TMI Blog2020 (1) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... owers vested in the Arbitral Tribunal in terms of the Section 17 of the A C Act are concerned, such powers can be exercised by the Tribunal constituted under the Gujarat Act because there is no inconsistency in these two Acts as far as the grant of interim relief is concerned - This power is already vested in the tribunal under the Gujarat Act and Section 17 of the A C Act compliments these powers and therefore it cannot be said that the provisions of Section 17 of the A C Act are inconsistent with the Gujarat Act. Appeal allowed. - CIVIL APPEAL NO. 8307 OF 2019 (@ SPECIAL LEAVE PETITION (CIVIL) NO. 36095 OF 2016), CIVIL APPEAL NO. 8308 OF 2019 (@ SPECIAL LEAVE PETITION (CIVIL) NO. 36096 OF 2016) - - - Dated:- 8-1-2020 - Deepak Gupta And Aniruddha Bose, JJ. For the Appellant : Mr. Preetesh Kapoor,Sr.Adv. Mr. A. P. Mayee,Adv. Mr. A.Rajaranjan,Adv. Ms. Charudatta Mahinrakar, Adv. For the Respondent : Mr. Anil K. Sharma,Adv. Mr. Vishwa Pal Singh, AOR JUDGMENT Deepak Gupta, J. The main question which arises for decision in these appeals is whether the Gujarat Public Works Contract Dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be made from the contractor as arrears of land revenue. 4. In this judgment, we are only referring to the facts of Civil Appeal No.8307 of 2019 @ SLP(C) No.36095 of 2016. The Respondent contractor was awarded a contract for strengthening a section of National Highway under work order dated 31.07.2007. According to the contractor, he completed the work on 30.04.2008 and final bill was paid to the contractor. The road was damaged and, according to the contractor, this had occurred due to heavy rains. The State called upon the contractor to repair the damaged portion and, according to the contractor, this repair was completed after the rains stopped. 5. The case of the contractor is that in terms of the contract, the contractor was only liable to remove defects for a period of 3 years which period ended on 30.04.2011. On 10.09.2012, the contractor wrote a letter to the State to release the security amount. This amount was accordingly released vide letter dated 10.09.2012. The State issued letter dated 11.11.2014 calling upon the contractor to pay a sum of ₹ 1,09,00,092/. This claim was based on the premise that the contractor had not carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced reliance on an order of the State Tribunal dated 24.11.2005 wherein the Tribunal held that it can only exercise jurisdiction, powers and authority conferred on it by or under the Gujarat Act of which it is a creation. It was further held that if the Gujarat Act does not empower the Tribunal to grant injunction, and it cannot take recourse to the Code of Civil Procedure, 1908 for grant of interim relief. It also held that an order of interim injunction, as prayed for like in the present case, does not fall within the ambit of interim award . The Tribunal held that there is no power to grant such injunction. 8. It appears to us that since then, in Gujarat, challenges to all communications/orders, whereby the State taking recourse to the provision of the contract akin to Clause 43.A seeks to recover amounts by setting it off against the claims of contractor in other contracts, are dealt with by the High Court. 9. We have extracted the main issue in the opening portion of the Judgment. Section 2(a) of the Gujarat Act defines an Arbitration Act to mean Arbitration Act, 1940. It is not disputed by the parties that this will now read to mean the A C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to the arbitral tribunal- (i) for the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings; or (ii) for an interim measure of protection in respect of any of the following matters, namely:- (a) the preservation, interim custody or sale of any goods which are the subject matter of the arbitration agreement; (b) securing the amount in dispute in the arbitration; (c) the detention, preservation or inspection of any property or thing which is the subject matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken, or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence; (d) interim injunction or the appointment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to arbitration under the said Act whether the agreement in question contained an arbitration clause or not. Basically, the intention of the Stage Legislature was that all disputes relating to works contract between the State Government and the persons executing the works defined as works contract would be compulsorily referred to the Arbitral Tribunal constituted under Section 3 of the Gujarat Act. Section 8(3) clearly provides that where the Tribunal admits a reference under subsection (2) it will make an award or an interim award giving its reasons thereof. This Section recognizes the power of the Tribunal to make interim awards. However, as pointed above, the Tribunal took a view that an interim award could not be in the nature of an injunction. 17. The practice and procedure of the Tribunal is governed by Section 9 of the Act. Section 12 of the Act vests revisional powers in the High Court of Gujarat where an award or any interim award can be challenged on the grounds set out therein. The High Court also has suo motu powers in this regard. Section 13 which is relevant for our purpose reads as follows: 13. Bar of jurisdiction of Courts.( 1) S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia and Others (2016) 11 SCC 720 to submit that till the demand of the Government is crystallised or adjudicated upon, the Government cannot withhold the money of the contractor. Since this case been specifically relied upon we are duty bound to go in the correctness of the view laid down in Gangotri Enterprises (supra). The judgment in Gangotri Enterprises (supra) is primarily based on the judgment of a two Judges Bench of this Court in Union of India vs. Raman Iron Foundry (1974) 2 SCC 231 In this case, this Court held that the Government had no right to appropriate the amount claimed without getting it first adjudicated. The relevant portion of the judgment reads as follows: 6 But here the order of interim injunction made by the learned Judge does not, expressly or by necessary implication, carry any direction to the appellant to pay the amounts due to the respondent under other contracts. It is not only in form but also in substance a negative injunction. It has no positive content. What it does is merely to injunct the appellant from recovering, suo moto, the damages claimed by it from out of other amounts due to the respondent. It does not direct that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd substance being the negative the respondent could refuse to pay such amounts if it thinks it has a valid defence, and if it chooses to do so there would be no breach of the injunction order. 22. It is true that the order of injunction in that case was in negative form. But if an order injuncted a party from withholding the amount due to the other side under pending bills in other contracts, the order necessarily means that the amount must be paid. If the amount is withheld there will be a defiance of the injunction order and that party could be hauled up for infringing the injunction order. It will be a contradiction in terms to say that a party is injuncted from withholding the amount and yet it can withhold the amount as of right. In any case if the injunction order is one which a party was not bound to comply with, the court would be loath and reluctant to pass such an ineffective injunction order. The court never passes an order for the fun of passing it. It is passed only for the purpose of being carried out. Once this Court came to the conclusion that the court has power under Section 41 (b) read with Second Schedule to issue interim injunction but such i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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