Union Of India vs M/S. Simplex Infrastructures Ltd

2. Briefly stated, the Respondent being the lowest bidder was allotted a contract by the Appellant in respect of work styled as “Construction of Tsunami Reconstruction Project in A & N Islands. SH: Construction of 821 units of permanent shelters (single stories) including internal water supply sanitary installation & internal Electrification in the Island of Teressa.” The contract agreement was entered into between the parties on 5th October, 2006. According to the Appellant, the Respondent failed to adhere to the time frame for completion of the contract. As a result, a show cause notice was issued to the Respondent on 27th April, 2007 to show cause as to why the contract should not be rescinded by invoking clause 3 of the agreement. The Respondent submitted its response thereto on 8th May, 2007. Despite the dismal performance of the Respondent, the Appellant gave it one more opportunity to improve on the performance vide a letter dated 20th June, 2007. The Respondent, however, submitted its 12th revised completion plan dated 10th October, 2007. Since the Respondent failed to adhere to the extended time line and also miserably failed to maintain the quality and progress of work, the Appellant served it with a second show cause notice on 4th January, 2008. The Respondent replied to the said show cause notice on 1st February 2008. However, the explanation offered by the Respondent, in the perception of the Appellant, was found to be unsatisfactory and baseless. Hence, the Appellant rescinded the contract vide letter No. 57(12)/RE/TRP/Kamorata/07-08/638 dated 25th February, 2008.

3. The Respondent then invoked the arbitration clause in the agreement, pursuant to which the competent authority appointed an Arbitrator vide letter no. 23(6)/(1)ADG(SR)/TRP/08-09/469 dated 27th August, 2008. The arbitration hearing concluded on 27th March, 2014. An Award was published vide letter No.ARB/RKM/TRP/Case 005/2014-20 dated 27th October, 2014. The Appellant received a hard copy of the Award on 31st October, 2014, wherein the Arbitrator held that the rescindment order passed by the Appellant was illegal as time was not the essence of the contract and further directed the Appellant to pay the final bill submitted by the Respondent. Aggrieved, the Appellant filed a petition for setting aside the arbitral award before the District Court at Port Blair being Appeal No. 2 of 2015. The Respondent, on the other hand, filed an execution proceeding in relation to the self same Award before the High Court at Calcutta being EC Case No.734 of 2015. The Appellant then preferred an application in Appeal No.2 of 2015 before the District Court, for stay of the Award. The District Judge allowed the said application. That fact was brought to the notice of the High Court at Calcutta in execution proceedings initiated by the Respondent. The High Court vide order dated 15th September, 2015, disposed of the Execution petition filed by the Respondent and gave liberty to the Respondent to appear before the District Court and to resist the proceedings pending in that court.

13. On a bare reading of this provision, it is noticed that remedy of appeal has been provided only against an order of setting aside or refusing to set aside an arbitral award under Section 34(1) (c). No appeal is provided against an order passed by the Court of competent jurisdiction condoning the delay in filing the petition under Section 34 of the Act as such. The Division Bench in the impugned Judgment, therefore, rightly noted that remedy of appeal against the impugned order of the learned Single Judge was not otherwise available under Section 37 of the Act.

16. Accordingly, the impugned judgment of the Division Bench of the High Court at Calcutta dated 20th June, 2016 passed in G.A.No.1650 of 2016 in APOT No. 183/2016 in A.P. No. 224/2016 is set aside with liberty to the Respondent to challenge the judgment of the learned Single Judge dated 27th April, 2016 in G.A. No. 958 of 2016 in AP No.: 224 of 2016. All contentions available to both sides with regard to the correctness of the Judgment of the Learned Single Judge dated 27th April, 2016, are kept open.

18. The appeals are allowed in the above terms with no order as to costs.