IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Writ Petition No.7992 of 2010 Date of decision: 20.05.2010 Parmod Kumar ….Petitioner versus The State of Haryana and others …Respondents CORAM: HON’BLE MR. JUSTICE K. KANNAN ------ Present: Mr. O.P.Goyal, Senior Advocate with Mr. S.S.Dalal, Advocate, for the petitioner. Mr. Ravi Dutt Sharma, Deputy Advocate General, Haryana, for respondents 1 and 4. Mr. D.R.Bansal, Advocate, for respondents 2 and 3. ----- 1. Whether reporters of local papers may be allowed to see the judgment? Yes. 2. To be referred to the reporters or not? Yes. 3. Whether the judgment should be reported in the digest? Yes. ----- K.Kannan, J (Oral) C.M. No.7298 of 2010 1. Application is allowed, as prayed for. Replication filed by the petitioner, is taken on record. Civil Writ Petition No.7992 of 2010 2. The writ petition challenges the decision of the 3rd respondent terminating a contract for collecting toll on a highway which was granted to the petitioner through an agreement dated 30th June, 2009. The tenure of the contract was one year and the premature termination done without issuing any notice or affording an opportunity to the Civil Writ Petition No.7992 of 2010 - 2 - petitioner to show cause against termination was the fulcrum issue for consideration. After notice to respondents, Shri D.R. Bansal, Advocate, appeared on behalf of respondents 2 and 3 and Shri Ravi Dutt Sharma, DAG, Haryana on behalf of respondents 1 and 4. They stated the preliminary objection that the contract which is alleged by the petitioner as having been breached provides for an arbitral agreement and the resort to a writ petition, under such a circumstance, is not maintainable. 3. It is not in dispute that the petitioner's right flows through the written agreement executed on 30.06.2009. Since the reliefs sought in the writ petition are resisted on a jurisdictional issue, I take it as a preliminary point and I sought the assistance of the counsel to address the arguments on the issue relating to the arbitral agreement and the feasibility of continuity of the proceedings before the Court. 4. The learned senior counsel Shri Goyal contends that the decision to terminate the contract was taken by the Executive Director, who was not the Executive Engineer referred to under the contract as a person who is competent to empower the collection of charges and as a person who is aggrieved by a decision of the Executive Director is not necessitated under any terms of the contract to resort to arbitration. For a fuller understanding of the contentious issue, the relevant clauses under the agreement shall be required to be reproduced: “39. Except where otherwise provided or specified in this agreement and subject also to such powers as may be delegated by the Managing Director, HSRDC to the Executive Engineer (PWD B&R) concerned or any one else for the time being in charge of the said fee collection, on all questions and matter whatsoever arising out of or in Civil Writ Petition No.7992 of 2010 - 3 - relation to or in connection with this Agreement or as to the interpretation of any of its conditions whether during the currency of this Agreement or at any time thereafter, shall be final and binding on the Entrepreneur/Agent.” “40. In the even the Entrepreneur/Agent disagreeing with the decision mentioned in the provision of above, he may request the Managing Director, HSRDC, for appointment of an Arbitrator for adjudication of the dispute. On receipt of request from the Entrepreneur/Agent for appointment of Arbitrator, Managing Director, HSRDC will appoint an Arbitrator for adjudication of the dispute. The arbitrator so appointed shall conduct the arbitration proceedings in accordance with the provision of the contract agreement. Fee of the Arbitrator shall be paid by the party who will seek the arbitration.” The first portion of Clause 39 excepts such of those actions which are specifically provided elsewhere under the agreement and stated to be subject also to such powers that may be delegated by the Managing Director to the Executive Engineer or to any other person in the charge of fee collection. All questions arising out of and in relation to the agreement shall be binding on the entrepreneur/agent. In other words, any decision pertaining to a contract shall be binding if a decision is taken by any authority except when through a specific clause in the agreement itself, it is provided otherwise. The decision could be taken by the Executive Engineer or any other person delegated by the Managing Director which could be binding ought to include the decision of the Managing Director. After all, if a person who is a delegatee from the Managing Director, a fortiorari, the decision of the Managing Director, shall also be binding. Therefore, if presently the Civil Writ Petition No.7992 of 2010 - 4 - termination of a contract has arisen by a decision of the Executive Director, it cannot be seen, in my view, as one passed by a person, who is incompetent to take such a decision. Clause 40 states that a person, who disagrees with the decision could request the Managing Director for an appointment of an Arbitrator. The construction put on these two clauses by Shri Goyal, the learned senior counsel appearing on behalf of the petitioner that only the Executive Engineer could take a decision and any other person is not so authorized by the Managing Director cannot take such a decision, in my view, is not correct. For the same reason, if a decision has been taken by the Executive Director and if a contracting party such as the petitioner is aggrieved by such decision, his remedy shall be only to apply for an appointment of an Arbitrator. 5. The learned counsel states that the clause 40 does not set out the arbitral process that will be required to be adopted not does it make a reference about the applicability of Arbitration and Conciliation Act of 1996. This objection also, in my view, is not sound for if there is a provision for a reference to arbitration between contracting parties, unless it is arbitration through a statute that independently provides for a particular method of arbitration, all references to arbitration must be understood as reference under the Arbitration and Conciliation Act of 1996. The preamble to the Act sets out that it is an act to consolidate and amend the law relating to domestic arbitration and Section 1(2) of the Act extends it to the whole of India and brought into force on the day when the Central Government by notification appoints. Ever since the Act was brought in force on 26.08.1996, whenever there is any reference Civil Writ Petition No.7992 of 2010 - 5 - to arbitration, it should always be understood that the arbitration shall go through the process as delineated under the Act without any exception. We have already seen the only possible exception is statutory arbitration which prescribes a mode of appointment of an Arbitrator and in what circumstances, the resort to arbitration could be made. Clause 40 of the contract is sufficient indication about how the process must be started by a request which an entrepreneur/agent should make to the Managing Director, HSRDC for appointment and that the Managing Director shall appoint an Arbitrator for adjudication of the dispute. The clause also states that the Arbitrator shall conduct the arbitration proceeding in accordance with the provisions of the contract agreement and that the fee shall be paid by the party, who seeks arbitration. The 1996 Act contains adequate provisions when the person who is bound to appoint an Arbitrator fails to do so. The party will have a remedy for taking action under Section 11 for the appointment of an Arbitrator. 6. The learned counsel states that the arbitration itself will not be appropriate in a case where there is a fundamental breach of a contract by violating the principles of natural justice where by an illegal process, the respondents have encashed a bank guarantee to the tune of 1.29 crores. The petitioner claims that he has suffered gross prejudice by being debarred from entering into any other contract that has grave civil consequences. The learned counsel refers to the decisions of the Hon'ble Supreme Court in Sahara India (Firm), Lucknow Versus Commissioner of Income Tax, Central-I and another-(2008) 14 Supreme Court Cases 151; Harbanslal Sahnia and another Versus Civil Writ Petition No.7992 of 2010 - 6 - Indian Oil Corporation Limited and others-(2003) 2 Supreme Court Cases 107; Sidheshwar Sahakari Sakhar Karkhana Limited Versus Union of India and others-(2005) 3 Supreme Court Cases 369; and ABL International Limited and another Versus Export Credit Guarantee Corporation of India Limited and others-(2004) 3 Supreme Court Cases 553. All these decisions have a single underlying theme that even a pure administrative act that entails civil consequences shall be addressed with reasonableness and rules of natural justice would require a right of hearing by application of the principle of audi alteram partem. This fundamental breach partakes the character of violation of fundamental right for which the affected party certainly has the most efficacious remedy through an intervention of prerogative writs under Article 226. 7. While the Court's power under Article 226 is wide enough to admit redressals of every grievance that violates fundamental rights, by the only fact that the powers are wide, there is a greater need for circumspection for exercise of such power. And that would include the consideration of whether there is an effective remedy that is possible through an alternative adjudicatary process. ADRs are the byword for speedier and quicker reliefs and arbitral process is the most sought after emerging forum for adjudication and more especially when commercial interests are involved and where the quicker adjudication is the most desirable result. The apprehension of the learned counsel again that the petitioner shall not be able to secure any interim relief which could protect him is allayed in the Arbitration and Conciliation Act itself, when Civil Writ Petition No.7992 of 2010 - 7 - it provides under Section 17 the power to pass interim orders to an Arbitrator which will be in the nature of issuing measures of protection in relation to the subject matter of dispute. In other words, when there is a clause for arbitration to which the petitioner has been a willing party when he enters into the contract, he shall have the remedy only through an arbitral process which is efficacious enough. 8. The writ petition is disposed of with liberty to the petitioner to resort to arbitration in the manner contemplated under the contract and provided through the statute. (K.KANNAN) JUDGE 20.05.2010 sanjeev