NHAI and contractor directed to approach IRC by SC

New Delhi, Oct 4 (UNI) The Supreme Court has directed the National Highway Authority of India (NHAI)and Bhumihiway DDB Ltd (JV), contractor, to approach the Indian Road Congress (IRC),part of Union Ministry for Shipping and Road Transport and Highways, for appointment of Presiding Arbitrator to resolve the dispute between the parties.

A bench comprising Justices A R Lakshmanan and Tarun Chatterjee in its judgment dated September 25 also quashed the appointment of retired chief justice of Andhra Pradesh High Court Justice P Chenna Keshav Reddy in place of justice Y Bhaskar Rao as Presiding Arbitrator by the Orissa High Court as illegal.

A contract between the appellant NHAI and the contractor was signed on June 11, 2001 for widening 4/6 lanes and strengthening of existing 2-Lane carriage of National Highway-5 from Km 233 to 284 between Ichapuram to Ganjam in the state of Orissa, which is part of the Chennai- Kolkata Corridor of the Golden Qauadrilateral connecting Delhi, Mumbai, Chennai and Kolkata.

During the pendency of the contract the project of national importance got delayed by more than five years due to the negligence on the part of the respondent no 1 and NHAI evicted the contractor from the site on January 14, 2004 pursuant to the action taken by NHAI as per clause 63.1 (d) of the conditions of the contract.

The high court while setting aside the restraint order passed by the District judge,permitted NHAI to go for re-tendering process with liberty to the contractor to participate in the process.

While allowing the appeal of NHAI and quashing the appointment of Presiding Arbitrator by the high court, the apex court observed, "Unless respondent no 2, IRC failed to exercise its jurisdiction under section 11 (6) of the Act, Respondent no 1 has wrongly invoked the jurisdiction of this court without first following the procedure agreed between the parties. Thus no cause of action had arisen in the facts of the case to seek the appointment from the high court under section 11(6) of the Act and thus the said petition was premature." It may be noted here that the problem started following refusal of retired Supreme Court judge K J Reddy and retired judge Ashok Desai to do the job.

According to the Solicitor General G E Vahanvati who appeared for NHAI, the government never agreed to the nomination of the Presiding Arbitrator by the high court without approaching the IRC with request to make the appointment following failure of the two arbitrators to agree to a commonly acceptable person as presiding Arbitrator and court could exercise powers under section 11(6) of the Act after failure of IRC to complete the job.

Contractor Bhumihiway DDB was represented by former Additional Solicitor General Altaf Ahmed.

The apex court also said," If the reasoning of the high court is accepted then the law laid down by this court in case of 'You one engineering'will be rendered nugatory. Further it will set a precedent which will vitally affect the appellant which is a central government undertaking in all the future contractual agreements." UNI AKS/SC RP PM1735