State Of Uttarakhand And Others vs M/s Dalip Singh Adhikari

Sudhanshu Dhulia, J

This appeal under Section 37 of the Arbitration & Conciliation Act, 1996 has been filed by the State Government challenging the judgment and order dated 08.10.2018 passed by the 3rd Additional District Judge, Dehradun in Arbitration Case No. 71 of 2017, whereby the appellants have been restrained from re-tendering the contract and to maintain status quo.

In a joint project of the Government of India and the Government of Uttarakhand, a motor road of 173 kilometers from Tanakpur to Jauljibi is to be constructed, which is on Indo-Nepal Border. A part of this project having an estimated cost of Rs.153 crores odd was given to the present contractor M/s Dalip Singh Adhikari. After the contract was executed and the work was started, the contract was cancelled by the State Government. The contractor went to the adjudicator for adjudication, which was a provision provided under the conditions of the contract. According to the contractor, the adjudicator gave a finding in his favour holding the cancellation of the contract to be bad. Nevertheless, the State Government was of the view that since the contractor had not submitted proper document of his experience, the bid of the contractor was in fact non-responsive.

Since the State Government did not agree with the adjudicator, an Arbitration Tribunal was appointed. The Arbitration Tribunal consists of Mr. A.K. Bisht as nominee arbitrator of the contractor, Mr. Pawan Kumar as nominee arbitrator of the employer/department and Mr. A.K. Singhal as the umpire arbitrator.

Even before the constitution of the Arbitration Tribunal, the contractor moved an application under Section 9 of the Arbitration and Conciliation Act, 1996 before the Principal Civil Court, Dehradun. The matter, however, was thereafter transferred to the 3rd Additional District Judge, Dehradun. The learned 3rd Additional District Judge gave an injunction in favour of the applicant/contractor and passed an order on 27.09.2017 restraining the employer i.e. the State Government from issuing a fresh tender regarding the said project.

Meanwhile, after the constitution of the arbitration tribunal, an application was made by the State Government stating that since the Arbitration Tribunal has been constituted, the application moved by the contractor under Section 9 of the Arbitration and Conciliation Act, 1996 has become infructuous. The learned 3rd Additional District Judge, Dehradun though allowed the application moved by the employer and dismissed the arbitration application as infructuous vide order dated 08.10.2018, but at the same time extended its earlier stay order dated 27.09.2017, till the decision of the Arbitrator. This order dated 08.10.2018 has been challenged by the appellants before this Court on the ground that it could not have been passed in view of sub-section (3) of Section 9 of the Arbitration and Conciliation Act, 1996.

The order of the learned 3rd Additional District Judge, Dehradun dated 08.10.2018 apart from merit has also been challenged on ground of jurisdiction. Learned State Counsel for the appellant would argue that the "court" has been defined under Section 2(1)(e) of the Arbitration and Conciliation Act, 1996 which is as follows:

"2. Definitions. - (1) In this part, unless the context otherwise requires, -

(a)...

(b)...

(c)...

(d)...

(e) "Court" means -

(i) in the case of an arbitration other than international commercial arbitration, the principal civil court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject matter of a suit, but does not include any civil court of a grade inferior to such principal civil court, or any Court of Small Causes." (ii)....."

Section 9 application has to go before the Principal Civil Court, and that would be the court of the learned District Judge, Dehradun, as this High Court does not have the original civil jurisdiction.

A perusal of the above provision would show that in the present case where the Principal Civil Court would be the District Judge, Dehradun, cognizance ought not have been taken in the matter by the Additional District Judge.

The language of Section 9 of the Arbitration and Conciliation Act, 1996 reads as under:-

"9. Interim measures, etc. by Court. -

(1) A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with Section 36, apply to a Court:-

(i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or

(ii) for an interim measure of protection in respect of any of the following matters, namely:-

(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;

(b) securing the amount in dispute in the arbitration;

(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;

(d) interim injunction or the appointment of a receiver;

(e) such other interim measure of protection as may appear to the Court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.

(2) Where, before the commencement of the arbitral proceedings, a court passes an order for any interim measure of protection under sub-section (1), the arbitral proceedings shall be commenced within a period of ninety days from the date of such order or within such further time as the court may determine.

(3) Once the arbitral tribunal has been constituted, the court shall not entertain an application under sub-section (1), unless the court finds that circumstances exist which may not render the remedy provided under Section 17 efficacious."

Although this objection ought to have been taken at the first instance, this objection has not been raised, but considering on the merits as well, the order dated 08.10.2018 by which parties have been directed to maintain status quo and the appellants have been restrained from re-tendering the contract does not seem to be proper. To that extent, the order dated 08.10.2018 which prohibits the appellants for re-tendering the contract is bad.

Consequently, appeal is allowed.

According to the contractor, he has already done a major part of the work and the cancellation of contract would cause immense financial hardship to him. This Court, however, refrains from passing any order on the merit. The contractor would be at liberty to seek interim relief by moving an application before the Arbitration Tribunal under Section 17 of the Arbitration and Conciliation Act, 1996.