Gujarat High Court

Sardar Sarovar Narmada Nigam ... vs Sadbhav Engineering Limited on 24 August, 2023

Bench: Vaibhavi D. Nanavati

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     C/MCA/1249/2023                          ORDER DATED: 24/08/2023

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       IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
        R/MISC. CIVIL APPLICATION NO. 1249 of 2023
                             In
       R/SPECIAL CIVIL APPLICATION NO. 6505 of 2023
                            With
        R/MISC. CIVIL APPLICATION NO. 1320 of 2023
                              In
        SPECIAL CIVIL APPLICATION NO. 6515 of 2023
                            With
        R/MISC. CIVIL APPLICATION NO. 1321 of 2023
                              In
        SPECIAL CIVIL APPLICATION NO. 6575 of 2023
                            With
        R/MISC. CIVIL APPLICATION NO. 1260 of 2023
                              In
        SPECIAL CIVIL APPLICATION NO. 6580 of 2023
===================================================
        SARDAR SAROVAR NARMADA NIGAM LIMITED
                           Versus
              SADBHAV ENGINEERING LIMITED
===================================================
Appearance:
MR SANJAY A MEHTA(469) for the Applicant(s) No. 1,2
MR PARAS K SUKHWANI(8284) for the Opponent(s) No. 1
===================================================
 CORAM:HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI

                          Date : 24/08/2023

                       COMMON ORAL ORDER

1. As the issue involved in all these applications are

common, the common order is passed in all these applications.

Misc. Civil Application No. 1249 of 2023 is treated as a lead matter

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and facts are stated from the said Application.

2. Heard Mr. Sanjay A. Mehta, learned advocate

appearing for the applicants and Mr. Paras K. Sukhwani, learned

advocate appearing for the opponent.

3. The present applicants are the original respondents,

whereas, the present opponent is the original petitioner. The

original petitioner has preferred the petition being Special Civil

Application No. 6505 of 2023, wherein, it was prayed for an

order/ direction for referring the Arbitration Reference No. 20 of

2013, either to Hon'ble Mr. Justice C.K. Thakkar (former Judge,

Supreme Court of India) or any former Judge of this Court. At

the joint statement having been made by the learned advocates

appearing for the respective parties, this Court passed the

following order on 21.06.2023 in Special Civil Application No.

6505 of 2023, Paragraphs 5 to 7 of the said order reads thus:

"5. In the facts of the present case, Mr. Paras S. Sukhwani, learned advocate appearing for the petitioner and Ms. Richa Shah, learned advocate for Mr. Alkesh N. Shah, learned advocate appearing for the respondent nos. 1 and 2 jointly request that Arbitration Reference No.20 of 2013 be referred to the Hon'ble Mr. Justice J.C. Upadhyay (former Judge, High Court of Gujarat).

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6. Considering the joint statement made by the learned advocates appearing for the respective parties, Hon'ble Mr. Justice J.C. Upadhyay (former Judge, High Court of Gujarat), be appointed as Arbitrator to decide the Arbitration Reference No. 20 of 2013.

7. The Registry to communicate the present order to Hon'ble Mr. Justice J.C. Upadhyay (former Judge, High Court of Gujarat) forthwith."

4. The present application has been filed at the instance

of the original respondents seeking recall of the order dated

21.06.2023 passed in Special Civil Application No. 6505 of 2023.

5.1. Mr. Sanjay A. Mehta, learned advocate

appearing for the applicants herein submitted that, this Court

passed the said order dated 21.06.2023 on the joint statement

made by the learned advocates appearing for the respective

parties. Mr. Mehta, learned advocate has placed reliance on the

communication dated 04.07.2023 duly produced at Annexure-C,

Page-26, wherein, the applicant herein - original respondents -

Sardar Sarovar Narmada Nigam Limited addressed a

communication to the learned advocate, stating that the

respondent authorities had not given any consent as stated by the

learned advocate appearing for the applicants herein - original

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respondents. Mr. Mehta, learned advocate submitted that, to the

said communication, a reply has been tendered by the learned

advocate on 05.07.2023, which was duly produced at Annexure-

D, Page-27 stating that the name of Mr. J.C. Upadhyay (form

Judge, High Court of Gujarat) was suggested by the learned

advocate on his own volition, considering the ratio as laid down

by the Hon'ble Apex Court in SLP (C) No. 31650 of 2014 in the

case of GKC Projects Ltd. v/s. SSNNL and order passed in

Petition under Arbitration Act No. 173 of 2019 in the case of

KCL-SRK JV through Authorized Rep Mayank Shivkumar Vyas

v/s. State of Gujarat. It was stated that the name was suggested

by the learned advocate appearing for the original respondents in

good faith, however, the respondent authority is not complied

with the same. Mr. Mehta, learned advocate submitted that

therefore the request was made to replace the name of

Arbitrator.

5.2. In the aforesaid facts, it was submitted by Mr. Mehta,

learned advocate appearing for the present applicants - original

respondents that in absence of the consent given by the

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respondent authorities - applicants herein as clearly stated in the

communication dated 04.07.2023 sent to the learned advocate

appearing for the original respondents, it was not open for the

learned advocate to make a statement for and on behalf of the

respondent authorities. It was further contended that the parties

herein are governed by the Gujarat Public Works Contracts

Disputes Arbitration Tribunal Act, 1992 (hereinafter referred to as

'the Act, 1992' for the sake of brevity) and the provision of

Sections 7 and 8 of the Act, 1992 would be applicable. Mr.

Mehta, learned advocate placing reliance on Section 8 of the said

Act submitted that where any dispute arises between the parties

to the works contract, either party shall, irrespective of whether

such works contract contains an arbitration clause or not, refer,

within one year from the date when the dispute has arisen, such

dispute in writing to the Tribunal for arbitration in such form

and accompanied by such documents or other evidence and by

such fees, as may be prescribed. Mr. Mehta, learned advocate

has also placed reliance on Section 21 of the Act, 1992, wherein,

it was submitted that the provisions of the Arbitration Act, shall

in so far as they are inconsistent with the provisions of the

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Gujarat Public Works Contracts Disputes Arbitration Tribunal Act,

1992, cease to apply to any dispute arising from a works contract

and all arbitration proceedings in relation to such dispute before

an arbitrator, umpire, court or authority shall stand transferred

to the Tribunal.

5.3. Placing reliance on the aforesaid submissions, it was

submitted by Mr. Mehta, learned advocate that Arbitration

Reference No. 20 of 2013 is pending adjudication before the

Tribunal and that it is the Tribunal to have the jurisdiction to

consider the dispute in question. It was submitted that the orders

which are relied upon by the learned advocate who appeared for

the respondent authorities at the time when the order came to be

passed by this Court in Special Civil Application No. 6505 of

2023, were at the time when the Tribunal was not in force. In

view thereof, the orders came to be passed, wherein, Arbitrator

came to be appointed. Reliance was placed on the order passed

in the petition under Arbitration Act No. 173 of 2019, was an

order passed under Section 11 of the Arbitration Act, wherein, an

Arbitrator came to be appointed for lack of quorum. The order

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passed by the Hon'ble Apex Court was also passed in such

circumstances, where the quorum was not available. Placing

reliance on the aforesaid, it was submitted that the Arbitration

Reference No. 20 of 2013 pending before the Tribunal and the

Tribunal being in force, the question of relegating the parties to

the Arbitrator would not arise.

5.4. Mr. Mehta, learned advocate placed reliance on the

following decisions:

(I)      AIR 2015 SC 2867, Para-23

(II)     2022 (1) GLR 627, para-15 and 16

(III)    AIR 2009 Guj 130, para-9 and 10

6. Heard Mr. Paras K. Sukhwani, learned advocate

appearing for the opponent herein.

6.1. Mr. Sukhwani, learned advocate submitted that it is

always open for this Court to relegate the parties to the private

Arbitrator, considering the fact that the proceedings before the

Tribunal are pending since long time.

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6.2. It was further submitted that, in view of non-

availability of the quorum, it is just and proper that the dispute

be relegated to the private arbitrator, that may be appointed by

the Court.

7. Considering the submissions advanced by the learned

advocates appearing for the respective parties, it appears that the

statement which were made by the learned advocate appearing

for the present applicants - original respondents, at the relevant

point of time, has without the consent of the respondent

authorities. The same is borne out from the communication dated

04.07.2023, duly produced Annexure-C, pg. 26. Considering the

submissions made by Mr. Mehta, learned advocate appearing for

the applicants, the Arbitration Reference being No. 20 of 2013 is

pending adjudication before the Tribunal and by virtue of the

order passed by this Court dated 21.06.2023, the records and

proceedings stands transferred to the Arbitrator appointed by this

Court. The order dated 21.06.2023 came to be passed by this

Court, considering the joint statement made by the learned

advocates appearing for the respective parties.

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8. It is apposite to refer to Sections 8 and 21 the

Gujarat Public Works Contracts Disputes Arbitration Tribunal Act,

1992, which reads thus:

"Section-8:

(1) Where any dispute arises between the parties to the works contract, either party shall, irrespective of whether such works contract contains an arbitration clause or not, refer, within one year from the date when the dispute has arisen, such dispute in writing to the Tribunal for arbitration in such form and accompanied by such documents or other evidence and by such fees, as may be prescribed.

(2) On receipt of a reference under sub-section (1), the Tribunal may, if satisfied after such inquiry as it may deem fit to make, that the requirements under this Act in relation to the reference are compiled with, admit such reference and where the Tribunal is not so satisfied, it may reject the reference summarily.

(3) Where the Tribunal admits the reference under sub-section (2), it shall, after recording evidence if necessary, and after perusal of the material on record and on affording an opportunity to the parties to submit their arguments, make an award or an interim award giving its reasons therefore. (4) The Tribunal shall use all reasonable despatch in entering on and proceeding with the reference admitted by it and making the award, and an endeavour shall be made to make an award within four months from the date on which the Tribunal had admitted the reference.

(5) The award including the interim award made by the Tribunal shall, subject to an order, if any, made under section 11 or 12 be final and binding on the parties to the dispute. (6) An award including an interim award as confirmed or varied by an order, if any, made under section 11 or 12 shall be deemed to be a decree within the meaning of section 2 of the Code of Civil Procedure, 1908 of the principal Court of original jurisdiction within the local limits whereof the award or the interim award has been made and shall be executed accordingly."

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Section-21:

The provisions of the Arbitration Act, shall in so far as they are inconsistent with the provisions of this Act, cease to apply to any dispute arising from a works contract and all arbitration proceedings in relation to such dispute before an arbitrator, umpire, court or authority shall stand transferred to the Tribunal."

9. POSITION OF LAW:

(I) In the case of Himalayan Cooperative Group Housing

Society v/s. Balwan Singh and others reported in AIR 2015 SC

2867, relevant Para-23 reads thus:

"23. Apart from the above, in our view lawyers are perceived to be their client's agents. The law of agency may not strictly apply to the client-lawyer's relationship as lawyers or agents, lawyers have certain authority and certain duties. Because lawyers are also fiduciaries, their duties will sometimes more demanding than those imposed on other agents. The authority-agency status affords the lawyers to act for the client on the subject-matter of the retainer. One of the most basic principles of the lawyer-client relationships is that lawyers owe fiduciary duties to their clients. As part of those duties, lawyers assume all the traditional duties that agents owe their principals and, thus, have to respect the client's autonomy to make decisions at a minimum, as to the objectives of the representation. Thus, according to generally accepted notions of professional responsibility, lawyers should follow the client's instructions rather than substitute their judgment for that of the client. The law is now well settled that a lawyer must be specifically authorized to settle and compromise a claim, that merely on the basis of his employment he has no implied or ostensible authority to bind his client to a compromise/settlement. To put it alternatively that a lawyer by virtue of retention, has the authority to choose the means for achieving the client's legal goal, while the client has the right to decide on what the goal will be. If

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the decision in question falls within those that clearly belong to the client, the lawyer's conduct in failing to consult the client or in making the decision for the client, is more likely to constitute ineffective assistance of counsel."

(II) In the case of M/s. SMS Infrastructure Limited v/s.

Gujarat State Road Development Corporation reported in 2022 (1)

GLR 627, relevant para-15 and 16 reads thus:

"15. In the instant case, as held herein above, the respondent Corporation is a "public undertaking" as contemplated in Clause (i) of Section 2(1)(i) and the contract entered into between the parties was a "works contract" as contemplated in Section 2(1)(k) of the said Act of 1992, and hence Section 8 of the said Act would come into play, which mandates the parties to refer the disputes arising between them to the Tribunal constituted under the Act for arbitration, within one year from the date when the dispute arises. Section 21 thereof also provides that the provisions of the Arbitration Act,1996, shall insofar as they are inconsistent with the provisions of the Act of 1992, cease to apply to any dispute arising from a works contract. The said provision of Section 21 has also been specifically mentioned in Clause 30 of the agreement in question and admitted by the parties. The Arbitration Tribunal Act of 1992 therefore being applicable to the facts of the case, the petitioner could not have invoked Section 11 of the Arbitration Act of 1996.

16. In that view of the matter, the present petition invoking Section 11 of the Arbitration Act is not be maintainable and is liable to be dismissed. It is clarified that the Court has not expressed any opinion on the merits of the case and it would be open for the petitioner to take recourse to any other remedy as may be permissible under the law. The petition is dismissed accordingly."

(III) In the case of R.M. Dasa v/s. Gujarat Water Supply &

Sewerage Board reported in AIR 2009 Guj 130, relevant para-9

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and 10 reads thus:

"9. For the reasons stated above, in light of above observations, findings by this Court, it is held that even where any dispute arises between the parties to the work contract (though brought within the definition of 'works contract' under Section 2(1) (k) of the Arbitration Tribunal Act, 1992 subsequently i.e. after execution of such contract) dispute has arisen after 23.09.2003, parties to such work contract are governed by section 8 of the Arbitration Tribunal Act, 1992 only and dispute is to be resolved by the Tribunal constituted under the aforesaid Act of 1992 only and no Court shall have any jurisdiction to decide the dispute between the parties to such work contract, may be executed prior to 23.09.2003.

10. In view of above, prayer of the petitioner to appoint sole arbitrator in exercise of powers under Section 11(6) of the Arbitration Act and to refer the parties to the domestic arbitration cannot be accepted and granted. The petitioner to approach the Tribunal constituted under the Arbitration Tribunal Act, 1992 for resolving the dispute between the parties with respect to work contract in question. As and when such application is made before the learned Tribunal, it will be open for the petitioner to invoke Section 16 and 17 of the Arbitration Tribunal Act, 1992 with appropriate application and same shall be considered in accordance with law and on merits. Accordingly, present application deserves to be dismissed and is accordingly dismissed. In the facts and circumstances of the case, there shall be no order as to costs."

10. In view of the aforesaid undisputed facts, it is the

Tribunal, which has the jurisdiction to adjudicate the disputes

with regard to the works contracts. In view thereof, considering

the fact that the Arbitration Reference being No. 20 of 2013 is

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pending before the Tribunal and on inquiring from Mr. Ayaan

Patel, learned Assistant Government Pleader appearing for the

respondent-State submitted that the Tribunal is taking up matters

for day-to-day basis.

11. In view of the aforesaid, the order dated 21.06.2023