PSUs, government litigants trying to dissuade judges with excessive paperwork: Meghalaya High Court imposes ₹10 lakh costs on PWD

The Meghalaya High Court recently took critical note that it has become fashionable for public sector undertakings (PSUs) and government litigants to overwhelm courts with excessive paperwork to discourage a thorough examination and to prompt adjournments. [Public Works Department (National Highway) v. M/s BSC-CC & JV, 6-2-913/914]

Chief Justice Sanjib Banerjee and Justice W Diengdoh made the observation while imposing ₹10 lakh costs on the Public Works Department (National Highway) for putting a contractor through unnecessary litigation.

"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," the order stated.

The Bench added that it was time that unworthy litigants give up the habit of preying on court delays. It also opined that the only way to ensure this was by imposing costs for such misadventures.

"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," the Court said.

The Court was hearing a challenge by the Public Works Department (PWD) to an order of the Commercial Court, Shillong. The case concerned an arbitral award passed in July 2021.

The dispute was regarding a contract for the two-laning of a highway. The PWD had engaged the respondent-contractor for the project.

The contract between the two parties required disputes to be referred to a Dispute Review Expert Board (DREB), whose decision would be final and binding unless challenged within 28 days.

The DREB in 2017 found that the contractor was entitled to a sum in excess of ₹117 crore on account of interest for delayed payments and unpaid bills.

On the remaining disputes between the parties pertaining to delay, disruption and prolongation of the contract, a separate decision was rendered by the DREB a year later.

The PWD did not comply with or contest the 2017 decision. Consequently, the contractor wrote to it on June 11, 2018 seeking to initiate arbitration. In response to the letter, the PWD claimed that it was going to appeal against the order of the DREB. This response was in disregard of the contract's provision that required disputes to be referred to arbitration within a specified period.

An arbitral tribunal was eventually constituted, and during the initial proceedings, the PWD did not raise any objections regarding the inclusion of the decisions made by the DREB in the arbitration.

However, several months later, the PWD filed an application under Section 16 of the Arbitration Act, arguing that the claims related to the DREB's decisions were not arbitrable.

In the final award, the arbitral tribunal considered the fact that the PWD had not raised any dispute concerning the decisions made by the DREB. As a result, the tribunal determined that the PWD could no longer object to the total amount awarded to the contractor. This prompted the PWD to move the High Court.

The Court at the outset said that the appeal was a complete waste of time and a reckless exercise undertaken by an irresponsible appellant. It questioned the PWD's failure to raise issues regarding duplication of interest in the previous decisions of the DREB. It stated that the arbitral tribunal had accurately interpreted the conduct of the PWD as acquiescence. This interpretation was based on the PWD's silence and failure to respond to important correspondence.

Criticising the conduct of the appellant, the Court said,

"Indeed, an issue has been sought to be raised quite seriously that the Union Ministry of Road Transport and Highways was a necessary and a proper party to the present proceedings. 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."

Further, it observed that the Court of first instance was perfectly justified in not touching the award as it was unimpeachable. The High Court arrived at this conclusion based on the admission of PWD that it was liable to pay the amount, but not at the behest of the arbitral tribunal.

The PWD was represented by Advocate General A Kumar, Additional Senior Government Advocate S Sengupta and Government Advocates S Sahay, AS Pandey and S Laloo.

The respondent-contractor was represented by Advocates R Prakash, K Ch Gautam, K Tiwari, S Gangar and A Pandey.

[Read Judgment]