A K Engineer and Contractor Pvt. Ltd vs UT of J&K

Arun Palli, CJ

The present petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator.

The petitioner being a Private Limited Company engaged in execution of civil contract works and registered under the Companies Act, 1956, participated in the bidding process initiated by respondent no.4 on 26.07.2019 for “Design and Construction of 160 Mtrs (03-Spans any economical arrangement as per GAD) double lane motorable Bridge on EPC Mode (Engineer Procurement & Construction) along with Footpath 1.20 Mtr on both sides and approaches on both sides over Nallah Jhajjar on Panthal Jhajjar road Km 1st from Jhajjar side (Complete Job) under CRF. Post evaluation of the technical and financial bids, the contract valued at Rs.1939.50 lacs was awarded in favour of the petitioner by the Chief Engineer-respondent no.2 vide his letter dated September 9, 2019. And the contract work was required to be completed within a period of 15 months. It is stated that petitioner started execution of the work and by the end of June, 2020, 60% of the contract work valuing at Rs. 11.50 crores was executed, out of which a meagre amount of Rs.1.35 crores was released in favour of the petitioner and the respondent department expressed its inability to release the balance amount due to non-availability of funds. A number of requests are stated to have been made by the petitioner for release of the balance amount but to no avail. And owing to the non-availability of adequate funds, the petitioner could not proceed further with execution of the work. However, an amount of Rs.10.60 Crores, which includes amount of Rs.1.35 Crores released earlier, came to be released in favour of the petitioner. It is submitted that, owing to non-availability of funds, the respondents remained silent with regard to execution of the balance work and after a period of two years, the respondent no.4 issued a show cause notice to the petitioner seeking resumption of the work within five days. The petitioner replied the show cause notice and agitated before the respondents that the contract work got delayed on account of non-payment of amounts due to the petitioner and a considerable period has lapsed since allotment of the contract work resulting in escalation of market prices. And, accordingly, the respondents were requested by the petitioner either to pay price variation prices along with 6% GST or pre-close the contract work. Thereafter, a number of communications were made by the respondents seeking execution of the balance work but the stand of the petitioner remained all along the same. And finally when the respondents did not accede to the request of the petitioner, the respondents terminated the contract and debarred the petitioner company from participating in tendering process in Pir Panjal Zone.

And the petitioner having failed in his attempt to persuade the respondents for foreclosure of the contract or paying him the escalated rates, was constrained to issue notice dated 30.09.2024 invoking the arbitration clauses 23 and 24 of the General Conditions of the Contract. Further, it is submitted that, despite service of the said notice, the respondents have failed to act and direct appointment of an arbitrator. Hence, this petition.

Pursuant to the notice issued by this Court, the respondents had caused appearance and filed the response. In brief what is sought to be urged is that petitioner was time and again requested to execute the work, which he failed, therefore, the petition is liable to be dismissed. It is urged that the petitioner has raised a dispute which is outside the context of the contract agreement. It is stated that timely payments were made in favour of the petitioner for the work done. And the delay caused in execution of the contract work is attributable to the petitioner. With regard to the request of the petitioner for making the payment on escalated rates, in so far as the balance work is concerned, the petitioner is entitled to same in view of Clause 12 of the e-NIT, which provides: “The unit rates and prices shall be quoted by the bidder entirely in Indian Rupees and the rates quoted shall be deemed to include price escalation and all taxes up to the completion of the work unless otherwise, specified.”

The existence of the arbitration clause, as aforesaid, and its invocation by the petitioner vide notice dated 30.09.2024 is not disputed.

Although, as indicated earlier, the respondents have filed objections to the petition but during the course of hearing, learned counsel for the respondents pleads no objection in case the petition is allowed.

In the given facts and circumstances, coupled with statement made at the Bar by learned counsel for the respondents, the application is allowed. Accordingly, with consent of learned counsel for the parties, Mr. Justice M. K. Hanjura (Former Judge, High Court of Jammu & Kashmir and Ladakh) is appointed as the sole arbitrator. Who shall proceed with the matter in accordance with the provisions of the Act. And to make an award within the time provided in the Act itself after charging the prescribed fee along with incidental expenses to be shared by the parties.

Registry to send a copy of this order to the learned arbitrator.