2023 (3) TMI 1420 - HC - Indian Laws

Legality of Clause 25(viii) contained in general conditions of contract of the NIT (Note Inviting Tender) (Annexure P-1) between petitioner and respondents - requirement to deposit 10% Deposit-at-call as per Clause 25(viii) - HELD THAT - In the light of the decision rendered by the Supreme Court in M/s Icomm Tele Ltd. 2019 (3) TMI 600 - SUPREME COURT which has considered absolutely an identical clause contained in the agreement between the parties and after doing so has struck down the said clause it is not for this Court i.e. the High Court to consider the contention of the respondent and take a different view as that would be not just beyond the authority of this Court but would also be an act of impropriety. This Court being bound by the decision rendered by the Supreme Court in M/s Icomm Tele Ltd. allowed the present petition filed by the petitioner and declares the arbitration clause 25(viii) of the tender conditions quoted above as unconstitutional and passes the same orders in similar terms as were passed by the Supreme Court in paragraph-28 of the decision rendered in M/s Icomm Tele Ltd. In view of the fact that the Supreme Court has considered and decided the question relating to an identical clause this Court is not required to and cannot go into any other issue raised by the petitioner which is left open to be considered and decided in appropriate proceedings. Petition disposed off.

Summary

Issues:
The issues involved in the judgment are the challenge to the validity of Clause 25(viii) of the contract between the petitioner and respondent, specifically regarding pre-deposit requirements for invoking arbitration, and the request for the quashing of related orders.

Validity of Clause 25(viii):
The petitioner sought relief by challenging the validity of Clause 25(viii) of the contract, contending it to be arbitrary, unconstitutional, and against public policy. The clause required a pre-deposit of 10% of the amount claimed before invoking arbitration. The petitioner argued that a similar clause in a Supreme Court case was found unconstitutional, leading to the petition to quash the clause in question.

Legal Precedents and Arguments:
The petitioner cited a Supreme Court decision in the case of M/s Icomm Tele Ltd. vs. Punjab State Water Supply & Sewerage Board, where a similar clause was declared unconstitutional. The petitioner emphasized that the offending clause did not provide for a total refund in case of arbitration in favor of the claimant, leading to proportional deductions and forfeiture. The respondent, on the other hand, relied on a previous Supreme Court judgment upholding pre-deposit clauses, emphasizing the distinction between the specific provisions of the clause in question and the broader legal principles.

Court Decision and Rationale:
The High Court, in line with the Supreme Court precedent, ruled in favor of the petitioner. The Court noted the identical nature of the disputed clause with the one struck down by the Supreme Court previously. Citing the Supreme Court's decision in M/s Icomm Tele Ltd., the High Court declared Clause 25(viii) unconstitutional and ordered similar relief as granted by the Supreme Court. The High Court emphasized its obligation to follow the Supreme Court's decision and upheld the petitioner's plea while disposing of the petition.