IMPORTANT POINT
Powers vested in Arbitral Tribunal in terms of the Section 17 of Act 1996 can be exercised by the Tribunal constituted u/s 3 of Act, 1992.

JUDGMENT :

Deepak Gupta, J.

The main question which arises for decision in these appeals is whether the Gujarat Public Works Contract Disputes Arbitration Tribunal (hereinafter referred to as ‘the Tribunal’) constituted under Section 3 of the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992 (hereinafter referred to as ‘the Gujarat Act’) has jurisdiction to make interim orders in terms of Section 17 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the A&C Act’).

2. At the outset, it may be noted that the Gujarat Act was enacted with a view to compulsorily refer all disputes arising out of “works contract” entered into by the State Government or the Public Sector Undertakings with any other person for those works defined as “works contract” in terms of Section 2 (k) of the Gujarat Act. As far as this case is concerned, it is not disputed that the contract entered into between the appellant State and the respondent-contractor was a “works contract”. The contract order pertaining to the parties dated 31.07.2007 contained an arbitration clause, relevant portion of which reads as follows:

“Clause : 30(1) Disputes to be referred to Tribunal : The dispute relating to this contract, so far as they relate to of the following matters, whether such disputes arise during the progress of the work of or after the completion or abandoned thereof, shall be referred to the Arbitration Tribunal, Gujarat State…”

3. It is not disputed that the Gujarat Act is applicable in the present cases. We are mainly concerned with Clause 43.A of the contract entered into between the parties, which reads as follows:

“43. A Any sum of money due and payable to the Contractor (including the security deposit returnable to the contractor) executing any Government work or work of any District Panchayat wholly financed as grant-in-aid under this contract shall be appropriate by any District Panchayat/Government and shall be set off against any claim of the Government/District Panchayat of Gujarat state by the District Panchayat of Gujarat State/Government for the payment of a sum of money arising out or under any other contract made by the contractor with the Government/District Panchayat of Gujarat State for the work wholly financed as grant-in-aid by Government of Gujarat State. When no such amount for purpose of the recovery from the contractor against any claim of the Government/District Panchayat of Gujarat state is available, such a recovery shall be made from the contractor as arrears of land revenue.”

4. In this judgment, we are only referring to the facts of Civil Appeal No.8307 of 2019 @ SLP(C) No.36095 of 2016. The respondent-contractor was awarded a contract for strengthening a section of National Highway under work order dated 31.07.2007. According to the contractor, he completed the work on 30.04.2008 and final bill was paid to the contractor. The road was damaged and, according to the contractor, this had occurred due to heavy rains. The State called upon the contractor to repair the damaged portion and, according to the contractor, this repair was completed after the rains stopped.

5. The case of the contractor is that in terms of the contract, the contractor was only liable to remove defects for a period of 3 years which period ended on 30.04.2011. On 10.09.2012, the contractor wrote a letter to the State to release the security amount. This amount was accordingly released vide letter dated 10.09.2012. The State issued letter dated 11.11.2014 calling upon the contractor to pay a sum of Rs.1,09,00,092/. This claim was based on the premise that the contractor had not carried out the road repair work in accordance with the contract. The appellant State threatened to withhold the payments from the security deposits and bills of other pending works. This notice was challenged by filing a writ petition in the High Court of Gujarat on the ground that the State was not competent to withhold the amount payable to