Case Note & Summary
The dispute arose from a contract awarded on 6 July 2012 by the State of Maharashtra through its Public Works Department to Manaj Tollway Private Limited for construction, maintenance, and four-laning on a Design Built Finance Operate & Transfer basis. Disputes led to termination of the contract by Manaj on 27 March 2015 and invocation of arbitration. A sole arbitrator, Justice J.A. Patil (Retd.), published an award on 17 August 2018, directing the State to pay Rs.332,66,39,870 with future interest at 15% per annum and costs. The award was corrected on 21 September 2018. Aggrieved, the State filed an application under Section 34 of the Arbitration and Conciliation Act, 1996 before the District Judge, Pune on 14 November 2018, seeking to set aside the award, and also sought a stay. Manaj filed a Commercial Execution Application before the Bombay High Court on 25 February 2019. On 8 August 2019, the Prothonotary and Senior Master issued a Warrant of Attachment under Order XXI Rule 46 of the Code of Civil Procedure, 1908, attaching debts due from Reserve Bank of India to the State, but only Rs.89,27,817 was available against the claimed amount. The District Judge rejected the State's stay application on 20 September 2019. Meanwhile, the execution application was listed on several dates, and on 12 December 2019, the High Court recorded consent terms dated 10 December 2019 between the State and Manaj, disposing of the execution application. The consent terms were signed on behalf of Manaj by its Managing Director and on behalf of the State by an Executive Engineer, with endorsement by a Section Officer. During this period, President's Rule was imposed in Maharashtra on 12 November 2019 under Article 356. The State subsequently filed a review petition seeking review of the consent order dated 12 December 2019. The court examined the background, including the President's Rule notification, which suspended certain constitutional provisions and vested state government functions in the President. The provided judgment text does not include the final decision or reasoning on the review petition.
Headnote
A) Constitutional Law - President's Rule - Effect on State Government Authority - Constitution of India, Article 356, Articles 153, 155-159, 163, 164, 166, 167, 169, 174, 175-177, 179, 181, 183, 185, 188, 189, 193, 194, 196-198, 199, 200, 201, 208-211, 213, 299, 323, 357, 361, Second Schedule - The court noted the proclamation of President's Rule in Maharashtra under Article 356, assuming all functions of the State Government and suspending certain constitutional provisions; parties made submissions on the consequences of the notification on the State's capacity to enter into consent terms (Paras 11-13).
B) Arbitration - Execution of Award - Consent Terms - Arbitration and Conciliation Act, 1996, Section 34; Code of Civil Procedure, 1908, Order XXI Rule 46 - The court recorded consent terms settling an arbitration award of Rs.332.66 crore passed in favour of the contractor against the State; execution proceedings were initiated after the State's stay application was rejected; attachment of debt was ordered; the consent order disposed of the execution application (Paras 2-10).
Issue of Consideration
Whether the consent terms dated 10 December 2019, executed during President's Rule, are valid and binding on the State of Maharashtra; Whether the consent order dated 12 December 2019 is liable to be reviewed.
Final Decision
Not mentioned in the provided text.
Law Points
- Review of consent order
- President's Rule under Article 356
- effect on State Government authority
- execution of arbitration award
- consent terms
- attachment of debt under Order XXI Rule 46 CPC
- Section 34 of Arbitration and Conciliation Act
- 1996
Case Details
2021 LawText (BOM) (03) 106
Review Petition (L.) No. 4505 of 2020 in Commercial Execution Application No. 310 of 2019
Mr. Anil Anturkar, Senior Advocate; Mr. Prathamesh Bhargude; Mr. Ranjit Shinde; Ms. Jyoti Chavan, AGP; Mr. S.B. Gore; Mr. Aspi Chinoy, Senior Advocate; Mr. Prasad Dhakephalkar, Senior Advocate; Mr. Cheerag Balsara; Srinivas Bobde; Kartikeya Desai; Mr. Asadali Mazgaonwala; Kartikeya & Associates
State of Maharashtra through Authorised Signatory Shri Rajendra Rahane
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Nature of Litigation
Review petition filed by State of Maharashtra seeking review of a consent order dated 12 December 2019 passed in Commercial Execution Application No.310 of 2019, which disposed of the execution application in terms of consent terms settling an arbitration award.
Remedy Sought
The State of Maharashtra sought review of the consent order dated 12 December 2019 and setting aside of the consent terms executed on 10 December 2019.
Filing Reason
The review petition was filed against the consent order dated 12 December 2019; the consent terms dated 10 December 2019 were executed while President's Rule was in force in Maharashtra (proclaimed on 12 November 2019).
Previous Decisions
Arbitral award dated 17 August 2018 (corrected 21 September 2018) directed the State to pay Rs.332,66,39,870 plus future interest at 15% p.a. and costs; the State's Section 34 application filed on 14 November 2018 before District Judge, Pune was pending; the District Judge rejected the State's stay application on 20 September 2019; Manaj filed execution application on 25 February 2019; Prothonotary issued warrant of attachment on 8 August 2019; Reserve Bank of India informed that only Rs.89,27,817 was available in the attached account on 16 August 2019; the Commercial Execution Application was disposed of by consent order dated 12 December 2019.
Issues
Whether the consent terms dated 10 December 2019, executed during President's Rule, are valid and binding on the State of Maharashtra.
Whether the consent order dated 12 December 2019 is liable to be reviewed under the applicable law.
Submissions/Arguments
Parties advanced submissions on the consequences of the President's Rule notification dated 12 November 2019.
Ratio Decidendi
Not mentioned in the provided text.
Judgment Excerpts
The State has prayed for review of the consent order passed by this Court on 12 December 2019, on the commercial execution application, which reads thus:-
The parties have agreed that the award stands satisfied in the manner as agreed in the Consent Terms.
On 12 November 2019 the President of India taking into consideration the report of the Governor and being satisfied that a situation had arisen, in which the Government of the State cannot be carried on in accordance with the Constitution, issued a proclamation notifying President’s Rule in the State of Maharashtra.
There is no dispute on the signatures made on the Consent Terms.
Procedural History
On 6 July 2012, the State through PWD awarded a contract for construction and maintenance and four-laning on DBFOT basis to Manaj. Disputes arose; Manaj terminated the contract on 27 March 2015 and invoked arbitration. Justice J.A. Patil (Retd.) was appointed sole arbitrator; he published an award on 17 August 2018 directing the State to pay Rs.332,66,39,870 plus future interest at 15% p.a. and costs; the award was corrected on 21 September 2018. On 14 November 2018, the State filed a Section 34 application before the District Judge, Pune, seeking to set aside the award; it also sought stay. Manaj filed the Commercial Execution Application on 25 February 2019. On 8 August 2019, the Prothonotary and Senior Master issued a Warrant of Attachment under Order XXI Rule 46 CPC against the State, attaching debt due from Reserve Bank of India to the extent of Rs.353,37,33,547/-. On 16 August 2019, Reserve Bank of India informed that only Rs.89,27,817/- was available in the attached account. On 20 September 2019, the District Judge rejected the State's stay application. The execution application was listed on 11 November 2019, 25 November 2019, and 9 December 2019. On 12 November 2019, President's Rule was proclaimed in Maharashtra under Article 356. On 18 November 2019, a note was initiated by the PWD department. On 10 December 2019, consent terms were executed between the State and Manaj. On 12 December 2019, the High Court passed the consent order disposing of the execution application.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 34
- Code of Civil Procedure, 1908: Order XXI Rule 46
- Constitution of India: Article 356, Article 153, Articles 155-159, Article 163, Article 164, Article 166, Article 167, Article 169, Article 174, Articles 175-177, Article 179, Article 181, Article 183, Article 185, Article 188, Article 189, Article 193, Article 194, Articles 196-198, Article 199, Article 200, Article 201, Articles 208-211, Article 213, Article 299, Article 323, Article 357, Article 361, Second Schedule
