Summary
A concessionaire under a BOT road concession agreement with the Madhya Pradesh Road Development Corporation invoked ICADR arbitration under the Arbitration and Conciliation Act, 1996 while its reference before the Madhya Pradesh Arbitration Tribunal was pending, and later withdrew that reference. The Supreme Court upheld the High Court's quashing of the private arbitration: the concession agreement is a 'works contract' under the M.P. Madhyastham Adhikaran Adhiniyam, 1983, Section 7 of which mandates reference to the Tribunal notwithstanding any arbitration clause; the writ against the private concessionaire was maintainable because of the public law element; and the parallel invocation was barred by election and estoppel. The appellant was permitted to seek revival of its withdrawn reference.
Issues
- Whether a writ petition under Article 226 filed by a State-owned corporation against a private concessionaire to challenge the invocation of private arbitration is maintainable.
- Whether a concession agreement for the development of a State highway or district road is a 'works contract' under Section 2(1)(i) of the M.P. Madhyastham Adhikaran Adhiniyam, 1983, so that disputes must be referred to the Madhya Pradesh Arbitration Tribunal under Section 7 notwithstanding an arbitration clause providing for arbitration under the 1996 Act.
- Whether the appellant's claims were 'ascertained' money claims falling within the definition of 'dispute' in Section 2(1)(d) of the 1983 Act.
- Whether invoking private arbitration while a reference before the Tribunal was pending, and withdrawing that reference without liberty, is barred by the doctrines of election, estoppel and constructive res judicata and by Rule 53 of the 1985 Regulations.
- Whether the appellant's claims arising from events of 2013-2015 are barred by limitation.
Provisions considered
- Section 2(1)(d), Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983'Dispute' means a claim of ascertained or ascertainable money of Rs. 50,000 or more arising from execution or non-execution of a works contract. The appellant's quantified claim of Rs. 280.1566 crores pleaded in its reference petition squarely fell within it; 'ascertained money' includes amounts ascertainable during the proceedings (Gangotri Enterprises), and the provision was amended after Viva Highways to include unascertained claims. (¶¶ 10, 11.2, 11.3, 11.4)
- Section 2(1)(i), Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983'Works contract' expressly includes all concession agreements entered into by the State Government, public undertakings or corporations, whether or not State support is involved. The agreement for a State highway/district road awarded by a State-controlled corporation therefore qualified as a works contract. (¶¶ 10, 10.1, 11.9)
- Sections 3 and 7, Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983Section 3 constitutes the Tribunal for all disputes pertaining to works contracts and Section 7(1) requires either party to refer the dispute to the Tribunal irrespective of whether the agreement contains an arbitration clause; the Court held the reference mandatory and the private arbitration non est. (¶¶ 10, 10.1, 11, 11.10)
- Section 20, Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983Section 20 bars the jurisdiction of civil courts over any dispute of which the Tribunal can take cognizance, notwithstanding the Arbitration Act, 1940 or any agreement, which reinforces the exclusive and overriding nature of the statutory mechanism. (¶¶ 10, 10.1)
- Section 2(3), (4) and (5), Arbitration and Conciliation Act, 1996These sub-sections preserve other laws under which certain disputes may not be submitted to arbitration and apply Part I to statutory arbitrations only so far as consistent with the other enactment; read together they show that a reference to a special tribunal under a special enactment survives irrespective of the 1996 Act mechanism, and there is no repugnancy between the two statutes. (¶ 10.1)
- Section 43 read with the Limitation Act, 1963, Arbitration and Conciliation Act, 1996Section 43 applies the Limitation Act to arbitrations; claims arising from events of 2013-2015, with arbitration invoked only in 2022 and continued in 2025, were held time-barred. (¶ 15)
- Rule 53(2) and 53(3)(b), Madhya Pradesh Madhyastham Adhikaran Regulations, 1985A petitioner who withdraws a reference without the Tribunal's permission under Rule 53(2) is precluded under Rule 53(3)(b) from instituting a fresh reference on the same subject matter, a substantive bar that also applies to pursuing the claims before other fora; nevertheless, in the interests of justice and on the Solicitor General's concession, the appellant was allowed to seek revival of its reference. (¶¶ 17, 17.1, 18)
- Article 226, Constitution of IndiaA writ by a State corporation against a private party must involve a public law element and a private party performing a public duty; the petition challenged the invocation of private arbitration despite a statutory forum, and the contract for a State road assigned by a government-owned corporation assumes the character of a public function even when performed by a private party, so the writ was maintainable. (¶¶ 8, 8.1, 8.2, 8.3, 8.4)
Held
- A writ petition by a State corporation against a private party is maintainable only where the dispute involves a public law element rather than purely private contractual obligations and the private party performs a public duty or is under a statutory obligation; the challenge to the invocation of private arbitration despite the statutory Tribunal concerned the availability and exclusivity of a statutory mechanism, and the construction of a State road assigned by a government corporation satisfies the functionality test. (¶¶ 8, 8.1, 8.4)
- The concession agreement is a 'works contract' under Section 2(1)(i) of the 1983 Act, which expressly includes concession agreements; Section 7 mandates reference of disputes to the Madhya Pradesh Arbitration Tribunal even where the agreement contains an arbitration clause, Section 20 bars civil courts, and sub-sections (3) to (5) of Section 2 of the 1996 Act preserve such special statutory fora; the 1996 Act therefore stands excluded and the private arbitration initiated by the appellant is non est. (¶¶ 10, 10.1, 11.9, 11.10)
- The Full Bench decision in Viva Highways, against which the SLPs (to which the appellant was a party) were dismissed, is binding; the argument that the claims were not 'ascertained' is untenable because the reference petition pleaded a quantified claim of Rs. 280.1566 crores, 'ascertained money' includes amounts ascertainable during the proceedings, and the definition has since been amended to cover unascertained claims. L.G. Chaudhary (three-Judge Bench), Gayathri Projects, KMC Constructions, ARSS Damoh and Backbone Enterprises reaffirm the Tribunal's exclusive jurisdiction. (¶¶ 11, 11.1, 11.2, 11.3, 11.4, 11.5, 11.6, 11.7, 11.8)
- Invoking private arbitration while a reference before the Tribunal was pending is parallel invocation of mutually inconsistent remedies on the same cause of action, hit by the doctrines of election and estoppel. Clause 44.3.1 of the agreement is inoperative to the extent it overrides the statutory mandate, because parties cannot contract out of a statutory obligation enacted in the public interest (Booz Allen), and Clause 44.4 itself contemplates a statutory forum displacing contractual arbitration. (¶¶ 12, 12.1, 13)
- The attempt to re-agitate private arbitration, already settled in Viva Highways and affirmed by this Court, is barred by constructive res judicata and is an abuse of process; withdrawing the reference without liberty while simultaneously initiating proceedings under the 1996 Act is forum shopping tainted with mala fides and deserves to be deprecated. (¶¶ 13.1, 14)
- Claims arising from events of 2013-2015, with arbitration invoked in 2022 and continued in 2025, are barred by limitation under Section 43 of the 1996 Act read with the Limitation Act, 1963. (¶ 15)
- Under Rule 53(3)(b) of the 1985 Regulations a petitioner who withdraws a reference without permission is precluded from instituting a fresh reference on the same subject matter, and this bar extends to pursuing the claims before alternative fora; nonetheless, considering the nature of the dispute and the Solicitor General's submission, the appellant was permitted to apply for recall of the withdrawal order and restoration of its reference, to be decided by the Tribunal on its own merits. (¶¶ 17, 17.1, 18)
Result
Appeal disposed of; the High Court's quashing of the ICADR arbitration upheld; the appellant directed to apply within two weeks for recall of the withdrawal order dated 08.02.2023 and restoration of Reference Petition No. 61 of 2018, which the Madhya Pradesh Arbitration Tribunal shall decide on its merits within a further two weeks and, if restored, dispose of on merits preferably within four months after hearing both parties; no order as to costs; pending applications disposed of.