Chattisgarh High Court

Cube Engitech Consultant Pvt. Ltd vs Public Works Department on 13 August, 2021

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                                                                                    AFR
                   HIGH COURT OF CHHATTISGARH AT BILASPUR
                                    ARBR No. 15 of 2018
             Cube Engitech Consultant Pvt. Ltd. Through Its Director Amit Kr Sinha
             Jeevan Lok Complex, Hinoo, Main Road, Ranchi, Jharkhand

                                                                         ---- Applicant
                                           Versus
           Public Works Department Through Its Engineer In Chief, Bridge Zone,
             Sirpur Bhawan Campus, Raipur, Chhattisgarh

                                                                     ---- Respondents

     For Applicant                    :     Mr. Mukesh Sharma, Advocate
     For Respondent                   :     Mr. Jitendra Pali, Dy. Advocate General


                            Hon'ble Shri Justice P. Sam Koshy
                                     Order on Board
13/08/2021

1. Present is an application under Section 11(6) of the Arbitration and

Conciliation Act, 1996 (hereinafter referred as "the Act of 1996") seeking

for appointment of an Arbitrator for redressal of the grievances between

applicant and respondent.

2. The brief facts, relevant for disposal of the present application, are that

the applicant is a Company registered under the Companies Act, 1956

engaged in providing consultancy services inter alia in Traffic Survey,

Techno Economic Feasibility study, preparation of scheme, preparation of

general arrangement drawing for structure, utility identification, soil

investigation, all good for construction drawings, preparation of Bill of

Quantity (BOQ) and other related disciplines.

3. The respondent State in the instant case had floated a NIT for

appointment of a Consultant for the purpose of providing Techno-

Economic Feasibility Study, Geometric Design, Structural Design, Issue

of Good for Construction Drawings Preparation. The applicant herein

having participated in the said tender proceeding was found to be the

most eligible and an agreement as such was entered into between

applicant and respondent.

4. From bare perusal of the agreement and the nature of tender floated, it

would clearly reflect that the service which was provided to the applicant

was a consultancy service. The agreement entered into between the

parties, Clause-9 envisages settlement of disputes by resorting to

arbitration under the provisions of the Act of 1996 and procedures were

clearly laid down which were to be availed while and before, invoking the

arbitration clause.

5. The contention of applicant is that on account of certain dispute in respect

of non-releasing of the bills raised by applicant, they had approached the

respondent authorities for resolving the dispute by way of arbitration as

agreed upon between the parties by way of an agreement. It is

contended that the respondent authorities did not respond to the

representations and the reminders put forth by the applicant. This non-

response by the respondent led to the filing of the present application

under Section 11(6) of the Arbitration and Conciliation Act, 1996 for

appointment of an Arbitrator.

6. As regards entering into the contract between the parties, the agreement

between the parties and in the agreement there being an arbitration

clause are not in dispute. It is also not in dispute that the nature of work

assigned to the applicant by the respondent was exclusively that of

consultancy.

7. Learned Dy. Advocate General however referring to the reply and to the

stand taken by the respondent, submits that whatever work was assigned

to the applicant herein was in respect of construction of a pathway within

the city of Raipur. Therefore, the nature of contract entered into between

the parties is one which could fall within the ambit of "works-contract"

defined under Section 2 (1)(i) Chhattisgarh Madhyastatha Adhikaran

Adhiniyam, 1983 (hereinafter referred as "Adhiniyam, 1983") and

therefore the present application under Section 11(6) of the Act of 1996

would not be maintainable and the recourse available to applicant herein

would be according to the provisions of Adhiniyam 1983, where the

matter has to be raised before the Tribunal established under the said Act

of 1983.

8. Learned Dy. Advocate General referred to Section 2 (1)(i) defining

"Works-Contract" and tried to emphasize the fact that since the nature of

work assigned to the applicant was relating to the construction of

pathway, it would come within the definition of a Work Contract. Learned

State counsel also referred to a full Bench judgment of the Madhya

Pradesh High Court in AIR 2017 MP 103 in support of his contention.

9. Learned counsel appearing for applicant, on the contrary, submits that the

applicant herein has got nothing to do with the execution of work of

construction of path way. The said execution of work was to be carried

out by a different agency altogether by a separate contract and

agreement being executed for the same. So far as the applicant

company is concerned, the applicant was only to provide consultancy

services and also the feasibility report which includes Geometric Design,

Structural Design and apart from the consultancy, the applicant company

was not in any manner associated with the execution of work. Thus, the

said contract and agreement entered into between the parties would be

get excluded from the ambit of Works Contract and the only remedy and

recourse available would be in terms of the agreement i.e. resorting to the

provisions of the Act of 1996. Learned counsel for applicant referred to a

recent decision of this High Court in the case of SMEC International

Private Ltd. Vs. State of Chhattisgarh, ARBR No.23/2018 decided on

13.05.2019 and the order of this Court has subsequently been affirmed by

the Supreme Court in Special Leave to Appeal (C) No. 21120/2019

decided on 11.09.2019.

10. For proper understanding of the dispute it would also be relevant at

this juncture to appreciate the fact that by the term "Consultancy" normally

it is understood as "giving an expert advice in respect of a particular

subject matter or a work". "Consultancy" does not mean undertaking a

work or a job for execution or completion of a project. The basic nature of

a consultant is to provide expert opinion in the form of reports,

presentations etc. which may be acceptable to the party who has sought

consultancy or may not be acceptable. If it is acceptable to the party who

has obtained consultancy they may get the work done by way of a fresh

contract and agreement.

11. At the same time, as regards "works contract", it is a contract

entered into between the parties for execution of a particular work and in

the instant case what needs consideration is the definition of "Works

Contract" as provided under the aforementioned Adhiniyam, 1983 which

for ready reference is reproduced hereinunder:

"works-contract" means an agreement in writing for the execution of any work relating to construction, repair or maintenance of any building or superstructure, dam, weir, canal, reservoir, tank, lake, road, well, bridge, culvert, factory, work-shop, powerhouse, transformers or such other works of the State Government or Public Undertaking as the State Government may, by notification, specify in this behalf at any of its stages, entered into by the State Government or by an official of the State Government

or Public Undertaking or its official for and on behalf of such Public Undertaking and includes an agreement for the supply of goods or material and all other matters relating to the execution of any of the said works."

12. A plain perusal of the definition of "Works Contract" would clearly

give an indication that within the provisions of the Adhiniyam, 1983, the

Works Contract would be a contract entered into between the parties for

execution of a work relating to firstly construction, secondly repairing and

thirdly maintenance of any of the items and nature of work specifically

mentioned in the aforesaid definition. While the term "execution" means

to carry out a work order for the course of action, the nature of work

assigned to the applicant herein was not for carrying out a plan rather it is

providing of a plan.

13. Keeping in view the aforesaid facts and circumstances and the

definition under the Adhiniyam, 1983 it would be apt at this juncture to

refer to the order passed by this Court in ARBR No.23/2018 where in

paragraphs 13 it has been held as under:

"After due consideration on over all facts and circumstances of case and documents present on record, I am of this view that nature of the contract between the applicant and the respondent is not a contract as defined under Section 2 (I) of Adhiniyam, 1983 and as such, it is not a work contract rather it is a service contract. Hence, on the basis of this finding, it is held that this dispute shall not be governed by the provisions of Adhiniyam, 1983, hence, the application brought before this Court has merits and, further, this Court has jurisdiction and power to invoke section 11(6) of Arbitration and Conciliation Act, 1996."

14. The aforesaid view of the Court has also received a stamp of approval

from the Hon'ble Supreme Court in Special Leave to Appeal (C) No.

21120/2019 decided on 11.09.2019

15. In view of the aforesaid legal position, the objection raised by the State

as regards the application being not maintainable is not acceptable and

the same deserves to be negated.

16. Given the aforesaid legal position as it stands, this court is of the opinion

that considering the nature of dispute and the stand of the respondent

and also considering the arbitration clause, this Court is of the opinion

that it is a fit case where the dispute needs to be referred to an Arbitrator.

17. Learned counsel appearing on either side proposed the name of Justice

Mr. Dhirendra Mishra, Retired Judge from the High Court of Chhattisgarh