LI Network
Published on: November 12, 2023 at 10:55 IST
The Jammu & Kashmir and Ladakh High Court recently pronounced that the arbitration clause within the original contract extends to cover disputes arising from additional work performed without a formal agreement.
The decision was ordered by Chief Justice N. Kotiswas Singh, emphasizing the binding nature of the initial contract’s terms, including the arbitration clause.
The case involved a Notice Invited Tender (NIT) issued by the respondent for the construction of a single-lane bridge.
The petitioner, awarded the project, entered into an agreement with the respondent. Subsequently, without formalizing a new agreement or amending the existing one, the scope and cost of the project were increased, leading to the construction of a two-lane bridge.
A dispute arose regarding payments for the expanded work, prompting the petitioner to file a writ petition.
The High Court directed the respondent to consider the claim within six weeks. However, when no payments were made, the petitioner invoked the arbitration clause, seeking the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act.
The respondent objected, asserting the absence of a valid contract beyond the initial agreement for a single-lane bridge. It emphasized the lack of a written contract for the additional two-lane bridge, citing constitutional and statutory provisions.
The petitioner countered, highlighting administrative actions taken after the initial announcement, such as the revision of the Detailed Project Report (DPR) and approval of the design for the two-lane bridge.
The petitioner invoked relevant sections of the Arbitration and Conciliation Act and the Contract Act to support the existence of a written agreement and reject the respondent’s objections.
The Court observed that despite the absence of a formal agreement or amendment, administrative actions were taken by the respondent, indicating acceptance of the expanded scope.
It held that the arbitration clause in the original contract applied to disputes arising from the additional work. Consequently, the Court allowed the petition and appointed Justice (Retd.) M.K. Hanjura as the sole arbitrator.
Case Title: A K Engineers and Contractors Pvt Ltd v. Union Territory of J&K, Arb P. No. 13 of 2022