Ajay Kumar Singh vs. The Union Of INDIA

Facts

This case involves multiple writ petitions concerning the construction of a bridge and approach roads connecting Bakhtiyarpur and Tajpur in Bihar. The primary petitioner in CWJC No. 1204 of 2021, Ajay Kumar Singh, filed a Public Interest Litigation highlighting the significant delay in the project, with only 47% completion despite a 2016 deadline. The project, estimated at Rs. 1602.74 Crores, involves a Public Private Partnership with Navayuga Engineering Company Limited (NECL) and the State Government. Other petitioners, M/s Navayuga Jahnavi Toll Bridge Private Ltd. (in CWJC No. 2255 and 4640 of 2021), are parties to the concession agreement and are involved in disputes related to project costs, including GST impact and price escalation. The proceedings before the High Court focused on resolving these financial and contractual issues to ensure project completion.

Held

The Court did not directly rule on the vires of Section 3(3)(b) of the Bihar Public Works Contracts Disputes Arbitration Tribunal Act, 2008. Instead, the focus shifted to resolving the financial disputes to facilitate project completion. Regarding the GST impact, the Court noted the State's affidavit stating that GST impact on construction cost will be compensated as per Article 41 of the Concession Agreement. For price escalation, the Court accepted the State's commitment to incorporate a methodology/formula from EPC contracts in the Supplementary Agreement, using November 2021 as the base index for price adjustment. A 6% price escalation provision in the cost estimate for the balance work was also noted, with the possibility of seeking approval for revised costs if this provision proves insufficient. The Court accepted the statements and commitments made by the parties in their affidavits and directed them to be adhered to. The petitions were disposed of based on these commitments, leaving further financial shortfalls to be resolved by the parties themselves.

Key Issues

1. Whether Section 3(3)(b) of the Bihar Public Works Contracts Disputes Arbitration Tribunal Act, 2008, is ultra vires the Constitution due to its eligibility criteria for Arbitral Tribunal members conflicting with Section 12 of the Arbitration and Conciliation Act, 1996? (Petitioner's contention: Yes, it is ultra vires as it contradicts the central act and lacks Presidential assent, thus the Arbitration and Conciliation Act, 1996 should govern disputes). 2. How should the impact of Goods and Services Tax (GST) on the cost of construction be compensated under the Concession Agreement? (Petitioner's contention: GST impact should be compensated under 'change in law' provisions. Revenue/State's contention: GST impact will be compensated as per Article 41 of the Concession Agreement and a 6% price escalation provision in the cost estimate for the balance work). 3. How should price escalation be handled for the balance work of the project? (Petitioner's contention: Revising the cost within six months based on current SOR rates and prevailing market rates. Revenue/State's contention: A methodology/formula adopted in EPC Contracts for price escalation will be incorporated in the Supplementary Agreement, with base indices in November 2021, and a 6% price escalation provision in the cost estimate for balance work, with approval for revised costs if insufficient).