Om Construction Co vs Ahmedabad Municipal Corp.& Anr

2. The appellant herein is a "C" class approved contractor, whose tender was accepted by the Ahmedabad Municipal Corporation for providing and fixing Nibhada Stone for paving and Footpath in 2 Kalupur and Dariapur wards in Central Zone within the City of Ahmedabad. The Work Order was issued on 6th June, 2006, and as per the appellant's version the work was completed by the end of October, 2006. According to the appellant, after giving credit for payments which had been made by the Corporation, a sum of Rs.68,46,872/- was still due towards the work performed in the Dariapur ward, while a sum of Rs.8,61,760/- was also due for the work carried out in Kalupur ward. It is the case of the appellant that despite notice having been served on the Corporation on 24th May, 2007, the said amounts remained unpaid. Ultimately, on 6th June, 2007, the appellant issued a notice to the Corporation setting out the facts relating to the work performed and the claim made in detail and claimed a sum of Rs.77,08,632/-, together with interest at the rate of 18% per annum, from the due date till the date of realization, which the appellant claimed, was the total outstanding amount. In the notice it was also indicated that the claim made by the appellant should be accepted and payment should be made within a 3 period of 30 days from the date of receipt of the notice or that an Arbitrator should be appointed by the Corporation within a period of 30 days from the date of receipt of the notice.

4. The appellant filed a petition before the Gujarat High Court on 9th July, 2007, being Arbitration Petition No. 35 of 2007, under Section 11 of the Arbitration and Conciliation Act, 1996, hereinafter referred to as "the 1996 Act", inter alia, praying for the appointment of an Arbitrator to resolve the disputes between the parties. The High Court by its order dated 20th November, 2007, rejected the said petition. While doing so, the High Court took note of Section 2(1)(k) of the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992, hereinafter 5 referred to as the "Gujarat Tribunal Act", which defines "works contract" to mean a contract made by the State Government or Public Undertaking which is notified in the Official Gazette by the State Government. The High Court also noticed Section 2(1)

11. Mr. Divan further submitted that in the absence of such Notification, clause 30 of Form B-I would remain inoperative and consequently the provisions relating to the settlement of disputes by arbitration would also not be available to the parties.

16. Having arrived at the aforesaid conclusion, the only question that remains to be decided is whether this matter should be remitted to the High Court for appointment of an Arbitrator or whether we should ourselves appoint an Arbitrator in terms of the Arbitration Agreement. Remitting the matter to the High Court would only mean another round of litigation, whereas if the appointment is made by us, the matter will achieve finality, which would ultimately be beneficial for all concerned.

17. We, accordingly, allow the appeal and appoint Hon'ble Mr. Justice C.K. Thakker, a former Judge of the Supreme Court, presently settled at D-64, Akash Towers, Judges' Bungalow Road, Vastrapur, Ahmedabad 15 to be the Arbitrator for settlement of the disputes which have arisen between the parties. The learned Arbitrator shall fix his own fees and shall also formulate the procedure to be adopted by him during the arbitration proceedings. The Arbitrator shall try and publish his Award as expeditiously as possible, but positively within six months from the date of entering upon the Reference. The Arbitrator will also decide the venue and sittings of the Arbitral Tribunal in consultation with the parties. The judgment and order of the High Court impugned in this appeal is, accordingly, set aside. The costs of this appeal shall be the costs in the arbitration proceedings.

_______________J.

(ALTAMAS KABIR) _______________J.

(MARKANDEY KATJU) NEW DELHI Dated: 13.01.2009