TaxTMI 
TaxTMI 
2020 (1) TMI 264
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....he Gujarat Act was enacted with a view to compulsorily refer all disputes arising out of "works contract" entered into by the State Government or the Public Sector Undertakings with any other person for those works defined as "works contract" in terms of Section 2 (k) of the Gujarat Act. As far as this case is concerned, it is not disputed that the contract entered into between the appellant State and the respondent contractor was a "works contract". The contract order pertaining to the parties dated 31.07.2007 contained an arbitration clause, relevant portion of which reads as follows:" Clause : 30(1) Disputes to be referred to Tribunal : The dispute relating to this contract, so far as they relate to of the following matters, whether such disputes arise during the progress of the work of or after the completin or abandoned thereof, shall be referred to the Arbitration Tribunal, Gujarat State..." 3. It is not disputed that the Gujarat Act is applicable in the present cases. We are mainly concerned with Clause 43.A of the contract entered into between the parties, which reads as follows: "43.A Any sum of money due and payable to the Contractor (including the security de....
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.... was determined and quantified by a Court or forum of competent jurisdiction. The stand of the State was that since the work of the contractor was defective, the State had got the work done from another person at the risk of the contractor. In case, the contractor has any dispute, he can approach the Court and reliance was placed on Clause 43.A of the agreement quoted above. 6. The High Court relied upon the judgment of this Court in State of Karnataka vs. Shree Rameshwara Rice Mills, Thirthahalli (1987) 2 SCC 160 and the consistent view of the Gujarat High Court in various judgments referred to in the impugned judgment and held that without quantification or crystallization of the amount sought to be recovered, the employer or the contractor cannot unilaterally recover the said amounts from the ongoing contract work of the same contractor in connection with another contract. It was further directed that the State could not recover the amounts sought to be recovered from the payments due and payable to the contractor in other contracts. Liberty was, however, given to the State to seek recovery through other means as may be permissible under law. Accordingly vide judgment dated 1....
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....tration if the same had been the subjectmatter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes;" 11. We may also refer to Section 2(2) & 2(4) of the A&C Act which read as follows: "(2) This Part shall apply where the place of arbitration is in India: Provided that subject to an agreement to the contrary, the provisions of sections 9, 27 and clause (a) of subsection (1) and subsection (3) of section 37 shall also apply to international commercial arbitration, even if the place of arbitration is outside India, and an arbitral award made or to be made in such place is enforceable and recognised under the provisions of Part II of this Act." xxx xxx xxx "(4) This Part except subsection (1) of section 40, sections 41 and 43 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except in so far as the provisions of this Part are inconsistent with that other enactment or with any rules made thereunder." 12. Secti....
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....ds as follows: "31. Form and contents of arbitral award.xxx xxx xxx (6) The arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral award on any matter with respect to which it may make a final arbitral award." 15. Part I of the A&C Act i.e. from Section 2 to Section 43 deals with Arbitration and Section 2(2) clearly states that the said Part would apply to all Arbitrations which take place in India. Section 2(4) makes it absolutely clear that other than Section 40(1), 41 and 43, Part I of the A&C Act shall apply to all arbitrations even if they are carried out under any other enactment as if the arbitrations were pursuant to an arbitration agreement except insofar as the provisions of Part I are inconsistent with the other enactment or any rules made thereunder. A plain reading would show that the provisions of Part I of the A&C Act would apply to all arbitrations where the place of arbitration is within India. Even statutory arbitrations under other Acts would be governed by Part I. The only exception is that if there is any departure from Part I in the special enactment then the special enactment will prevail and....
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.... by Civil Courts insofar as the awards made under the Gujarat Act are concerned. As far as Gujarat Act is concerned, the power to set aside/modify an award is vested in the High Court under Section 12. Section 21 of the Gujarat Act reads as follows: " 21. Arbitration Act to cease to apply. The provisions of the Arbitration Act, shall in so far as they are inconsistent with the provisions of this Act, cease to apply to any dispute arising from a works contract and all arbitration proceedings in relation to such dispute before an arbitrator, umpire, court or authority shall stand transferred to the Tribunal." 18. We are clearly of the view that the appropriate remedy for the contractor was to approach the arbitral tribunal constituted under the Gujarat Act since that would have jurisdiction to decide whether the notice issued by the Government was a legal notice and whether the Government was, in fact, entitled to recover any amount from the contractor. It would also be within the jurisdiction of the Tribunal to decide whether the contractor has made out a prima facie case for grant of interim relief. We are purposely not going into the merits of the case because once ....
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....at until such claim is adjudicated upon, the appellant shall be restrained from recovering it by appropriating other amounts due to the respondent. The order of interim injunction made by the learned Judge cannot, therefore, be said to be outside the scope of his power under Section 41 (b) read with the Second Schedule. xxx xxx xxx "11...We must, therefore, hold that the appellant had no right or authority under Clause 18 to appropriate the amounts of other pending bills of the respondent in or towards satisfaction of its claim for damages against the respondent and the learned Judge was justified in issuing an interim injunction restraining the appellant from doing so." The judgment in Raman Iron Foundry (supra), was specifically overruled on the issue in hand by a three Judge Bench of this Court in the case of H.M. Kamaluddin Ansari & Co. vs. Union of India (1983) 4 SCC 417. In this case there was a general condition which entitled the Government to recover the damages claimed by appropriating any sum which may become due to the contractor under other pending bills. In this case, this Court disagreed with the findings in the Raman Iron Foundry (supra) and hel....