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2017 (5) TMI 1622

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..... se factors will not determine its real nature. Whether, in view of statutory provisions of Section 7 of the Adhiniyam of 1983, the matter has to be referred to the M.P. Arbitration Tribunal constituted under Section 3 of the 1983 Adhiniyam, even in cases where the parties have incorporated a clause in agreement regarding resolution of dispute by some other forum or under the Arbitration and Conciliation Act, 1996? - Held that:- Sub-section (1) makes it clear that the aggrieved party to a works contract may refer its dispute in writing to the Tribunal irrespective of the fact whether there exists any agreement between the parties which contains an arbitration clause or not. Indisputably, the Adhiniyam of 1983 was held to be intra vires - The jurisdiction to decide a 'dispute' in a case of a works contract is with the Tribunal constituted under the Adhiniyam of 1983 - In view of statutory mandate contained in Section 7(i) of the Adhiniyam, the parties to a works contract needs to approach the Tribunal for resolution of their 'dispute'. Whether, the substituted definition of work contract in the M.P. Madhyastham Adhikaran Adhiniyam, 1983 by Act No. 7 of 2017 is clarificatory a .....

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..... av, Additional Advocate General and Amit Seth, Government Advocate JUDGMENT Sujoy Paul, J. 1. The order of reference dated 31.1.2017 which has occasioned the constitution of this Full Bench has been passed by a Division Bench in AC No. 27/2013 (M/s. ESSEL Infra Projects Ltd. vs. State of M.P.). 2. The relevant facts giving rise to the reference are that the aforesaid arbitration case filed under Section 11(6) of Arbitration and Conciliation Act, 1996 (for short 'Act of 1996') was listed before the learned Single Judge wherein it is prayed that an appropriate Arbitrator may be appointed as per the relevant dispute resolution clause in the agreement. During the course of hearing of the said matter before the learned Single Judge, the respondents have raised an objection as to maintainability of the application under Section 11(6) of the Act of 1996 on the ground that the provisions of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 (Adhiniyam of 1983) are applicable for the dispute between the parties and; therefore, matter has to be referred to the Tribunal constituted under the Adhiniyam of 1983. 3. During the course of hearing before the lear .....

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..... view petition was challenged before the Supreme Court in SLP (Civil) No. 22890-22891/2015. The Supreme Court disposed of the aforesaid SLPs by quoting findings recorded by Division Bench of this Court to the effect that the dispute between the parties pertains to a works contract and shall be referred to the Tribunal under the provisions of Adhiniyam, 1983. Thereafter, taking note of the fact that an arbitration appeal under Section 17 of the Act of 1996 was pending before this court, disposed of the SLP by observing that the aforesaid observation regarding the contract being a works contract would not come in the way of petitioner Ashoka Infraways Ltd. in prosecuting the appeal under Section 37 of the Act of 1996 which was pending before the High Court. 6. The Division Bench was apprised that subsequently another IA was filed in the SLP which was again disposed of on 2.9.2015 observing that the learned Single Judge of the High Court shall consider the said application under Section 11(6) of the Act of 1996 on its own merit without getting influenced by the earlier orders passed by the High Court on 9.7.2015 and 31.7.2015 i.e. the orders passed in the writ petition and the revie .....

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..... case i.e. M/s. Landlord Infrastructure (Supra). The observations given by the learned Single Judge were reproduced by the Division Bench in the reference order dated 31.1.2017. It is apposite to quote the same which reads as under: 9. .Alternatively, it was held that even if the contract in question is considered to be a work contract, then also, in view of the decision laid down by the Supreme Court in the case of APS Kushwaha (SSI Unit) vs. The Municipal Corporation, Gwalior and others, 2011 (13) SCC 258, the dispute has to be resolved as per the provisions of 1996 Act. However, in the case of Jabalpur Corridor (Supra), it has not been noticed that the decision in the case of APS Kushwaha (Supra) is based on the view taken in VA Tech Escher Wyass Flowel Ltd. vs. MPSEB, 2011 (13) SCC 261 which was held to be per incuriam in L.G. Choudhary's case, and the submission pertaining to works contract has been dealt with by way of alternative submission only. Therefore, the decision in the case of Jabalpur Corridor (Supra) is of no assistance to the petitioner in the facts, as admittedly, in the instant case, the agreement in question is a works contract. 10. In the light of .....

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..... re in the State of M.P. with a view to enable the growth of sports in the State. In order to enable more efficient use of public resources, GOMP has taken decision to support the development of sports infrastructure in the State through PPP route. The State Government realized that the development, operation and maintenance of sports infrastructure is not a commercial viably business on its own. The GOMP has accordingly decided to structure projects for development of sports infrastructure by associating them with related real state development. 14. Learned senior counsel pointed out that in furtherance of aforesaid objective, the authority has resolved to develop sports infrastructure on a build transfer (BT) basis for sports infrastructure and build, own operate and transfer ( BOOT ) basis for real state development in accordance with terms and conditions set forth in the said concession agreement. The reference is made to Clause D(e), (g), (h), (j) (k) of this agreement. The attention of the Bench is drawn on the definition of 'construction' mentioned in Clause 1.2.1(f) of Article 1 of the agreement. He also relied on Article 3 of the agreement, which deals with .....

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..... r out of in relation to this contract (including its interpretation) between the parties, and so notified in writing shall be attempted to be resolved amicably in accordance with procedure laid down in this chapter. Clause 38.4 is relied upon to submit that this clause makes it clear that intention of the respondents was to reserve their rights to send the dispute for adjudication/resolution to a statutory regulatory body/commission which may be constituted at a later point of time. Hence, it is urged that the respondents were conscious about the fact that present statutory body namely Tribunal constituted under the Adhiniyam of 1983 is not an appropriate body for resolving the disputes arising out of concession agreement. Any such regulatory authority could be constituted in future which may deal with such disputes which may arise after constitution of said authority/commission. 15. Shri Naman Nagrath, learned senior counsel for the applicant further relied on certain portions of the agreement which deals with project account agreement , which is a tripartite agreement, substitution agreement etc. He submits that every such agreement in which third party (other than State or i .....

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..... arger Bench and the decision of Larger Bench is still awaited. It is also admitted between the parties that constitutionality of the Adhiniyam, 1983 is already upheld and it is settled that in case of works contract the dispute can be resolved by the Tribunal constituted under the 1983 Adhiniyam. 20. The further contention of learned counsel for the applicant is that the Concession Agreement is not merely a use of another terminology in place of Works Contract but it has a statutory basis as well. Reliance is placed on Section 80(IA) of the Income Tax Act wherein the word Concession Agreement is differently dealt with in comparison to the Works Contract . Shri Nagrath, supplied copy of a railway contract to the Bench during the course of hearing wherein the certificate issued by the concessionaire is recognized by the railway administration. 21. It is an admitted fact between the parties that during pendency of these matters, Section 2(i) which defines works contract has been amended by notification dated 17.01.2017. It is also not in dispute that constitutionality of the amended definition of works contract is not the subject matter of challenge in the present m .....

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..... e Court aforesaid is differently worded and has a different impact which shows that the correctness of the order passed by this court in the case of Jabalpur Corridor (Supra), cannot be questioned. 26. Shri Jai Savla appearing in AC No. 79/16 contended that in his case, there exist State support agreement and substitution agreement etc. Clause-38.1 deals with the right and title which shows that the applicant is a licensee. He submits that section 7 of the Act of 1983 talks about dispute . The dispute is defined in section 2(d) of the Adhiniyam of 1983. He submits that in the present cases, the claim of the applicants is not related to any ascertained money valued at ₹ 50,000/- or more and, hence, the dispute existing between the present parties does not fall within the ambit and scope of section 2(d) of the Adhiniyam. It is a common ground that in the present cases, if applicant/appellant ultimately succeed, they will get some extension of period to operate/function which shall be in terms of further days and not in terms of any ascertained money. Shri Nagrath, in addition to aforesaid, urged that the definition of dispute was earlier wider which included any kind of .....

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..... e amended definition is important. Amendment is being introduced recently and its validity can be gone into in the present case. Reliance is placed on the judgment of Supreme Court in the case of Indira Sawhney vs. Union of India, 1992 Suppl. III SCC 217. In addition, he placed reliance on the judgments reported in 2013 (5) SCC 1, State of Punjab v. Salil Sabhlok Others, 1996 (7) SCC 637, Indian Aluminium Co. Others vs. State of Kerala others, and 2009 (13) SCC 165, State of Himachal Pradesh vs. Narain Singh. 31. Contention of respondents- Shri Purushendra Kourav, Amit Seth and Shri Dhurv Verma appeared on behalf of the respondents and opposed the said contentions. Shri Kourav submits that even unamended definition of works contract is wide enough to include all matters relating to execution of work. He relied on the dictionary meaning of work as given in the Black's Law Dictionary. By placing reliance on Statement of Object and Reasons behind insertion of new definition, it is urged that amendment in the definition is clarificatory in nature. It does not create any new burden or liability on the parties. Such clarificatory notification has retrospective operatio .....

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..... taxing statute is totally irrelevant. 35. Learned counsel for the State contended that the applicants do not have any choice of forum. No legal, vested or statutory right of applicant is taken away by amending the definition. As per Section 7 of the Adhiniyam of 1983 coupled with the full bench judgment of this Court reported in 2007 (4) MPHT-444 [Shri Shankarnarayan Construction Co. vs. State of M.P.], it is clear that the appropriate remedy for the applicants is before the tribunal constituted under the Adhiniyam of 1983. 36. Respondents relied on AIR 1954 SC 340 (Kiran Singh and others vs. Chaman Paswan and others) to submit that the question of jurisdiction can be raised at any point of time. This can be raised at the appellate stage or even at the stage of execution proceedings. Lack of jurisdiction nullifies everything. It is also urged that in view of judgment of Supreme Court in AIR 2000 SC 2587 (Kunhayammed Ors. vs. State of Kerala), it is clear that when SLP is dismissed in limine, the findings given by the Supreme Court does not mean that the order of the High Court got a stamp of approval on merits or it got merged in the order of Apex Court on the basis of doct .....

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..... and Reclamation Corporation Ltd. Chandigarh vs. Presiding Officer, Labour Court Chandigarh and others. (1990) 3 SCC 682 it has been observed by the Apex Court that a definition is an explicit statement of full connotation of a term. It has further been observed that when a statute says that a word or phase shall 'mean' certain things or acts, the definition is a hard and fast definition and no other meaning can be assigned to the expression than is put down in definition. 16. Since, as per section 2(i) of the Adhiniyam 'Work Contract' means an agreement in writing for the execution of any work specified therein; it is clear that a work to constitute and to be construed as 'Works Contract' must be strictly covered by the works specified in the said definition and that no other work should be treated as 'Works Contracts'. 17. Learned counsel for the respondents in the above context submitted that, Water Treatment Plant, essentially consists of building and water tanks. It was therefore submitted that the name Water Treatment Plant used in the contract between the parties, by itself would not exclude the said work executed by the appellant, fro .....

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..... 9; in section 2(i) of the Adhiniyam appears to have a very wide spectrum, because it relates to the execution of any work relating to construction, repairs or maintenance of 'any' building or superstructure, tank, canal, reservoir, etc. the repetition of word 'any' in the said definition prior to the word 'Work' as well as before the nature of construction, e.g. building, superstructure, etc., clearly indicates the intention of legislature to provide for its wide amplitude and application. Therefore, it appears that the definition of 'Works Contracts' as given in section 2(i) of the Act, applies to all works of construction, repairs or maintenance of all types of buildings, superstructures, reservoirs, tanks etc. 21. Therefore, all types of buildings, tanks whatever be its technical nomenclature, would be covered under the said definition of 'Works Contract'. In Ghanshim Das vs. Debi Prasad and another, AIR 1966 SC 1998 the Supreme Court with reference to U.P. Zamindari Abolition and Land Reforms Act, observed: The word building has not been defined in the Act an is, therefore, to be construed in its ordinary grammatical sense unless t .....

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..... y services. The relevant portion of this order in the case of D.D. Sharma (Supra) reads as under: 9. Now the crucial question which has been raised by the applicant in this petition is that the agreement and work assigned to the applicant does not fall within the definition of 'Works Contract', may be examined. To assess the nature of contract entered into between the parties it would be necessary to refer certain clauses of the agreement which provides the works to be done under the supervision consultancy for the work of construction/upgradation of rural roads in Madhya Pradesh under the Pradhan Mantri Gram Sadak Yojna scheme. Clause 4.2, 4.3, 4.5, 4.6 and 7.1 are relevant, which provides construction, supervision to check quality of materials and works, measurement of works, scrutinize the claim raised by the contractor and held the management to clear the payment. The petitioner was to monitor progress of the work with certain services as enumerated in clause 4.6 and to submit various reports as enumerated in Clause 7.1 of the scheme. The aforesaid all the works are related to the works contract. Clause 2 of the terms of reference provides objectives for providin .....

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..... ctor the applicants existence cannot be presumed. The entire work of applicant was related to the works contract and the contract of applicant falls within the purview of matters relating to the 'execution of works contracts'. M/s. Technogem Consultants Pvt. Ltd. (supra) the learned Judge considering this aspect held thus: 18. Mere perusal of aforequoted definition of works contract in Section 2(i) and in particular the words underlined would go to show that if the State Government or its official enters into a contract with any person for construction, repairs and maintenance of road then it becomes a works contract, as defined in Section 2(i). Similarly, definition of works contract , also includes an agreement in relation to all other matters relating to execution of any of the said work i.e., road. In other word, if in execution of main work as in this case road, any other agreement is entered into by State Government with any person for accomplishing execution of road work then the said agreement would also be regarded as works contract within the meaning of Section 2(i) ibid. 19. In my considered view, therefore, the agreement in question (Annexure P-1) bei .....

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..... cally opposite to the interpretation given by previous Benches in Kamini Malhotra, Technogem and D.D. Sharma (Supra). Detail and design etc. are essential part of activity of 'construction'. 47. In Jabalpur Corridor (Supra), the reasons for holding that concession agreement is not a works contract are - the concession agreement does not include detailed design, financing and operation of the contract, the works contract is a lump sum contract wherein the contractor has to quote the amount for execution of the work based on details furnished by the employer, there is no necessity for creation of any escrow account in works contract, in works contract the payment is made against the running account bills prepared by the contractor and submitted to the employer periodically whereas in concession agreement, the Concessionaire has to utilize and arrange the funds, the concessionaire under the agreement after completion of construction recovers the amount invested by him for completion of the project by way of toll, no State support agreement is executed in case of a works contract whereas it takes place in a case of concession agreement. The Concessionaire is not liable to pa .....

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..... ir or maintenance is immaterial. If aforesaid essential ingredients of works contract are available in the agreement and in addition thereto certain other elements are added in the agreement which are not included in the definition of works contract , it will not take out the agreement outside the purview of works contract. If present agreement is tested on the anvil of aforesaid principle, it will be clear like noon day that the agreement fulfills the said requirement i.e. there exists an agreement in writing for execution of work relating to construction, repair and maintenance of building and other entities. In addition, the Concessionaires can operate the contract. Apart from this, it is noteworthy that the definition of 'works contract' is totally silent about the mode and method of payment. It is also silent as to how the work relating to construction, repair or maintenance should be carried out. The definition of 'works contract' contains the word construction , repair and maintenance . These words can be further divided and bifurcated. The definition of word construction in the concession agreement mentioned above is an example of the same. Its a matt .....

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..... tions, of the works contract. If in addition to these primary description, applicant are engaged in other activity like operation of project or maintaining a particular type of account etc. or signed other contracts also, this will not take away the agreements outside the scope of 'works contract'. The requirement of payment of tax is a different facet and as per Section 2(i) of the Adhiniyam it will not determine the nature of agreement. Similarly, mode of payment and method of arranging and utilizing money will not determine the nature of agreement. The definition of 'works contract' alone will determine whether a particular agreement falls within its ambit or not. For this reason, the argument of Shri Naman Nagrath based on relevant provisions of IT Act and railway contract must fail. 52. Similarly, in the case of R.V. Infrastructure Engineers Pvt. Ltd. (supra), this court had no occasion to test the agreement on the anvil of definition of works contract. In the said case, the question was whether the particular agreement is a lease or licence within the meaning of Transfer of Property Act and Easement Act. The question was relating to payment of stamp duty an .....

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..... n in Ashoka Infraways (Supra) for the reasons stated above. In addition, it is well settled that question of jurisdiction goes to very root of the matter and this legal question needs to be examined on the basis of interpretation of enabling provisions. The jurisdiction cannot be assumed by consent of parties. See AIR 1954 SC 340 (Kiran Singh vs. Chaman Paswan). For the aforementioned reasons, in Jabalpur Corridor (Supra) and in Ashoka Infraways (Supra), the Benches have committed an error in holding that the concession agreement is not a works contract . Hence, these orders to the said extent are overruled. As to question No. (ii): 56. Section 7 of the Adhiniyam, 1983 reads as under: 7. Reference to Tribunal (1) Either party to a works contract shall irrespective of the fact whether the agreement contains an arbitration clause or not, refer in writing the dispute to the Tribunal. (2) Such reference shall be drawn up in such form as may be prescribed and shall be supported by an affidavit verifying the averments. (3) The reference shall be accompanied by such fee as may be prescribed. (4) Every reference shall be accompanied by such documents or other evidence .....

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..... ion, strikes at the very authority of the Court to pose any decree, and such a defect cannot be cured even by consent of parties. (Emphasis Supplied) 58. In view of statutory mandate contained in Section 7(i) of the Adhiniyam, the parties to a works contract needs to approach the Tribunal for resolution of their 'dispute'. However, whether this mandate will be applicable in cases of terminated contract or not will be decided by the Supreme Court in a reference made in the case of L.G. Choudhary (Supra). The curtains will be finally drawn on this issue by the Supreme Court. Since the said question is pending before the Supreme Court, we are not inclined to deal with the said aspect and the present order shall not be construed as an order dealing with aforesaid aspect. As to question No. (iv) 59. Before dealing with rival contentions, it is apposite to take note of statement of object and reasons behind introduction of M.P. Madhyastham Adhikaran Sanshodhan Adhiniyam, 2016 which reads as under: Statement of Objects and Reasons In Civil Writ Petition No. 6557/2013 M/s. Jabalpur Corridor (India) Private Limited and another versus Madhya Pradesh Road Develop .....

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..... easons shows that the reason for bringing this amendment is that this Court in the case of Jabalpur Corridor (Supra) has not regarded the concession agreement in the sense of 'works contract' due to which the dispute under the concession agreement is settled under the Act of 1996. The basic reason for introducing the amendment is to clarify that the definition of works contract will include concession agreement. No new liabilities are fastened on the parties by bringing this amendment. 62. Shri Nagrath, learned senior counsel placed reliance on the judgment of Supreme Court in the case of M/s. Mahalaxmi Oil Mills (Supra). In the said case, the question was whether tobacco seed and tobacco cake will falls within relevant entry of the Excise Act. The Apex Court noted that the expression means as well as includes were used. It was held to be exhaustive. In the said case, in the first part of the definition, tobacco seed and cake was not mentioned. In the second part of definition, leaves, stalks and stems were mentioned but there was no mention about the seed. Tobacco seeds did not fall within the definition. Hence, Apex Court accepted the contention of the State that i .....

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..... , in its recent judgment, reported in AIR 2014 (Karnataka) 120 (The Hassan Cooperative Milk Producers Societies Union Ltd. vs. State of Karnataka) opined that when amendment is made by substitution of a provision, it has the effect of replacing the old provision by the substituted provision and in absence of repugnancy, inconsistency and absurdity, it must be construed as if it is incorporated in the Act right from ab initio. Hence, in the present case of substitution of definition, it will be presumed that the amended definition is in force from the date unamended definition came into being. 64. The appellants also relied on 2016 (9) SCC 720, Union of India vs. Indusind Bank Ltd. and another to bolster their submission that amendment in the definition cannot have any retrospective effect. The said judgment is of no help to the applicants. In the said case, it was held that the amendment was remedial in nature and not clarificatory or declaratory of the law. Certain agreements covered by unamended provision were made void for the first time. It was found that rights and liabilities that have already accrued between the parties are sought to be taken away. In this backdrop, it wa .....

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..... ment it was made clear that the present dispute will be decided by the arbitration proceedings as per the Act of 1996 and Regulatory Body etc. may deal with future disputes. Suffice it to say that no clause of agreement can prevail over the statutory provisions of the Adhiniyam of 1983. If a dispute falls within the ambit of Section 2(i)(d) (i) as per Section 7 of the Adhiniyam, the Tribunal constituted under the 1983 Adhiniyam alone will have jurisdiction. As to question No. (v): 69. The applicants/appellants advanced an alternative submission. It is contended that even if concession agreement is treated to be a works contract, the remedy under the Adhiniyam of 1983 can be invoked only when there exists a dispute between the parties. 70. It is common ground that only claim of ascertained money valued at ₹ 50,000/- or more falls within the ambit of definition of dispute . In the present case, if applicants succeed, they will get some additional days to operate their projects. How much they will earn during those additional days is not quantifiable in terms of money. Hence, the remedy under the Adhiniyam cannot be invoked and the parties may be directed to settle .....

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..... he execution or non-execution of works contract or part thereto was recognised as a dispute. Whereas, in the amended definition 'dispute' is confined to claim of ascertained money . There is a remarkable difference in the language employed in both the definitions. In amended definition, the law makers have not chosen the words claim of ascertainable money. Indeed, they consciously used the word ascertained . The words ascertainable and ascertained have different meaning. Ascertainable means an amount which can be ascertained by any process of reasoning, formula, procedure, investigation, etc. whereas ascertained is the outcome of an exercise already undertaken for quantification of the amount. Hence, claim of ascertained money will arise only when such claim in terms of money has already been ascertained . 73. The Legislature has chosen to use the words claim of ascertained money and not the words claim of ascertainable money. The word ascertain is defined in Black's Law Dictionary as under: Ascertain. To fix; to render certain or definite; to estimate and determine; to clear of doubt or obscurity. To insure as a certainty. To find out by inve .....

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..... rence between the parties unless it falls within the statutory definition of dispute under the Act of 1983. 76. Shri Amit Seth submitted that money can be ascertained on the basis of average toll collection for a specified period or on the basis of cash flow chart, financial identical rate of return (FIRR) and yearly cash flow statement (YCFS). We do not see much merit in the said contention. As the applicants have based their claim to operate the project for a specified period, if they succeed in their claim, they will get extra days for operating the project. For example, if a Concessionaire who is operating a toll plaza succeeds, what he will get will be in terms of extension of days and not in terms of money which is ascertainable or ascertained. During extended period of operation of projects, how much will be the vehicular movement and how much toll will be collected cannot be ascertained at this point of time by any process of reasoning. Similarly, while operating a sports complex, how much the Concessionaire will earn cannot be determined/ascertained by any guess work. For this reason, the claim of the applicants is in terms of extension of days to operate the project .....

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..... amount/good is quantified, fixed or determined. In our view, in absence of any such claim of ascertained money by the applicants, their claim does not fall within the ambit of dispute as per Section 2(d) of the Adhiniyam of 1983. 79. In C.R. No. 136/1988 (Progressive Construction Pvt. Ltd. vs. MPSEB) decided on 24.6.1996, this Court expressed its view that if a law prescribes a thing to be done in a particular manner, it has to be done in the same manner and other methods are forbidden. Following the said principles in Satish Kumar Raizada (Supra), this court considered the word dispute in the Adhiniyam and opined that the Tribunal can decide only such disputes which are covered by this definition. The dispute under this definition must be for ascertained money . It means the sum which is known or made certain or fixed or determined or quantified . Since in the said case, the reference was relating to fixing the rates of work it was held to be not relating to any ascertained sum of money . We are in respectful agreement with the view taken by this court in Satish Kumar Raizada (Supra). In absence of claim of ascertained money, the cases of present applicants do no .....

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..... wer of resolution of dispute to any authority, the jurisdiction to decide the dispute will remain with the Tribunal constituted under the Adhiniyam of 1983. 82. On the basis of foregoing analysis, we may summarize our conclusions as under: (i) If an agreement by whatever name called falls within the definition of works contract and difference between the parties is covered in the definition of 'dispute' as defined under the Adhiniyam of 1983, it has to be referred for adjudication before the Tribunal constituted under Section 3 of the Adhiniyam of 1983. (ii) In view of statutory provision of Section 7 of the Adhiniyam of 1983, even in cases where the parties have incorporated a clause in such agreement regarding resolution of dispute by some other forum or under the Act of 1996, the forum subject to (i) above, would be the Tribunal under the Adhiniyam of 1983. This conclusion, however, will presently not include the cases of terminated contract, which aspect is pending consideration before a Larger Bench of the Supreme Court. The decision of Larger Bench will draw the curtains on this aspect. (iii) The judgment of Jabalpur Corridor (Supra) reported in 2014 (2) .....

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