Dharmendra Kumar Srivastava And Another Vs Union of India (Allahabad High Court)
Summary: The Allahabad High Court allowed the application under Section 11(6) of the Arbitration and Conciliation Act, 1996 and appointed a former Judge of the High Court as Sole Arbitrator to adjudicate disputes arising from a railway construction contract, including the applicant’s claim for reimbursement of GST of Rs. 50,27,115/-. The Court held that the disputed circumstances surrounding withdrawal of the earlier arbitration demand and issuance of the No Claim Certificate could not be conclusively adjudicated at the Section 11 stage.
The applicant had been awarded the work pursuant to Tender No. NEF/LJN/2016/21 Item-06 dated 06.10.2016. The Letter of Acceptance dated 20.03.2017 recorded a contract value of Rs. 9,45,15,300/-, following which Contract Agreement No. DRM/LJN/11/2018 dated 31.01.2018 was executed for construction of Limited Height Subways in lieu of five level crossings in the Gonda-Anandnagar (BG) Section. According to the applicant, the work was delayed because the Railway failed to hand over the site free from encumbrances and eight extensions of time were granted. The applicant claimed price variation of Rs. 93,30,289.53/- and GST reimbursement of Rs. 50,27,115/-.
The applicant contended that the GST reimbursement was required in view of the Railway Board letter dated 27.10.2017 and that the respondents relied upon an unsigned and uncommunicated Joint Procedural Order (JPO). The applicant further alleged that when a consolidated claim of Rs. 2,25,36,000.53/- was pursued, the Senior Divisional Engineer represented that dues would be released only if the arbitration reference was withdrawn. The applicant stated that, being in financial distress, he withdrew the reference on 03.11.2023 on that assurance. Thereafter, the Earnest Money, Security Deposit, Performance Bank Guarantee and PVC amount were released, but the GST claim remained unpaid.
