How can a govt. contract for ₹91.81 crore restrict arbitration to disputes of up to ₹50,000, asks HC
The Hindu
Dismisses TNUHDB’s plea against K.P. Park tenement contractor
The Madras High Court has expressed surprise over a written agreement between the Tamil Nadu Urban Habitat Development Board (TNUHDB) and a private contractor, for constructing multistorey tenements at a cost of ₹91.81 crore at Kesavan Pillai Park, Pulianthope in Chennai, containing a clause that any dispute between them would be referred to arbitration only if the value of the claim was up to ₹50,000.
Justice N. Anand Venkatesh referred the matter to the Chief Secretary to ensure that any future agreements entered between government institutions and private contractors did not contain such “archaic” clauses. “If the authorities had applied their mind and had not acted in a mechanical fashion, they would not have fixed the value as ridiculous as ₹50,000,” the judge remarked while dismissing an application preferred by the TNUHDB.
The applicant had insisted upon referring a dispute between it and PST Engineering Construction, accused of poor quality of construction at the K.P. Park tenements, for arbitration. It was the case of the applicant that the private firm ought not to have filed a civil suit in the High Court and obtained an interim injunction against backlisting it without first resorting to the arbitration clause found in the 2017 agreement.