bank of India, the
concession period stipulated in the contract shall be
reworked out with the change rates based on the cash
flow statement/project statement of loan and repayment.
(6) The applicant requested Government of
Maharashtra through its Secretary from time and again to
give an opportunity before reworking the concession
period but for no use. The Government finally issued
notification dt. 09.11.2012 contending that the lending
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interest rate has been changed by the Reserve Bank of
India and thereby as per clause 3.7.11 of the contract, the
concession period in view of the new lending rate has
been worked out and period for collection of toll is bound
to end before 14.11.2012. Such notification was issued on
13.05.2012, which was to take effect from 14.11.2012.
(7) ig In view of the notification, the letter was issued
by Executive Engineer dt. 17.11.2012, asking the applicant
to stop the toll collection and accordingly panchanama
was drawn and toll collection was stopped on 17.11.2012
at 21.00 hours.
(8) According to applicant the said impugned
notification, letter and panchanama whereby toll collection
was stopped, are null and void and ab-initio illegal. The
clause 3.7.11 of the contract provides for reworking of
concession period on the cash flow statement/project
statement of loan and repayment. The applicant was
authorised to collect toll till 04.11.2015. However, it was
stopped arbitrarily without giving any opportunity. The
said act on the part of Government of Maharashtra, was
challenged by the applicant by filing petition before the
Hon'ble High Court of Judicature at Bombay, Bench at
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Aurangabad, vide Writ Petition No. 9622 of 2012. The
Hon'ble High Court vide order dt. 16.01.2013 was pleased
to pass order in Writ Petition No. 9622 of 2012 as under :-
"The parties i.e. petitioner and respondent no.3 have
presented a joint pursis, duly signed by them. The pursis is
taken on record and marked "X" for identification.
Respondent no.3 has agreed to issue notice to the
petitioner calling upon the petitioner to reply the
contentions raised in the notice. It is also agreed by
respondent no.3 to afford personal hearing to the
petitioner and thereafter to pass a speaking order in the
matter. In view of the agreement arrived at between the
parties, nothing survives for consideration in the petition.
Writ Petition, therefore, stands disposed of."
[Joint pursis reads as under :-
"The parties hereby agree that the respondent no.2 will
issue show cause notice to the petitioner within one week.
The petitioner will reply to the same within one week from
the receipt of the said notice. The petitioner will be granted
hearing within one week of the receipt of reply. The
respondent no.2 will pass speaking order within two weeks
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from date of conclusion of hearing. It is agreed that entire
proceeding will be completed within four weeks.
Both the parties agree to settle all their
disputes,if any, by referring the same to the Arbitral
Tribunal. "
(9) In view of the order aforesaid, the parties
approached the competent authority comprising of Shri Ajit
B. Pawar, Shri V.S.Karandikar and Shri S.L.Jadhav for
settlement. The applicant has however, challenged order
passed by said authority by invoking arbitration clause
and now the dispute is pending before Arbitral Tribunal.
(10) Now the applicant, during pendency of the
arbitral proceedings has filed the present application u/s. 9
of the Act for the prayers already stated."
3] The respondents herein resisted the claim before the District
Court by filing reply at Exh. 10. The District Court in para 14 of the
impugned judgment framed necessary points for its determination and by
reasoned order, rejected the application filed by the appellant under
Section 9 of the said Act. Hence, this Arbitration Appeal by the appellant.
4] The learned Senior Counsel appearing for the appellant
submitted that the letter, dated 17.11.2012, by which notification dated
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9.11.2012 was served upon the appellant, thereby asking the appellant to
stop the toll collection, which has been run by the appellant at
Ahmednagar-Karmala road SH No. 141, is illegal, in as much as, it is
based on Circular, which is not part of the contract and amends the
contract unilaterally by replacing word, 'LR' with 'PLR'. It is submitted that
the Circular, dated 7.4.2003 has adopted calculations for reworking cash
flow, which is provided in the contract and is unilateral. The Circular is
unilateral and the appellant has been denied opportunity to explain his
side on it is thus denial of natural justice. It is submitted that since
beginning the Government was aware of the prime lending rates of five
major public sector Banks and deregulation of lending rates bu R.B.I. etc.,
but the Government never acted on it, and therefore, the conduct of the
parties is required to be seriously looked into. It is submitted that the
statutory provisions cannot be used wrongly to deny justice to the injured
party. The 'lease' termed as 'concession' by the respondent under the
statutory contract drafted by the respondent cannot be interpreted in
favour of drafter when the Government/respondent had with it as a granter
huge resources. It is further submitted that the table no. 74 relied upon by
the respondent for lending rates of Reserve Bank contains a note that
rates in the table after 1994-95 are the prime lending rates of five major
public sector Banks and are not the rates prescribed by the Reserve Bank
of India in view of deregulation of lending rates by the Reserve Bank of
India. It is submitted that the District Court ignored the provisions of
Section 9 of the said Act and exception to Rule of compensation. It is
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further submitted that the District Court proceeded on the footing that,
since the matter is referred to the Arbitral Tribunal, the District Court can
entertain the application only after arbitrator passes the final award. It is
submitted that Section 9 of the said Act can be invoked even during the
pendency of arbitration proceedings before the arbitrator.
5] In support of his contention, the learned Senior Counsel
appearing for the appellant pressed into service reported judgment of the
Supreme Court in the case of M/s Transmission Corporation of A.P.
Ltd. Vs M/s Lanco Kondapalli Power Pvt. Ltd. [(2006) 1 SCC
540]. It is submitted that Section 9 of the said Act should be applied, so
that status quo may be directed to be maintained having regard to the fact
that the parties understood the workability of the agreement in a particular
manner.
6] The learned Senior Counsel appearing for the appellant further
pressed into service the exposition of the Supreme Court reported in the
case of Adhunik Steels Ltd. Vs Orissa Manganese and Minerals
Pvt. Ltd., [(2007) 7 SCC 125] and submitted that the grant of interim
prohibitory injunction or an interim mandatory injunction are governed by
well known Rules and it is difficult to imagine that the Legislator while
enacting Section 9 of the said Act intended to make a provision which was
de hors the accepted principles that governed the grant of interim
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injunction.
6] The learned Senior Counsel appearing for the appellant further
invited my attention to the reported judgment of this court in the case of
Oberoi Constructions Pvt. Ltd. Vs Worli Shivshahi Co-op.
Housing Society Ltd., [2009 (2) RAJ 467] and in particular para 8
thereof. It is submitted that this court held that under Section 9 of the said
Act, the court has power to grant interim relief before or during the process
of arbitration and even on conclusion of arbitral proceedings the award
becomes deemed decree of the court.
7] It is submitted that the appellant is willing to maintain the
accounts of collection of toll and also the names of person who have paid
the toll and also to maintain the amount received by separate account, if
the appellant is allowed to resume the toll collection. It is submitted that in
case the appellant succeeds before the arbitrator, in that case the Arbitral
Tribunal can grant the relief of further period of concession for collection
of the toll tax. It is submitted that the Arbitral Tribunal cannot grant
damages. It is further submitted that applying the the prime lending rates
of five major public sector Banks or any other lending interest rates of of
alleged Reserve Bank of India without there being any provision in the
contract, amending term in the contract unilaterally and without consent of
the appellant.
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8] It is submitted that in some what similar fact situation, this
court by interim order in Writ Petition allowed the appellant therein to
collect the toll, thereby directing to maintain the separate accounts. The
Senior Counsel has tendered across Bar a copy of the order passed by
the court on 23.10.2009 in the case of Ashok Infrastructure
Consortium (AO) Nashik vs The State of Maharashtra and
another.
9] The learned Senior Counsel appearing for the appellant has
also invited my attention to the grounds taken in the appeal memo,
annexures thereto and the contentions raised in the application and
submits that this appeal deserves to be allowed.
10] The learned Senior Counsel appearing for the appellant
alternatively submits that in case this court is not inclined to entertain the
appeal, the appellant may be allowed to make prayer for interim relief
before the arbitrator under Section 17 of the said Act. In support of this
contention, he relied upon the reported judgment of this court in the case
of Kunitakara Electric Company vs Greenvalley Home
Developers (P)Ltd. [2010 (1) RAJ 197 (Bom.).
11] On the other hand, learned Special counsel appearing for the
respondents invited my attention to the reasons recorded by the District
Court and also affidavit in reply filed by the respondents and Sur-rejoinder.
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According to the learned counsel appearing for the respondents, by way of
filing application under Section 9 of the said Act, the appellant is praying
for mandatory injunction, which cannot be granted. It is submitted that the
contract is terminated one year back and thereafter the appellant herein
did file the Writ Petition before the Division Bench and said Writ Petition
was heard and disposed of on the basis of minutes of order prepared by
the parties. It is submitted that by filing the minutes of order in Writ
Petition No. 9622 of 2012, the appellant agreed to settle all the disputes
between the appellant and the respondents by referring the matter to the
Arbitral Tribunal. It is submitted that the Division Bench, in view of the
agreement of the parties, directed the respondent no.3 to issue notices to
the parties and after hearing them, pass appropriate order, and
accordingly, the Deputy Secretary of the respondent/Department has
heard the parties and passed the order. It is submitted that in the said Writ
Petition, there was prayer for cancellation of the order passed by the
respondents and also prayer for allowing the appellant to collect the toll
tax. Therefore, it is submitted that once such petition was filed and
disposed of by the Division Bench, it was not appropriate on the part of
the appellant to file application under Section 9 of the said Act before the
District Court, Ahmednagar. Counsel invited my attention to the reasons
recorded by the District Court and submits that the appeal is devoid of any
merits and same may be dismissed.
12] It is submitted that the application under Section 9 of the said
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Act would not maintainable where the contract, which, in its nature is
determinable. Counsel invited my attention to the reported judgment of
Delhi High Court in the case of Rajasthan Breweries Limited vs
Stroh Brewery Company, [AIR 2000 DELHI 450].
13] It is submitted that while considering the application under
Section 9 of the said Act, the court has to consider the provisions of Order
XXXVIII Rule 5, Order XXXIX Rules 1 and 2 of the Civil Procedure Code
and also Sections 14 and 41 of the Specific Relief Act. In support of this
contention, learned counsel appearing for the respondents placed reliance
on the reported judgment in the case of Vijay Agarwal vs Lehman
Brothers Advisors Pvt. Ltd. And anr., [2009 (4) ALL MR 738].
14] Learned counsel appearing for the respondents also invited my
attention to the reported judgment of the Punjab and Haryana High
Court in the case of Union of India vs Bakhshi Amrik Singh,
[AIR 1963 PUNJAB 104 and submitted that the courts while issuing
permanent or temporary injunction, must act in a careful and conservative
manner and grant relief only in situations which so clearly call for it as to
make its refusal work real and serious hardship and injustice.
15] Counsel also invited my attention to the reported judgment of
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the Supreme Court in the case of Adhunik Steels Ltd. Vs Orissa
Manganese and Minerals Pvt.Ltd., reported in [AIR 2007 SC
2563] and submitted that the power under Section 9 of the said Act is not
totally independent of the well known principles governing grant of interim
injunction and relevant provisions of Specific Relief Act cannot be kept out
of consideration.
16]
Learned counsel appearing for the respondents relying upon
the reported judgment of this court in the case of Oil and Natural Gas
Corporation Ltd. Vs Streamline Shipping Co. Pvt. Ltd., M/s, [AIR
2002 BOMBAY 420] submitted that in the facts of that case, this court
held that though the contract was for a period of three years, clause in
contract giving right to ONGC to terminate contract after expiry of one year
without assigning any reasons, cannot be said to unconstitutional or
opposed to public policy and in such case no injunction can be granted to
prevent breach of such contract.
17] I have given careful consideration to the submissions of the
learned Senior Counsel appearing for the appellant and learned counsel
for the respondents. With their able assistance, I have perused the
grounds taken in the appeal memo, annexures thereto, reply filed by the
respondents, rejoinder affidavit filed by the petitioner, Sur-rejoinder filed by
the respondents and the judgments of various High Court and the
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Supreme Court.
18] The submission made by the learned Senior Counsel
appearing for the appellant during the course of arguments that, prior to
approaching the arbitrator, it was not possible for the appellant to
approach the District Court by way of filing application under Section 9 of
the said Act, deserves no consideration. It is well settled that an
application under Section 9 of the said Act can be filed even before the
commencement of arbitration proceedings, as held by the Supreme Court
in the case of Sundaram Finance Ltd. Vs NEPC India Ltd.,
[(1999) 2 SCC 479]. Therefore, it was open for the appellant to
approach the District Court by way of filing application under Section 9 of
the said Act instead of filing Writ Petition No. 9622 of 2012 before the
Division Bench of this court. It is admitted position that the appellant has
stopped toll collection from the month of November, 2012. The appellant
by way of filing Writ Petition No. 9622 of 2012 prayed for following reliefs :-
"A) This writ petition may kindly be allowed;
B) To hold and declare that the impugned
notifications dated 07/04/2013, 09/11/2012 and impugned
letter dated 17/11/2012 and impugned panchanama dated
17/11/2012 is illegal, arbitrary and violative of Articles 14,
19(i)(g) and same may kindly be quashed and set aside;
C) By issue of writ of Mandamus or any other
appropriate writ, order or direction in the nature of
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Mandamus, the respondents may kindly be directed to
restore the toll collection facility run by the petitioner on
Ahmednagar-Karmala Road, S.H. No. 141 Km. 0/0 to
80/600 forthwith;
D) Pending hearing and final disposal of this writ
petition, the operation of notification dated 09.11.2012 and
letter dated 17.11.2012 may kindly be stayed and the
respondents may kindly be restrained from obstructing the
petitioner and its staff, officers/employees, agents, etc.
from collecting toll in respect of the project of
improvements to Ahmednagar-Karmala Road, S.H. No.
141 Km. 0/0 to 80/600 Ahmednagar to District Border
under BOT scheme (with toll rights) at the toll collection
booths by using any coercive methods or otherwise either
personally or through their staff, officers,servants,
agents,etc.;
E) Ad-interim relief in terms of prayer clause "D"
above be kindly granted;
F) Costs of the petition may kindly be awarded to
the petitioner;
G) Any other relief in favour of the petitioner may
kindly be granted."
19] Upon careful perusal of the prayer clause 'B' in the said Writ
Petition, it is abundantly clear that by way of said prayer, the appellant
herein prayed the relief to hold and declare that the impugned notifications
dated 7.4.2013 and 9.11.2012 and the impugned letter, dated 17.11.2012
and panchanama, dated 17.11.2012, are illegal, arbitrary and violative of
Articles 14 and 19(i)(g) of the Constitution of India. By prayer clause 'C',
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the appellant i.e. petitioner in said Writ Petition, prayed for issuance of writ
of mandamus or any other appropriate writ or direction in the nature of
mandamus to the respondents to restore the toll collection facility run by
the petitioner on Ahmednagar-Karmala road SH No. 141 Km. 0/0 to
80/160 forthwith. Therefore, the reliefs which were prayed in the said
Writ Petition, appear to be given up by the appellant by way of filing
minutes of order. The minutes of order in Writ Petition No. 9622 of 2012
read thus :-
"Both the parties agree to settle all their disputes, if any,
by referring the same to the Arbitral Tribunal."
20] Upon careful perusal of the minutes of the order, it is
abundantly clear that both the parties agree to settle all their disputes, if
any, arising out of the contract, by referring the same to the Arbitral
Tribunal. Therefore, attempt of the appellant to file application under
Section 9 of the said Act is contrary to the minutes of the order, which is
part of the record in Writ Petition No. 9622 of 2012, passed by the Division
Bench of this court on 16.1.2013.
21] In pursuant to the disposal of the said Writ Petition, it is not in
dispute that the parties are heard by the Deputy Secretary of the
respondents/Department and following order is passed :-
" The contentions of the concessionaire in its written
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say to get the higher interest (i.e. 23%) is not proper,
reasonable and appropriate. Therefore the demand of the
concessionaire is not acceptable and hence it could not
be allowed. The Government Notification issued on the
09.11.2012 by the PWD to rescind the previous
Notification dated 13.05.2012 regarding termination of
concession period as per clause 3.7.11 in respect of the
contract "Improvements to the Ahmednagar Karmala
Road State High No. 141 Km. 0/00 to 80/600 Ahmednagar
District border under BOT scheme is valid, proper and
correct.
Hence, I hold that, the Notification issued by the
Government dt. 9th November, 2012 is valid and there is
no need to modify it."
22] Upon perusal of the order, passed by the Deputy Secretary,
P.W.D. (Privatization), Government of Maharashtra, it is abundantly clear
that the said authority has held that the Government notification issued on
9.11.2012 by P.W.D. to rescind the previous notification, dated 13.5.2012
regarding termination of concession period as per clause 3.7.11 in respect
of contract in "Improvements to the Ahmednagar-Karmala road State
Highway No. 141 Km. 0/0 to 80/160 Ahmednagar District border under
BOT is valid and correct. Since the said order was passed in pursuance
of the disposal of the Writ Petition, as observed earlier, the minutes of
order, passed in the said Writ Petition, binds the parties to have solution to
the dispute only before the Arbitral Tribunal. Therefore, it was open for the
appellant to invoke the provisions of Section 17 of the said Act before the
Tribunal. In case the appellant was aggrieved by the order passed by the
Deputy Secretary, PWD (Privitazation), Government of Maharashtra, it
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was open for the appellant to seek appropriate remedy. However, the
order passed by the said authority attained finality, and therefore, belated
attempt of the appellant to file application under Section 9 of the said Act
before the District Court, of which adjudication had taken place, almost
about after nine months, deserves no consideration. The impugned order
of the District Court refusing to grant mandatory injunction cannot be said
to be unreasonable or de hors the material placed on record.
23]
By way of filing application under Section 9 of the said Act, the
appellant herein prayed for following reliefs :-
"(1) Toll stations at 8/00 k.m. And 55/00 k.m. On
State Highway No.141 may kindly be restored to the
applicant and permit the applicant to collect the toll at the
toll stations forthwith.
(2) The opponent may kindly be prohibited by an
order of injunction from obstructing the applicant and its
staff from collecting toll in respect of the project of
improvements to Ahmednagar-Karmala Road, S.H. 141
Km 0/0 to 80/600 Ahmednagar to District Border under
BOT scheme (with toll rights), at the toll collection booths,
by using any coercive methods or otherwise either
personally or through their officers,servants, agents, etc. "
24] Upon perusal of the prayers in the application, in substance,
the appellant prayed before the District Court to grant reliefs which are
given up before the Division Bench of this court by way of filing minutes of
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order and thereby agreeing to settle the disputes arising out of the
agreement/contract between the parties before the Atribral Tribunal.
The relevant clause of the agreement, on the basis of which
the period of toll collection of the appellant has been curtailed by the
respondents 3.7.11, reads thus :-
"3.7.11 -- In case of change of lending interest rates by
Reserve Bank of India, the concession period stipulated
in the contract shall be reworked out with the changed
rates based on the cash flow statement/projected
statement of loan and repayment. "
The said clause does exist in agreement, dated 27.7.1999
entered between the parties. It is not in dispute that at the relevant time
when said agreement was given effect, the interest rate was 23 per cent,
as it is clear from the chart at page 84 of the compilation of the appeal and
it appears that the said interest rate has climbed down to 17.6 per cent.
Therefore, prima facie, it appears to this court that the action taken by the
respondents is in consonance with the terms of the agreement. However,
since the parties are before the Arbitral Tribunal, this court refrains itself
from expressing any opinion about the merits of the matter.
25] It is true that by way of filing application under Section 9 of the
said Act, interim relief can be prayed and granted by the court. However,
in the peculiar facts of this case, the appellant having been approached
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before the Division Bench of this court by way of filing Writ Petition and by
filing minutes of the order agreed to resolve disputes arising out of contract
before the Arbitral Tribunal, the District Court was right in declining the
relief as prayed by the appellant. The District Court is right in holding that
by way of filing application under Section 9 of the said Act, in substance,
the prayer which is for mandatory injunction, cannot be granted.
26]
As observed earlier, it is not in dispute that in November, 2012
the appellant has stopped the collection of toll. The District Court has
considered the ingredients of Order XXXIX Rules 1 and 2 of the Civil
Procedure Code in the impugned judgment and held in para 27 thus :-
"27) On the conspectus of discussion in foregoing
paras, it will be thus crystal clear that the apaplication
does not fall within the ambit of Sec. 9 of the Arbitration
and Conciliation Act, 1996 and even otherwise the
applicant has failed to make out a prima facie case in its
favour and that it will suffer irreparable loss in case
injunction is not granted. The balance of convenience
lies in favour of people at large and in any case not in
favour of applicant and therefore, on all counts, the
application deserves to be rejected. I, therefore, answer
the points accordingly and pass following order.
O R D E R
Application stands rejected with costs. "
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27] The District Court did consider the judgment cited by the
appellant and also the balance of convenience, irreparable loss and
remedy available to the appellant. In case the appellant succeeds before
the Arbitrarl Tribunal, certainly concession period can be extended from
the date of such order as per terms of contract. In case, the appellant
feels that he is entitled to damages, he is free to file such proceedings.
The District Court has considered the submission of the respondents that if
concession period is not extended and if the matter before the Arbitral
Tribunal goes in appellant's favour, the person using the road for the
period thereafter till the concession period will pay tax, and therefore, there
is no irreparable loss to the appellant. The District Court, in paras 19, 20
and 21 held thus :-
"19) A plain reading of the said clause gives full
authority to the government to rework out the schedule of
concession period of collection of toll tax and accordingly
in view of the change in the lending interest rates, the
Government of Maharashtra has issued the notification.
In view of the said notification the work of the applicant
was stopped and the said act was challenged before the
Hon'ble High Court. The Hon'ble High Court directed
Government to give an opportunity to the applicant and
accordingly an opportunity was given and the act of the
State of Maharashtra was maintained and the said act is
now challenged before Arbitral Tribunal and therefore,
there is no question of commenting on merits of that act
by this Court.
20) In such circumstances, whether the act on
the part of Government to stop collection of the toll tax
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was arbitrary and whether the reworking of the schedule
of concession period for collection of toll tax was
arbitrary?, is a matter to be decided by Arbitral Tribunal
and unless this issue is decided by the competent
authority, it cannot be said that the applicant has prima
facie case.
21) In case the applicant is not allowed to collect
toll tax and it is held that the action on the part of
Government stopping him from collection of toll tax is
illegal, the concession period can be extended from the
date of such order as per terms of contract and since it
has been observed that the applicant has already
recovered amount, no irreparable loss will be caused to
the applicant. As against this, if the applicant is allowed
to collect toll tax and if it is held that the action on the
part of non-applicant stopping collection was legal, the
people in general will suffer irreparable loss as they will
have to pay the tax illegally. The learned counsel for the
applicant submitted that the applicant is ready to keep all
the amount in separate account and the said amount will
not be utilized by the applicant and the same will be
refunded to the persons from whom it is recovered, in
case the applicant fails before Arbitral Tribunal.
Countering the attack,the learned counsel for the non-
applicant submitted that the user of the road will be
public in general, which may be used by different
persons every day and it will be very difficult to refund
the amount to them. I totally agree with the submission
made by the learned counsel for the non-applicant. As
against, if the concession period is not extended and if
the matter before Arbitral Tribunal goes in applicant's
favour, the persons using the road, for the period
thereafter till the concession period, will pay tax. I,
therefore, find that no irreparable loss will be caused to
the applicant and the balance of convenience is also in
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favour of people in general who are using the road. "
28] Upon perusal of the afore said paragraphs from the District
Court judgment, it is abundantly clear that the District Court has
considered the relevant clause i.e. 3.7.11 from the agreement and also
prima facie case, balance of convenience and irreparable loss and
declined to grant mandatory injunction.
29] It is not necessary for this court to reproduce or reiterate what
has been held by the District Court, since this court is in agreement with
the findings/reasons recorded by the District Court.
30] The Senior Counsel appearing for the appellant submitted that
the respondents are likely to allow the other persons to collect the toll tax.
However, in reply to the said argument, the counsel appearing for the
respondents, relying upon the affidavit in reply, submitted that the new
work is in respect of four lane road to be constructed, in which the
appellant herein has also filled in the tender, and therefore, the appellant is
not right in contending that for the same work the respondents have invited
the tenders.
31] As held by Delhi High Court in the case of Rajasthan
Breweries Limited (supra), the effect of breach of contract by a party
25 aa15.13
seeking specifically enforce the contract under the Indian law is enshrined
in Section 16 (c) r/w Section 41(e) of the Specific Relief Act, 1963,
Clause (e) of Section 41 of the Specific Relief Act provides that injunction
cannot be granted to prevent the breach of contract, performance of which
would not be specifically enforced. Clause (c) of Sub-section (1) of
Section 14 of the Specific Relief Act says that a contract, which is in its
nature determinable cannot be specifically enforced. In the said judgment,
Delhi High Court has considered the situation in absence of specific clause
authorizing and enabling either party to terminate the agreement in the
event of happening of events specified therein and in para 20 it is held as
under :-
"20) Even in the absence of specific clause authorising
and enabling either party to terminate the agreement in
the event of happening of the events specified therein,
from the very nature of the agreement, which is private
commercial transaction, the same could be terminated
even without assigning any reason by serving a
reasonable notice. At the most, in case ultimately it is
found that termination was bad in law or contrary to the
terms of the agreement or of any understanding between
the parties or for any other reason, the remedy of the
appellants would be to seek compensation for wrongful
termination but not a claim for specific performance of
the agreements and for that view of the matter learned
Single Judge was justified in coming to the conclusion
that the appellant had sought for an injunction seeking to
specifically enforce the agreement. Such an injunction is
statutorily prohibited with respect of a contract, which is
determinable in nature. The application being under the
provisions of Section 9(ii)(e) of the Arbitration and
Conciliation Act, relief was not granted in view of
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Section 14(i)(c) read with Section 41 of the Specific
Relief Act. It was rightly held that other clauses of
Section 9 of the Act shall not apply to the contract, which
is otherwise determinable in respect of which the prayer
is made specifically to enforce the same. "
32] In the light of discussion herein above, in the facts and
circumstances of this case, prima facie, it appears to this court that in view
of clause 3.7.11 of the agreement between the parties, the respondents
were right in reducing the period stipulated in the contract. The District
Court, by well reasoned order, has declined to entertain the application
under Section 9 of the said Act. No case is made out for interference.
33] The Arbitration Appeal and Civil Application stand dismissed.
However, at this stage, learned Senior Counsel appearing for the
appellant seeks liberty to approach the Arbitrator under Section 17 of the
Arbitration and Conciliation Act, since said section enables the appellant to
apply before the Tribunal. This Court has not expressed any opinion, if
the appellant is entitled to apply under section 17 of the said Act, Arbitrator
will take care of such prayer.
(S.S.SHINDE, J.)
dbm/aa15.13
