Marymatha Infrastructure Pvt. Ltd vs State Of Kerala And Ors

The Writ Petition is filed seeking the following reliefs:

i. Issue a writ of certiorari or other appropriate writ, order or direction calling for the original of Ext.P14 and quash the same.

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ii. Issue a writ of mandamus or other appropriate writ, order or direction commanding the respondents that the scope of new adjudicator

appointed in terms of Ext.P14 will be limited to decide the disputes not covered by Ext.P10 and a further direction that the adjudicator

appointed under Ext.P14 has no jurisdiction to re-agitate the disputes/matters covered by Ext.P10.

iii. Issue a writ of mandamus or other appropriate writ, order or direction commanding the respondents that the remedy against Ext.P10

shall be only in accordance with terms of Ext.P1 agreement.

iv. Issue such other appropriate writ order or direction that may be deemed to be just and equitable in the facts and circumstances of the

case.â€​

The petitioner is a contractor, who was awarded the work of construction of a new bridge for diversion of traffic for safety of old barrage at

Bhoothathankettu based on which Ext.P1 agreement was executed on 18.05.2016. The issue arising in the case relates to the award passed by an

adjudicator appointed in terms of the provisions contained in the agreement. The conditions of contract which forms part of Ext.P1 agreement in

clauses 24 to 26 provide that if the contractor disputes the decision of the Engineer it shall be referred to an Adjudicator within 14 days; the

adjudicator shall give his decision within 28 days and either party can refer the decision of the Adjudicator to Arbitrator within 28 days and if not

referred within 28 days, the adjudicator's decision would be final and binding. Clause 26 provides for appointment of a new adjudicator in the event of

resignation, death or on agreement by both parties and on disagreement by one party by the appointing authority.

The details regarding the petitions submitted by the petitioner and the decisions on it by the Adjudicator as stated by the petitioner are as follows: On

04.01.2018 the petitioner submitted Ext.P5 petition before the Adjudicator, alleging delay in approval, changes in design, extra items, quantity, rate etc.

The 2nd respondent filed Ext.P5(A) objection on 30.1.2018 and the adjudicator decided the issue on 12.2.2018 as per Ext.P5(B). Thereafter, the

petitioner submitted Ext.P6 claim petition on 12.4.2018 and an updated statement Ext.P6(A) on 18.5.2018 and another updated claim statement

Ext.P6(B) on 18.6.2018. After the adjudicator called for objections as per his letter dated 29.06.2018, the 2nd respondent filed objection on 15.09.2018.

The adjudicator gave Ext.P8 decision on 03.12.2018 which was followed by Ext.P8(A) decision on 15.12.2018. On Ext.P9 updated petition submitted

on 12.01.2019, the respondent submitted Ext.P9(A) objection on 02.03.2019 to which the adjudicator, after calling for supporting documents on

11.04.2019 and 12.04.2019 and after conducting a site visit on 17.12.2019 with intimation to both sides and conducting a hearing on 21.12.2019, gave

his Ext.P10 decision on 20.01.2020.

Whileso, the 2nd respondent as per Ext.P11 letter dated 29.01.2020 informed the petitioner that they are appointing another adjudicator to decide

the disputes. The petitioner objected to the same stating that a new adjudicator cannot be appointed on disputes covered by Ext.P10. However, the

2nd respondent, as per Ext.P13 letter dated 13.02.2020 requested the appointing authority to appoint a new adjudicator. According to the petitioner, the

proceedings for appointment of a new adjudicator was contrary to the provisions contained in the agreement and even if the decision of the adjudicator

is wrong, the remedy available for the respondent was to move for arbitration and not appointment of a new adjudicator. As per Ext.P14 letter dated

24.2.2020 the respondent intimated the appointment of new adjudicator. The petitioner objected to the same as per Ext.P15 letter on 10.3.2020. The

Writ Petition was filed at this stage challenging Ext.P14 letter alleging violation of clause 25.2 and 25.3 of Ext.P1 agreement and that the respondents

cannot ignore Ext.P10 except by way of challenging the same by way of arbitration proceedings and that the respondents are estopped from

appointing a new adjudicator.

The petitioner has also filed an I.A producing Ext.P16 to Ext.P34 documents along with an additional affidavit. It is stated that the Adjudicator was

appointed by the 2nd respondent and that name of the Adjudicator was given in the tender document itself. It is stated that though the Adjudicator had

as per Ext.P16 letter dated 05.03.2018 tendered his resignation, he continued at the request of the 2nd respondent as seen from Ext.P17 letter dated

05.04.2018. It is stated that since the 2nd respondent did not respond to Ext.P6(B) petition submitted by the petitioner on 18.06.2018, even after mail

dated 29.06.2018, the Adjudicator again called for their reply as per Ext.P18 letter dated 22.09.2018. It is stated that site visit was conducted by the

Adjudicator on 12.10.2018 after intimating the parties as per Ext.P19 letter dated 11.10.2018. It is stated that the Adjudicator again tendered

resignation as per Ext.P20 letter on 13.11.2018 based on which the 2nd respondent informed the Chief Engineer as per Ext.P21 letter dated

14.11.2018. It is stated that despite this, the 2nd respondent as per Ext.P22 letter dt.19.11.2018, requested the adjudicator to report the remarks on the

points raised by the contractor in its letter dated 19.11.2018. (However the said letter dated 19.11.2018 is not produced). It is stated that as per

Ext.P23 letter dated 20.11.2018 the adjudicator expressed his willingness to continue; the adjudicator scheduled the hearing to 23.11.2018, as per

Ext.P24 letter dated 22.11.2018 and in that hearing the adjudicator, as per Ext.P25 letter, requested for extension of time for giving decision upto

15.12.2018 and thereafter he passed Ext.P26 interim award on 01.12.18 and Ext.P27 award on 03.12.2018. It is stated that as per Ext.P28 letter dated

08.12.2018 the 2nd respondent had sought for the willingness of the petitioner on the request of adjudicator for extension of time and the petitioner had

as per Ext.P29 letter dated 10.12.2018 expressed no objection. It is stated that the adjudicator passed the award on some of the disputes on

15.12.2018 and the petitioner had submitted Ext.P9 updated claim statement on 12.01.2019, as directed by the adjudicator, to which the respondent

filed Ext.P9(A) objection on 02.03.2019. It is stated that the Adjudicator thereafter as per Ext.P31 letter dated 12.04.2019 called for further

documents from the 2nd respondent and the 2nd respondent had replied to that. It is stated that pursuant to Ext.P32 letter dated 12.12.2019 of the

adjudicator proposing site visit on 17.12.2019, the officers of the 2nd respondent and the petitioner were present for the site visit and thereafter in the

hearing conducted on 21.12.19 at the office of the 2nd respondent officers of the respondent attended the same as evident from Ext.P34 attendance

register. It is stated that the hearing which was originally fixed on 20.12.2019 as per Ext.P33 notice, was postponed to 21.12.2019 at the request of the

2nd respondent.

The learned Senior Government Pleader filed a statement on behalf of respondents 1 and 2 on 18.08.2020 stating that a Writ Petition is not

maintainable in respect of contractual matters as there are provisions for appointment of arbitrator/adjudicator in clauses 24, 25 and 26 of General

Conditions of Contract. It was stated that Ext.P14 which is under challenge is only a communication based on the appointment made by Institution of

Engineers (Indian) Kerala State Centre, Thiruvananthapuram and the order of appointment which was communicated to the petitioner is not under

challenge. It is stated that the appointment was made as per clause 25 and 26 of Ext.P1. It is stated that on resignation of the adjudicator as per

Annexure A letter dated 13.11.2018, it became necessary to appoint a new adjudicator and since the petitioner expressed disagreement, Adjudicator

was appointed under clause 26.1 by the appointing authority designated in the contract data. It is stated that on receipt of Ext.P10, the Adjudicator

was informed as per Annexure B letter dated 29.01.2020 that Ext.P10 decision rendered ten months after the claim petition, on 20.01.2020, was

without any written consent to extend the period of adjudication and the same was not binding on the respondents. It was stated that he had to give the

decision within 28 days of the claim. The adjudicator was informed that he was being replaced by another Adjudicator. It is stated that on a claim

petition submitted before the Adjudicator after his resignation, the 2nd respondent, submitted the remarks on 02.03.2019, subject to the objection

regarding the authority of the adjudicator and the adjudicator after directing production of certain documents as per letter dated 12.04.2019,

communicated Ext.P10 decision as per letter dated 20.01.2020; whereas the adjudicator had to give a decision on the claim within 28 days of receipt

of the notification of the dispute, as per clause 25.1. It is stated that on the claim notified on 12.01.2019, a decision of the adjudicator after a period of

28 days is bad and the adjudicator has failed to fulfill its functions in accordance with the provisions of the contract. As per Annexure C letter dated

04.02.2020 the 2nd respondent has requested the Chairman Institute of Engineers to appoint a new Adjudicator. It was stated that the adjudicator and

the writ petitioner had colluded themselves and prepared Ext.P10 decision in order to favour the petitioner and to upset public interest. It is further

stated that the period of contract expired on 31.12.2019 and therefore the period of adjudicator also expired on that day. Therefore, on that ground

also the adjudicator was not supposed to issue Ext.P10 on 20.1.2020 and hence Ext.P10 is without jurisdiction and void.

Thereafter a counter affidavit was filed on behalf of the 2nd respondent pointing out the subsequent production of Exts.P16 to P34 along with the

additional affidavit filed by the petitioner. It is stated that no hearing was conducted on 21.12.2019 as the authority of adjudicator was expired by that

time and no extension was granted to the adjudicator. Admitting that e-mail dated 19.12.2019 was received in the office of the Superintending

Engineer it is stated that the adjudicator was informed that time limit was already over; the hearing was adjourned to 21.12.2019 not because of the

inconvenience of the 2nd respondent, on the other hand, the Superintending Engineer had informed the adjudicator that no hearing can be conducted

pursuant to the email dated 19.12.2019. In paras.8 to 10 of the counter affidavit it is stated as follows:

It is submitted that Exhibit P33 is a document fabricated for the purpose of this case as no such notice produced as Exhibit P33, is

issued to the respondents. Evidently, same is not seen issued to the respondent and no endorsement from any of the officers of the

respondents is seen in Exhibit P33. It is further recorded in the office file to the effect that period of the adjudicator is already expired. It is

further relevant to note that no notice produced as Exhibit P32 is received to the respondents and none of the authorized officers of the

respondents participated in the so called site visit on 17.12.2019. As per the report submitted by the then Superintending Engineer

Smt.Rosamma Mathew the facts averred relating to the alleged site visit on 17.12.2019 is with palpable ulterior motives.

It is further reported by the then Superintending Engineer that on 21.12.2019 the adjudicator accompanied by some of the contractor's

staff came to the office of the 2nd respondent and insisted the Superintending Engineer to give signature to show that they visited the office

and then she signed and given only as an evidence to show that the erstwhile adjudicator visited the office. The very wording `attendance in

the adjudication sitting in the Chamber of Superintending Engineer, Project Circle, Piravom on 21.12.2019 at 11.00 A.M' was not there in

the paper in which the erstwhile adjudicator obtained the signature. He simply want the signature by then Superintending Engineer (In

charge) and Executive Engineer (in charge). The respondents doubts that Exhibit P34 has been fabricated using the signature of the then

Superintending Engineer and the Executive Engineer at the convenience of the erstwhile adjudicator in collusion with the contractor. Then

then Executive Engineer (in charge) Sri.Basil Paul had also given a statement to the 2nd respondent to the effect that though the

adjudicator requested the then Superintending Engineer to extent the time of adjudication, the then Superintending Engineer to extent the

time of adjudication, the then Superintending Engineer had not agreed to the same and when the request of the erstwhile adjudicator was

denied by the then Superintending Engineer/2nd respondent he requested the Executive Engineer (in charge) to sign in a paper to show that

he was present in the office at that time.

It was further reported by Sri. Basil Paul that the erstwhile adjudicator had purposefully done that and no discussion was held as stated

by the petitioner. The respondent doubts that Exhibit P32 to P34 are fabricated at the convenience of the erstwhile adjudicator in collusion

with the petitioner. It is further significant to note that no minutes of the meeting was seen prepared in the alleged meeting dated

21.12.2019, itself shows that there was no sitting of the adjudicator done neither on 20.12.2019 nor on 21.12.2019.â€​

The petitioner filed a reply affidavit refuting the contentions in the counter affidavit and the statement. It was stated that despite the fact that the

adjudicator has to give its decision within a period of 28 days, the 2nd respondent never submitted its reply on the claim statements within 28 days

except in the case of the first claim in Ext.P5, against which Ext.P5(A) objection was submitted on 30.1.2018 on the 26th day. Ext.P5 decision was

given on it on 12.02.2018, after 32 days of submission of the claim. On the second claim Ext.P6 submitted on 12.04.2018, the decision Ext.P6(A) was

given on 18.06.2018 after 65 days of the claim. On Ext.P6(B) claim submitted on 18.06.2018, the 2nd respondent submitted its objection Ext.P6(C) on

the 87th day on 15.09.2018. Decision was rendered on it as per Ext.P8 on 3.12.2018 after 154 days and Ext.P8(A) decision was given on 15.12.2018,

after 165 days. It is stated that the respondents had never raised any objection regarding the time frame while accepting those decisions till Ext.P10

was issued. It is stated that the respondents had also not raised any complaints against the adjudicator before any authority and that they are estopped

from raising such contentions at this stage. The petitioner alleged that the respondents are playing fraud before this Court by way of its contradictory

and false statements and active concealment of material facts in the counter affidavit which amounts to criminal contempt and therefore proceedings

should be taken against the deponent of the counter affidavit. They reiterated that hearing was conducted on 21.12.2019 in the chambers of the

Superintending Engineer and Smt.Rosamma Mathew and Basil Paul had attended the hearing. It is also stated that Sri Basil Paulose had participated

in the site visit.

Heard the learned Senior Counsel Sri Ramesh Babu for the petitioner, duly assisted by Adv. Sri. Shanes Mather as also the learned Senior

Government Pleader, Sri. K.V. Manojkumar appearing for the respondents.

Relying on the judgments of the Apex Court in ABL International Ltd. & Anr. v. Export Credit Garantee Corporation of India Ltd. & Ors.: (2004)

3 SCC 553 and Noble Resources Ltd. v. State of Orissa & Anr. : (2006) 10 SCC 236: 2006 KHC 1325 the learned Senior Counsel argued that there

is no blanket ban against interference under Article 226 of the Constitution of India in contractual matters. Relying on the judgment in Kailash v.

Nanhku: (2005) 4 SCC 480: KHC 697, Topline Shoes Ltd v. Corporation Bank: (2002)6 SCC 33, it was argued that the 28 days' period prescribed in

clause 25.1, is only directory and not mandatory and that the adjudicator does not become functus officio on completion of 28 days. Pointing out the

dates on which the 2nd respondent submitted their objections beyond 28 days and the dates of decisions which were being rendered till Ext.P10, it was

argued that the respondents are estopped from raising a plea on the restriction of 28 days' period as they themselves were not taking any seriousness

on the same and they had never raised any objection on that ground. It was argued that if at all there is any dispute on the decision of the adjudicator,

the 2nd respondent ought to have taken up the matter before the arbitrator and in the event of a resignation they ought to have proceeded in

accordance with clause 26. Referring to the judgment of the Royal Courts of Justice, London in Brims Construction Ltd V A2M Development Ltd:

[2013EWHC 3262 (TCC), it was argued that the participation of the respondents in the proceedings before adjudicator without raising any objection

would amount to waiver and that the decisions of the adjudicators are liable to be honoured and enforced and in a case where the decision is not

acceptable to a party it has to challenge the same. Pointing out the definition of adjudicator in clause 1.1 of Ext.P1 it was argued that it was for the

Engineer to take a decision at the first instance. It was argued that the name of the adjudicator was shown as Suresh in the notice inviting tender

itself. It is also pointed out that unlike Clause 25.3 relating to the procedure relating to arbitration, no modifications were effected on clause 25.1 or

25.2 in respect of proceedings before the Adjudicator. It was argued that on the face of Ext.P13 the respondent could not have filed any counter

affidavit contradictory to the same.

Sri. K.V.Manojkumar, the learned Senior Government Pleader, relying on the judgment of the Apex Court in DLF Housing Construction Pvt. Ltd.

v. Delhi Municipal Corporation & Ors:. (1976) 3 SCC 160 para.20, Vishambhar Dayal Chandra Mohan v. State of U.P : (1982) 1 SCC 39, State of

U.P & Ors. v. Bridge and Roof Company (India) Ltd :AIR 1996 SC 3515, .ABL International (2004)3 SCC 553, M/s.Gail (India) Ltd. v.

M/s.Nagarjuna Cerachem Pvt.Ltd. : AIR 2005 A.P 151, Kamla Construction Co V State of Jharkhand & others: 2004 (3)Arb LR 457, Vijayalakshmi

Rice Mill & Ors. v. Commercial Tax Officer, Palakol & Ors: 2006 (6) SCC 763, Iron & Steel Co.Ltd. v. Tiwari Road Lines : (2007)5 SCC 703,

Empire Jute Company Ltd. & Ors. v. Jute Corporation of India Ltd. & Anr: (2007) 14 SCC 680, etc. argued that the Writ Petition is not maintainable

when the agreement itself provides for the remedies in the event of disputes and there are disputed question of facts. It was also argued that clause

25.5.1 of Ext.P1 mandates that adjudicator shall give the decision within 28 days. The learned Government Pleader argued that Clause 25.2 itself

provides for the consequence to the effect and matter has to be referred to arbitration and no Writ Petition can be maintained on the question of

estoppel which requires adjudication of the question after adducing evidence.

Having heard the contentions on either side, it is necessary to have a look at the provisions contained in Clauses 24 to 26 in the general conditions

of Contract in Ext.P1 which read as follows:

“24. Disputes

24.1: If the Contractor believes that a decision taken by the Engineer was either outside the authority given to the Engineer by the Contract

or that the decision was wrongly taken, the decision shall be referred to the Adjudicator within 14 days of the notification of the Engineer's

decision.

Procedure for Disputes

25.1: The Adjudicator shall give a decision in writing within 28 days of receipt of a notification of a dispute.

25.2: The Adjudicator shall be paid daily at the rate specified in the Contract Data together with reimbursable expenses of the types

specified in the Contract Data and the cost shall be divided equally between the Employer and

the Contractor, whatever decision is reached by the Adjudicator. Either party may refer a decision of the Adjudicator to an Arbitrator

within 28

days of the Adjudicator's written decision. If neither party refers the dispute to arbitration within the above 28 days, the Adjudicator's

decision will be final and binding.

25.3: The arbitration shall be conducted in accordance with the arbitration procedure stated in the Special Conditions of Contract.

Replacement of Adjudicator

26.1 : Should the Adjudicator resign or die, or should the Employer and the Contractor agree that the Adjudicator is not fulfilling his

functions in accordance with the provisions of the Contract, a new Adjudicator will be jointly appointed by the Employer and the

Contractor. In case of disagreement between the Employer and the Contractor, within 30 days, the Adjudicator shall be designated by the

Appointing Authority designated in the Contract Data at the request of either party, within 14 days of receipt of such request.â€​

A perusal of the aforesaid provisions would show that there is a prescription of particular number of days at each stage for approaching the

Adjudicator and also for the decision of the Adjudicator and thereafter for approaching the Arbitrator.

Under Clause 24 if the contractor disputes the decision of the Engineer, the decision “shall be†referred to the Adjudicator within 14 days of

the decision of the Engineer. It does not even refer to the response or objection to be obtained by the Adjudicator. It only says that the adjudicator

shall give a decision in writing within 28 days of the receipt of notification of a dispute. It would be optional for either party to approach the Arbitrator;

but it should be within 28 days. And if it is not referred, the decision of the adjudicator would be binding. But there is not even a single decision of

adjudicator before or within 28 days.

It is seen that the Adjudicator had at one stage requested for time upto 15.12.2018. No material is produced to show the permission, if any,

obtained to continue after the said date. The Adjudicator, who submitted resignation at least twice goes on calling for updated claim petitions,

additional documents, site visit etc., takes about 10 months for a decision on Ext.P9 petition. The petitioner continues to submit petitions, updated

claims; the 2nd respondent continues to submit their objections after months, despite the time limit prescribed for each stage of the process for

initiating, finalising and for referring the matter .

It is also relevant to note that the adjudicator continues with the proceedings even after the expiry of the agreement on 31.12.2019 and much after

the time permitted was over. The respondents at one stage says that when there is no agreement after 31.12.2019 there cannot be any Adjudicator.

At the same time, they say that they are got a new adjudicator appointed after the said date. It is not clear whether a new adjudicator can function in

the absence of agreement. Though several judgments were relied on in support of the contention that the respondents who waived the time limit

without raising any objection are estopped from raising objections as to delay occurred in the decision of the Adjudicator, when serious allegations are

raised by each other on the proceedings leading to Ext.P10, I am of the view that a decision as to the finality of Ext.P10 need be considered by this

Court only if it is decided to entertain the Writ Petition.

As rightly contended by the learned Senior Counsel, the Government and the authorities under it are expected to act fairly and even in contractual

matters there is no total ban against judicial review as held in ABL International's case (supra). But in the very same judgment, as contended by the

learned Government Pleader, the Apex Court held that in cases where agreement itself provides for settling disputes, that remedy has to be resorted

to. In that case it was found that there was no provision in the agreement for settlement of disputes. In para.14 of the judgment it was held as follows:

“14. xxxx It is well known that if the parties to a dispute had agreed to settle their dispute and if there is an agreement in that regard, the courts will

not permit recourse to any other remedy without invoking the remedy by way of arbitration, unless of course both the parties to the dispute agree on

another mode of dispute resolution.â€​

From the pleadings it is seen that serious allegations are raised between the parties with respect to the proceedings stated to have been adopted by

the adjudicator, the documents produced by the petitioner and very serious allegations are raised against the contentions raised in the counter affidavit

of the respondents. A decision as to the veracity of these allegations can be arrived at only after adjudication after adducing evidence. Therefore, in

the light of the judgments relied on by the learned Government Pleader in D.L.F. Housing Construction (P) Ltd's case (supra), Bishambhar Dayal

Chandra Mohan's case (supra), Bridge & Roof Co. (India) Ltd's case (supra), Iron & Steel Co. Ltd. Empire Jute Co. Ltd's case (supra), I am of the

view that exercise of jurisdiction under Article 226 is not warranted in the facts and circumstances of the case.

The writ petition is accordingly dismissed, leaving open all the contentions raised by the parties.