NATIONAL HIGHWAY AUTHORITY Vs. BUMIHIWAY DDB LTD

JUDGEMENT

(1.) THESE two appeals have been filed invoking jurisdiction of this Court under Section 37(1)(a) of the Arbitration and Conciliation. Act, 1996 (hereinafter called 'the Act') assailing the Order dated 2 April, 2004 passed by the District Judge, Ganjam Gajapati, Berhampur in Arbitration Petition No. 2 of 2004.

(2.) THE aforesaid Arbitration Petition was filed by Bumihiway DDB Ltd. (JV) and others under Section 9 of the Act seeking interim protection by way of restraining the National Highway Authority of India and others from entering upon the work site and/or giving effect to the order of cancellation dated 14th January, 2004 and further restraining the said National Highway Authority from invoking the Bank guarantee(s). The District Judge disposed of the said Arbitration Petition directing as follows :

(3.) IN order to appreciate the inter se disputes, bereft of unnecessary details, it would be prudent to state the cases of both sides. Appellant Nos. 2 and 3 in ARBA No. 5 of 2004 entered into a joint venture in the name and style of 'Bumihiway DDB Ltd. (JV), Appellant No. 1. The N.H. Authority which is in charge of execution of the Golden Quadrilateral under the National Highways Development Programme for the entire country, with the aim and objective of connecting the four metropolis, such as Delhi, Mumbai, Chenai and Calcutta, called for tenders for the work as described in Paragraph 3 above. The Firm, among others, submitted its bid which was accepted by the N.H. Authority and a letter of acceptance was issued in favour of the Firm on 19th April, 2001. An agreement was also entered into on 19th June, 2001 between the parties inter se codifying the terms and conditions. According to the agreement, the work was scheduled to be completed within a period of thirty two months. The Firm was required to furnish mobilization advance in the form of Bank guarantee(s) to a tune of around eighteen crores of rupees, which in fact it did. After completion of all paraphernalia and execution of agreement, it is averred by both sides, the Firm commenced the work. Unfortunately disputes cropped up soon thereafter. According to the N. H. Authority there were dissensions between the two partners of the joint venture, inasmuch as one of the partners made several correspondences with the N. H. Authority complaining against the other. But then as the same is not the subject matter of these appeals, there is no need to dilate over the said disputes. According to the N. H. Authority, due to such dissensions between the two partners, the work entrusted to the Firm suffered to a great, extent, inasmuch as from the day one, the Firm neglected in keeping up with the target fixed in the agreement. A number of opportunities were given to the Firm to speed up the construction work to reach the target. The Firm after negotiation though assured the N. H. Authority on several occasions to reach the target, yet failed to keep up its commitments. The construction of the work in question was of paramount importance and the time was the essence of the contract. However, due to inaction/negligence of the Firm the country as a whole was subjected to great loss and inconvenience, inasmuch as there was disruption of free flow of vehicular traffic, both passenger and goods, on N. H. No. 5. Having no other way out, the N. H. Authority, after giving adequate opportunity to the Firm, directed the Firm to show cause by 20th of December, 2003 as to why action under Clause 63.1 (d) of the agreement would not be taken against it for delay in fulfilling the contractual obligation and the agreement would not be cancelled.