Petitioner issued a Notice of Negligence under Clause 37 of the GCC against the respondent for not obeying the orders passed by them and the same issue was held in the judgement passed by a single bench judge comprising HON’BLE MR. JUSTICE VIBHU BAKHRU, in the matter STEEL AUTHORITY OF INDIA LIMITED Vs M/S SP SINGLA CONSTRUCTIONS PVT LTD, dealt with an issue mentioned above.
Steel Authority of India Limited has filed the present appeal under Section 37(2)(b) of the Arbitration and Conciliation Act 1996, inter alia, impugning an order dated 21.08.2020, passed by the learned Arbitral Tribunal (by majority) under Section 17 of the A&C Act.
SAIL issued a Notice Inviting Tenders (Tender Notice bearing no. DGM/PCC/TK/5(749) R/2009/3090) inviting tenders from pre-qualified bidders for the construction of flyovers for its steel plant located at Bhilai on a Divisible Turnkey Contract basis. Thereafter, on 18.06.2010, SAIL issued the Notification of Letter of Acceptance in favour of the respondent. Admittedly, they mentioned that the Project was not completed within the stipulated time period.
The aforesaid disputes between the parties were referred to ARB. A. (COMM.) 47/2021 arbitration before the Arbitral Tribunal comprising of three members and the arbitration proceedings commenced on 07.01.2019. Thereafter, on 18.07.2019, SAIL issued a letter to the respondent providing details for the balance work to be completed and requested the respondent to resume the works regarding flyover no. 2 within a period of ten days and to start the work. On 03.08.2019, SAIL once again requested the respondent to resume the balance works within seven days of receipt of the letter, On 23.08.2019, SAIL issued a Notice of Negligence under Clause 37 of the GCC to the respondent.
On 29.08.2019, the respondent applied Section 23(3) of the A&C Act and submitted an amended Statement of Claims, as further disputes had arisen between the parties. Meanwhile, on 09.09.2019, during the pendency of disputes before the learned Arbitral Tribunal, the respondent applied Section 17 of the A&C Act, inter alia, seeking maintenance of status quo in all further disputes between the parties in respect of their legal relationship, whether contractual or not.
On 19.09.2019, the learned Arbitral Tribunal issued the notice, however, it passed no orders regarding the application filed by the respondent under Sections 17 and 23(3) of the A&C Act. It also directed SAIL to file its reply by 15.10.2019 and further, fixed a meeting on 08.11.2019 at the Bhilai Steel Plant for an amicable discussion between the parties to mutually settle their disputes. In the meanwhile, by a letter dated 09.11.2019, SAIL issued a Risk Purchase Notice under Clause 37 of the GCC read with Clause 44.2 of the GCC to the respondent to take immediate steps to expedite the execution of the work within a period of fourteen days from the date of the notice.
Shri Ashok Sharma, one of the learned Arbitrators, passed a dissenting order and held that the application preferred by the respondent under Section 17 of the A&C Act is liable to be rejected. The learned Arbitrator observed that Clauses 37 and 44 of the GCC provided the right to SAIL to terminate the agreement under certain circumstances as well as “for any reason”. Later Aggrieved by the impugned order, SAIL filed the present appeal.
Mr Basu, learned senior counsel appearing for SAIL contended that the impugned order is liable to be set aside on several grounds. First, he submitted that the Arbitral Tribunal has, in effect, directed a specific performance of the Contract, which is contrary to the Specific Relief Act, 1963. He submitted that the Contract is determinable and therefore, no orders could be passed compelling specific performance of the Contract. Lastly, he submitted that the Arbitral Tribunal has, in effect, modified the Risk and Purchase Notice dated 09.11.2019 and directed SAIL to execute the work based on a no default on the part of the respondent and, the same is beyond its jurisdiction.
The Arbitral Tribunal had returned the finding that SAIL is responsible for the delay in execution of the Contract. However, it was also clarified in the impugned order that the findings are only tentative and only for the interim application. Because of the above, no interference with the impugned order is warranted by this Court in these proceedings.
The court perused the facts and argument’s presented, it believed that- “It is also relevant to note that the impugned order (majority view) is dated 21.08.2020 and the present appeal was filed on 19.04.2021 after a considerable delay. On this ground as well, no interference with the impugned order is warranted in these proceedings. For the reasons stated above, the appeal is dismissed. All pending applications are also disposed of”.
Judgment Reviewed by: Mandira BS