Interim protection against coercive recovery must be maintained pending adjudication of contractual disputes by the Arbitration Tribunal.

The Petitioner, a registered "Class AA" Government Contractor, was awarded a contract for strengthening a section of National Highway 8A in 2007

The work was completed on 24.08.2008, and the Final Bill was paid on 04.09.2008

In 2014, Respondent No. 2 issued a notice demanding Rs. 88,66,371/- for repairing "patch work" that occurred during the monsoon, threatening recovery from other contracts

After a series of litigations reaching the Supreme Court (which directed the matter to the Tribunal), the Petitioner filed Arbitration Reference No. 2 of 2020 and Civil Application No. 3 of 2020 for interim relief

The Gujarat Public Works Contract Disputes Arbitration Tribunal dismissed the interim application via a common order dated 21.07.2022

The Petitioner challenged this dismissal before the High Court under Articles 226 and 227 of the Constitution

1. Whether the Arbitration Tribunal committed an error in dismissing the application for interim relief and failing to consider the substantive law/merits as directed by higher courts

2. Whether the Petitioner is entitled to protection against coercive recovery pending the final adjudication of the dispute

The Court's jurisdiction was invoked under Articles 226 and 227 of the Constitution of India and the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992

The Petitioner specifically relied on Section 28(1) of the Arbitration and Conciliation Act, 1996, which mandates that disputes be adjudicated in accordance with the substantive law for the time being in force

The Court also exercised its discretionary power to issue a Writ of Mandamus to ensure the expeditious disposal of statutory arbitration proceedings

The Court evaluated the Petitioner’s contention that the Tribunal erred by consolidating multiple applications into a common judgment without a formal application for consolidation and by failing to address the merits as per the Supreme Court’s prior directions

While the Tribunal had dismissed the interim relief application (Civil Application No. 3 of 2020), the High Court noted the necessity of a time-bound resolution for the main reference

Rather than delving into the legality of the patch-work repairs or the delay in the recovery notice, the Court found it equitable to balance the State's interest with the Petitioner’s right to a fair hearing by staying coercive actions while mandating a strict timeline for the Tribunal to conclude the final proceedings

The Court ordered that "no coercive steps shall be taken against the petitioner" until the Tribunal reaches a final decision

The High Court partly allowed the petition... Rule was made absolute to this extent