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HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT JAMMU
N. Kotiswar Singh, CJ
A K Engineers and Contractors Pvt. Ltd. – Appellant
Versus
Union Territory of J&K – Respondent
Arb P No. 13/2022
For the Appellants/Petitioners: R K Gupta, Udhay Bhaskar
For the Respondents: Raja M. Bucha, Ravinder Gupta
When additional work is intrinsically linked to an original contract containing an arbitration clause, it is deemed an integrated part of that contract. A referral court should refer the dispute to arbitration if the existence of an arbitration agreement is 'plainly arguable' to avoid premature mini-trials.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11(6) - Constitution of India - Article 299 - Appointment of Arbitrator - Whether subsequent work of constructing a double-Laned bridge, following a public announcement and administrative approval, constitutes an integrated part of the original single-lane bridge contract containing an arbitration clause - Court held that when additional work is intrinsically linked to the original contract, the arbitration clause in the original contract applies - Referral court should refer the matter when the existence of an arbitration agreement is 'plainly arguable' and not manifestly non-existent - (Paras 20, 24, 25, 26)
Facts of the case:
The petitioner was awarded a civil contract for construction of a single-lane bridge. Following a public announcement by a Minister and subsequent administrative approval from the Development Commissioner, the petitioner constructed a double-lane bridge instead. The respondents failed to pay the full outstanding amount for the completed work, leading the petitioner to invoke the arbitration clause via Section 11 of the Act. The respondents contended no valid contract existed for the double-lane bridge, citing Article 299 requirements.
Findings of Court:
The Court found that the construction of the double-lane bridge was a continuation and extension of the original work, authorized by the respondents' administrative actions. Applying the principle of 'when in doubt, do refer,' the Court held that the arbitrability of the dispute should be left to the arbitrator.
Issues: Whether there exists a valid arbitration agreement for the extended work and whether the referral court should conclusively decide the arbitrability of such claims.
Ratio Decidendi: If additional work is an integral part of the original contract and cannot be segregated, it is deemed part of the original agreement. When there is a 'good arguable case' for the existence of an arbitration agreement, the Court should refer the matter to the Arbitral Tribunal for a final determination under the 'competence-competence' principle.
Result: Petition allowed; Arbitrator appointed.
| Table of Content |
|---|
| 1. respondent's contentions regarding the absence of a valid contract and non-arbitrability. (Para 10 , 11 , 12 , 13) |
| 2. petitioner's rebuttals asserting existence of agreement through conduct and communication. (Para 14 , 15 , 16 , 17 , 18 , 19) |
| 3. court's finding that integrated work falls under the original arbitration clause. (Para 20 , 21 , 22 , 23 , 24) |
| 4. application of the principle of 'when in doubt, do refer' to arbitration. (Para 25 , 26) |
| 5. appointment of an arbitrator to resolve the dispute. (Para 27 , 28) |
ORDER
01. Heard Mr. R K Gupta, learned Senior counsel assisted by Mr. Udhay Bhaskar, learned counsel for the petitioner and Mr. Raja M. Bucha, learned counsel for the respondents.
02. The petition has been filed seeking appointment of an arbitrator by invoking Section 11 of the Arbitration and Conciliation Act, 1996 (for short the „Act‟).
03. It is the case of the petitioner that the petitioner Company was awarded a civil contract by the respondents for design and construction of a Single Lane Bridge of 100 mtr long (4x2.500Mtr C/c of bearings, pre stressed concrete memorable) on Krial-Rehal, for an amount of ₹ 385.00/- Lacsafter being the successful bidder in the NIT dated 11.01.2004.As per the contract, the work allotted to the petitioner on 26.04.2014 was to be completed within eighteen months.
04. According to the petitioner, after the award of the contract, the foundation stone laying ceremony of the bridge was held on 03.03.2014 on which date the then Union Minister of Health and Family Welfare had laid the foundation on which occasion, a public announcement was made for converting the single lane bridge to a double lane-bridge. It is the case of the petitioner that after such a public announcement, the authorities acted upon the public announcement and a revised Detailed Project Report (DPR)was prepared and administrative approval was accorded by the concerned authority, i.e., the Development Commissioner, Works vide his letter No. PW/DCW/1552/15 dated 20.03.2015.Accordingly, the work was revisedatthe estimated cost of ₹ 752.00 Lacsas per the relevant Code of IRC/BIS/MORD/MORTH Manual/specifications.
05. It has been submitted that at the time of according administrative approval to the aforesaid revised project of double land bridge,the following conditions were specified:
“1. That the proposal is strictly devised and designed as per relevant Code of IRC/BIS/MORD/MORTH Manual/specifications.
2. That all the items related to Earth Work conform to authenticated NSLS.
3. That any such item(s) not covered under relevant schedule of Rats shall be paid in accordance with the set Codal Procedure.
4. That the work is executed in conformity with the revised Structural Design vetted/proof checked by IIT Delhi.
5. That the Chief Engineer R&B Department Jammu will ensure that the rates recommended for the increased scope are comparable with the similar nature of work.
6. That there is no Cost overrun or Time overrun involved in the Project.”
06. According to the petitioner, in terms of the revised DPR, the petitioner constructed the DoubleLane Concrete Bridgeas per the drawing approved by the Department, and on completion of the bridge in the year 2015, it was handed over to the Department. It has been submitted that no dispute had been raised by the authorities as regards the quality of the work or any other aspect.However, when the petitioner raised the bills for payment for the works executed, the authorities released only ₹ 238.00 Lacs and subsequently, ₹ 60,000/- were paid. According to the petitioner, though certain amounts have been paid to him, an amount of ₹ 312.00 lacs remains unpaid.
07. As the said amount was not paid despite repeated requests made by the petitioner, he was compelled to approach this Court by filling a writ petition, being OWP No. 1360/2017, ‘M/s A K Engineers versus State of J&K and ors.’ which was disposed of by this Court on 25.08.2017 with the dire
