Enforcement of arbitration clause and mitigation of penalty consequences.

JUDGMENT

Prathiba M. Singh, J. (ral)--This hearing has been done through hybrid mode.

2. The present petition is filed under Article 226 of the Constitution of India seeking quashing of the letter bearing no. A-12026/7/2018-E.II (pt 1) (E-22629) dated 14th February, 2023, issued by the Deputy Director (E.II) of the respondent directing the petitioner to deposit a penalty amounting to Rs.5,70,262/- within 07 days from the date of the receipt of the said letter and other further release.

3. The National Sample Survey Office (NSSO), Field operations, Ministry of Statistics and Programme Implementation, GOI had floated a NIT for procurement of manpower to conduct various surveys. The said manpower was to be also equipped with tablets with proper GPS capabilities. The manpower was to be supplied in 30 different offices of the Respondent. The Petitioner was declared the successful bidder and agreement dated 31st January 2019 was executed between the parties. One of the offices of the Respondent at Prayagraj, complained about non-functional tablets leading to levy of the penalty which is under challenge.

4. A perusal of the impugned order would show that the Petitioner has been asked to deposit the penalties to the concerned regional offices within 7 days failing which the Petitioner would be debarred from participation in the future works. The letter dated 14th February, 2023 is set out below:

"Sub: Minutes of the Meeting held under the Chairmanship of DDG(Admn.) & HOD on 23/01/2023 to review the pending obligations/penalties reg.

I am directed to invite reference to the subject cited above and to forward the Minutes of the Meeting held under the Chairmanship of DDG(Admn.) & HOD on 23/01/2023 to review the pending obligations/penalties.

2. In this regard, all the manpower providing agencies are requested to deposit the obligation/penalties to concerned Regional Offices within 07 days of receipt of this minutes failing which the agencies shall be debarred from participation in future tenders/works of FOD and simultaneously necessary action would be initiated as per agreement and extant rules.

3. Regional Offices of West Zone are requested to release the amount dues of the agencies as recommended by Zonal level committee of West Zone. Further, all the concerned Regional Offices are requested to provide the latest status as on 21/02/2023 to this Section on top priority.

This issues with approval of the Competent Authority"

The amount which was to be deposited by the Petitioner was also assessed and if the said amount is not deposited, the Petitioner shall stand debarred from participation in future tenders/works as per the above communication.

5. The contract between the parties consists of an arbitration clause which is set out below:

"16. Dispute Resolution

16.1. In event of any dispute or difference between the parties hereto, such disputes or differences shall be resolved amicably by mutual consultation. If such resolution is not possible, then the unresolved dispute or difference shall be referred to arbitration of the sole arbitrator to be appointed by the Secretary, Ministry of Statistics and Programme Implementation on the recommendation of the Secretary, Department of Legal Affairs ("Law Secretary), Government of India. The provisions of Arbitration and Conciliation Act 1996 (No. 26 of 1996) shall be applicable to arbitration. The venue of such arbitration shall be at Delhi or any other place as may be decided by the arbitrator the language proceedings shall be English. The arbitrator shall make a reasoned award (the "Award"), which shall be final and binding on the parties The cost of arbitration shall be shared equally by the parties to the agreement However, expenses incurred by each party in connection with the preparation, presentation shall be borne by the party itself.

16.2. Pending the submission of and/or decision on a dispute, difference or claim or until the arbitral award is published, the Parties shall continue to perfo