HC dismisses appeal filed by IRCON against UT in matter arbitration of Rs 100 Crores

17/01/2020

JAMMU, Jan 16: The Vacation Judge of the J&K High Court comprising of Justice Sanjeev Kumar announced a Judgment in a matter arising out of an appeal filed by IRCON international against the UT of J&K wherein the issue in question involved Rs 120 Crores; and dismissed this appeal.
The Appellant was IRCON International Limited were represented by Mr. Sunil Sethi, Sr. Advocate with M/s Navyug Sethi & Paras Gupta, Advocates V/s Union Territory of J&K and others who was represented by Mr. Amit Gupta, AAG Justice Sanjeev Kumar observed that the arbitration appeal purportedly filed under Section 37(2)(b) of the J&K Arbitration and Conciliation Act, 1996 against a composite order dated 08.10.2019 passed by the Arbitral Tribunal comprising of Justice (Retd.) F.M. Ibrahim Kalifulla, Justice (Retd.) Kurian Joseph and Justice (Retd.) Mansoor Ahmed Mir in Arbitration cases No.4-A, 4-B and 4-C of 2019, all titled as M/s Ircon International Limited v. State of Jammu & Kashmir and others. The challenge to the order impugned by the appellant is only to the extent it defers the consideration of applications filed by the appellant purportedly under Section 17 of the Act seeking a direction to the 2 AA No.18/2019 respondents to release undisputed amount/payments in reference to the three works which are subject matter of aforementioned three arbitration cases.
"While the Arbitral Tribunal was set to formulate points for determination in the reference, three applications one in each arbitration reference came to be filed by the appellant claiming, inter alia, a direction to the respondents to release the undisputed amounts /payments due to the appellant in all the three contracts. The applications were styled as applications under section 17 of the Act and the release of undisputed amounts/ payments was sought by way of interim measure of protection. In the applications filed, the appellant specifically pleaded that in relation to works subject matter of adjudication, there are certain payments due to the appellant regarding which there is no dispute. Invoices prepared and the bills raised had got the approval of the respondents and were lying in the account section of the project wing of the respondents. It is, thus, submitted that since the payment of ? 6.73 crores in arbitration case No.4-A of 2019 and payment of ? 10.80 crores in arbitration case No.4-B of 2019 and payment of ? 3.93 crores in arbitration case No.4-C of 2019 are the admitted payments and have not been specifically disputed by the respondents, as such, the Tribunal should issue a direction purportedly under Section 17 of the Act to release the aforesaid payments." the Court observed.
AAG Mr Amit Gupta resisted the claim of the appellant for release of so called admitted payments and filed their objections in each of the application. The long and short of the stand taken by the respondents to oppose the applications is that the payments claimed by the appellant are not admitted but are subject matter of adjudication in the main reference. It was the specific stand of the respondents before the Arbitral Tribunal that due to the abandonment of works by the appellant, the respondents have been put to a huge financial loss. They, therefore, invoked the clause of the contracts 4 AA No.18/2019 providing for liquidated damages. It was submitted that on account of liquidated damages, the appellant was liable to pay an amount which is more than the amount claimed by the appellant and, therefore, no payment could be released in favour of the appellant. It was, thus, claimed by the respondents that no amount, as claimed by the appellant, is due. The Arbitral Tribunal considered all the three applications and vide order impugned deferred the consideration thereof primarily on the ground that there was a specific issue raised in this regard in the main dispute and, therefore, it would be appropriate to defer the consideration of the applications and take them up along with main disputes. As is apparent from the impugned order, the applications of the appellant have not been specifically rejected. The Arbitral Tribunal after deferring the consideration of the applications moved by the appellant has further proceeded to formulate points for determination in the main reference.
“Having heard Mr. Sunil Sethi, Senior Advocate for the appellant and Mr. Amit Gupta, AAG for the respondents, I am of the view that the appeal filed by the appellant under Section 37(2)(b) of the Act is not maintainable. Though, the applications filed by the appellant for seeking a direction to the respondents to release admitted amounts are purportedly under Section 17 of the Act, yet a careful perusal whereof would show that the same are essentially applications requesting the Arbitral Tribunal to pass an interim award. Admittedly, arbitral award which includes an interim award in terms of Section 2(c) of the Act, is not appealable under section 37 of the Act but could only be made subject matter of challenge under Section 34 of the Act. 8.”
The High Court observed "In view of the foregoing discussion and position of law adumbrated herein above, this Court is of the considered view that the impugned order passed by the arbitral tribunal is not appealable and, therefore, cannot be assailed by way of appeal under Section 37(2) (b) of the Act. Merely, because applications filed by the appellant before the arbitral tribunal are styled as applications under Section 17 of the Act, would not bring the order 9 AA No.18/2019 impugned within the purview and ambit of Section 17 of the Act. The order impugned, even if it is taken to be an order refusing to direct the respondents to release the admitted payments may constitute interim arbitral award liable to be challenged only by way of application under Section 34 of the Act. As rightly observed by the arbitral tribunal, the amounts/payments claimed by the appellant are part of or subsume in specific issue raised in this regard in the main reference. As a matter of fact, the arbitral tribunal has, in the order impugned itself, framed sixteen points for determination including point No.14, which pertains to the issue of admissibility of amount claimed, liquidated damages, interest and cost of arbitration etc. The points of determination, when considered in their entirety, would fortify the observation of the arbitral tribunal that the amounts/ payments claimed by the appellant as "admitted payments? are not the admitted payments but are subject matter of disputes to be decided by the arbitral tribunal in the main references. 15. For all these reasons, this Court holds this appeal not maintainable and the same is, accordingly, dismissed.”

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