M/S G. T. C. India vs Union Of India And Anr on 5 February, 2026

Author: Soumitra Saikia

Bench: Soumitra Saikia

                                                                         Page No.# 1/11

GAHC010176132023




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                              THE GAUHATI HIGH COURT
   (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                                   Case No. : Arb.P./23/2023

            M/S G. T. C. INDIA
            REPRESENTED BY ITS PARTNER SHRI SAURAV GHOSH,
            A PARTNERSHIP FIRM REGISTERED UNDER THE INDIAN PARTNERSHIP
            ACT,
            HAVING ITS PRINCIPLE PLACE OF BUSINESS AT 2ND FLOOR,
            CHOUDHURY MINI MARKET,
            BIDHAN ROAD, SILIGURI- 734001.



            VERSUS

            UNION OF INDIA AND ANR.
            REPRESENTED BY EXECUTIVE ENGINEER,
            CENTRAL PUBLIC WORKS DEPARTMENT (CPWD),
            PROJECT DIVISION, BORJHAR,
            KAHIKUCHI BAZAR,
            GUWAHATI- 781015.

            2:THE CHIEF ENGINEER
             CENTRAL PUBLIC WORKS DEPARTMENT (CPWD)
             GORCHUCK
             GUWAHATI - 781035

Advocate for the Petitioner   : MR. R HUSSAIN, F. SHAHIN,MR A A AHMED,MS P SEN

Advocate for the Respondent : DY.S.G.I.,
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                                 BEFORE
                  HONOURABLE MR. JUSTICE SOUMITRA SAIKIA

                                     ORDER

05.02.2026

Heard Mr. R. Hussain, learned counsel for the petitioner, also heard MR. P.K. Medhi, learned CGC appearing for the respondents.

2. This is an application under Section 11 of the Arbitrations and Conciliations Act 1996. The petitioner was awarded a contract for construction of Residential Building (Type- V/6 Nos. & Type- IV/03 Nos.) quarters i/e E&M Works at Ftr. Hqrs., SSB, Sonapur (Assam). Pursuant to the said contract agreement, the same duly executed by and between the petitioner and the respondent. As per the said agreement, if any dispute arises between the parties then as per Clause 25 the procedure prescribed would be followed. In terms of Clause 25, the contractor if he makes a claim of dispute will request the respondent's authority to refer the matter for resolution before the Dispute Redressal Committee which is to be constituted by the respondents in terms of the contract agreement. This reference is to be made within a period of 15 days from the date on which the disputes raised by the petitioners are received. The reference is to be made along with the list of disputes with the amounts claim. The Dispute Redressal Committee shall give its decision within a period of 60 days that can be extendable by 30 days by consent of both the parties from the receipt of reference from the Chief Engineer/ CPM/ ADG/ SDG. Thereafter the Dispute Redressal Committee will submit its decision to the concerned ADG/ SDG for acceptance. The ADG/ SDG in a time limit of 30 days from the date of receipt of the DRC decision will convey acceptance or otherwise of the decision. If DRC fails to give its decision within the aforesaid period or any party is dissatisfied Page No.# 3/11

with the decision of Dispute Redressal Committee, then either party may within a period of 30 days from the receipt of the decision of the Dispute Redressal Committee or expiry of the aforesaid time limits may give notice to the respondents for appointment of an arbitrator. Where the claimed amount is below Rs. 20 crore, then the matter shall be referred to a sole arbitrator.

3. According to the petitioner after the petitioner had completed the work, the same is not accepted by the respondents. It is submitted that because the petitioner could not complete the work the contract was terminated. The petitioner raised his grievances vide communication dated 05.10.2022 raised a final claim amounting to Rs. 1,67,97,983/-. Thereafter the respondents replied to the communication that the respondents requested the petitioner several times to attend the joint measurement in presence of representative of the petitioner and the respondent. Pursuant thereto, the petitioner by communication dated 15.11.2022 raised his final claim again requesting the respondents to refer the dispute to the DRC. The respondents replied by communication dated 01.12.2022 intimating the petitioner that the communication for referring the dispute to DRC was received on 30.11.2022 and the DRC will be constituted accordingly. Subsequently, on 19.12.2022 a committee was constituted comprising of one member which is at variance from the members prescribed in the contract in respect of the DRC. Therefore, the consent was sought for from the petitioner. The petitioner thereafter declined to give consent and requiring the respondent's authorities to constitute the DRC as per the specification of the contract agreement. Subsequently on 05.01.2023 the respondents replied to the request made by the petitioner by re-constituting the DRC comprising of the members as specified in the contract agreement.

4. According to the petitioner, the reply received on 05.01.2023, beyond the Page No.# 4/11

prescribed under Clause 25 of the contract. Therefore, it is incumbent on the respondent authorities to refer the matter to arbitration for sole arbitrator. However, that not having been done, the petitioner issued a notice dated 08.02.2023 calling upon the respondents to appoint the sole arbitrator. In response, the respondents stated that since the DRC was constituted it was necessary to refer the matter to the DRC in terms of the Clause of the contract and that not have been done, therefore, the question of appointing arbitrator did not arise. The matter was being situated, thus the petition has been filed seeking appointment of an arbitrator under Section 11.

5. Mr. P.K. Medhi, learned CGC for the respondents submits that the prescription of Clause 25 was required to be followed and which was followed by the respondents, but in spite of that petitioner did not yield to the steps taken by the respondents by constituting the DRC in terms of Clause 25. Accordingly, since the procedure prescribed under Clause 25 has not been followed, this petition is premature at this stage to seek appointment of an arbitrator. First the prescription under Rule 25 for attempting to resolve of disputes through the DRC must be resorted to by both the parties as it is a part of agreement executed by and between the parties.

6. Learned counsel for parties have been heard. Pleadings available on record have been carefully perused. The Clause 25 of the Contract agreement reads as under:

"Except where otherwise provided in the contract, all questions and disputes relating to the meaning of the specifications, design, drawings and instructions here-in before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or these conditions or Page No.# 5/11

otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after the cancellation, termination, completion or abandonment thereof shall be dealt with as mentioned hereinafter:

(i) If the contractor considers any work demanded of him to be outside the requirements of the contract, or disputes any drawings, record or decision given in writing by the Engineer-in-Charge or if the Engineer in Charge considers any act or decision of the contractor on any matter in connection with or arising out of the contract or carrying out of the work, to be unacceptable and is disputed, such party shall promptly within 15 days of the arising of the disputes request the Chief Engineer/ CPM, or where there is no Chief Engineer/CPM, request the Additional Director General/Special Director General, who shall refer the disputes to Dispute Reressal Committee (DRC) within 15 days along with a list of disputes with amounts claimed if any in respect of each such dispute. The Dispute Redressal Committee (DRC) give its decision within a period of 60 days extendable by 30 days by consent of both the parties from the receipt of reference from CE/CPM/ADG/SDG. The constitution of Dispute Redressal Committee (DRC) shall be as indicated in Schedule 'F'. Provided that no party shall be represented before the Dispute Redressal Committee by an advocate/legal counsel etc. The DRC will submit its decision to the concerned ADG/SDG for acceptance.

ADG/SDG in a time limit of 30 days from receipt of DRC decision will convey acceptance or otherwise on the said decision. If the Dispute Redressal Committee (DRC) fails to give its decision within the aforesaid period or the ADG/SDG fails to give his decision in the aforesaid time limit or any party is dissatisfied with the decision of Dispute Redressal Committee (DRC)/ADG/ SDG theneither party may within a period of 30 days from the receipt of the decision of Dispute Redressal Committee (DRC)/ADG/SDG or on expiry of aforesaid the time limits available to DRC/ADG/SDG, may give notice to the Chief Engineer/CPM, CPWD, in charge of the work or if there be no Chief Engineer/CPM,, the Additional Director General/Special Director General Page No.# 6/11

concerned or if there be no Additional Director General/ Special Director General, the Director General, CPWD for appointment of arbitrator on prescribed proforma as per Appendix XVII under intimation to the other party. It is a term of contract that each party invoking arbitration must exhaust the aforesaid mechanism of settlement of claims/disputes prior to invoking arbitration.

The CE/ADG/ SDG shall in such case appoint the sole arbitrator or one of the three arbitrators as the case may be within 30 days of receipt of such a request and refer such disputes to arbitration. Wherever the Arbitral Tribunal consists of three Arbitrators, the contractor shall appoint one arbitrator within 30 days of making request for arbitration or of receipt of request by Engineer-in-charge to CE/ADG/SDG/DG for appointment of arbitrator, as the case may be, and two appointed arbitrators shall appoint the third arbitrator who shall act as the Presiding Arbitrator. In the event of

(a) A party fails to appoint the second Arbitrator, or

(b) The two appointed Arbitrators fail to appoint the Presiding Arbitrator, then the Director General, CPWD shall appoint the second or Presiding Arbitrator as the case may be.

(ii) Dispute or difference shall be referred for adjudication through arbitration by a Tribunal having sole arbitrator where claimed amount is Rs. 20 Crore or less. Where claimed Value is more than Rs. 20 Crore, Tribunal shall consist of three Arbitrators as above. The requirements of the Arbitration and Conciliation Act, 1995 (26 of 1996) and any further statutory modification or re- enactment thereof and the rules made there under and for the time being in force shall be applicable.

It is a term of this contract thatthe party invoking arbitration shall give a list of disputes with amounts claimed, if any, in respect of each such dispute along with the notice for appointment of arbitrator and giving reference to the decision of the ADG/ SDG on the finding /recommendation of DRC. It is also a term of this contract that member(s) of the Arbitration Tribunal shall be a Graduate Engineer with experience in handling public works engineering Page No.# 7/11

contracts, and further he shall have earlier worked at a level not lower than Chief Engineer/ equivalent (i.e. Joint Secretary level of Government of India). This shall be treated as a mandatory qualification to be appointed as arbitrator. Parties, before or at the time of appointment of Arbitral Tribunal may agree in writing for fast track arbitration as per the Arbitration and Conciliation Act, 1996 (26 of 1996) as amended in 2015.

Subject to provision in the Arbitration and Conciliation Act, 1996 (26 of 1996) as amended in 2015 whereby the counter claims if any can be directly filed before the arbitrator without any requirement of reference by the appointing authority. The arbitrator shall adjudicate on only such disputes as are referred to him by the appointing authority and give separate award against each dispute and claim referred to him and in all cases where the total amount of the claims by any party exceeds Rs. 1,00,000/-, the arbitrator shall give reasons for the award.

It is also a term of the contract that fees payable to arbitral tribunal shall be as approved by DG, CPWD, OM issued vide no.2/2006/SE(TLC)/CSQ/137 dated 19- 11-2019 (or its latest amendment as approved by DG, CPWD). This fee shall be shared equally by parties.

The place of arbitration shall be as mentioned in Schedule F. In case there is no mention of place of arbitration, the arbitral tribunal shall determine the place of arbitration.

The venue of the arbitration shall be such place as may be fixed by the Arbitral Tribunal in consultation with both the parties. Failing any such agreement, then the Arbitral Tribunal shall decide the venue."

7. A bare perusal of the Clause as extracted above reveals that the resolution of disputes as agreed to by the parties are in two stage. Once the dispute are identified and raised by the contractor, the same is required to be referred to the Chief Engineer/CPM within 15 days of the dispute arising request the authorities prescribed under Clause 25(I) to refer the disputes to DRC within 15 Page No.# 8/11

days along with list of the disputes. The Members of the DRC constituted under Section 25 is a part of the contract agreement. The members are already identified and specified under Clause 25 are :

            i)        Chairman (CE, Shillong)
            ii)      Member (SE (W& TLQA), (RG))
            iii)     Member (SE (P), (RG), Guwahati)

8. In terms of the clauses of the contract agreement, the petitioner raised the dispute and called upon the respondent authorities to refer the matter for pressing before the DRC. The communication of the petitioner raising the dispute was received by the respondent authorities on 30.11.2022, as is accepted their communication dated 01.12.2022 addressed to the petitioner. Therefore, in terms of Clause 25 within 15 days the respondents were required to refer the disputes raised by the petitioner before the DRC. Thereafter the DRC was constituted with a third member who is a member other than one specified in the contract. This was informed to the petitioner on 14.12.2022, requiring the petitioner to accept the constitution and appear before the DRC. The petitioner by his communication dated 23.12.2022 objected the constitution of the DRC with a member which is different from the one specified in the contract agreement and refused to give their consent. On the contrary, the respondents were requested to recall the constitution of the DRC and reconstitute again along with members specified in the contract agreement. Thereafter by communication dated 05.01.2023, the respondent authorities reconstituted the DRC with the members specified in the contract agreement and intimated the petitioners.

9. However, it is seen that from 30.11.2022 the respondent were required to constitute the DRC within 15 days i.e. 15.12.2022 in terms of Clause 25 of the Page No.# 9/11

contract agreement. However, the constitution ultimately was communicated only on 05.01.2023 which is well beyond the period under Clause 25 of the agreement. Therefore, in terms of Clause 25 of the agreement itself if the disputes resolution is unable to resolve the disputes within the period prescribed, then either of the party within a period of 30 days from the date of receipt of the decision of the DRC or on the expiry of the aforesaid time-limit give notice to the Chief Engineer/CPM, CPWD for appointment of an arbitrator in the prescribed format. The petitioner accordingly by notice dated 08.02.2023 issued notice on the respondents calling upon them to refer the matter for resolution of the disputes before the sole arbitrator. The respondents however declined to do so, and rather insist the matter being referred to DRC since the DRC has already been constituted. Since the matter was under referred to arbitration the present application has been filed under 11(6).

10. Having heard, the counsel and notice the pleadings before this court and the submissions urged before this court, it is seen that the time period prescribed under Clause 25 of the agreement was not adhered to by the respondent authorities for constitution of the DRC and referring the matter for resolution of disputes by DRC. Clause 25 itself of the agreement clearly provides that where the order of the DRC is not accepted by the party or the DRC is unable to resolve disputes within the time period prescribed then matter can be referred to arbitration by either of the party. The period within which the matter is to be referred to the DRC is 15 days from the issuance of the notice raised in the disputes. Even assuming that these 15 days is to be counted from the date of receipt or such a notice, the notice of the petitioner raising the dispute was admittedly received by the respondent on 30.11.2022 and in terms of Clause 25 the same dispute is required to referred to DRC within 15 days there from which Page No.# 10/11

will expire on 15.12.2022. However, on 14.12.2022 although the DRC was constituted, the petitioner did not accept the said Constitution on the ground that one of the member named in the said order is at variance from the list of members which is clearly expressed in the agreement. Therefore, a communication was issued on 23.12.2022 requiring the respondents to re-call the earlier order and reconstitute the DRC. In response to the communication the DRC was finally constituted on 05.01.2023. It is clear from the said communication that the pleading prescribed in the Clause 25 has not been adhered to. Even assuming that the petitioner requesting the respondents to reconstitute the DRC in terms of the members specified in the contract self can amount to waiver of the time period prescribed in the agreement, however the same cannot be treated to have a binding effect on the petitioner, unless the consent to that effect is given by the petitioner. The contract is binding that both the parties including the clauses prescribed. There is a clear prescription on the time period within which the DRC is to resolve the dispute, where the DRC could not be constituted and disputes be referred within the specified time period. The subsequent constitution of the DRC, according to this Court will have no binding effect in terms of the clause 25 of the Contract agreement. Therefore it will not be open to the respondents at this stage to insist since the dispute resolution prescribed under Clause 25 which was required to be resorted to. In the first instance by the DRC, not having been resorted to this stage for referring the matter for arbitration is not being reached. Such contention of the respondent cannot be accepted in view of the clear prescription under Clause 25, prescribing the specific time period.

11. Under such circumstances, this Court is unable to accept the contentions of the respondent and upon giving its anxious consideration as concluded that the Page No.# 11/11

prayers made by the petitioner are required to be allowed. Therefore, under the powers conferred under Section 11 Arbitration and Conciliations Act 1996, this Court therefore appoints Smt. Chaya Rani Goswami, retired District and Sessions Judge of Assam as Sole Arbitrator to resolve the disputes arising by and between the parties and thereafter passed appropriate award. The Tribunal will also consider all objections that may be raised by the parties regarding arbitrator of the issues raised. This appointment, however, is prospective till the time written declaration is received from the arbitrator appointed by this order in terms of Clause 12(1) of the Arbitration and Conciliations Act. Upon receipt of such declaration by the prospective arbitrator the appointment will be confirmed.

12. Copy of this order is marked to the prospective arbitrator appointed by the Registry of this Court. The parties will place a copy of this order and the parties

will appear before the arbitrator on 27th of February, 2026.

13. Matter therefore be listed on 13th of March, 2026.

JUDGE

Comparing Assistant