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2022 Supreme(Bom) 432

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
G.S. KULKARNI, J.
M/s. Moonline Express Cargo Pvt. Ltd. – Appellant
Versus
Union of India through Divisional Railway Manager (Commercial) - Respondent
Arbitration Petition (L.) No.1665 of 2022
Decided on : 27-01-2022

Advocates:
Advocate Appeared:
For the Appellant : Mr. Mutahhar Khan i/b. Mr. Rajesh Gupta
For the Respondent: Mr. T. J. Pandian with Mr. T. C. Subramanian and Mr. Dheer Sampat

Headnote:

Arbitration and Conciliation Act, 1996 - Section 9, (2) - Tender - Grant Of Leasing Rights - Arbitral Proceedings - Petition filed under Section 9 of Arbitration and Conciliation Act, 1996 whereby petitioner has prayed for interim reliefs pending arbitral proceedings - Disputes between parties have arisen under a contract entered by respondent -Railways with petitioner, awarded in pursuance of a tender, for grant of leasing rights in respect of a “3.9 Ton parcel space in Train – Held, A party to contract like respondent was under a more solemn obligation to adhere to principles of law in imposing a debarment on petitioner acting under contract - It is also significant that petitioner’s registration has not been cancelled, a consequence of which is that petitioner continuous to be a panel contractor - However, by issuing a debarment and that too illegally, respondent has meted out to petition a consequence of a civil death - Action on part of respondent is thus prima facie not only perverse to contractual conditions, but also illegal affecting legal and constitutional rights of petitioner as held by Supreme Court - In aforesaid circumstances, in Court opinion a strong prima facie case has been made out by petitioner for grant of interim measures pending arbitral proceedings to extent it debars petitioner for a period of two years - It is would be requirement of law for Court to stay of such illegal condition being inserted in termination letter as such condition is prima facie void ab initio being contrary to settled principles of law as laid down in decisions as discussed above - In so far as prayers as made in clauses (a) and (b) are concerned, Court is not inclined to grant any relief to petitioner, as prayed for in such prayers, as these reliefs are in nature of reliefs, which can be granted only on final adjudication of disputes, in proposed arbitral proceedings – Petition Disposed of.

JUDGMENT :

1. This is a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996 (for short, “the Act”) whereby the petitioner has prayed for interim reliefs pending the arbitral proceedings. The disputes between the parties have arisen under a contract entered by the respondent -Railways with the petitioner, awarded in pursuance of a tender floated by it on 03 March, 2021, for grant of leasing rights in respect of a “3.9 Ton parcel space in Train No. 03202 (FL WLRRM) LTTPNBE Spl Ex. Operating between Lokmanya Tilak Terminus and Patna” for a period of five years.

2. It is also necessary to note the date on which petitioner, participated in such tender which was on 26 March, 2021. The dates of issuance of the tender and the date on which the petitioner submitted its bid, according to the petitioner are indicative of quite a normal period after the first wave of the Covid 19 pandemic. The petitioner has contended that in April 2021 the second wave of Covid-19 had commenced, consequent to which lockdown restrictions were imposed in Mumbai as also in Patna.

3. On 17 May 2021, the respondent having accepted the petitioner’s bid, issued a ‘Letter of Allotment’ in favour of the petitioner. This was during the time when the lockdown restrictions were imposed. As per the letter of allotment the respondent called upon the petitioner to commence loading within 15 days of issuance of the letter of allotment.

4. It is the petitioner’s case that due to the circumstances created by the lock down, it was not possible for the petitioner to comply with the requirement of immediate loading as contained in the letter of allotment. On the issue of commencement of the loading there was correspondence between the parties. By its letters dated 31 May, 2021, 29 June, 2021 and 19 July, 2021 the petitioner informed the respondent about the lockdown restrictions in Mumbai as also in Patna and due to which it had become difficult for the petitioner to comply with such conditions as contained in the letter of allotment.

5. The petitioner’s request however was not accepted by the respondent and a show cause notice dated 26 July, 2021 came to be issued to the petitioner calling upon the petitioner to start loading with effect from 01 August, 2021, failing which the petitioner was put to a notice that its allotment would stand terminated. It is the petitioner’s case that the show cause notice did not refer and /or contain any intimation or a threat that the petitioner would be debarred or blacklisted from submitting its bid in future tenders.

6. The petitioner responded to the show cause notice of the respondent by its letter dated 28 July, 2021 interalia setting out the circumstances which were prevailing. The petitioner categorically pointed out that when the tender in question was floated by the respondent as also when the petitioner submitted its bid, the circumstances of a lockdown were not existing, that is in March 2021. The petitioner has contended that the respondent although considered the petitioner’s reply to the show cause notice, however, the reasons as pointed out by the petitioner were not accepted by the respondent, inasmuch as the respondent on 8 September, 2021 issued a termination letter to the petitioner, terminating the award of the said contract and forfeiting the earnest money deposit of Rs.1 Lakh, as also, debarring the petitioner from participating in the future tenders of the respondent for a period of two years. Such termination letter dated 8 September, 2021 was received by the petitioner on 16 October, 2021.

7. The petitioner being aggrieved by such action of the respondent to debar the petitioner from participating in future tenders, approached this Court by filing Writ Petition No.3581 of 2021, which came to be filed on 28 October, 2021. However, as an alternate remedy was available to the petitioner including resorting to arbitration, a Division Bench of this Court by an order dated 17 January, 2022 permitted the

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