2013 Supreme(Del) 349

IN THE HIGH COURT OF DELHI AT NEW DELHI
MANMOHAN SINGH, J.
NATIONAL HIGHWAYS AUTHORITY INDIA - Petitioner
Versus
MECON - GEA ENERGY SYSTEMS INDIA LTD JV - Respondent
OMP No.790/2012
Decided On : April 2, 2013

Headnote:

The court held that the impugned order of the Arbitral Tribunal, which accepted the plea of lack of jurisdiction and refused to entertain the claims of the petitioner, was not maintainable under Section 37(2) of the Arbitration and Conciliation Act, 1996 (the Act). The court found that the objection raised by the respondent that the claims presented by the petitioner fell outside the scope of arbitration was of jurisdictional nature and fulfilled the provisions of Section 16(2) of the Act. Therefore, the appeal was maintainable.

Fact of the Case:

The petitioner and the respondent entered into a contract agreement for the widening/four laning and strengthening of the existing 2 lane carriageway of NH-47, including the bridges from Vytilla to Aroor Junction, totaling a distance of 348.382 kms to 358.750 kms of Nh-47 in the state of Kerala. The work under the contract commenced on 9th February, 2004 with the completion date scheduled on 8th August, 2006. The contract price of the project was Rs. 79.52 crores. The project could not be completed timely and both the parties claimed that there are breach of obligations on either side. Thereafter, the respondent / claimant before the tribunal vide its letter dated 16th June, 2006 requested for extension of time (EOT) upto 31st July, 2007 for completion of the project. In reply to the same, the petitioner replied by stating that the respondent had not submitted any notice regarding the events of compensation and that the details of the revised target program need to be submitted by the claimant in order for the respondent to process the EOT application. The respondent further replied to the said letter on 12th July, 2006 and stated that the updated program had already been submitted by it in March 2005 for the balance works and also furnished all the details of the earlier correspondences to the petitioner. That vide letter dated 7th August, 2006, the petitioner granted the extension of time up to 8th November, 2006 stating that the EOT application of the respondent was under process. Despite several communications between the parties, the issue of EOT could not be resolved. However, the respondent was asked to continue with the execution of works. On 8th March, 2007, the petitioner in reply to the request of the respondent to release the payments for the works done, assured that the payments would be released after verification and implied that the same was not a formal approval of EOT but, was only a facilitating measure to restart the work. Thereafter, some disputes arose between the parties and consequently, the respondent moved the competent court seeking directions for appointment of Dispute Resolution Board (DRB) for resolution of the disputes, as was provided under the agreement. The notice of termination of the contract was issued by M/s Cochin Port Road Co. Ltd alleging fundamental breaches of contract by respondent on 4 counts under clause 59.2(a), 59.2(g), 59.2(h) and item No. 41(a) of the contract data read with clause 9 of the General Conditions of the Contract (GCC). The respondent by its reply dated 8th June, 2007 denied the said allegations of fundamental breaches of contract and contended that it had not committed any breach and on the contrary alleged acts or omissions on the part of the petitioner including the omission to constitute DRB even after acceptance of the letter for the grant of EOT has lead to breaches. The respondent further alleged that despite several requests from the claimant regarding the disputes and differences, it was the employer who was in default and breach of the contract and therefore, it was constrained to invoke the Arbitration clause i.e. clause 24.2 of the contract in view of the Employer to nominate DRB.

Finding of the Court:

The court found that the impugned order of the Arbitral Tribunal was not maintainable under Section 37(2) of the Act as it accepted the plea of lack of jurisdiction and refused to entertain the claims of the petitioner. The court held that the objection raised by the respondent that the claims presented by the petitioner fell outside the scope of arbitration was of jurisdictional nature and fulfilled the provisions of Section 16(2) of the Act. Therefore, the appeal was maintainable.

Issues: Whether the impugned order of the Arbitral Tribunal was maintainable under Section 37(2) of the Act.

Ratio Decidendi: The court held that the impugned order of the Arbitral Tribunal was not maintainable under Section 37(2) of the Act as it accepted the plea of lack of jurisdiction and refused to entertain the claims of the petitioner. The court found that the objection raised by the respondent that the claims presented by the petitioner fell outside the scope of arbitration was of jurisdictional nature and fulfilled the provisions of Section 16(2) of the Act. Therefore, the appeal was maintainable.

Final Decision: The court allowed the appeal and set aside the impugned order of the Arbitral Tribunal. The court directed the Arbitral Tribunal to entertain the claims of the petitioner and decide the same on merits in accordance with law.