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2024 Supreme(Online)(Bom) 3090
BOMBAY HIGH COURT
Firdosh P. Pooniwalla, J
KALPATARU PROJECTS INTERNATIONAL LIMITED – Appellant
Versus
MUNICIPAL CORPORATION GREATER MUMBAI AND ANOTHER – Respondent
CARAP 166 / 2022
Mr. Naresh Thacker with Ms. Tvisha Desai i/b. Economic Laws Practice, for the Applicant. Mr. P. G. Lad with Ms. Aparna Kalathi and Ms. Sheetal Metkari i/b. Adv. Sunil Sonawane, for the Respondent-BMC.
The modified Clause 96 of the GCC does not constitute an arbitration agreement as it lacks explicit reference to arbitration and retains a title indicating non-arbitrability.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11 - Dispute regarding the interpretation of modified Clause 96 of the General Conditions of Contract (GCC) - The clause was argued to constitute an arbitration agreement between the parties. The court found that the clause did not reference arbitration and maintained the title of 'Finality of Decision and non-arbitrability', indicating no intention to arbitrate. (Paras 17, 29, 36)
(B) Arbitration Agreement - Essential elements - The court reiterated that an arbitration agreement must show the intention of the parties to resolve disputes through arbitration, which was not established in this case. (Paras 26, 28)
Facts of the case:
The Applicant submitted a bid for a construction project, which was accepted, but disputes arose regarding claims after project completion. The Applicant sought arbitration after pre-arbitral steps failed.
Findings of Court:
The modified Clause 96 of the GCC does not constitute an arbitration agreement as it lacks explicit reference to arbitration and retains a title suggesting non-arbitrability.
Issues: Whether modified Clause 96 of the GCC constitutes an arbitration agreement.
Ratio Decidendi: The court concluded that the absence of explicit arbitration language and the title of the clause indicated no intention to arbitrate.
Result: Application dismissed.
JUDGEMENT:-
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 even date. The first meeting was held before the Committee on 10th December, 2021. Subsequent to the first meeting, t
