UNION OF INDIA Vs. MOHATA CONSTRUCTION COMPANY

JUDGEMENT

(1.) The petitioner/employer awarded a contract for the construction of quarters for cadets at Chennai to the respondent/contractor. For ease of reference, the petitioner is referred to as the employer and the respondent as the contractor throughout this order. The total value of the contract was Rs.11,03,48,460.47. Work was to be executed in two phases: Phase-I to be completed by 30/9/2009 and Phase-II by 30/6/2010. In course of execution of Phase-I work, extensions of time were requested for and granted. By communication dtd. 22/5/2010, extension up to 5/3/2010 was granted by the employer under condition 11 (A)(vii) of IAFW-2249, General Conditions of Contract (the GCC). Similarly, in course of execution of Phase-II work, extensions of time were requested for and granted. The last extension that was granted while work was being carried on was up to 15/3/2012. All extensions were under condition 11 (A)(vii) of the GCC. By communication dtd. 7/7/2015, the employer informed the contractor that the Phase-II work was completed on 3/7/2012 subject to rectification of defects.

(2.) By communication dtd. 13/4/2015, the contractor invoked the arbitration clause in the contract and requested the employer to take necessary steps to form the arbitral tribunal to adjudicate 28 claims. As is evident from the narration in the preceding paragraph, while work was carried out and completed subject to defect rectification on 3/7/2012, extension of time for the period running from 16/3/2012 to 3/7/2012 had not been granted. Therefore, parties corresponded on said issue and the processing of the final bill. In that context, a letter dtd. 7/1/2016 and a letter dtd. 18/2/2016 enclosing an affidavit were issued by the contractor agreeing to withdraw all court cases and the request for appointment of an arbitrator. Pursuant thereto, as requested, extension of time was granted up to 3/7/2012 by communication dtd. 21/3/2016. Meanwhile, pursuant to a communication dtd. 16/6/2016 from the Engineer-in-chief, the arbitrator entered upon reference and called upon parties to submit pleadings by notice dtd. 2/7/2016. In response, by letter dtd. 16/7/2016, the employer informed the arbitrator about the submission of an affidavit by the contractor agreeing to withdraw the request for arbitration, and the grant of extension of time pursuant thereto. Therefore, it was submitted that there are no claims/disputes requiring adjudication.

(3.) Thereafter, by communication dtd. 8/8/2016, the contractor informed the Arbitral Tribunal that the affidavit was given under pressure since the contractor was informed that extension of time would be granted only if such affidavit is provided, and that the final bill would be paid subject to such condition. An application under Sec. 16 of the Arbitration and Conciliation Act, 1996 (the Arbitration Act) was filed by the employer in these facts and circumstances on 6/9/2016. By order dtd. 4/11/2016, the Arbitral Tribunal rejected the jurisdictional challenge on the ground that the letter dtd. 7/1/2016 and affidavit were not submitted under free consent. The arbitral proceedings continued and the contractor made 17 claims before the Arbitral Tribunal.