VIJAY CONSTRUCTION CO.CONSULTING ENGINEERS & CONTRACTORS Vs SARDAR SAROVAR NARMADA NIGAM LIMITED THRO CHAIRMAN & ORS

This Letters Patent Appeal under clause 15 of Letters Patent is filed by the original respondent No.1 in Special Civil Application No.831 of

2013 aggrieved by the order dated 26.04.2017 passed by the learned Single Judge. By the aforesaid order, the learned Single Judge has allowed

the petition filed by respondent Nos.1 and 2 original petitioners and quashed and set aside the order dated 30.11.2010 passed in Arbitration

Reference No.16 of 2002 by the Gujarat Public Works Contracts Disputes Arbitration Tribunal, Ahmedabad.

Necessary facts, in brief, for disposal of this appeal are as under :

2.1. The contract, which would qualify as works contract, within the meaning of Gujarat Public Works Contracts Disputes Arbitration Tribunal

Act, 1992 was awarded to the appellant Contractor bearing proceeding No.LCB01/ 199394 for construction of distributaries and minors for

Block No.3B of Mandwa Branch Canal (earth work, brick lining and structures) to be completed within 36 months from the date of award.

Agreement was entered into on 25.05.1993. Contract work came to be completed, but not within time. Contract work came to be completed on

15.06.1999, whereupon the respondents have issued completion certificate. The appellant had preferred Arbitration Reference No.16 of 2002

before the Gujarat Public Works Contracts Disputes Arbitration Tribunal (for short ''the Tribunal'') constituted under Gujarat Public Works

Contracts Disputes Arbitration Tribunal Act, 1992 (for short ''the Act, 1992'') in respect of various claims towards loss, outstanding payment

under different heads etc.

2.2. In the said Arbitration Reference No.16 of 2002, the appellant herein has filed Civil Application No.13 of 2010 before the Tribunal interalia

stating that in view of judgment of the Hon''ble Supreme Court in the case of Va Tech Escher Wyass Flovel Limited v/s. Madhya Pradesh State

Electricity Board reported in (2011) 13 SCC 261, such Arbitration Application is not maintainable before the Tribunal. In the aforesaid judgment

which was delivered on 14.01.2010 in the case of Va Tech Esher Wyass Flovel Limited (supra), the Hon''ble Supreme Court has ruled that if the

contract qualified as works contracts under the Act contain arbitration clause for the purpose of adjudication of disputes in respect of such contract

by and between the parties thereto, then in that case, reference of such dispute would not be required to be made to the Arbitration Tribunal

constituted under the said Act, but same would be required to made before the Arbitration Tribunal constituted under the provisions of Arbitration

and Conciliation Act, 1996 (for short ''the Act, 1996""). When the Civil Application No.13 of 2010 was filed by the appellant herein in view of

judgment in the case of Va Tech Esher Wyass Flovel Limited (supra), same was granted and Arbitration Reference No.16 of 2002 was also

disposed of in terms of judgment of the Hon''ble Supreme Court by recording a finding that such reference is not maintainable before the

Arbitration Tribunal constituted under the Act of 1992.

2.4. In view of aforesaid development, after the judgment of the Hon''ble Supreme Court in the case of Madhya Pradesh Rural Road Development

Authority (supra), respondent Nos.1 and 2 filed Writ Petition being Special Civil Application No.831 of 2013 seeking to quash and set aside

order dated 30.11.2010 passed by the Tribunal with a request to restore Arbitration Reference No.16 of 2002 of the appellant to the Tribunal for

the purpose of deciding the same on merits.

2.5. Learned Single Judge vide impugned CAV judgment dated 26.04.2017 allowed the aforesaid petition, filed by respondent Nos.1 and 2 by

quashing and setting aside the order dated 30.11.2010 passed by the Tribunal, in Arbitration Reference No.16 of 2002 with further directions to

restore the said reference, before the Tribunal, for deciding the same on merits. Learned Single Judge in the judgment has held that, order passed

though with conformity at the relevant time, but same is against the provisions and without jurisdiction, as such, it will be void abinitio. Further, it is

held that Hon''ble Supreme Court in subsequent decision has reversed its earlier decision decided in the case of Va Tech Esher Wyass Flovel

Limited (supra).

Heard Mr.D.C.Dave, learned Senior Counsel appearing for the appellant and Mr. Kamal Trivedi appearing for respondent Nos.1 and 2.

In this appeal, it is contended by Mr. D.C.Dave, learned Senior Counsel appearing for the appellant that learned Single Judge committed error

in allowing the petition filed by respondent Nos.1 and 2 by quashing and setting aside the order dated 30.11.2010. It is submitted that at the

relevant point of time, law declared in the case of Va Tech Esher Wyass Flovel Limited (supra) was in force and subsequent change in law is no

ground to take away jurisdiction from the arbitrator who was appointed under the provisions of the Act, 1996. Learned Counsel in support of his

argument has placed reliance in the case of Union of India v/s. Madras Telephone SC and ST Social Welfare Association and Ors. reported in

(2006) 8 SCC 662. In this case, considering the dispute relating to seniority, in view of change in law, the Hon''ble Supreme Court has held in

paragraph Nos.19,20 and 21 as under :

We, therefore, direct that such of the applicants whose seniority had been determined by the competent authority, and who had

been given benefit of seniority and promotion pursuant to the orders passed by Courts or Tribunals following the principles laid down

by the Allahabad High Court and approved by this Court, which orders have since attained finality, cannot be reverted with

retrospective effect. The determination of their seniority and the consequent promotion having attained finality, the principles laid

down in later judgments will not adversely affect their cases.

This Court has clearly clarified the position in its aforesaid judgment. The observations made by this Court while disposing of the

appeal of Parmanand Lal are also pertinent. This Court clearly laid down the principle that the seniority fixed on the basis of the

directions of this Court which had attained finality is not liable to be altered by virtue of a different interpretation being given for

fixation of seniority by different benches of Tribunal. Consequently, the promotions already effected on the basis of seniority

determined in accordance with the principles laid down in the judgment of the Allahabad High Court cannot be altered.

Having regard to the above observations and clarification we have no doubt that such of the applicants whose claim to seniority

and consequent promotion on the basis of the principles laid down in the Allahabad High Court''s judgment in Parmanand Lal''s case

have been upheld or recognized by Court or Tribunal by judgment and order which have attained finality will not be adversely

affected by the contrary view now taken in the judgment reported in 1997 (10) SCC 226. Since the rights of such applicants were

determined in a duly constituted proceeding, which determination has attained finality, a subsequent judgment of a Court or Tribunal

taking a contrary view will not adversely affect the applicants in whose cases the orders have attained finality. We order accordingly.

4.1. It is the contention of the learned Counsel for the appellant that order dated 30.11.2010 is an order in invitum and as such, petition should not

have been entertained to question such order. While referring to section 5 and 16 of the Act, 1996, it is submitted that no intervention is necessary

at this point of time in the arbitration proceedings. It is submitted that as much as, no objection was raised with regard to jurisdiction before filing of

statement of defence, it is not open to raise such dispute at this point of time, as proceedings before the Arbitration Tribunal constituted under the

Act, 1996 are at advance stage. In support of contention that intervention is not necessary at this point of time, learned Counsel for the appellant

has placed reliance in the case of SBP and Co. v/s. Patel Engineering Ltd. and Another reported in (2005) 8 SCC 618 and also in the case of

MSP Infrastructure Limited v/s. Madhya Pradesh Road Development Corporation Limited reported in (2015) 13 SCC 713.

Mr. Kamal Trivedi, learned Senior Counsel appearing for respondent Nos.1 and 2 has submitted that dispute between the parties to works

contract, is not in dispute and the Tribunal constituted under the Act of 1992 alone has jurisdiction to adjudicate the disputes. It is submitted that

said Act is enacted by the State Government to provide for constitution of Tribunal to arbitrate in disputes arising from works contracts to which

the State Government or a Public Undertaking is a party and to provide for matters connected therewith. It is submitted that under Section 21 of

the Gujarat Act No.4 of 1992, the provisions of the Arbitration Act, shall in so far as they are inconsistent with the provisions of the Act, cease to

apply to any dispute arising from a works contract and all such disputes stand transferred to Tribunal constituted under the said Act. It is submitted

that even before the judgment of Va Tech Esher Wyass Flovel Limited (supra) was delivered on 14.01.2010, there was judgment of the Hon''ble

Supreme Court in the case of Anshuman Shukla (supra) delivered on 12.05.2008 interpreting similar legislation, wherein the Hon''ble Supreme

Court held that the award of the Arbitral Tribunal is not subject to the provisions of the Arbitration Act, 1940 and the Arbitration and Conciliation

Act, 1996. It is submitted that when State legislation is in force, provisions of the Central Act has no application. It is further submitted that

judgment in the case of Va Tech Esher Wyass Flovel Limited (supra) was rendered per incuriam in view of later judgment in the case of

L.G.Chaudhary Engineers and Contractors (supra). It is submitted that only Tribunal constituted under the State Act has jurisdiction to decide the

disputes. It is submitted that jurisdiction cannot be conferred by the consent of the parties and it is a legislative function. In view of operating law in

the State of Gujarat, i.e. Act No.4 of 1992, the learned Single Judge has rightly quashed the order and ordered to restore Arbitration Reference

No.16 of 2002. Learned Senior Counsel Mr. Trivedi has brought to our notice judgment of the this Court in Special Civil Application No.12632

of 2012 and allied matters, wherein, the Tribunal constituted under the Act had passed orders based on judgment in the case of Va Tech (supra)

and such orders are quashed and set set aside and Arbitration References are restored. Further, it is brought to our notice the judgment in the case

of Sardar Construction Co. v/s. State of Gujarat reported in (1999) 3 SCC 114, wherein, the Hon''ble Supreme Court has confirmed the order

passed by this Court transferring proceedings to the Tribunal constituted under the special Act. Further, reliance is placed by learned Senior

Counsel Mr. Trivedi in the case of M.A.Murthy v/s. State of Karnataka and Ors. Reported in (2003) 7 SCC 517, wherein, the Hon''ble Supreme

Court has held that law declared by the Hon''ble Supreme Court normally is to be assumed as law from inception. It is held in the said case that

prospective overruling which is an exception to normal rule. Further in support of his argument that jurisdiction of the Court cannot be conferred by

the consent of parties, learned Senior Counsel Mr. Trivedi has relied on the judgment in the case of Jagmittar Sain Bhagat and Ors. v/s. Director,

Health Services, Haryana and Ors. reported in (2013) 10 SCC 136.

Having learned Senior Counsel for both the sides, we have perused the order passed by the learned Single Judge and other material placed on

record.

Before we consider submissions made by learned Counsels, we deem it appropriate to refer certain relevant provisions of the Gujarat Public

Works Contracts Disputes Arbitration Tribunal Act, 1992 (Gujarat Act No.4 of 1992). Said Act is enacted to provide for constitution of the

Tribunal to arbitrate in disputes arising from works contract to which the State Government or a Public Undertaking is a party and to provide for

matters connected therewith. Works contract is defined under Section 2(k) of the said Act reads as under :

2(k) Works contract"" means a contract made by the State Government or the public undertaking with any other person for the execution of any of

its works relating to construction, repairs or maintenance of any building on superstructure, dam, weir, canal, reservoir, tank, lake, road, well,

bridge, culvert, factory or work shops or of such other work of the State Government or, as the case may be, of the public undertaking as the

State Government may by notification in the official gazette specify and includes :

(i) a contract made for the supply of goods relating to the execution of any of such works.

(ii) a contract made by the Central Stores Purchase Organization of the State Government for purchase of sale of goods.

Under Section 3 of the Act, 1992 the State Government is empowered by notification in official gazette to establish a Tribunal to be called

Gujarat Public Works Contract Disputes Arbitration Tribunal. The said Tribunal consists of the Chairman and such number of other members as

may be appointed by the Government. Qualification of Chairman and members of the Tribunal are prescribed under section 3(3) of the Act.

Reference to procedure of Tribunal is referred in Chapter III of the Act. Section 8 of the Act reads as under :

8(1) Where any dispute arises between the parties to the works contracts, 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 subsection (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 subsection (2), it shall, after 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.

It is clear from section 8(6) of the Act, 1992 that an award including an interim award passed by the Tribunal shall be deemed to be decree

within the meaning of Section 2 of the Code of Civil Procedure, 1908. Under section 13 of the Act, 1992 Civil Court jurisdiction is barred. As per

section 21 of the Act, 1992, provisions of the Arbitration Act, shall in so far as they are inconsistent with the provisions of said Act are not

applicable to any dispute arising from works contract and even pending proceedings shall stand transferred to the Tribunal constituted under the

said Act.

In this case, it is not dispute that as per terms of contract, works executed by the appellant relate to works contract within the meaning of

Gujarat Act No.4 of 1992. The appellant has rightly approached the Tribunal constituted under the said Act and raised dispute which is numbered

as Arbitration Reference No.16 of 2002. However, during pendency of proceedings before the Tribunal constituted under the said Act, the

appellant herein has filed Civil Application No.13 of 2010 before the Tribunal in view of judgment of the Hon''ble Supreme Court in the case of Va

Tech (supra). In fact, there was earlier judgment of the Hon''ble Supreme Court in the case Anshuman Shukla (supra), wherein, interpreting similar

provisions of the M.P. Madhyastham Adhikaran Adhiniyam, the Hon''ble Supreme Court has clearly held that award of the Arbitral Tribunal is not

subject to the provisions of the Arbitration Act, 1940 and the Arbitration and Conciliation Act, 1996. It is also held that disputes arising out of

works contract, the Tribunal constituted under the State Act alone has jurisdiction to decide the lis. It is true that in the case of Va Tech (supra),

the Hon''ble Supreme Court has held that after enactment of Arbitration and Conciliation Act, 1996, all kinds of disputes including the dispute

relating to work contracts are covered under the said Act. Further in subsequent judgment in the case of L.G.Chaudhary Engineers and

Contractors (supra), the Hon''ble Supreme Court has held that earlier judgment in the case of Va Tech(supra) was rendered per incuriam.

Learned Senior Counsel Mr. Dave to buttress his argument that subsequent change in law cannot be operated retrospective, placed reliance

on the judgment in the case of Union of India v/s. Madras Telephone SC and ST Social Welfare Association reported in (2006) 8 SCC 662. This

judgment relate to dispute regarding seniority in service law. Taking note of the fact that earlier seniority list was prepared based on law which was

declared, same was acted upon and promotions were given effect to, the Hon''ble Supreme Court held that determination of seniority and

subsequent promotions having attained finality, subsequent change in law cannot affect rights of such persons. However, in the case on hand, there

is dispute with regard to very jurisdiction based on the special legislation brought into force by the State. As such, we are of the view that said

judgment relied on by the learned counsel for the appellant would not render any assistance.

Further, learned Senior Counsel Mr. Dave has also contended that as proceedings before the Tribunal constituted under the Act, 1996 are at

advance stage, as such, no intervention could have been made by entertaining the petition under Article 226 of the Constitution of India. He has

placed reliance on the judgment in the case of SBP and Co. v/s. Patel Engineering Ltd. And Anr. reported in (2005) 8 SCC 618. In the said

judgment, while considering the provisions of Act, 1996, the Hon''ble Supreme Court has held that once the matter reaches the Arbitral Tribunal or

the sole arbitrator, the High Court would not interfere with the orders passed by the arbitrator or the Arbitral Tribunal during the course of the

arbitration proceedings and the parties could approach the Court only in terms of Section 37 or 34 of the Act. With reference to said submission

made by the learned Counsel for the appellant, we are of the view that judgment of Patel Engineering Ltd. and Anr. (Supra) would not render any

assistance in support of the appellant having regard to facts of the case. Jurisdiction of the Tribunal was not subject matter of dispute in the said

case.

Having regard to issue involved in the present case viz. whether in view of Tribunal constituted under State Act for resolution of disputes

relating to works contract, the Tribunal constituted under the Act of 1996 can be allowed to handle the disputes relating to works contract, is a

matter which arise for consideration. In that view of the matter, by placing reliance on the judgments referred above and by referring to provisions

under Section 5 and 16 of the Arbitration and Conciliation Act, 1996, we are not convinced to accept submission made by learned Counsel for

the appellant that learned Single Judge has committed error by entertaining the petition at this stage. Further, it is to be noticed that order impugned

dated 30.11.2010 in the petition is passed only in view of judgment in the case of Va Tech (supra) and same is held to be per incuriam in the

subsequent judgment in the case of L.G.Chaudhary Engineers and Contractors (supra).

In the case of M.A.Murthy (supra) relied by learned Senior Counsel Mr. Trivedi for the respondents, it is categorically held by the Hon''ble

Supreme Court that normally, decision of the Court enunciating a principle of law is applicable to all cases irrespective of stage of pendency from

inception. In the aforesaid judgment, it is held that doctrine of prospective overruling which is a feature of American jurisprudence is an exception

to the normal principle of law. Further, in the case of Jagmittar Sain Bhagat and Ors. (supra) relied by learned Senior Counsel Mr. Trivedi for the

respondents, the Hon''ble Supreme Court has held that conferment of jurisdiction is a legislative function and it can neither be conferred with the

consent of the parties nor by a superior court, and if the court passes a decree holding no jurisdiction over the matter, it would amount to nullity as

the matter goes to the root of the matter. Both the judgments referred above, supports the case of the respondents.

Further, in the case of Executive Engineer, Sardar Sarovar Narmada Nigam v/s. Bhaven Construction and Anr. reported in 2013 (1) GLR

580, the Division Bench of this Court has held that dispute arising out of public works contract is to be adjudicated by Arbitration Tribunal under

the Act, 1992 and not under the Arbitration and Conciliation Act, 1996.

In view of above case law on subject, which supports the case of the respondents and having regard to findings recorded by the learned Single

Judge, we are of the view that learned Single Judge has not committed any error so as to interfere with the said judgment.

For the aforesaid reasons, we are of the view that order passed by the learned Single Judge is required to be confirmed by rejecting this

appeal of the appellant. Accordingly, the Letters Patent Appeal is dismissed confirming the order passed by the learned Single Judge. No order as

to costs. Consequently, Civil Application stands disposed of.