2007 (8) TMI 830 - HC - Indian Laws

Dispute Ruled Under M.P. Arbitration Tribunal; Consultancy Services Classified as 'Works Contract' by Court.

D.D. Sharma and Ors. Versus Madhya Pradesh Rural Roads Development Authority and Ors.

The court determined that the dispute falls under the jurisdiction of the M.P. Arbitration Tribunal as per the Adhiniyam of 1983, overriding the ... - Issues Involved:1. Jurisdiction of the M.P. Arbitration Tribunal under the Adhiniyam of 1983 versus the Arbitration and Conciliation Act, 1996.2. Definition and scope of 'Works Contract' under the Adhiniyam of 1983.3. Applicability of arbitration clauses in the contract.4. The status of the M.P. Rural Roads Development Authority as a public undertaking.Issue-wise Detailed Analysis:1. Jurisdiction of the M.P. Arbitration Tribunal versus the Arbitration and Conciliation Act, 1996:The primary issue was whether the dispute should be referred to the M.P. Arbitration Tribunal under the Adhiniyam of 1983 or be resolved under the Arbitration and Conciliation Act, 1996. The non-applicant contended that the M.P. Arbitration Tribunal had exclusive jurisdiction as the contract was a 'Works Contract' under the Adhiniyam of 1983. The applicant argued that the arbitration clause in the contract should prevail, invoking the Act of 1996. However, the court held that the Adhiniyam of 1983, having received the President's assent, prevails in the State of M.P. over the Act of 1996 due to Article 254 of the Constitution, which allows state law to prevail when it has received presidential assent.2. Definition and Scope of 'Works Contract':The court examined whether the consultancy services provided by the applicant fell under the definition of a 'Works Contract' as per Section 2(i) of the Adhiniyam of 1983. The applicant argued that their role was limited to supervision and did not constitute a 'Works Contract.' However, the court referred to the comprehensive definition of 'Works Contract,' which includes agreements for supervision and other related activities necessary for the execution of construction works. The court concluded that the consultancy services were indeed part of the 'Works Contract' as they were integral to the execution and supervision of the construction project.3. Applicability of Arbitration Clauses:The applicant invoked Clause 8.2 of the special conditions of the contract, which provided for arbitration under the Act of 1996. The court noted that while the contract contained an arbitration clause, the Adhiniyam of 1983 specifically provided for statutory arbitration for disputes arising out of works contracts with the state or its undertakings. The court emphasized that statutory provisions under the Adhiniyam of 1983 could not be overridden by contractual agreements, thus upholding the jurisdiction of the M.P. Arbitration Tribunal.4. Status of the M.P. Rural Roads Development Authority as a Public Undertaking:The non-applicant argued that the M.P. Rural Roads Development Authority was a public undertaking under Section 2(g) of the Adhiniyam of 1983, being fully owned and controlled by the State Government. The court agreed, noting that the Authority was constituted as a society by the state for executing rural road projects, and thus retained the characteristics of a state entity. This status brought the Authority under the purview of the Adhiniyam of 1983, reinforcing the jurisdiction of the M.P. Arbitration Tribunal.Conclusion:The court concluded that the dispute was subject to the jurisdiction of the M.P. Arbitration Tribunal under the Adhiniyam of 1983. The applicant's consultancy services were deemed part of a 'Works Contract,' and the Authority was recognized as a public undertaking. The court dismissed the petitions, granting the applicant the liberty to file a reference to the Tribunal within sixty days.