Petition for Arbitrator Appointment Dismissed; Consultancy Agreement Deemed a "Works Contract" Under Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992
In a significant ruling, the Gujarat High Court has dismissed a petition filed by M/s. Soham Consultancy Services seeking the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. The petitioner, engaged in a consultancy agreement with Limbdi Nagarpalika, contended that the respondent municipality failed to appoint an arbitrator as per the agreement's clause. However, the court held that the nature of the contract fell within the definition of a "works contract" as per the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992, thus directing the petitioner to seek recourse through the designated tribunal.
The dispute originated from a consultancy agreement executed on May 30, 2019, whereby Soham Consultancy was engaged by Limbdi Nagarpalika to undertake various development projects, including infrastructure and water supply-related works. Despite completing the assigned tasks and raising invoices amounting to Rs. 38,96,412.39, the petitioner alleged non-payment by the municipality, prompting the invocation of the arbitration clause.
The core of the legal contention revolved around whether the agreement constituted a "works contract" under the 1992 Act. The Gujarat High Court, presided by Justice D.N. Ray, examined the scope and nature of the agreement, which included preparation and completion of works, and concluded that it indeed fell within the expansive definition of a "works contract" under Section 2(1)(k) of the 1992 Act.
The court rejected the petitioner's argument that the municipality did not qualify as a "public undertaking" under the 1992 Act, noting a relevant government notification. The ruling underscored the tribunal's exclusive jurisdiction over such disputes, precluding the appointment of an arbitrator under the 1996 Act.
The petitioner has been granted eight weeks to approach the Gujarat Public Works Contracts Disputes Arbitration Tribunal under Section 8 of the 1992 Act. The court also allowed the exclusion of the time spent during the invocation of disputes for calculating the limitation period as per Section 16 of the 1992 Act.
This judgment reinforces the jurisdictional boundaries set by the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992, emphasizing the tribunal's role in resolving disputes arising from contracts involving public undertakings.
Bottom line:-
Arbitration - Dispute arising out of consultancy agreement with Nagarpalika - Petitioner sought appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 - Held, dispute falls under the definition of "works contract" as per Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992 - Petitioner to approach Tribunal constituted under Act, 1992.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Section 11, Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992 Sections 2(1)(k), 8, 16
M/s. Soham Consultancy Services v. Limbdi Nagarpalika, (Gujarat) : Law Finder Doc id # 2928724
