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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
FIRDOSH P. POONIWALLA, J.
Kalpataru Projects International Ltd. – Appellant
Versus
Municipal Corporation of Greater – Respondent
Comm. Arbitration Application No. 166 of 2022
Decided on : 10-01-2024.
Arbitration - Construction Contract - Section 11 of the Arbitration and Conciliation Act, 1996 - 96 - Summary of Acts and Sections: The court discussed the provisions of Section 11 of the Arbitration and Conciliation Act, 1996 and the modified Clause 96 of the General Conditions of Contract (GCC) in detail. The court analyzed the essential elements of an Arbitration Agreement as laid down by the Hon’ble Supreme Court and examined the intention of the parties to settle their disputes by arbitration. The court also considered precedents and judgments related to the interpretation of similar clauses in contracts and their classification as arbitration agreements.
Fact of the Case:
The Applicant sought arbitration under Section 11 of the Arbitration and Conciliation Act, 1996, due to disputes arising from a construction contract. The Respondent contested the arbitration, arguing that the modified Clause 96 of the GCC did not constitute an Arbitration Agreement.
Finding of the Court:
The court found that the modified Clause 96 of the GCC did not constitute an Arbitration Agreement between the parties. The court reasoned that the clause did not make any reference to arbitration or the appointment of an arbitrator, and the title 'Finality of Decision and non-arbitrability' indicated a different intention. The court also distinguished the case from precedents where similar clauses were interpreted as arbitration agreements.
Issues: The main issue was whether the modified Clause 96 of the GCC constituted an Arbitration Agreement between the parties.
Ratio Decidendi: The court's decision was based on the analysis of the essential elements of an Arbitration Agreement, the intention of the parties, and the interpretation of the modified Clause 96 of the GCC in the context of relevant precedents and judgments.
Final Decision: The court dismissed the Arbitration Application, ruling that the parties had not agreed to have their disputes resolved by arbitration.
JUDGMENT :
This Application has been filed under the provisions of Section 11 of the Arbitration and Conciliation Act, 1996 (“the said Act”).
2. Respondent No.1 issued an E-Tender Notice dated 25th January, 2016, inviting bids for the construction of the Ghatkopar-Mankhurd Link Road Flyover (“GMLR flyover”) for the tender amount of Rs.313,85,05,635.80/-. The scope of work as described in the Tender Documents included the construction of (a) the GMLR flyover (b) three foot over bridges at Indian Oil Nagar, Rising City and Baiganwadi junction respectively and (c) a vehicular underpass at Mohite Patil Nagar Junction.
3. The Applicant submitted its bid in response to the said Tender, which was accepted by Respondent No.1 vide Resolution No. 1275 dated 21st December, 2016 passed by Respondent No.1’s Standing Committee. Respondent No.1 awarded the contract to the Applicant by a Letter of Acceptance dated 26th December, 2016.
4. Respondent No.1, thereafter, issued a Work Order No.7803 dated 28th December, 2016. Since the Tender Documents prescribed a time period of 30 months for the completion of the works, the project was slated to be completed by 3rd July, 2019.
5. Although the Applicant commenced work immediately post the issuance of the work order, the parties formally signed the Contract only on 14th May, 2018.
6. It is the case of the Applicant that the planned progress of work was disrupted by various delay events caused by the Respondents or unforeseen circumstances, and additional works instructed by the Respondents which constituted a change in the scope of work envisaged under the Tender Documents. The Applicant was, therefore, constrained to seek extensions of time of the contract period, which were granted on various occasions.
7. The project was substantially completed on 25th July, 2021 and inaugurated on 1st August, 2021. It is, however, the case of the Applicant that Respondent No.1, thereafter, instructed the Applicant to carry out additional variation works and extended the contract period to 30th September, 2021 to complete the said additional variation works. The understanding between the parties with respect to the additional variation works carried out post inauguration of the project and the consequent extension of time granted is recorded in Respondent No.1’s letter dated 8th April, 2022.
8. It is the case of the Applicant that it duly completed all the balance work and variation works by 30th September, 2021 and a Certificate of Completion was issued by the Respondents.
9. During the course of the works, and post the completion of the project, the Applicant raised various claims in accordance with the Contract.
10. In this regard, in September 2021, the Applicant addressed various letters to the Respondents. The Chief Engineer of Respondent No.1 rejected / declined to award certain claims of the Applicant. It is the case of the Applicant that the Chief Engineer’s decisions were unsubstantiated by the Contract and in law. It is the case of the Applicant that, therefore, disputes pertaining to the Contract arose and the Applicant initiated the pre-arbitral steps as provided in Clause 96 of the General Conditions of Contract (“GCC”) to ensure strict compliance with the provisions of the Contract.
11. The Applicant addressed a letter dated 24th September, 2021 to the Additional Municipal Commissioner, placing on record all its objections to the Chief Engineer’s decisions in respect of the claims and reiterating its entitlement thereto. The Applicant, further, notified the Additional Municipal Commissioner to proceed with the constitution of a committee comprising of three officers of Respondent No.1 as envisaged in the first paragraph of Clause 96 of the GCC to settle the disputes.
12. The Committee was appointed on 12th October, 2021 and the appointment was communicated to the Applicant by way of an Office Order of eve
Point of Law : The very purpose of the A & C Act is to enable a party to invoke an arbitration clause at the earliest and for the arbitration to be completed at the earliest.
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