HINDUSTAN CONSTRUCTION COMPANY LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This set of Writ Petitions seek to challenge the constitutional validity of Section 87 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Arbitration Act, 1996") as inserted by Section 13 of the Arbitration and Conciliation (Amendment) Act, 2019 (hereinafter referred to as the "2019 Amendment Act") and brought into force with effect from 30.08.2019. They also seek to challenge the repeal (with effect from 23.10.2015) of Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as the "2015 Amendment Act") by Section 15 of the 2019 Amendment Act. Apart from the aforesaid challenge, a challenge is also made to various provisions of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "Insolvency Code") which, as stated by the Petitioners, result in discriminatory treatment being meted out to them.

(2.) The facts relevant for the determination of these matters may be gleaned from Writ Petition (Civil) No.1074 of 2019. The Petitioner No.1 therein, i.e. Hindustan Construction Company Limited, is an infrastructure construction company involved in the business of construction of public-utilities and projects like roads, bridges, hydropower and nuclear plants, tunnels and rail facilities. The Petitioner company, inter alia, undertakes these building projects as a contractor for government bodies such as the National Highways Authority of India ("NHAI", i.e. Respondent No.5 in the Writ Petition), NHPC Ltd. ("NHPC", i.e. Respondent No.6), NTPC Ltd. ("NTPC", i.e. Respondent No.8), IRCON International Ltd. ("IRCON", i.e. Respondent No.7) and the Public Works Department ("PWD"). Such projects are allotted to the Petitioner through the public tendering system. As Government bodies are owners and beneficiaries of such projects, cost overrun is almost invariably disputed by these bodies, leading to huge delays in the recovery of the legitimate dues of the petitioners. Also, these dues can only be recovered through civil proceedings or through arbitrations.

(3.) Arbitration awards that are in favour of the Petitioner company are invariably challenged under Sections 34 and 37 of the Arbitration Act, 1996, and on average, more than 6 years are spent in defending these challenges. The major problem in the way of the Petitioners is that the moment a challenge is made under Section 34, there is an 'automatic-stay' of such awards under the Arbitration Act, 1996.