BEFORE THE ARBITRAL TRIBUNAL

ARBITRATORS: MISS ANKITHA BHANSAL, MISS RATHNA, MISS

SOWBARNIGHA

STATEMENT OF DEFENCE FOR MAHARASTHRA STATE ROAD

DEVELOPMENT CORPORATION LTD

IN THE DISPUTE BETWEEN

K7 CONSTRUCTION PVT. LTD.

AND

MUMBAI STATE ROAD DEVELOPMENT CORPORATION

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 IN THE HON’BLE ARBITRAL TRIBUNAL, TIRUCHIRAPPALLI

Arbitration Claim

Petition No. : 0021 / ACGHKN / 12/2022

In the matter of Construction Agreement No. 77/2022

M/s. K7 Construction Private Limited..........................................Claimant

VS.

Maharasthra State Road Development Corporation Ltd...............Respondent

WRITTEN STATEMENT PRESENTED BY THE RESPONDENT

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 TABLE OF CONTENTS

Table of Contents......................................................................................................................3

Description of the Parties..........................................................................................................4

Statement of Facts....................................................................................................................5

Statement of Jurisdiction...........................................................................................................7

Issues raised...............................................................................................................................8

Arguments advanced................................................................................................................9

Issue 1: Whether The Subject Matter Of The Issue Above Is Maintainable In This
Hon‘Ble Arbitration Tribunal?...............................................................................................9

Issue 2: Whether The Said Claim For Damages Is Res Subjudice?.......................................9

Issue 3: Whether The Claim For Damages For Delay And Revocation Of Contract By The
Appelant is Viable Under Law?

3.1. Is The Covid Pandemic Considered A Force Majeure?

3.2. Whether The State Is Entitled To Damages For A Breach Contractual Milestones In
Constructing The Road?
..................................................................................................................................................13

Issue 4: is the appointment of Ms. Ankitha as an arbitrator against the conditions

provided under the Arbitration Act…………………………………………………….......

Prayer.......................................................................................................................................16

Exhibit 1...................................................................................................................................17

Exhibit 2...................................................................................................................................19

Exhibit 3...................................................................................................................................21

Exhibit 4...................................................................................................................................23

Exhibit 5...................................................................................................................................30

Exhibit 6...................................................................................................................................32

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 ABOUT THE PARTIES

1. Claimant: M/s. K7 Construction Private Limited, represented by its CEO Mr.

Phani, 9/85 , Area 31, Mumbai.

2. Respondent: Maharasthra State Road Development Corporation Ltd

represented by Superintendent Engineer, 48/ 52, Tnnli Street, Mumbai.

ADDRESS FOR SERVICE IS AS ABOVE AND AS

NIVEDITHA .B.Com.L.l..B. (Hons),

ADVOCATE, (Enrollment No. Ms. 0036/2087) .

KAVI PRIYA B.Com.L.L.B(Hons),

ADVOCATE, (Enrollment No. Ms. 0004/2007)

CATALYST LEGAL PARTNERS

Mullai Nagar,

Mumbai 620026

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 STATEMENT OF FACTS

1. The Maharashtra State Road Development Corporation (Ltd.) in lieu of the goal and objective
of increasing mobility and efficiency of shift transportation of Covid -19 Vaccine across the
state of Maharashtra as a matter involving serious public health and national securities
concerns had planned to construct two roads (for a distance covering 60 kilometres and 80
kilometres respectively) that connected Mumbai and Lonavala. as major Covid-19 vaccine
manufacturing units such as Serum Institute of India (Covishield) , Bharat Biotech (Covaxin
and Sputnik V) are located within the proximity of Mumbai.
2. In furtherance of the same the Maharashtra State Road Development Corporation (Ltd.)
published a tender Notice in both the English and Hindi dailies circulated within the state of
Maharashtra on 1.9.2021 inviting bidders to submit their bids before 2.10.2021 for the
construction and maintenance of two roads (A reference for the same can be made in Exhibit -
1).
3. As a response to the issued Notification, the claimant herein K7 ltd, has submitted his bid on
01-10-2021 (Refer to Exhibit - 2). After extensive evaluation of bids, the respondent herein
has accepted the claimant’s construction proposal via the letter dated 05-10-2021(Refer
Exhibit – 3)
4. A tentative quote of collectively Rs.200 crores (at cost 100 crore per road) with additional
buffer cost of 20 crore to meet contingencies. After taking into consideration, the size of the
project the same was agreed upon (vide exhibit 4).
5. In lieu of acceptance of both parties a detailed contract document containing arbitration
clause was mutually agreed & signed. (Vide exhibit 5). As per the contract K7 ltd. has to
complete the agreed construction work within 12 months from the date of entering into the
agreement i.e., on or before 21.10.22.
a. As per Clause.21 of the agreement, 

“Excluding Force Majeure events either the Contractor or client may terminate this

Agreement, and any obligations stated hereunder, with reasonable cause by providing
written notice of a material breach of the other party; or any act exposing the other
party to liability to others for personal injury or property damage”
6. K7 ltd has completed one road , but the company didn’t help in maintenance and repairs that
was promised under the contract. At this stage the suddenly fourth Wave of COVID- 19 out

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 broke and considerably affected all avenues of life including this Project with depleted
workforce and increase in cost of raw material. And also due to recent border tensions with
China, the imports of cement to India took a hit.
7. Following it the Deputy Secretary of the Government of India and the Ministry of Finance
released a notification added COVID-19 as a force majeure event in para 9.7 of the Manual of
Procurement of Goods, 2017.And stated that all construction/work contracts, goods and
services contracts and PPP contracts with government agencies to be completed on or after
October 20, 2022, can invoke the force majeure clause. And they will get an extension of
three to six months at no extra cost or penalty. (vide Ex 4)
8. The delay in construction has cost the Board an unanticipated additional expense of Rs. 80
Crores till date. The respondent invoked clause 52 of the agreement and terminated the same,
citing reasons for the slow progress of work by the appellant. (vide Ex 5)
9. On the other hand, K7 Limited also has provided a detailed break-up of actual expenditure
incurred by them and are demanding a refund for the same. However, respondent invoked
clause 44.1 and clause 53.1 of the agreement and sent a notice to the appellant to ascertain the
liquidated damages. (vide Ex 6)
10. The appellants hold the board responsible for causing the delay due to untimely release of
funds. The builders had to maintain the necessary tools and amps; plants, scaffolding etc,
during the prolongation of the contract resulting in expenditure for the same. Whereas the
Development Board demands compensation for delay from the builders. One of the facts
noted negligence on part of the builders regarding electrification work and the same caused
hire charges.
11. The Appellant filed appellant challenged the notice of respondent before Maharashtra High
Court. In response the court disposed of it and directed the parties to challenge it before the
arbitral tribunal.
12. Following it the appellant filed under an application under Sec. 7 of Arbitration act, 1996
before the Mumbai Arbitral tribunal. While the application was pending, the respondent sent
notice to the appellant for specific offers to recover the damages mentioned above. (Vide Ex
7)
13. Again, the appellant challenged this action stating the sub judice nature of the damages. the
question of damages was pending before the tribunal.

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 LIST OF EXHIBITS

S.No ITEM DESCRIPTION DATE

1. Tender Notice Inviting Tender 1/09/2021

2. Acceptance of offer A notice accepting the offer of K7 05/10/2021

3. Construction Agreement with the government was sent to the quality 21/10/2021
Contract construction and other related clauses
Agreement

4. Government Force Majeure notification 13/05/2022

Notification

5. Termination Notice Notice for the termination of the contract 1/11/2022

6. Recovery of damages Notice for damages- Rs.80 crores 20/11/2022

Notice
7. Specific offer notice Second notice with revised damages of Rs. 50 10/01/2022
for recovery of crores
damages

8. News article News Article about relaxation of norms 20/10/2022

9. Acknowledgement of Slip noting the date of the registered post 09/01/2023

post

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 STATEMENT OF JURISDICTION

The MAHARASTHRA STATE ROAD DEVELOPMENT CORPORATION LTD the

Respondent in the present case, takes pride in submitting this Statement of Claims and
invoke the jurisdiction of this Hon‘ble Arbitral Tribunal, in pursuance of Clause 26 of the
Agreement between the Claimant and the Respondent dated 21/10/2021.

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 ISSUES RAISED

ISSUE 1: WHETHER THE MATTER OF THE ALLEGED ISSUE IS MAINTAINABLE IN

THIS HON‘BLE ARBITRATION TRIBUNAL?

ISSUE 2: WHETHER THE SAID CLAIM FOR DAMAGES IN THE FORM OF NOTICE,

RES SUBJUDICE?

ISSUE 3: WHETHER THE CLAIM FOR DAMAGES FOR DELAY AND REVOCATION OF
CONTRACT BY THE APPELLANT IS VIABLE UNDER LAW?
3.1. IS THE COVID PANDEMIC CONSIDERED A FORCE MAJEURE?
3.2. WHETHER THE STATE IS ENTITLED TO DAMAGES FOR A BREACH
CONTRACTUAL MILESTONES IN CONSTRUCTING THE ROAD?

ISSUE 4: IS THE APPOINTMENT OF MS. ANKITHA AS AN ARBITRATOR AGAINST

THE CONDITIONS PROVIDED UNDER THE ARBITRATION ACT

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 SUMMARY OF ISSUES RAISED

ISSUE 1: WHETHER THE MATTER OF THE ALLEGED ISSUE IS MAINTAINABLE IN

THIS HON‘BLE ARBITRATION TRIBUNAL?

The arbitral clause suggests arbitral tribunals as one of the options to resolve disputes. The

court in the case of Wellington Associates Ltd. V. Kirit Mehta (AIR 2007 S.C. 1379), has

stated that use of words ‘may also go’ or ‘may go to arbitration’, as being outside the scope of

Section 7. In the contract between the appellant and respondent, the arbitral clause (Clause

26) states that arbitration ‘can also be sought the allegation that the notice is invalid due to the

res sub-judice doctrine should not be arbitrated upon as it is not a subject matter under the

purported ‘arbitral agreement’ referred by the appellants. Due to the fact that respondents

were not consulted about switching to the arbitral tribunal, this proceeding is not binding on

us.

ISSUE 2: WHETHER THE SAID CLAIM FOR DAMAGES IN THE FORM OF NOTICE,

RES SUBJUDICE?

It is submitted that the present proceedings do not get covered under the sub judice doctrine.

Section 10 of CPC does not apply to arbitral proceedings but only to courts and its

proceedings. And it is the discretion of the parties to formulate their own procedure as per

Section 19 of the act. That is also why the act expressly specifies the term ‘substantive law’ in

its provisions (Section 28). The arbitral application submitted by the appellant does not

automatically commence the proceedings. Section 21 of the act states that unless a request for

referring the dispute to arbitration is received by the respondent, the proceedings will not

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commence. Sahyadri Earthmovers Vs. L and T Finance Limited and Anr, 2011 (7)

ALLMR 279 clarifies that unless the act explicitly states that CPC should be referred to the

tribunal is shall not adhere to CPC without the prior consent of parties. By means of revising

the notice, we have reduced the damages seeked to Rs. 50 Crores in the hope that the legal

proceedings would be done away with the notice for revised compensation’ was posted far

before the State party received the request for arbitration under Section 21 of the act on

10/1/2023

ISSUE 3: WHETHER THE CLAIM FOR DAMAGES FOR DELAY AND REVOCATION OF
CONTRACT BY THE APPELLANT VIABLE UNDER LAW?

3.1. IS THE COVID PANDEMIC CONSIDERED A FORCE MAJEURE?

3.2. WHETHER THE STATE IS ENTITLED TO DAMAGES FOR A BREACH
CONTRACTUAL MILESTONES IN CONSTRUCTING THE ROAD?
It is submitted to the Hon‘ble Tribunal that the appellant is not entitled to claim force majure
clause as per section 56 of Indian Contracts Act since they have the knowledge about the
pandemic before itself as well as the appellant only responsible for the shortage of labour as per
clause 19.1.4 of the agreement. So the non performance of contract completely is the violation
and it amounts for recovery of damages as per clauses 44.1 and 53.1 of the agreement.

ISSUE 4: IS THE APPOINTMENT OF MS. ANKITHA AS AN ARBITRATOR AGAINST

THE CONDITIONS PROVIDED UNDER THE ARBITRATION ACT?

Section 12(3) if there is justifiable doubts about their impartiality. Referring Schedule 5-
which states that a person who has a financial interest in one of the parties (Item 13) or
anyone who performs an advisory role or has interest in the company can be said to give
reasonable doubts as to their independence. An independent director under Schedule IV of the
Companies Act, 2013 is obliged to uphold the ‘interest of the parties’ while taking
decisions. They are also remunerated fo their contribution under Section 149(9) of the
Companies Act, which presumably is a financial interest the independent director has over the
company. Mere disclosure of information prior to proceedings does not reflect good conduct.
A substantial evidence on the credibility of the arbitrator and their past experiences as the
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 appellant’s arbitrator is required. It is therefore submitted that the above mentioned reasons
justifiably give rise to suspicion of impartiality and the act provides for disqualification,
unless a contrary is proved to convince the respondents.

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 ARGUMENTS ADVANCED

__________________________________________________________________ISSUE 1:
WHETHER THE MATTER OF THE ALLEGED ISSUES IS MAINTAINABLE IN
THIS HON‘BLE ARBITRATION TRIBUNAL?

1. It is submitted that the subject matter in hand is maintainable in this Hon‘ble Arbitral
Tribunal following the nature of contractual relationship and arbitral referrence between
both parties as provided for under Section 7(1) of the Arbitration and Conciliation Act, 1996
(hereinafter, The Act)

2. However, Section 7 does not cover the arbitral clauses where arbitration is stated as one of
the options for the subject matter stated. In fact, the court in the case of Wellington
Associates Ltd. V. Kirit Mehta (AIR 2007 S.C. 1379), has stated that use of words ‘may
also go’ or ‘may go to arbitration’, as being outside the scope of Section 7. In the contract
between the appellant and respondent, the arbitral clause (Clause 26) states that arbitration
‘can also be sought

3. There is no provision in the act to refer the parties to arbitration by the court without an
arbitral agreement in this regard. Section 8 allows courts to refer parties to arbitration only
in the presence of an agreement. This can be inferred with the help of Section 5 of the act
which limits judicial intervention. In the case of Seth Thawardas Pherumal vs The Union
Of India (1955 2 SCR 48), the court stated that the court cannot compel a party to arbitrate
without the presence of an explicit arbitral agreement. As there is not real agreement, the
referral by court to arbitrate is not binding on us.

4. The Bombay HC in 2002 opined in a case- Garden Finance v Prakash Inds. Ltd (A.I.R.
2002 Bom. 8) that to exercise its power under Sction 8, the court has to satisfy three
consitions-

i. There is an arbitral agreement

ii. On party has brought a suit to the court

iii. Subject matter of the suit is same as the one referred in the arbitral agreement

5. For the sake of argument, let the subject matter (being the breach of contractual milestones)
be covered in the ‘arbitral agreement’, the allegation that the notice is invalid due to the res
sub-judice doctrine should not be arbitrated upon as it not a subject matter under the
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 purported ‘arbitral agreement’ referred by the appellants.

6. Due to the fact that respondents were not consulted about switching to the arbitral tribunal,
this proceeding is not binding on us.

7. Therefore, it is submitted that the application to the tribunal cannot institute a valid
arbitral proceeding and the State is not answerable to the arbitral proceeding.

__________________________________________________________________ ISSUE 2:
WHETHER THE SAID CLAIM FOR DAMAGES IN THE FORM OF NOTICE-RES
SUB JUDICE?

1. We humbly submit that the notice sent by the government with the revised damages of
Rs. 50 crores, cannot be restricted by the doctrine of res-subjudice.
2. Res subjudice means a matter or case is being considered by court or judge. For this the
proceeding should be in process. Only when such a matter is pending before the court, res
subjudice should be invoked.

3. We submit that in this case

i. Section 10 of CPC does not apply to arbitral proceedings but only to courts and its
proceedings. And it is the discretion of the parties to formulate their own
procedure as per Section 19 of the act. That is also why the act expressly specifies
the term ‘substantive law’ in its provisions (Section 28)

ii. The arbitral application submitted by the appellant does not automatically
commence the proceedings. Section 21 of the act states that unless a request for
referring the dispute to arbitration is received by the respondent, the proceedings
will not commence.

4. General Officer Commanding vs CBI & Anr clarified that arbitration is not a judicial
proceeding whereas Section 10 only mentions courts and not tribunals. In the case of
National Institute of Mental Health and Neuro-Sciences v. C. Parmeshwara, AIR 2005
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 SC 242 as well. The court had said this doctrine concerns itself with CPC only and not
proceedings under other statutes.

5. Moreover, the intention of the arbitral proceedings is itself less procedures. Section 19
states that the tribunal is not bound by provisions of Code of Civil Procedure, including
Section 10 which talks about sub-judice. Sahyadri Earthmovers Vs. L and T Finance
Limited and Anr, 2011 (7) ALLMR 279 clarifies that unless the act explicitly states that
CPC should be referred to the tribunal is shall not adhere to CPC without the prior
consent of parties

6. This, being a proceeding under the Arbitration Act cannot be precluded by the doctrine.
The purpose of the doctrine is to prevent the same suit being filed twice and vexing the
other party and courts. We submit that, in this case, the State party had attempted to do
the same but in a different manner.

7. The proceeding was initiated based on the first notice issued doe claiming damages for
Rs. 80 Crores, which led the other party to file a suit in court and also subsequently
initiate arbitration. By means of revising the notice, we have reduced the damages seeked
to Rs. 50 Crores in the hope that the legal proceedings would be done away with.

8. The intention of the state is not to delay the proceedings or vex the other party. It is
apparent that the state needs to immediately start working on the road as it is significant
for crucial medical supplies and national security reasons. We would like to highlight that
the other party was well aware of the significance of the road but was still negligent.

9. The pandemic has caused financial constraints on the state and the rising oil prices due to
war has again put State under stress. To set out another tender and choose someone who
have the capacity to finish the work faster to compensate the delay would require a lot of
finance which led the State to issue such notice. Arbitral proceedings consumes time
which the State does not have.

10. In the interest of the nation’s security from threats by Chinese ships in Arabian Sea and
medical supplies transportation, the State had reduced the quotation and prefers
negotiation rather than arbitration.

11. Nextly, for the benefit of the tribunal, we would like to quote that ‘the notice for revised
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 compensation’ was posted far before the State party received the request for arbitration
under Section 21 of the act on 17/10/2022 (Exhibit 9)

12. Accordingly, once the letter was posted as a registered post, it was outside the control of
the State party. The Mail box rule states the exact same thing. An offer, as in here
(specific offer), is said to be made once it reaches the mail box.

13. In the case of Bhagwandas Goverdan Kedia, the court said that an offer and acceptance is
said to be done when they are set into transmission. In this context, it means once it’s
posted, the offer comes into existence.

14. Given all these reasons, we disagree to the claim that there was not unfair practice in
sending such a notice and it was done with good intention and is not attract the
impairment as per doctrine of res sub judice.

__________________________________________________________________ISSUE 3:
WHETHER THE CLAIM FOR DAMAGES FOR DELAY AND REVOCATION OF
CONTRACT BY THE APPELLANT VIABLE UNDER LAW?

1. Yes, the appellant is liable for their act of non completion of the contract resulting in
revocation on their part of the contract thereby the claim we asked for is valid.
3.1. IS THE COVID PANDEMIC CONSIDERED A FORCE MAJEURE?
2. No, in this situation the appellant cannot exercise the claim of force majeure clause on
the ongoing issue of Covid Pandemic with regard to the agreement, since (exhibit 3) has
entered into force on 21.10.21 i.e. in the middle of the pandemic. Also, the claimant
knew the difficulties and challenges during that times but only accepted for a 12
months’ time period to construct and maintain the roads. Plus, though they, knowing the
importance of construction of roads, they were slow in progress and claiming for force
majeure clause is invalid also the claim made with the section 56 of the Indian Contract
Act is also invalid when the act to be performed afterwards cannot be deemed
impossible.
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 3. It is submitted to the Hon‘ble Tribunal that in the case Sri Ananda Chandra Behera v.
Chairman, Orissa Electricity Board 1998 85 CLT 79, gives some information on the
causal link between the force majeure incident and the ensuing scenario by stating, with
approval, the decision of House of Lords in Greenock Corporation v. Caledonian
Railway Co 1917 AC 556, it was held that “…..If an incident is the direct outcome of
natural forces without the involvement of human beings, it may be an act of God.
Although human and natural forces frequently work together to obtain value, the
immediate and direct cause alone should be considered when deciding whether an act
was performed by God or by a person. When a ship gets swept away in a storm, the
owner's decision to send her out to sea is too responsible; however, God is ultimately
too responsible for the loss.” Further Complex causal link concerns may also occur
where the immediate and direct cause is not the Covid-19 pandemic itself, but the
actions of authorities in reaction to it, such as lockdown, curfew, or limitations on
movement of persons and commodities. Depending on the language of the force
majeure clause, such acts by authorities may constitute a separate and independent force
majeure event that excuses contract performance.
4. It is submitted to the Hon‘ble Tribunal that in the case Standard Retail Pvt.Ltd v. M/s
G.S.Global Corp & Ors Arbitration Petition No.404 of 2020, the Court refused to issue
an injunction due to lack of a direct causal link between the Covid-19 pandemic and the
failure to performance of Contract. However, the Court stated that steel distribution
was a necessary service, and as there were no limitations on its movement, the contract's
performance was unaffected.
5. Thereby, the act of construction of roads can be treated as a mandatory service since the
completion of construction would result in a time line, where it becomes easier for the
people to seek faster medical attention with regard to Covid due to the availability of
manufacturing units. Also one cannot also explicitly rely upon force majeure since there
are alternatives other than cement are present and effective regarding its usage. Further
the appellant to bear responsible for any acts of negligence an emergencies and
accidents in the aspect of labour as per clause 19.1.4 of the agreement (Exhibit 3). It is
submitted that the same must be considered by the Hon‘ble Tribunal that Claimant’s
raise of force majeure clause as invalid in this situation for non performance of contract.

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 ISSUE: 3.2: WHETHER THE STATE IS ENTITLED TO DAMAGES FOR A
BREACH CONTRACTUAL MILESTONES IN CONSTRUCTING THE ROAD?
6. It is humbly presented in front of The Hon’ble Tribunal that the performance of an act
cannot be done in a way, which is not stated in the agreement per se. Thereby, the act
performed should basically fall under the specifications of the agreement made in the
contract. This is mentioned in the case of Bishamber Nath Agarwal v. Kishan Chand
AIR 1990 All 65, wherein, “the performance of the activity should only be done based
on the criteria stated in the contract, that is the completion of such should be done
within a certain period and manner.”

7. It is humbly presented in front of The Hon’ble Tribunal in the present case, the claimant
i.e.K7 Pvt Ltd entered into an agreement with the Maharashtra State Road Development
Corporation (MSRDC) to construct and maintain two roads which connects Mumbai
and Lonavala on 21.10.2021. It is submitted that the claimant herein is in violation of
Clause 52 of the mentioned agreement as the claimant failed to complete the
construction of roads as well as maintenance and repair works within the stipulated
duration of the Agreement i.e., on or before 21.10.2022 resulting in actual breach of
contract due to slow progress of work.

8. It is submitted to the Hon‘ble Tribunal that when one party in a contract does not fulfill
his or her contractual duties by the performance deadline, the other party is not required
to perform his or her obligations and can hold the breaching party liable for contract
breach. Considering the fact that the Claimant herein has failed in his contractual
obligations embedded in Clause 42 of the Agreement, the Claimant herein is liable of
breach of the Contract dated 21.10.2021.

9. Based on the situation in hand, it can be easily stated that there is violation with regard
to substantial law. The issue in concern is that, there is violation of sections 73 and 74
of the Indian Contract Act, which is identified with the help of the case law, ONGC v.
Saw Pipes (2003) 5 SCC 705, and thereby we associate this with our circumstance since
there is breach of contract on the part of the appellant.
10. It is submitted that in the case of Fateh Chand v. Balkishan Das 1963 AIR 1405, it was
decided that under Section 73 of the Indian Contract Act, 1872, the party who suffers
from a breach of contract is entitled to compensation for any loss caused to him that the

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 parties knew, at the time the contract was made, would likely result from the breach of
it.

11. It is submitted to the Hon‘ble Tribunal that in the case Smt. Panna Sunit Khatau &
Others v/s Dilip Dharamsey Khatau & Others, Arbitration Petition No. 4 of 1986, it was
stated that Section 73 of the Indian Contract Act, 1872, is to be read with Section 74,
which deals with the penalty stipulated in the contract. This provision states that when a
contract has been broken, if a sum is named in the contract as the amount to be paid in
case of such breach, the complaining party is entitled, whether or not actual loss is
proven to have been caused, to receive from the party who has broken the contract
reasonable compensation not exorbitant. It also decided that Section 73 of the Indian
Contract Act of 1872 emphasizes that in the event of a breach of contract, the party
complaining of the breach is entitled to receive reasonable compensation, regardless of
whether actual loss was demonstrated to have been caused by such breach. The focus is
on fair compensation as an outcome.
12. It is submitted that in the case of Panna Sunit Khatau & Anr. V. Dilip Dharamsey
Khatau 6/50 Arbitration Petition No. 4 of 1986 if the contract stipulates that
compensation would be provided as a punishment, the consideration would be different
and the party would only be entitled to reasonable compensation for the loss incurred.
However, if the compensation specified in the contract for such a breach is a genuine
pre-estimate of loss that the parties knew when they made the contract to be likely to
result from the breach of it, there is no question of proving such loss or such party is not
required to lead evidence to prove actual loss suffered by him. It was also ruled that the
burden of proof is on the opposite party to demonstrate that no loss is likely to result
from such a violation. It is argued that because the purpose of the compensation in this
case is to make up for the respondent's and the public's loss and inconvenience, the
respondent is entitled to compensation herein.
13. It is submitted to the Hon‘ble Tribunal that the Section 74 of the Indian Contract Act,
1872, also adds that ‘in assessing the damage or loss resulting from the breach of
contract, the inconvenience caused by the non-performance of the contract must also be
taken into consideration’. Due to the delay caused in construction of the roads as well as
failure of maintenance and repair works as per the before mentioned contract of laying
down roads connecting Mumbai and Lonaval, wherein, major Covid – 19 vaccine
manufacturing Units such as Serum Institute of India & Bharat Biotech are located in

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 that proximity. This is reason behind the consequent factor of the citizens, to face a
great inconvenience as there was delay in getting vaccines because the rural areas and
cities will be connected through these roads only. In short, due to the Claimant’s
improper nature in completing the work in stipulated time period as stated earlier i.e.
21.10.22, the respondent is incurring the damages for not giving the welfare to the
citizens of the state and in addition by giving the tender to the K7 Ltd, the respondent
was also affected by way of wastage of time and potential resources. Further the said
roads will be connecting highways to Delhi through which weapons and men & material
is transported and it is also affected due to the incompletion of work by the claimant. It
is submitted that the same must be considered by the Hon‘ble Tribunal in assessing the
damage from the breach of contract.

__________________________________________________________________ISSUE 4:
IS THE APPOINTMENT OF MS. ANKITHA AS AN ARBITRATOR AGAINST THE
CONDITIONS PROVIDED UNDER THE ARBITRATION ACT?

1. It is presented before the tribunal that the sole purpose of seeking arbitration is to relieve
oneself of lengthy processes and procedures while not compromising on the justice
granted. An arbitrator like a judge has to be unbiased and fair. The act itself allows us to
choose arbitrators so a fair proceeding is ensured. However, the respondents are wary of
the appointment of Ms.Ankitha as an arbitrator.

2. We would like to being to light the fact that she was in fact an independent director in K7
earlier. This would mean that she is likely to exercise favoritism and the proceeding is
will be against natural justice, as a person is a judge in his own case or a case he is
interested in.

3. This would invalidate the arbitral award that will be passed by the tribunal as it is against
natural justice and is conflicting with rule of law as provided under Section 24(2) (b) (ii).
This would only lead to prolonged legal proceedings and consume more time and
resources.

4. An arbitral tribunal must treat all parties equally and fairly under Section 18 of the act, but
the State is apprehensive if the arbitrator associated with K7 will do so. Section 12(3)

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 notes that under a person who is an interested party cannot be an arbitrator and their
appointment can be challenged.

5. Though she had disclosed the information of her association with the other party, Section
12(3) if there is justifiable doubts about their impartiality. Referring Schedule 5- which
states that a person who has a financial interest in one of the parties (Item 13) or anyone
who performs an advisory role or has interest in the company can be said to give
reasonable doubts as to their independence.

6. An independent director under Schedule IV of the Companies Act, 2013 is obliged to

uphold the ‘interest of the parties’ while taking decisions. They are also remunerated for
their contribution under Section 149(9) of the Companies Act, which presumably is a
financial interest the independent director has over the company.

7. So an independent director cannot be made an arbitrator though she has disclosed the
facts earlier and has the needed qualifications.

8. The fact that the other party has engaged Ankitha for three years as an arbitrator after she
quit five years ago shows that they have a close relationship which can turn to bias.
Positively, in Item 1 of the schedule 7 of the act, the past business relationship is also
mentioned as a criteria for disqualification.

9. Moreover, such an engagement is said to raise reasonable doubts as provided in the

Schedule V which states that if the person had been appointed as arbitrator in the
preceding three years for two or more times, then a reasonable doubt will be justified. So
Ankitha who has been an arbitrator for three years for K7.

10. If she has practiced as an arbitrator for the company, then the other party should be able to
provide evidence that Ankitha is an impartial arbitrator and has been so in the previous
arbitrations concerning the company.

11. Mere disclosure of information prior to proceedings does not reflect good conduct. A
substantial evidence on the credibility of the arbitrator and their past experiences as the
appellant’s arbitrator is required.

12. It is therefore submitted that the above mentioned reasons justifiably give rise to suspicion
of impartiality and the act provides for disqualification, unless a contrary is proved to
convince the respondents.
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 PRAYER

In the light of the aforementioned contentions, it is humbly prayed that the Hon‘ble Tribunal
may be pleased to award the relevant remedies, it deems fit in the form of an award enforceable
under Part VIII of the Arbitration and Conciliation Act, 1996

1. To hold that the State party is not bound to participate in the arbitral proceedings under
the Arbitral clause

2. To hold the Appointment of the Substitute Arbitrator by the Respondent invalid.

3. To reject the outrageous claims that the notice to claim for damages is precluded
under doctrine of res subjudice and the notice is valid
4. To declare that Covid-19 is not a force majeure and that slow progress amounts to
breach
5. To award any damages that the Hon‘ble Tribunal may deem fit in the present case.

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 Notice Inviting Tender (Ex 1)

MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION (LTD.)

(A Govt. Of Maharashtra undertaking)

Rajeev Gandhi Sea Link Project office, Opp. Bandra Reclamation Bus Depot, Bandra (W),
K.C. Marg, Mumbai – 400050, INDIA. Commercial Unit

Tel: - 022 26517960 Fax: 022 26417893.

Website: - www.msrdc.org E-Tendering Portal: https://mahatenders.gov.in

Notice Inviting Tender

“Invitation of bids for construction and Maintenance of Two Roads connecting Mumbai and
Lonavala”

Tender No. 567 / 2020-2021/ Roads Date: 1.09.2021.

On behalf of the Maharashtra State Road Development Corporation Ltd., the undersigned invites on
line Tenders for the following works for 12 months contract period. This project seeks construct and
maintain two roads connecting Mumbai and Lovnavala.

Date Nature of work Description Approximate value

of contract (in
crores)

1.9.2021 Construction & Two road: 60 km & 200 crores

maintenance of two 80 km each (exclusion of buffer
roads connecting charges for
Mumbai & contingency)
Lonavala.

Note:
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1. Tender scheduled and all other details can be downloaded free of cost from website
https://mahatenders.gov.in.
2. The last date of submission is 02.10.2022.
3. Tenderer should submit Original Documents (those were uploaded during bid submission) for
verification at the time of Technical Bid opening.
4. The MSRDC Ltd, reserves the right to accept or reject any or all the tenders without assigning
any reason.

Superintendent Engineer

MSRDC

Letter of Acceptance of offer (Ex 2)

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 MAHARASHTRA STATE ROAD DEVELOPMENT CORPORATION (LTD.)

(A Govt. Of Maharashtra undertaking)

Rajeev Gandhi Sea Link Project office, Opp. Bandra Reclamation Bus Depot, Bandra (W),

K.C. Marg, Mumbai – 400050, INDIA. Commercial Unit

Tel: - 022 26517960 Fax: 022 26417893.

Date: 5.10.22

From,

Superintendent Engineer,

MSRDC ltd,

Mumbai – 400050

To,

Ravi Kumar,

Chief Executive Officer, K7 ltd,

Gokul Arcade, Vile Parle East,

Mumbai, Maharashtra 400057

Respected Sir,

Sub : Acceptance of offer for construction of two roads connective Mumbai to Lonavala.

I am representing the MSRDC, writing to confirm acceptance of your offer. This letter is to inform
you that Tender No. 567 / 2020-2021/ Roads dated 01.09.2021, the tender is given to K7 Pvt. Ltd. As

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mentioned in the sender nice, the value given by this construction is 200 crores (excluding buffer
price for contingency). This amount is considered the lowest among the offers given by other
companies. The final decision of this tender is given to the K7 Pvt. Ltd.

Further steps to start the agreement with considerable conditions. The agreement is going to sign and
the work is approximately starting on 21.10.2021.

Superintendent Engineer,

MSRDC, Trichy

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 CONSTRUCTION CONTRACT AGREEMENT (Ex 3)

1. PARTIES

This Construction Contract Agreement (hereinafter referred to as the “Agreement”) is

entered into on 21.10.2021 (the “Effective Date”), by and between K7 Pvt. Ltd with an
address of 304, Gokul Arcade B Wing, Subhash Road, Near Garware, Vile Parle East, ,
Mumbai, Maharashtra 400057 (hereinafter referred to as the “Constructor”), and
Maharashtra State Road Development Corporation (Ltd.), with an address of Rajeev
Gandhi Sea Link Project office, Opp. Bandra Reclamation Bus Depot, Bandra (W), K.C.
Marg, Mumbai – 400050, (hereinafter referred to as the “Client”) (collectively referred
to as the "Parties").
2. CONSTRUCTION PROPERTY

The Property that is to be constructed is located at the following address:

- Construction of two roads connection Mumbai- Lonavala with a distance of 60 kms
and 80 kms each respectively.
3. SCOPE OF WORK:

The Constructor agrees to perform the construction described below:

3.1. Contractor hereby agrees that a will exert every reasonable and diligent effort to ensure that
all labour employed by Contractor, including that of its Subcontractors for Work on the
Project, shall be in accordance with the Contract Documents and shall incorporate the
requirements set forth by applicable rides, regulations, codes and statues of Permitting
Authority
3.2. Contractor covenants to furnish its best skill and judgment in furthering the interests of the
said project. Contractor agrees to furnish efficient business administration and
superintendence and use as best efforts to complete the Project in the best and soundest way
and in the most expeditious and economical manner consistent with the interests of the said
project
3.3. Contractor shall provide pre-installation Work which includes, but shall not be limited to ,
the following:
3.3.1. Maintain a list of Subcontractions, including local business and workforce
participation
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4. Contractor shall become thoroughly familiar with the evolving architectural, civil. mechanical,
plumbing, electrical, and structural plans and specifications. Contractor shall submit to the
MSRDC, and Permitting Authorities such comments as may be appropriate concerning
construction feasibility and practicality.
5. The contractor shall perform the Work in accordance with the Contract Documents If the
Contractor performs Work knowing it to be contrary to laws, statutes, ordinances, building codes,
and rules and regulations without such notice to the MSRDC, it shall assume full responsibility
for such Work, and shall bear the attributable costs.
6. Contractor warrants and accepts that any and all repair work required at any phase of the Project,
irrespective of the cause, shall be deemed the responsibility of the Contractor at no additional
cost to the MSRDC
7. The MSRDC shall provide information regarding is requirements for the Project, with reasonable
promptness to avoid delay in the orderly progress of the Work
8. The MSRDC shall designate a Project Manager who shall be fully acquainted the Project and
shall define the lines of MSRDC authority to approve Change and render decisions promptly and
furnish information expeditiously.
9. If the Contractor fails to correct Work which is not in accordance with the requirements of the
Contract Documents, or persistently fails to carry out Work in accordance with the requirements
of the Contract Documents and the law of India, rules and regulations, then the MSRDC may
order the Contractor to stop the Work. or any portion thereof, until the cause for such order has
been eliminated. The right of the to stop Work on the Project shall not give rise to a duty on the
part of the MSRDC, to the benefit of the Contractor, Subcontractors, or any other person or
entity.
10. Finally, the Contractor accepts understands and agrees that these provisions of the Agreement
constitute a material inducement for the MSRDC to enter into this Agreement and that the
MSRDC has indeed relied on these particular provisions in making its decision to enter into this
Agreement with Contractor
11. The MSRDC reserves the right, in is best interests, to cancel this Agreement by giving written
notice to Contractor thirty (30) Days prior to the effective date of such cancellation
12. All notices, demands, correspondence and other communications between the Parties shall be
deemed sufficiently given under the terms of this Agreement when dispatched by registered or
certified mail, postage prepaid, return receipt requested, addressed as follows or as the same may
be changed from time to time:

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 For contractor: K7 Pvt. Ltd with an address of 304, Gokul Arcade B Wing, Subhash Road,
Near Garware, Vile Parle East, Mumbai, Maharashtra 400057

To MSRDC: Rajeev Gandhi Sea Link Project office, Opp. Bandra Reclamation Bus Depot,
Bandra (W), K.C. Marg, Mumbai – 400050.
13. In addition to the aforementioned, the Contractor agrees to abide by and perform all the work that
is shown on the construction plan available on the property's site.
14. The parties had agreed that if any party breaches the contract, then the said party should
compensate the other party which depends on the case to case basis and the tribunal will have the
jurisdiction to decide the same.
15. TERM:
15.1. This Agreement shall be effective on the date of the signing this Agreement (hereafter
referred to as the “Effective Date”) and will end when the construction services are
completed.
15.2. The term of this Agreement may be extended upon the provision of written consent
from both Parties.
15.3. The Parties agree that the Construction will begin on 21.10.2021 and will end on or
before 21.10.2022
16. PAYMENT AND FEES
16.1. The Parties agree that the total cost of the services will be Rs. 200 crores + additional
buffer charges for contingencies which will be paid at the completion.
16.2. The Parties agree that the means of payment will be via Deemed Draft.
17. PERMITS AND LICENSES
17.1. The Parties agree that a is the duty of the Constructs to obtain all permits and licenses
needed to commence in the construction of the site and provide his/her services.
17.2. The Parties further agree that the constructor will be responsible to pay the fees for the
MSRDC inspections, if need be.
18. USAGE OF MATERIALS AND LABOR
18.1. The Parties agree that it is the Contractor's responsibility to provide as well as pay for
any labor and/or equipment needed to complete the construction as per the Agreement 23
The Parties further agree that the materials used for the construction are to be brand new.
19. ADDITIONAL RESPONSIBILITIES OF THE CONSTRUCTOR
19.1. The Constructor agrees to the following:
19.1.1. To supervise, manage and complete all the construction services as per this
Agreement.
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 19.1.2. To keep record of the documents in a safe place accessible only to the Constructor and
the Client.
19.1.3. To take an necessary precautions for all safety in general
19.1.4. To bear responsibility for any acts of negligence and emergencies and accidents
19.1.5. To provide a guarantee to the Client that the work commenced will be in accordance
with the documents of this Agreement.
19.1.6. To maintain the property, keep it clean, and to safely dispose of hazardous materials
and waste.
19.1.7. To train personnel on handling hazardous materials and to be responsible for any
illness, damage, or loss of personnel
20. INSURANCE
20.1. The Parties agree that is the Contractor's responsibility to purchase an insurance
policy for the construction
20.2. The Parties further agree that is the Client’s responsibility to maintain an insurance
that covers replacement costs in the event of fire, theft, act of nature and/or casualty(s).
21. INDEMNIFICATION
21.1. The Constructor agrees to hold harmless as well as indemnify its personnel employees
and others against all liabilities, expenses, claims or other.
21.2. The Constructor further agrees to be held responsible for providing a defense against
the aforementioned liability, claims and or demands, if any,
22. GOVERNING LAW
22.1. This Amendment shall be governed by and construed in accordance with the laws of
India.
23. AMENDMENTS
23.1. The Parties agree that any amendments made to this Agreement must be in writing
where they must be signed by both Parties to this Agreement

As such, any amendments made by the Parties will be applied to this Agreement.

24. ASSIGNMENT
24.1. The Parties hereby agree not to assign any of the responsibilities in this Agreement to
a third party unless consented to by both Parties in writing.

LIQUIDATED DAMAGES

44.1. In event of delay/non-completion of the project within the stipulated time frame of any reason
32 | P a g e
 resulting in loss of either party then the parties hereby agree to arrive at a reasonable amount as a
recourse through Liquidated damages. The Parties terminating the contract hereby agree to pay
up the same after wholly accepting and consenting for the same as to be arrived through just and
reasonable calculation.

………….
1. TERMINATION

Either the Contractor or client may terminate this Agreement, and any obligations stated
hereunder, with reasonable cause by providing written notice of a material breach of the other
party; or any act exposing the other party to liability to others for personal injury or property
damage

….

2. LIQUIDATED DAMAGES NOTICE:

53.1. In the event that the company is required to pay liquidated damages amount to MSRDC
upon receipt of notice of liquidated damages not later than 15 days from the receipt of
liquidated damages notice

3. ALTERNATIVE DISPUTE RESOLUTION

a. In case of a dispute, the parties can consider other dispute resolution mechanisms
before litigation.
4. ENTIRE AGREEMENT
a. This Agreement contains the entire agreement and understanding among the Parties
hereto with respect to the subject matter hereof, and supersedes all prior agreements.
understandings, inducements and conditions, express or implied, onl or written, of any
nature whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and or usage of the trade
inconsistent with any of the terms hereof.
5. SEVERABILITY
a. In an event where any provision of this Agreement is found to be void and
unenforceable by a court of competent jurisdiction, then the remaining provisions will
remain to be enforced in accordance with the Parties" intention
6. SIGNATURE AND DATE
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 a. The Parties hereby agree to the terms and conditions set forth in this Agreement and
such is demonstrated throughout by their signatures below:

CONSTRUCTOR CLIENT

K7 Pvt Ltd. Name: Superintendent engineer (MSRDC)

Signature:

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 Termination Notice Ex 5

TERMINATION NOTICE

[1, November ,2022]

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To,

Ravi Kumar,
Chief Executive Officer, K7 ltd,

Gokul Arcade, Vile Parle East,

Mumbai, Maharashtra 400057
Re: Construction Contract Termination

Dear Managing director:

This correspondence is sent in accordance with clause 52 of the contract between Maharastra state
road development corporation Ltd., and K7 Ltd.,

it has become clear that the construction project of two roads at Mumbai and Lonavala is not going to
be finished within 12 months after entering into the agreement and maintenance that were promised
in the original contract is not done. Accordingly, K7 Ltd. is hereby notified of the termination of this
contract.

Specifically, Maharastra state road development corporation Ltd. became aware of the fact that only
one road is constructed and not maintained in the 12 months.

Clause 52 of the contract stipulates that Maharastra state road development corporation Ltd. may
terminate the contract if one of the parties breaches the agreement or one of the conditions set forth.

Accordingly, this contract is terminated, and The Maharastra state road development corporation Ltd.
is not responsible for any balance due to K7 Ltd., lease sign a copy of this letter and return it to us
within seven days of receipts.

Very truly yours,

Maharastra state road development corporation Ltd.

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 Notice for Recovery of Liquidated Damages (Ex 6)

NOTICE FOR RECOVERY OF LIQUIDATED DAMAGES

[November 20, 2022]
To,

Ravi Kumar,
Chief Executive Officer, K7 ltd,

Gokul Arcade, Vile Parle East,

Mumbai, Maharashtra 400057

Sub : Claim for Recovery of liquidated damages

Dear CEO,

This correspondence is sent in accordance with clause 44.1 r/w 53.1 of the contract between
Maharashtra state road development corporation Ltd., and K7 Ltd., it has become clear that the
construction project of two roads at Mumbai and Lonavala is not going to be finished within 12
months after entering into the agreement and maintenance that were promised in the original contract
is not done. Accordingly, K7 Ltd. is hereby notified of the contract agreement stands terminated and
in pursuance slow progress in construction and non-completion of the project within the stipulated
time being aware of the exigency and public interest associated with the project has caused
unanticipated additional expense of Rs. 10,00,000 till date to the MSRDC.

Accordingly, by invoking clause 44.1 r/w 53.1 of contract agreement for the resulting damage of loss
for MSRDC a reasonable amount of Rs. 80 crores is claimed as recourse through Liquidated
damages which is directed to be paid within 15 days from the date of receipt of notice i.e. on or
before 5.10.22.

Very truly yours,

Maharastra state road development corporation Ltd.

(Exhibit 7)
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 SPECFIC OFFER NOTICE FOR RECOVERY OF LIQUIDATED DAMAGES
[December 10, 2022]
To,

Ravi Kumar,
Chief Executive Officer, K7 ltd,

Gokul Arcade, Vile Parle East,

Mumbai, Maharashtra 400057

Sub : Claim for Recovery of liquidated damages

Dear CEO,

This correspondence to the earlier notice for recovery of liquidated damages in accordance with
clause 44.1 r/w 53.1 of the contract between Maharashtra state road development corporation Ltd.,
and K7 Ltd., dated November 20,2022 . Accordingly, K7 Ltd. is hereby notified of the contract
agreement stands terminated and in pursuance slow progress in construction and non-completion of
the project within the stipulated time being aware of the exigency and public interest associated with
the project has caused unanticipated additional expense of Rs. 10,00,000 till date to the MSRDC.

Accordingly, by invoking clause 44.1 r/w 53.1 of contract agreement for the resulting damage of loss
for MSRDC a reasonable amount of Rs. 80 crores has been revised taking into consideration of the
brunt of Covid 19 as a recourse of Rs. 50 crore through Liquidated damages which is directed to be
paid within 15 days from the date of receipt of notice.

Very truly yours,

Maharastra state road development corporation Ltd

(Exhibit 8)
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 RELAXATION OF COVID NORMS

(Exhibit 8)
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 ACKNOWLEDGEMENT SLIP FOR POSTING OF NOTICE

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