1. This petition filed under Section 9 of the Arbitration and Conciliation Act, 1996 was heard on 12 th April, 2022, when the following order was passed:

"1. I have heard Mr. Sancheti, learned senior counsel for the petitioner for some time on this petition as also Mr. Badgujar, learned counsel for the respondent, who has sought time to take instructions.

2. Mr. Sancheti, on instructions has submitted that the petitioner is the contractor of repute, however unfortunately it is facing termination in relation to the contracts subject matter of the present proceedings. He submits that in the peculiar facts of the case, the petitioner is willing to make an offer to the respondent that it will complete the contractual work within a period of six months, as also the petitioner would enhance the bank guarantee to make it 10%. His submission is that this would also be In public interest in as much as even if a new tender is issued, it would take substantial time to finalize such tender for the balance work which is about 50%, as also any new tender would be at an escalated cost. On instructions, Mr. Sancheti states that the petitioner shall carry out the balance work under the contract at the same rate and without demanding for any escalation/additional amount from the respondent.

3. In my prima facie opinion, the proposal as sought to be made by the petitioner in the peculiar facts needs to be considered by the respondent as prima facie it appears that it would be in public interest to reduce further escalated expenditure to be incurred to complete the balance work under the contract.

4. It is appropriate that let such proposal in writing be submitted to the respondent within three days. Let the same be considered by the respondent on or before the adjourned date of hearing, so that the respondent can take an appropriate position and place on record its decision, which can guide the further orders to be passed on the present proceedings.

5. Needless to observe that the above proposal and its consideration shall be without prejudice to the rights and contentions of the parties.

6. Accordingly, stand over to 22 April, 2022.

7. In the meantime, let the materials of the petitioner on site be not disturbed. The bank guarantee as invoked shall be subject to the further orders to be passed on this petition"

2. In pursuance of the above order discussions were held between the parties. Accordingly, today, on behalf of the respondent a without prejudice offer has been made to the petitioner under the respondent's letter dated 27th April, 2022, a copy of which is placed on record. The workable arrangement as proposed by the respondent to resolve the disputes is set out in clauses (a) to (h) of paragraph 9 of the said offer letter, which reads thus.

"9. However, considering an increase in the cost with the lapse of time, additional time required for retendering and finalising the bid, mobilisation of new contractor, MRIDC may accept you offer/presentation and revoke the termination subject to the following conditions:

a) You shall submit an irrevocable and unconditional additional bank guarantee towards your performance security for the balance work for an amount of Rs. 10 Crore (in the form of bank guarantee) till 06th May 2022. It is one of the preconditions for revocation of the termination.

b) You shall complete the work in all respect and handover the project site to MRIDC for Public use on or before 31.10.2022 irrespective of inclement weather conditions, local issues or any other hindrances if any. It is deemed that you ave visited the site and assessed the site conditions and other associated works / parallel activities by other agencies. You shall not be able to work for approximately 45 days due to the launching of steel girder in the Railway portion by other contractor engaged by MRIDC. It is deemed that you must have considered the same and this is part and parcel of the total work.

c) No further extension of time shall be granted on account of delay for whatsoever reason.

d) In case you fail to complete the work by 31.10.2022, all security deposits including Retention Money and this bank Guarantee of Rs. 10 Crore shall be forfeited, and your organisation deemed to be blacklisted for 5 years.

e) You will execute the balance work at the same contractual rate without any price escalation or any extra claim towards abnormal increase in the construction material price. MRIDC will not be responsible for your any financial loss.

f) You will not leave the site or any part of the site abandoned or unattended at any point of time during the execution of the work.

g) All the terms and conditions of the terminated contract (Contract Agreement No. MRIDC/ PROJ/ ROB/ PUNEII/ MICHIGEN/ 2019/18 dated 30.1.2020) will hold good.

h) You shall withdraw you present Commercial Arbitration petition bearing No.(L) 11818 of 2022."

[emphasis supplied]

3. Mr. Sancheti learned senior counsel for the petitioner has stated that the petitioner would not have any objection to comply with the conditions as set out in paragraph 9, except for a clarification which according to him would be necessary in regard to the clauses (b) and (d) of paragraph 9 as emphasized above.

4. In regard to clause (b) Mr. Sancheti's contention is that the "period of 6 months" within which the petitioner would now undertake and complete the balance contractual work would be required to be considered by excluding the 45 days period, during which the launching of steel girder in the railway portion, is being undertaken by respondent through the other contractors. In this regard, in my opinion, a workable approach, would be to the effect, that such period of 45 days which possibly would not be available to the petitioner to complete the balance contract work, cannot be included within the six months period, within which the petitioner now intends to complete such work. Accordingly, petitioner shall be permitted to avail such period of 6 months plus a period of 45 days to complete the balance work. This would put at rest, the issue in regard to any ambiguity in regard to the the period of six months as available to the petitioner to complete the balance contractual work.

5. Insofar as the clause (d) of the condition is concerned, Mr. Sancheti has a grievance about the inclusion of the condition of deemed blacklisting for 5 years, in the event, the petitioner fails to complete the balance work within 6 months as stated in clause (b) and as clarified above. In my opinion, inclusion of such deemed blacklisting may not be appropriate as it would be contrary to the well settled principle of law which mandate that a procedure by adherence to the principles of natural justice needs to be followed to blacklist a contractor, as any action of blacklisting entails civil consequences (See: Erusian Equipments and Chemicals Ltd. v. State of West Bengal1, Southern Painters vs. Fertilizers and Chemicals Travancore Ltd.2, Gorkha Security Services Vs. Government (NCT of Delhi)3 as also a recent decision of the Division Bench of this Court in BVG India vs. State of Maharashtra and Ors. 4) Thus, in the event, if the petitioner fails to complete the work within the stipulated period i.e. 6 months and 45 days, it would be permissible for the respondent to take steps to blacklist the petitioners only by following procedure as known to law. All contentions of the parties, in that regard are expressly kept open.

6. Further, there is no issue for the petitioner in regard to the compliance of the other conditions, as set out in paragraph 9 of the 1 (1975) 1 SCC 70 2 1994 Supp (2) SCC 699 3 (2014) 9 SCC 105 4 2021 SCC Online 412 respondent's letter and as noted above. Thus, the proceedings would not warrant any further adjudication.

7. It is clarified that considering the above subsequent developments, the respondent shall issue a necessary clarificatory letter to the petitioner to enable the petitioner to approach its bankers, so that the petitioner can avail the bank guarantee on the footing that the contract subsists for completion of the balance work. The petitioner undertakes to furnish bank guarantee by 23 rd May 2022, the petitioner however be permitted to commence the contractual work.

8. The petition is disposed of, in the above terms. No costs.