Has Become Fashion For Government Litigants To Throw Bulky Files To Disuade Judges: Meghalaya HC Imposes Cost On Public Works Department

The Meghalaya High Court recently while dealing with an Arbitration Appeal came heavily on the Public Works Department (National Highway) for consuming and wasting the Judicial time for an unworthy case by stretching the contract of the subject matter beyond its original period and for not tendering the payments to the Respondent contractor within a reasonable time.

The Division Bench of Chief Justice Sanjib Banerjee and Justice W. Diengdoh while reprimanding the Public Sector Undertaking (PSU) for its conduct noted that "It has become fashionable, particularly for public sector undertakings and government litigants, to throw sheafs of paper at the court and believe that such voluminous tomes would dissuade judges from looking deep into the matter and be frightened enough to grant an adjournment and delay the inevitable. It is time that unworthy litigants with frivolous causes give up the habit of preying on the court's delays and the only way this can be ensured is by imposing actual and primitive costs for such misadventure."

Advocate General A. Kumar along with Additional Senior Government Advocate S. Sengupta appeared for the Appellant while the Respondent Contractor was represented by Advocate R Prakash along with Advocates K. Ch. Gautam, K. Tiwari, S. Gangar, and A. Pandey.

The High Court was dealing with an appeal, by the Public Works Department (National Highway), under Section 37 of the Arbitration and Conciliation Act, 1996 to an order passed by the Commercial Court, Shillong. The PWD had engaged the Respondent contractor for the two-laning of the highway from Shillong to Nongstoin and beyond. At a later stage, the dispute arose regarding claims in the reference pertaining to the delay, disruption and prolongation of the contract together with interest on account of delayed payments.

It was noted that the arbitral tribunal was formed, and during the initial proceedings, the PWD (Public Works Department) did not raise any objections regarding the inclusion of the decisions made by the DREB (Dispute Resolution and Expertise Board) in the arbitration process. After several months, the PWD filed an application under Section 16 of the Arbitration Act, claiming that the claims related to the DREB's decisions were not suitable for arbitration. In the final award, the arbitral tribunal took into account the fact that the PWD had not previously disputed the decisions made by the DREB. Consequently, the tribunal ruled that the PWD could no longer object to the total amount awarded to the contractor. Being aggrieved with which, the PWD appealed to the High Court.

The High Court after considering the material before them noted that "This is a complete waste of time and a reckless exercise undertaken by an irresponsible appellant". It was also observed that "Classically, in the early days of arbitration law in this country, it was also the understanding of some courts that the mere non-payment without any attempt to justify such non-payment would not be a dispute which would be covered by an arbitration agreement to be referred to arbitration. Indeed, the understanding in such regard has undergone a transformation over the last century or so and even the mere non-payment now amounts to a dispute, since without any adjudication thereof, despite there being no dispute, the party claiming the money has no recourse to the same."

The Court further found that in the contentions the appellant herein admitted, accepted and acknowledged that it was liable to pay such amount; only that the arbitral tribunal could not go into it since there was no dispute in such regard and, as a consequence, the matter was not amenable to arbitration or any form of adjudication. It was also observed that the argument appears to be a figment of the appellant's imagination.

Accordingly, the Court noted that it was a case of a contract being stretched beyond its original period and payments not being tendered within a reasonable time. The Court also noted the exchange of communication between the PWD and the Union Ministry of Road Transport and Highways and expressed their shock at the advice received, it was observed that "Surprises never cease. Such ludicrous assertion may probably be because the officials who are behind the appellant; who do not need to pay from their own pockets for their recalcitrance and it is the tax-payers money that being squandered."

Finding no fault with the impugned order, the High Court in its order remarked that "The real tragedy is not in the appellant as a litigant shying away from payment or its officials being too clever and a half; the tragedy is in the erroneous expert advice that is rendered to the litigants as the appellant. it was also said that rather than waging only a verbal war against corruption from every possible pulpit, persons in authority may serve the system better by setting the government house in order in such regard."

The High Court dismissed the appeal with costs assessed at Rs.10 lakhs to be paid over and in addition to the amount awarded.

Cause Title: Public Works Department v. M/s BSC-CC & JV

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