The doctrine of estoppel can bar a party from challenging a contract after taking benefits under it, and the limitation period for challenging a contract may apply.

JUDGMENT

Manmeet Pritam Singh Arora, J. (Oral)

1. This petition filed under Article 227 of the Constitution of India impugns the order dated 12.05.2023 passed by the learned Sole Arbitrator in arbitration proceedings titled as M/s Radhey Enterprises v. Delhi Metro Rail Corporation Ltd., dismissing the application filed by the Petitioner.

1.1. The Petitioner had filed an application on 18.08.2022 for declaring the contract dated 21.10.2013 executed between the parties to be void-ab-initio for not being in conformity with Article 299 of the Constitution of India; and further seeking stay of the Arbitral proceedings in Arbitration Petition No.415/2014.

2. The learned sole Arbitrator vide impugned order dated 12.05.2023 has dismissed the said application with costs of Rs. 10,000/-.

2.1. The learned sole Arbitrator while dismissing the said application has given the following key findings, relevant for this petition:

a. Issue 1: Whether the Respondent company is a `state' within the meaning of Article 12 of the Constitution of India?

Finding: The certificate of incorporation of the Respondent Company evidences that it was registered under the Companies Act, 1956. It was a joint venture of the Government of NCT of Delhi and the Central Government with equal equity participation from both the governments. Various provisions of the Metro Railways (Operation and Management) Act, 2002 (`the Act of 2002'), coupled with the fact that Central Government had released total funds of around Rs. 35,089.70 crores to Delhi Metro, evidences the complete control of the Central Government in financial and administrative matters. Therefore, the Delhi Metro Corporation was an instrumentality or agency of the state and was an `Authority' and was a `State' within the meaning of Article 12 of the Constitution of India.

b. Issue 2: Whether the Contract entered into between the parties was in exercise of the executive power of the Government and that the Contract was void-ab-initio being not in conformity with the provisions of Article 299 of the Constitution of India.?

Finding: Section 6 (2) (d) of the Act of 2002 empowers the Respondent Company to execute any lease or grant any license in respect of the property held by it and under the sub-clause (e) can enter into, assign and rescind any contract or obligation. Article 148 (8) of the Article of Association of the Respondent Company specifies that the board of the company can institute, conduct, defend, compound or abandon any legal proceedings. Further as per Clause III (B) para (2) of the amended Memorandum and Article of Association, the Respondent Company is empowered to enter into any contract or arrangement for more efficient conduct of any of business of the company. These provisions make it amply clear that the Respondent Company had made the contract with the Petitioner in exercise of the statutory power and not in exercise of executive power of Union or the State, therefore rigour of Article 299 of the Constitution of India would not apply.

c. Issue No. 3: Estoppel; The application for appointment of arbitrator was moved before the High Court at the behest of the Petitioner and the Sole Arbitrator was appointed; at the relevant time no plea was taken by the claimant that the contract dated 21.10.2013 was void-ab-initio being violative of Article 299 of the Constitution of India.

The Petitioner has filed statement of claims and the respondent had filed the statement of defence along with the counter claim and both the parties had concluded the evidence and the case is at the final stages; no plea was taken by the Petitioner at any point during this period with respect to contract not being in conformity with Article 299 of the Constitution of India.

The Petitioner had taken benefits under the contract for 9 years and now cannot take a plea that the same is not binding. Doctrine of estoppel bars the Petitioner to take such plea.

d. Issue No. 4: Limitation; The prayer made by the Petitioner is highly t