The Supreme Court ruled last week that an arbitration tribunal can allow an employer to withhold the security deposit of a contractor in one project if his work in another work contract is under scrutiny. The judgment came in the case, State of Gujarat vs Amber Builders, in which the power of the Gujarat Public Works Contract Disputes Arbitration Tribunal was challenged by a contracting firm. This state law makes it compulsory to arbitrate disputes over works contracts. The firm, in this case, had built a road but it was washed away in rain. The government appointed a new contractor to repair it and withheld the deposit of the former. The firm challenged the action of the government in the high court. It allowed the petition, against which the state moved the Supreme Court. The court set aside the high court ruling and clarified that the state law and the central law on arbitration were not in conflict and the tribunal can pass interim orders. The Supreme Court also declared that its earlier ruling in another case was wrong. In that case, the court held that the government had no right to appropriate the deposit amount claimed by the contractor without getting it first adjudicated.
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First Published: Sun, January 12 2020. 20:17 IST