1. This is an application for appointment of a learned Arbitrator to arbitrate
termination of the contract which was awarded to the petitioner.
2. Mr. Basu, learned Senior Advocate refers to the arbitration clause and
also the notice invoking arbitration. Clause 12A of the General Terms
cum Managing Director of a subsidiary company. It is the specific
amicable settlement nor settlement by way of an in-house mechanism.
Arbitrator. It is submitted that, the clause provides for unilateral
prohibited by law. Reference is made to the decision of Perkins
Eastman Architects DPC and Another vs. HSCC (India) Ltd. reported
Railway Electrification vs. ECI SPIC SMO MCML (JV) A Joint
Venture Company reported in2024 SCC OnLine SC 3219.
4. Mr. SarosijDasgupta, learned Advocate for the respondent submits that
b) The petitioner, thereafter, filed a writ petition wherein the issues were
adjudicated.The liberty granted by the Writ Court to approach the
appropriate forum was subject to the provisions of law.
c) The application should be dismissed on the principles of res judicata
and/or constructive res judicata, as the claims were denied by
another forum.
d) The referral court should apply the principles of Order 23 Rule (1)(4)
of the Code of Civil Procedure and reject the prayer for appointment
of an Arbitrator on the ground that leave was not granted to the
petitioner to move afresh on the self-same claim or cause of action.
5. Mr. Dasgupta relies on the decision of the Hon'ble Apex Court in the
matter of HPCL Bio-Fuels Ltd. Vs. ShahajiBhanudasBhad reported in
2024 SCC OnLine SC 3190.
6. Heard learned advocates for the respective parties.
7. This court finds that the in-house mechanism which has been provided
under Clause 12 of the GCC covers disputes which arise during the
execution of the contract. Moreover, the background of the case
indicates that a dispute with regard to the completion of the work
originated long ago. Ultimately, stop work notices and show cause
notices were issued. Thereafter, the contract was terminated.
8. Under such circumstances, this court is of the view that referring the
parties to settle the dispute by the in-house mechanism, will be an
empty formality. Reference is made to the decisions of Demerara
Distilleries Private Limited and Another v.Demerar Distillers
Limited reported in (2015)13 SCC 610 and Visa International Ltd. v.
Continental Resources (USA) Ltd., reported in (2009) 2 SCC 55.
9. The question is whether this court should refer the disputes to an
Arbitrator, upon considering the objections of Mr. Dasgupta.
10. While disposing of WPA/9099/2024,this Court had observed that
the order of termination was not a part of the plaint.Thesteps taken by
the tendering authority, the show cause notice and the proposed actions
to be taken including termination, banning etc. were subject matters of
the suit. The petitioner withdrew the suit after having failed to obtain
any order of temporary injunction. In the order of temporary injunction,
the learned Civil Judge (Senior Division) took into account the facts
leading to the issuance of the show cause notice which culminated in
the order of termination. While making the observation that the
termination was justified, the learned trial Judge had rejected the
application for injunction, finding the same to be misconceived.
Thereafter, the suit was withdrawn. The petitioner filed a writ petition.
11. This writ court took note of the above order, but did not express
any opinion that, the termination of the contract was the subject matter
of challenge in the suit. Rather, it was observed that, the plaint did not
disclose that the cause of action in the suit, arose out of the termination.
In any event, observations in the order rejecting the application for
injunction are tentative findings in an interlocutory application. The writ
court came to the conclusion that, prima facie, there were sufficient
reasons to justify the termination of the contract but, further
investigation into the correctness of the steps taken by the respondent
vis-à-vis the rights and liabilities of the petitioner arising out of the
contract, were left open to be adjudicated by the competent forum, as
per the agreement. The court was of the view that, weighing of evidence
was beyond the power of judicial review. Thus, the writ petition was held
to be not maintainable and was disposed of along with the connected
application.
12. The relevant portions of the order of passed in the writ petition are
quoted below :-
" 20. Whether the reasons are correct, justified or borne out from the evidence,
are matters which the writ court cannot delve into because such procedure would
require scanning and appreciation of evidence. The veracity and the correctness
of the reasons provided cannot be gone into by the writ court, in view of the
disputed questions of fact. Scanning of evidence is not permissible under the writ
jurisdiction.
21. In State of U.P. v. Bridge & Roof Co. (India) Ltd. (State of U.P. v. Bridge &
Roof Co. (India) Ltd., (1996) 6 SCC 22), the Apex noted that the contract in
question contained articles providing, inter alia, for settlement of disputes by
reference to arbitration and the very resort to Article 226 was found to be
misconceived in the circumstances. The Court also laid down as follows:-
"16. Firstly, the contract between the parties is a contract in the realm of
private law. It is not a statutory contract. It is governed by the provisions of
the Contract Act or, may be, also by certain provisions of the Sale of Goods
Act. Any dispute relating to interpretation of the terms and conditions of
such a contract cannot be agitated, and could not have been agitated, in a
writ petition. That is a matter either for arbitration as provided by the
contract or for the civil court, as the case may be. Whether any amount is
due to the respondent from the appellant Government under the contract
and, if so, how much and the further question whether retention or refusal
to pay any amount by the Government is justified, or not, are all matters
which cannot be agitated in or adjudicated upon in a writ petition. The
prayer in the writ petition viz. to restrain the Government from deducting a
particular amount from the writ petitioner's bill(s) was not a prayer which
could be granted by the High Court under Article 226. Indeed, the High
Court has not granted the said prayer."
22. The Hon'ble Apex Court, in Jaipur VidyutVitran Nigam Ltd. v. MB Power
(M.P.) Ltd., reported in 2024 SCC OnLine SC 26 held the following:--
"137. This Court in the case of Reliance Infrastructure Limited v. State of
Maharashtra has held that while exercising its power of judicial review,
the Court can step in where a case of manifest unreasonableness or
arbitrariness is made out.
138. In the present case, there is not even an allegation with regard to that
effect. In such circumstances, recourse to a petition under Article 226 of the
Constitution of India in the availability of efficacious alternate remedy
under a statute, which is a complete code in itself, in our view, was not
justified.
139. No doubt that availability of an alternate remedy is not a complete
bar in the exercise of the power of judicial review by the High Courts. But,
recourse to such a remedy would be permissible only if extraordinary and
exceptional circumstances are made out. A reference in this respect could
be made to the judgments of this Court in the cases of Radha Krishan
Industries v. State of Himachal Pradesh and South Indian Bank Ltd. v.
Naveen Mathew Philip."
23. This writ petition should not be entertained. There appears to be an
efficacious remedy under the terms and conditions of the contract, for settlement
of disputes, including an arbitration clause. The petitioners are at liberty to take
appropriate steps in accordance with law.
24. It also prima facie appears that the show cause notice and the order
impugned were issued by the same authority as per the terms and conditions.
25. The observations made hereinabove, are tentative and restricted to the
disposal of the writ petition. If the petitioners avail of the remedy under the
contract, all points raised by either party, including the maintainability of the
proceeding shall be decided by the competent authority without being influenced
by this order.
26. The writ petition is accordingly disposed of. There shall be no order as to
costs.
27. In view of such disposal of the writ petition, the connected application
of.//being CAN 1 of 2024 is also disposed of."
13. Under such circumstances, although Mr. Dasgupta's contention
that the principles of Order 23(1)(4) would apply even to a referral court,
to weed out non-arbitrable claims, this court observes that, the
termination of the contract per se, was not the subject matter of the suit
although the termination was the ultimate outcome of the show cause
notices which were subject matters of the suit. Moreover, the writ court
had granted liberty to the petitioner to approach the appropriate forum,
in accordance with the dispute resolution clause. Thus, the issue raised
by Mr. Dasgupta with regard to the bar of any proceeding before any
court or forum on account of withdrawal of the suit without any liberty,
is left open to be decided by the learned Arbitrator. All other objections
which Mr. Dasgupta has raised with regard to the merits of the claim
and the mode and manner in which the petitioner had proceeded in the
execution of the work, which ultimately led to the termination of the
contract, are also to be adjudicated by the learned Arbitrator. The
respondent also submits that the petitioner is liable to compensate the
respondent.
14. Accordingly, this application is disposed of by appointing Hon'ble
Justice Tapan Kumar Dutt, retired Judge of this Court, as the learned
Arbitrator, to arbitrate upon the disputes between the parties. This
order is subject to compliance of Section 12 of the Arbitration and
Conciliation Act, 1996. The learned Arbitrator shall fix his own
remuneration as per the schedule of the Act.
15. All points on the merits of the claim is kept-open.
16. AP-COM/113/2025 is accordingly, disposed of.
(SHAMPA SARKAR, J.)
pa/pkd
