AI Structured Summary
Not yet generated for this judgment
Judgment
MANMOHAN, J (Oral)
I.A. 1784/2018
Present application has been filed under Order VII Rule 11 CPC read with Sections 5, 34(1), 35 & 36 of the Arbitration and Conciliation Act, 1996
for rejection of the plaint on the grounds of limitation and that the decision of the Dispute Review Board (hereinafter referred to as „DRB‟) is an
arbitral award, which is final and binding. It is also averred in the application that the present suit amounts to forum-shopping and malafide practice.
Learned counsel for the applicant/defendant states that in accordance with the modified Clause 67 of the General Conditions of Contract (for short
“GCCâ€) read with Tripartite Agreement between the parties and the DRB, the decision of the DRB is an arbitral award. The modified Clause 67
of the GCC is reproduced hereinbelow:-
“(i) If the Contractor considers any work demanded of him to be outside the requirements of the Contract or considers any decision of the
Engineer-in-Charge on any matter in connection with or arising out of the Contract or carrying out of work to be unacceptable, he shall promptly ask
the Engineer-in-Charge in writing for written instructions or decision. There-upon the Engineer-in-Charge shall give his written instructions or decision
within a period of thirty days of such request.
Upon receipt of the written instructions or decision, the Contractor shall promptly proceed without delay to comply with such instructions or decision.
If the Engineer-in-Charge fails to give his instructions or decision in writing within a period of thirty days after being requested for or if the Contractor
is dissatisfied with the instructions or decision of the Engineer-in-Charge, the Contractor may within thirty days after receiving the instructions or
decision, file a written appeal with the CMD, NJPC stating clearly, and in detail, the basis for the objection. The CMD will consider the written appeal
and make his decision on the basis of the relevant Contract provisions, together with the facts and circumstances involved in the dispute. The decision
will be furnished in writing to the Contractor within thirty days after the receipt of the Contractor‟s written appeal.
If the Contractor is dissatisfied with this decision, the Contractor, within a period of fifteen days from the receipt of the decision, shall indicate to the
CMD, NJPC (SJVN Ltd) his intention to refer the matter to the Disputes Review Board (DRB) and within a period of another fifteen days shall
formally appeal to the Disputes Review Board.
The constitution of the Disputes Review Board and the procedure to be adopted by it for resolving the disputes is elaborated in the Annexure-A,
provided, however, all such disputes which may arise to the Constitution of the Board, shall be taken up for consideration at its first meeting convened
not later than 30 days upon its constitution. As specified para 1 of Annex-A, the disputes involving the individual up to Rs.50.00 (fifty) million shall be
binding on the NJPC (SJVN Ltd) and the Contractor. In the case of the dispute involving individual claim beyond Rs.50.00 (fifty) million, if inspite of
the recommendations/decision of the Disputes Review Board, the dispute remains unresolved, either party, within 15 days of the receipt of the
aforesaid recommendations/decision of the Board, may appeal the decision back to the Board for review.
However, if even after this review of its recommendations/decision by the Disputes Review Board, the two parties still fail to resolve the dispute,
either party may resort to arbitration. In that case, within a period of 30 days of the receipt of the Disputes Review Board‟s final
recommendations/decision, the party desiring to resort to arbitration shall indicate its intention to refer the dispute to Arbitration, failing which, the said
final recommendations/decision of the Disputes Review Board shall be conclusive and binding.
(ii) The dispute arising between a foreign Contractor and the NJPC (SJVN Ltd) shall be referred to the adjudication of three Arbitrators, one to be
nominated by the NJPC (SJVN Ltd), the second by the Contractor and the third by the President of the International Chamber of Commerce. The
arbitration shall be conducted in accordance with the provisions of Indian Arbitration Act, 1940 or any statutory amendments thereof or at the
Contractor‟s option, in accordance with the Rules or procedure for arbitration of the International Chamber of Commerce, Paris.
The term “Foreign Contractor†applies to a Contractor who is not registered in India and is not a juristic person under Indian Law.
(iii) The disputes arising between an Indian Contractor and the NJPC shall be resolved by „arbitration‟ in accordance with the provisions of Indian
Arbitration Act, 1940 or any statutory amendments thereof. The Board of arbitrators shall be constituted by three „arbitrators‟ one to be nominated
by the Contractor, the second by the NJPC and the third by the Secretary (Power), Ministry of Energy, Govt. of India.
The term „Indian Contractor‟ applies to a Contractor who is registered in India and is a juristic person under Indian Law or to a Joint Venture of
Indian and Foreign firms eligible for price preference as stipulated in Para 1.29.2 (Chapter-I) of these documents.
(iv) The said arbitrators shall have full power to open up, revise and review any decision, opinion, direction, certificate of value etc. relating to the
matter of dispute.
(v) If either of the parties fail to appoint its arbitrators in pursuance of sub-clauses (ii) and (iii) above, within sixty days after receipt of the notice of
the appointment of its arbitrators, then the President of International Chamber of Commerce in case of Foreign Contractor or the Secretary (Power),
Ministry of Energy, Govt. of India in case of Indian Contractor, as the case may be, shall have the power, at the request of either party to appoint
arbitrator. A certified copy of the President‟s /Secretary (Power)‟s order making such an appointment shall be furnished to both the parties.
(vi) Neither party shall be limited in the proceedings before such arbitrators to the evidence or arguments already put before any authority hereinabove
provided for the purpose of obtaining its said recommendation/decisions. No recommendations/decisions given by the DRB shall disqualify any of its
members from being called as a witness and giving evidence before the arbitrators on any matter whatsoever relevant to the dispute or difference
referred to the arbitrators as aforesaid.
(vii) The reference to arbitration may proceed notwithstanding that the Words shall not then be or be alleged to be complete, provided always that the
obligations of the NJPC (SJVN Ltd), the Engineer-in-Charge and the Contractor shall not be altered by reason of the arbitration being conducted
during the progress of the Works. Neither party shall be entitled to suspend such Work to which the dispute relates and payment to the Contractor
shall be continued to be made in terms of the Contract.
(viii) (a) All arbitration shall be held at New Delhi, India.
(b) the language of the arbitration proceedings and that of all documents and communications between the parties shall be English.
(ix) The decision of the majority of arbitrators shall be final and binding upon the parties. The expenses of the arbitrators as determined by the
arbitrators shall be shared equally by the NJPC (SJVN Ltd) and the Contractor. However, the expenses incurred by each party in connection with the
preparation, presentation etc. of its cases prior to, during and after the arbitration proceedings shall be borne by each party itself.
(x) All awards of arbitration shall be in writing and shall state reasons for the amounts awarded.â€
In support of the submission that the decision of the DRB is an arbitral award, learned counsel for the applicant/defendant relies upon the judgment
of the Himachal Pradesh High Court in Satluj Jal Vidyut Nigam Limited Vs. M/s Nathpa Jhakri Joint Venture passed on 07th June, 2006 in OMP
No.113/2005 in Civil Suit No.56/2004. The relevant portion of the said judgment is reproduced hereinbelow:-
“….. At the time of hearing of this application, I was informed by the learned counsel of the parties that there are number of other suits wherein
the same point is involved and, therefore, I permitted the counsel who are appearing in other matters to address me on the limited question as to
whether the order of the DRB amounts to an Arbitral award or not?
xxx xxx xxx
Modified Clause 67 has to distinct parts. The first part relating to disputes including individual claims up to Rs.50 million and the second part relates to
disputes involving individual claims above Rs.50 million. In my opinion, the intention of the parties was clear that in so far as the disputes up to Rs.50
million are concerned the decision of the DRB was final and binding. It was only a recommendation as far as claims beyond Rs.50 million are
concerned. A careful reading of modified Clause 67, Annexure-A thereto as well as the tripartite agreement entered into between the parties and the
DRB clearly show that the members of the Board are to act impartially and in a judicial manner. The members are to be totally independent and in
fact are to disclose their conflict or interest, if any, before becoming members. The members of the DRB are appointed with the consent of both
parties. Modified Clause 67, Annexure-A and the tripartite agreement in no uncertain terms lay down the procedure to be followed by the DRB. The
procedure prescribed is a fair procedure in consonance with the Rules of Natural Justice. The contractor is given an opportunity to put-forth his
claims, the plaintiff has an opportunity to rebut the same, both parties can lead evidence and have a right to be heard. The procedure prescribed to
determine the rights of the parties is an impartial and judicial procedure which is fair to both sides and gives equal opportunity to both parties.
xxx xxx xxx
......However, the intention of the parties is to be deciphered from all the attending circumstances. As already held above the parties had agreed that
the decision of the DRB would be final and binding in case of individual claims up to Rs.50 million. It would indeed be a paradox if in disputes involving
a higher amount the parties were required to go in for arbitration but in disputes involving lower amounts they were to approach the Law Courts. This
in my view was not the intention of the parties. The parties in my opinion were ad idem on the issue that the decision of the DRB was an award within
the meaning of the Arbitration and Conciliation Act.
xxx xxx xxx
In my opinion, this arbitral award would be executable under Section 36of the Arbitration and Conciliation Act, 1996.
xxx xxx xxx
.....It is quite obvious that the parties had agreed that as far as disputes up to Rs.50 million are concerned the decision of the DRB would be final,
binding and in the nature of arbitral award.
An Arbitral Award is final and binding under Section 35 of the Act and enforceable as a decree under Section 36 of the Act. Section 5 of the Act lays
down that no judicial authority shall intervene in matters governed by Part-I of the Act except as provided for under that part. Judicial intervention is
provided for only under Section 34 of the Act.
In view of the above discussion, I hold that in the present case since the decision of the DRB involves an individual dispute not exceeding Rs.50
million, it amounts to an arbitral award. The said award could have been challenged only under Section 34 of the Arbitration and Conciliation Act,
1996. OMP NO.113 of 205 is consequently allowed and it is held that the present suit is not maintainable and is hereby dismissed with costs.â€
(emphasis supplied)
Learned counsel for the defendant states that the above said judgment has been accepted by the plaintiff and no appeal was filed against the same.
Thus, according to him, the aforesaid judgment is final and binding.
Per contra, learned counsel for the plaintiff states that the present suit is maintainable as subsequent to the decision of the DRB, the defendant had
refused to pay any amount to the plaintiff on the ground that it was entitled to set-off and there had been a subsequent settlement.
Learned counsel for the plaintiff further submits that the judgment in Satluj Jal Vidyut Nigam Limited (supra) is inapplicable to the present factual
scenario as in the said case, the plaintiff had sought to challenge the decision of the DRB, while in the present case the plaintiff seeks a declaration
that the decision of the DRB is factually and legally correct.
He also points out that in the present case, the plaintiff is independently seeking a relief of decree of the amount that had been awarded by the
DRB.
Having heard learned counsel for the parties, this Court is of the view that the issues raised in the present application are not res integra. The High
Court of Himachal Pradesh after interpreting the same dispute resolution Clause 67 and after hearing the plaintiff and the defendant has already held
that the decision of the DRB amounts to an arbitral award. The said judgment has attained finality and cannot be challenged by filing a separate
proceeding in another High Court.
The fact that in the present case the plaintiff does not challenge the decision of the DRB but only seeks a declaration that the decision of the DRB
is factually and legally correct makes no difference to the nature of the decision of the DRB.
Consequently, in view of the judgment in Satluj Jal Vidyut Nigam Limited (supra), this Court is of the view that the relief sought by the plaintiff for
declaration that the decisions of the DRB dated 20th September, 2008 and 12th August, 2009 are factually and legally correct is not maintainable.
This Court is further of the view that it cannot decree the amount that has already been awarded by the DRB as the said dispute had already been
adjudicated in favour of the plaintiff and against the defendant. Grant of such a relief would also amount to re-litigation and re-determination of
disputes that had already been adjudicated upon by a Forum agreed upon between the parties.
In the event, the defendant refuses to pay to the plaintiff for any reason whatsoever, the remedy lies with the plaintiff in filing an execution petition
and not by way of the present suit.
Consequently, the present suit is dismissed with liberty to the plaintiff to file appropriate legal proceedings in accordance with law. The rights and
contentions of all the parties are left open.