Arbitration Appeal No. 02/2009. Case: K.T. Construction (I) Ltd. Vs State of Madhya Pradesh and Ors.. High Court of Madhya Pradesh (India)

Case NumberArbitration Appeal No. 02/2009
CounselFor Appellant: K.N. Gupta, Learned Senior Counsel, Pravin N. Surange and Harshwardhan Topre, Counsel and For Respondents: Arvind Dudawat, Learned Additional Advocate General and Amit Bansal, Deputy Government Advocate
JudgesAlok Aradhe and Vivek Agarwal, JJ.
IssueArbitration and Conciliation Act, 1996 - Sections 11(6), 31, 31(3), 34, 34(2)(a), 34(2)(b)(ii), 37, 75, 81; Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 - Section 2(d)
Judgement DateApril 29, 2016
CourtHigh Court of Madhya Pradesh (India)


Alok Aradhe, J.

  1. In this appeal under Section 37 of the Arbitration and Conciliation Act 1996 (hereinafter referred to "the Act"), the appellant has assailed the validity of the order dated 15.9.2008 passed by the trial court by which objections preferred by the appellant under Section 34 of the Act, have been rejected. In order to appreciate the appellant's challenge to the impugned order, few facts need mention which are stated infra.

  2. The respondent No. 2 had issued Notice Inviting Tenders (NIT) in respect of the work "Replacement and construction of culvert, strengthening and maintenance of Shivpuri Circular Road Km. 3/6 to 8/6 complete in all respects including construction of Toll Ta x Barrier and booths at tenderer's capital and resources with authorisation to collect Toll under Build-operate Transfer Scheme along with toll plaza and toll barrier and to collect toll tax from vehicles passing through the utility at the rate specified for the agreed period. The bid of the appellant was accepted and an agreement dated 19.5.1999 was executed between the parties. Under the agreement, the appellant was supposed to carry out the work as per drawings and specifications which were to be provided by the respondent No. 2 herein. Admittedly under the contract, the appellant had to construct the road utilising his own capital and resources and in lieu thereof the appellant was authorised to collect the toll tax at the specified rates and conditions from the date thirty days after completion of the whole work or from such date as may be notified for the purpose. Clause 17 of the agreement deals with settlement of the dispute and provides that the provisions of the Act shall apply.

  3. The appellant was allowed to collect the toll tax w.e.f. 3.2.2000 as per the authority given by the appellants. The respondent No. 1 had raised certain claims vide letter dated 15.6.2001, which were rejected by the Executive Engineer vide letter dated 22.1.2004 except one claim for 43 days as bonus days. The appellant did not directly raise any claim before the Chief Engineer but approached him for appointment of an arbitrator. However, the aforesaid request was turned down by the Chief Engineer vide communication dated 9.2.2004. The appellant filed an application under Section 11(6) of the Act before the District Judge, Shivpuri, which was rejected by order dated 15.3.2004. The appellant thereupon approached this Court by filing an application under Section 11(6) of the Act, which was registered as Misc. Civil Case No. 57/2004 and learned Single Judge by order dated 29.11.2004 appointed Mr. Justice R.B. Dixit, a retired Judge of this Court as an arbitrator. The appellant filed its statement of claims before the arbitrator in which various claims under 13 heads were made. The respondents herein also filed their statement of claims in which specific objection was raised that since the contract in question is a works contract, therefore, the arbitrator has no jurisdiction to deal with the dispute referred to him as the same has to be tried by a Tribunal constituted under the provisions of Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 (hereinafter referred to as the "1983 Act"). The claims made on behalf of the appellant in various heads were denied.

  4. The arbitrator passed an award on 5.11.2005 and inter alia held that the contract in question is not a works contract as the same is not of ascertained money value and, therefore, falls outside the purview of the dispute as contemplated under Section 2(d) of the 1983 Act. The arbitrator out of 13 claims decreed 8 claims of the appellant and held that the appellant is entitled to benefit of collection of toll tax for additional 208 days or in lieu thereof a sum of Rs. 79,18,560/-. The arbitrator by placing reliance on Executive Engineer's report with regard to the extra work carried out by the appellant, i.e. claim No. 3, has awarded 36 additional days for collection of toll tax. The arbitrator has further held that the rate of toll tax was enhanced by notification dated 27.1.2000 issued by the State Government and it was clearly provided that the aforesaid rate would not apply in respect of the agreements prior to issuance of the notification and since the contract in favour of the appellant was executed on 19.5.1999, therefore, the appellant was not entitled to collect the toll tax at the enhanced rate under the notification dated 27.1.2000 and the amount of excess toll tax recovered by the petitioner has rightly been adjusted from the amount of earnest money. It has further been held that the communication dated 18.3.1999 was part of the contract and the appellant was bound by it.

  5. Being aggrieved, the appellant as well as respondents filed objections under Section 34 of the Act. In the objections preferred by the appellant, the appellant assailed the award in so far as it pertains to rejection of his claims, whereas in the objections filed by the respondents, it was stated that the award passed by the arbitrator is per se without jurisdiction as the contract in question is a works contract. The trial court vide order dated 15.9.2008 rejected the objection preferred by the appellant as well as respondents. The trial court while dealing with the claim of the appellant for additional work has held that the appellant has not placed on record any written permission of the Chief Engineer to carry out the extra work. It has further been held that the amount of toll tax unauthorisedly collected by the appellant at the enhanced rate under the notification dated 27.1.2000 has rightly been adjusted from the security deposit. It has further been held that the appellant is not entitled to interest. Being aggrieved, the respondents have filed Arbitration Appeal No. 5/2009 which was decided by this Court vide judgment dated 27.4.2016 and the award has been modified in so far as it directs that in lieu of 208 days remaining period of toll tax the respondent would be entitled to sum of Rs. 79,18,560/-. In the aforesaid background, the appellant has approached this Court.

  6. Learned senior counsel for the appellant submitted that the appellant in the statement of claim filed...

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