Common Contract Management PDF
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This document covers contract management, including the Indian Contract Act of 1872 and the legal aspects of public procurement of works. It details essential elements, frequently used terms, and various relevant laws. The document is geared towards professional use.
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CONTRACT MANAGEMENT I. INTRODUCTION 1. WHAT IS CONTRACT? The promises, agreements, transactions between two parties based on which commercial activities are carried out are called contracts. Indian Contract Act, 1872 deals with all types of Contracts. Section 2(h) of the Indian Contract Act, 1872 de...
CONTRACT MANAGEMENT I. INTRODUCTION 1. WHAT IS CONTRACT? The promises, agreements, transactions between two parties based on which commercial activities are carried out are called contracts. Indian Contract Act, 1872 deals with all types of Contracts. Section 2(h) of the Indian Contract Act, 1872 defines the term Contract as “An agreement enforceable by law” An agreement means a set of promises forming the consideration for each other. There are two parties to a contract in practice, if someone wants some work to be executed, he approaches a person for the said purpose. The other person on receiving the proposal, quotes his price or charges, which is a consideration and other terms and conditions. An agreement in relation to it comes into force. If this agreement is liable to be enforced by law, it is called a CONTRACT. 2. ESSENTIAL REQUIREMENTS FOR VALID CONTRACTS ARE: Offer and its acceptance Free consent of both parties Parties should be competent to enter into contract Mutual and lawful consideration for agreement Object should be lawful and not expressly declared to be void Certainty and possibility of performance It should be enforceable by law. Hence, intention should be to create legal relationship. Agreements of social or domestic nature are not contracts. Contract should not have been declared as void under Contract Act or any other law. 3. LEGAL ASPECTS GOVERNING PUBLIC PROCUREMENT OF WORKS A public procurement contract, besides being a commercial transaction, is also a legal transaction. There are a number of laws that may affect various commercial aspects of public procurement contracts. A public procurement professional is expected to be generally aware of the implications of following basic laws affecting procurement of works; however, he or she is not expected to be a legal expert i. The Constitution of India; ii. Indian Contracts Act, 1872; iii. Arbitration and Conciliation Act, 1996 read with The Arbitration and Conciliation (Amendment) Act, 2015; iv. Competition Act, 2002 as amended with Competition (Amendment) Act, 2007; v. The Information Technology Act, 2000 (IT Act, regarding e-procurement and e-auction); vi. Right to Information (RTI) Act 2005; vii. Central Vigilance Commission Act 2003; viii. Delhi Special Police Establishment Act, 1946 (DSPE – basis of the Central Bureau of Investigation); ix. Prevention of Corruption Act, 1988; x. Code of Criminal Procedure, 1973 (Sections 195(1) and 197(1)); xi. Various labor laws applicable at the works site; and laws applicable for ESI and EPF deductions and GST & work contract tax xii. Various building and safety acts, codes, standards applicable in the context of the scope of work; and xiii. Various environmental and mining laws, codes, standards applicable in the context of the scope of work. 4. FREQUENTLY USED TERMS IN CONTRACT MANAGEMENT Some of the terms frequently used with reference to tenders and contracts are: 1. Bidder: A Person, firm, company (or any other legal person) who has submitted an offer in response to a notice inviting tender. 2. Contractor: The bidder whose tender (offer) has been accepted, and who has entered into a valid agreement. 3. "Supplier" means the individual or firm supplying the goods on contract. 4. "Goods" means all the equipment, machinery or other material which the supplier is required to supply under the contract. 5. "Advance purchase Order" means the intention of purchaser to place the purchase order on the bidder 6. "Purchase Order" means the order placed by the purchaser on the supplier signed by the purchaser including all attachments and appendices thereto and all documents incorporated by reference therein. The purchase order shall be deemed as 'Contract'. 7. "Work Order" means the order issued to the contractor by the officer in charge of the works. 8. "Contract Price" means the price payable to the supplier under the purchase order for the full and proper performance of its contractual obligations. 9. "Bid documents/ Tender documents" means all the documents of 1. Specifications of the materials or work 2. Terms and conditions of the contract 3. Plans and detailed diagrams if any and other related documents forming part of contract. 10. "Notice Inviting Tender" (NIT) means any publication or notice issued to the public through website or otherwise expressing the intention of the corporation to get the supplies or work done and requesting the bidder to make offers. 11. "Earnest Money Deposit (EMD)/ Bid Security" means an amount required to be deposited by the bidder/ tenderer along with his offer as a security against his default of entering into contract. 12. "Security Deposit/ Performance Guarantee" means an amount fixed as security for ensuring the performance of the contract and compliance to the other conditions of contract by the contractor. II. PUBLIC PROCUREMENT INFRASTRUCTURE AT THE CENTRE 1. PROCUREMENT POLICY DIVISION Procurement Policy Division (PPD) in Department of Expenditure; Ministry of Finance has been created to encourage uniformity and harmonization in public procurement processes by setting guidelines, dissemination of best practices, providing guidance, oversight and capacity building and issuing of procurement manuals. However, Centralization of procurement or involvement in procurement processes is not the intended purpose of creation of PPD. 2. CENTRAL PUBLIC PROCUREMENT PORTAL Central Public Procurement Portal (CPPP) has been designed, developed and hosted by National Informatics Centre (NIC, Ministry of Electronics & Information Technology) in association with Dept. of Expenditure to ensure transparency in the public procurement process. The primary objective of the Central Public Procurement portal is to provide a single point access to the information on procurements made across various Ministries and the Departments. The CPPP has e-publishing and e-procurement modules. It is mandatory for all Ministries/ Departments of the Central Government, Central Public Sector Enterprises (CPSEs) and Autonomous and Statutory Bodies to publish on the CPPP all their tender enquiries and information about the resulting contracts. CPPP provides access to information such as documents relating to pre-qualification, Bidders’ enlistment, Bidding documents; details of bidders, their pre-qualification, enlistment, exclusions/ debarments; decisions taken regarding prequalification and selection of successful bid. GFR 2017 (Rule 160) makes it mandatory for Ministries/ Departments to receive all bids through e-procurement portals in respect of all procurements. Ministries/ Departments which do not have a large volume of procurement or carry out procurements required only for day-to-day running of offices and also have not initiated e-procurement through any other solution provided so far, may use e-procurement solution (CPPP) developed by NIC. Other Ministries/ Departments may either use eprocurement solution developed by NIC or engage any other service provider following due process. In the latter case, data on tenders are to be published on CPPP as well through webservice. 3. GOVERNMENT E-MARKET PLACE (GEM) To ensure better transparency and higher efficiency an online Government eMarketplace (GeM– an e-commerce marketplace) has been developed for common use goods and services. In GeM product or services are offered by a number of eligible sellers and all the eligible buyers can view/ compare all the product/ services and select the product/ services offered by any one of the sellers. In general, because online marketplaces aggregate product/ services from a wide array of providers, selection is usually wider, availability is higher, and prices are more competitive than in vendor-specific online retail stores. The procurement process on GeM is online and electronic - end to end from placement of supply order to payment to suppliers. The registration of suppliers on GeM is online and automatic based on ID authentication etc. The procuring authorities have to assess the reasonability of rates. Buyer’s transactions are processed by the GeM portal and then product/ services are delivered and fulfilled directly by the participating sellers. Tools of reverse bidding and e-auction are also available which can be utilized for the procurement of bulk quantities. More details are available in Rule 149, GFR, 2017. The Procurement of Goods and Services by Ministries or Departments are mandatory for Goods or Services available on GeM. Ministries/ Departments/PSUs are expected to make all their procurements through GeM platform in case of all the products and services available on GeM. 3. PUBLICATION OF ADVERTISEMENT OF TENDERS The requirement of compulsory advertisement in Newspapers as per GFR 2005 has been dispensed with vide Department of Expenditure OM No. F.1/8/2018-PPD dated 8.3.2018. Advertisement in case of tenders above certain threshold value should be given on Central Public Procurement Portal (CPPP), Government e-market place (GeM) portal as well as on the website of Ministries/Departments/Organizations if available. In view of this, tender advertisement should be published on GeM portal (if applicable), BSNL website, e-tendering portal and CPP portal. This is applicable to all procurements wherever open tender is resorted to as per procurement guidelines and delegation of financial powers. (BSNL Corporate office letter No. CA/MMT/3-1/2018 dated 17.7.2018) 5. VERIFICATION OF EXPERIENCE CERTIFICATES PRODUCED BY THE BIDDERS In some cases, it was noticed that fake certificates were produced along with the bids. In view of this, BSNL decided that 1. It shall be clearly stated in APO that the same is subject to verification of eligibility criteria documents submitted in the tender with originals. 2. The bidder is required to show the originals to the APO issuing authority or an officer/committee nominated by him for this purpose within the time prescribed time period. 3. In case the eligibility criteria document is issued by a BSNL unit, then the APO issuing authority shall verify the same from the concerned BSNL unit. 4. The PO will be placed on the vendor only on successful verification of documents and certificates. (BSNL Corporate office letter No. CA/MMT/10-9/2014/Pt. I dated 8.6.2018) 6. TENDER SYSTEMS IMPROVEMENT A. Based on a meeting with CVO, CMD –BSNL decided that 1. To enhance transparency in tender decisions, the tender accepting authority is required to pass detailed speaking orders before cancellation of tenders and promptly report each case of cancellation to the next higher authority. 2. Tender conditions in Works tenders must not vary across SSAs within a Circle and across Circles as far as possible. In case of any required deviation in tender conditions, prior approval from next higher authority must be mandatorily taken. (BSNL Corporate office letter No. CA/MMT/10-9/2014/Pt.1 dated 10.10.2018) B. Vigilance cell has issued the following instructions on 2.12.19 – CVC has observed that placement of work orders against contract agreements without any reference to contract agreements or item(s) rate is a serious lapse. In order to avoid such lapse in future, it is requested to strictly follow the following systematic improvement measures – (ii) Distinct schedule of items & rates should be appended with the tender and agreement to avoid any ambiguity in awarded work at the time of execution of the work. (iii) Period & value of the contract should clearly be mentioned in the contract agreement (iv) Contract agreement no./tender no. or item rates should clearly be mentioned in each and every work order issued to the contractor by work order issuing authority. (BSNL Corporate office letter No. CA/MMT/10-9/2014/Pt.1 dated 02.12.2019) C. BSNL CO has issued instructions that – In order to follow uniform practice in respect of issue related to alteration in performance security deposit after award of work it has been decided that “No work beyond the original contract/order value can be executed if there is no such provision in the tender about intention of the purchaser for increase in contract/order value. Therefore, vendor cannot be allowed to execute the work in excess, on its own. In case of orders for any additional quantities required to be issued as per tender provisions, additional orders can only be placed strictly after prior approval of the competent authority with appropriate security cover and practice of seeking covering approval may be dispensed with. Additional performance security deposit may be taken as a security cover against the approved additional work as per tender provision.” (BSNL Corporate office letter No. CA/MMT/10-9/2014/Pt.1 dated 11.12.2019) D. BSNL has modified the BSNL Procurement Manual vide F. No. C A/MMTl3-112019 Dated 2.10.2019 as following – With regard to various tender/APO/Pos it has been observed that some of the APOs had been issued with delivery period mentioned therein from the date of APO. Hereafter no APO shall be issued with delivery period mentioned therein from the date of APO; any deviation if required as an exception, shall be only with the approval of CMD. Further, in the APO it shall be explicitly mentioned that APO is only a letter of intent and is neither a contract nor the firm purchase order and to be converted in the firm purchase order only through separate purchase order. E. CVC advised BSNL to take systematic improvements with respect to type of tenders to be invited. Based on same, following guidelines were issued: Two bid system (2 packets - techno-commercial in 1st envelope and Price/ Financial bid in 2nd envelope) open tender methodology should be followed instead of limited tendering / empanelment methods to give fair opportunity to all and discover better competitive rates. In case, Limited Tendering / bids from empanelled vendors is found to be more suitable, considering the specialized nature of work, the number of vendors/ firms empanelled should not be less than three and inviting tenders from only 01/02 empanelled vendors will be seen as against the principles of public procurement. ( No : BSNLCO-MMT/I2(16)/1/2021MMT Dated 10th June 2022) Subject: Regarding acceptance of Corporate Guarantees in place of Bank Guarantee towards security deposit like EMD, Performance security & any Additional security. (F. No. BSNLCO-MMT/12/15/1/2021-MMT Dated 14.11.2022) Some vendors/bidders, especially PSUs/CPSEs, approach BSNL Units to allow submission of Corporate Guarantees in place of Bank Guarantee (BG) towards security deposit like EMD, Performance security & any Additional security. In this regard, this is to clarify that that Corporate Guarantee shall not be accepted against requirement of security deposits like EMD, Performance security or any other security Deposit in BSNL tenders. III. INDIAN CONTRACT ACT, 1872 1. Sec-1 Short Title 1. Applicable to whole of India. 2. Applicable from the first day of September, 1872. Sec-2 Interpretation-Clause Proposal When one person signifies to another his willingness to do something, with a view to obtain the assent of another person, he is said to make a proposal. Promise A proposal, when accepted, becomes a promise. Promisor The person making the proposal is called PROMISOR (Contractor). Promisee The person accepting the proposal is called PROMISEE (Deptt./BSNL). Consideration When, at the desire of Promisor, the Promisee has done something or promises to do something, such act of promise is called Consideration. Agreement Every promise or set of promises forming the consideration for each other is an AGREEMENT. Reciprocal Promises Promises which form the consideration for each other are called Reciprocal Promises. Contract An Agreement enforceable by Law is a CONTRACT. An agreement not enforceable by Law is said to be void. Communication, Acceptance and Revocation of Proposals 2. Sec-4 Communication When Complete The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. The Communication of an Acceptance is Complete:– The Communication of an acceptance is Complete:– as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor; – as against the acceptor, when it comes to the knowledge of the proposer. The Communication of a Revocation is Complete:– The communication of a revocation is complete – as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it; – as against the person to whom it is made, when it comes to his knowledge. 3. Sec-5 Revocation of Proposal and Acceptance A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards. 4. Sec- 8. Acceptance by performing conditions, or receiving consideration.— Performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal. 5. Sec-9 Promises, Express and Implied – If proposal or acceptance of promise is made in words, the promise said to be Express. If proposal or acceptance of promise is made otherwise than in words, the promise is said to be implied. Of Contracts, Voidable Contracts, and Void Agreements 6. Sec-10 – What agreements are contracts (Ingredients of Contract) All the agreements are contracts: If they are made by free consent Parties competent to contract(Sec-11) For a Lawful consideration. With Lawful object Lawful objects are not expressly declared to be void 7. Sec-11 Who are competent to contract Every person is competent to contract who is Major of sound mind(Sec-12) not disqualified from contracting by any law 8. Sec-13 “Consent” defined Two or more persons are said to consent when they agree upon the same thing in the same sense. 9. Sec-14 Free consent defined Free consent if No coercion(Sec-15) No undue influence(Sec-16) No Fraud(Sec-17) No misrepresentation of facts(Sec-18) No mistake (Sec-20, 21, &22) 10 Sec. 23. What considerations and objects are lawful, and what not.— The consideration or object of an agreement is lawful, unless— it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent ; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. Every agreement of which the object or consideration is unlawful is void. Sec-24 Agreement void, if consideration and objects are unlawful in part 11. Sec-25 Agreements without consideration, void An agreement without consideration is void, unless 12. It is expressed in writing and registered under the law and is made on account of natural love and affection between the parties standing in near relation to each other. It is a promise to compensate a person who has done something for the Promisor. If a person promise to pay a debt which is time barred by Limitation Law. Sec-29 Agreements Void for uncertainty Agreements, the meaning of which is not certain, or capable of being made certain, are void. Of the Performance of Contracts, Contracts Which Must Be Performed Performance of Reciprocal Promises 13. Sec-37. Obligation of parties of contracts The parties to a contract must perform their respective promises, unless such performance is dispensed with or excused under this Act or of any other Law. Promises bind the representatives of the promisor in case of death of such promisor before performance, unless a contrary intention appears from the contract. 14. 15. Sec-39. Effect of refusal of party to perform promise wholly When a party to a contract refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance. Sec-51 – Promisor not bound to perform, unless reciprocal promisee ready and willing to perform When a contract consists of reciprocal promises to be simultaneously performed, no Promisor need perform his promise unless the Promisee is ready and willing to perform his reciprocal promise. 16. Sec-52 – Order of performance of reciprocal promises Where the order in which reciprocal promises are to be performed is expressly fixed by the contract, they shall be performed in that order, and where the order is not expressly fixed by the contract, they shall be performed in that order which the nature of the transaction requires. 17. Sec-53 – Liability of party preventing event on which contract is to take effect When a contract contains reciprocal promises and one party to the contract prevents the other from performing his promise, the contract becomes voidable at the option of the party so prevented; and he is entitled to compensation from the other party for any loss which he may sustain in consequence of the non- performance of the contract. 18. Sec-54 – Effect of default as to that promise which should be first performed, in contract consisting of reciprocal promises When a contract consists of reciprocal promises, such that one of them cannot be performed, or that its performance cannot be claimed till the other has been performed, and the promisor of the promise last mentioned fails to perform it, such promisor cannot claim the performance of the reciprocal promise, and must make compensation to the other party to the contract for any loss which such other party may sustain by the non-performance of the contract. 19. Sec-55 Effect of failure to perform at fixed time, in contract in which time is essential When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified time and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the Promisee, if the intention of the parties was that time should be of the essence of the contract. Effect of such failure when time is not essential:-If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the Promisee is entitled to compensation from the Promisor for any loss occasioned to him by such failure. Effect of acceptance of performance at time other than that agreed upon:-If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the Promisee accepts performance of such promise at any time other than that agreed, the Promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance he gives notice to the Promisor of his intention to do so. Notice under section 55 before expiry of stipulated period is must before granting any provisional Extension of Time at the request of contractor. Even if contractor does not apply and Promisee intends to continue the contract, su-moto provisional extension of time with notice under section 55 should be given to the contractor. If contractor continues to work, receiving instructions & accepting measurement & bills, it is implied acceptance of contractor. 20. Sec-67 –Effect of neglect of promisee to afford promisor reasonable facilities for performance If any promisee neglects or refuses to afford the promisor reasonable facilities for the performance of his promise, the promisor is excused by such neglect or refusal as to any non-performance caused thereby. Of Certain Relations Resembling Those Created by Contract 21. Sec-70 –Obligation of person enjoying benefit of non-gratuitous act Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered. Of The Consequences of Breach of Contract 22. Sec-73 Compensation for loss or damage caused by breach of contract When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. Explanation.-In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused-by the non- performance of the contract must be taken into account. 23. Sec-74 Compensation for breach of contract where penalty stipulated for. 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, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for. 24. Sec-75 Party rightfully rescinding contract, entitled to compensation A person who rightfully rescinds a contract is entitled to compensation for any damage which he has sustained through the non-fulfillment of the contract. IV. THE ARBITRATION AND CONCILIATION ACT, 1996 1. SEC-1 SHORT TITLE, EXTENT AND COMMENCEMENT Arbitration has increasingly become a preferred option to settle commercial disputes globally for quick enforcement of contracts & settlement of monetary claims. Arbitration & Conciliation Act came into effect from 25.01.1996and was amended by Act 3 of 2016. The amended act deemed to have come into force from 23.10.15. It was further amended by Act 33 of 2019 with effect from 9th August 2019.The Key features of this amendment act are: (1) Establishment of an independent body called the Arbitration Council of India. (2) Appointment of arbitrators by arbitral institutions. (3) The time restriction for arbitral tribunals to make their award within a period of 12 months is removed for international commercial arbitrations. (4) The time limit to file written claim and the defense to the claim before an arbitral tribunal has been fixed as six months. 2. ARBITRATION “Arbitration” means any arbitration whether or not administered by permanent arbitral institution. 3. SEC-7 ARBITRATION AGREEMENT Means an agreement by the parties to submit to Arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship. An arbitration agreement must in writing. It may be in the form of an Arbitration Clause in the contract or in the form of separate agreement. 4. SEC- 8 POWER TO REFER PARTIES TO ARBITRATION WHERE THERE IS AN ARBITRATION AGREEMENT (i) A Judicial authority before which an action is brought where ArbitrationAgreement exist shall refer the parties to Arbitration. (ii) (Sub Section-3) If same issue under Sub Section-1 is pending before the judicial authority, an arbitration may be commenced or continued and Arbitration Award made. 5. COMPOSITION OF ARBITRAL TRIBUNAL (SEC-10TO 12) (i). A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. The parties are free to determine the number of arbitrators, provided that such number shall not be an even number. They can agree for a sole arbitrator. (ii) The parties are free to agree on a procedure for appointing the arbitrator or arbitrators. In absence of any agreement otherwise, in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. As per Sec-11, an arbitrator should be appointed within thirty days from the date of receipt of request from the other party or otherwise the appointment shall be made, upon request of a party, by the Supreme/High Court or any person or institution designated by such Court. Any arbitrator so appointed is required to disclose in writing,in the form specified in the Sixth Schedule, any circumstances— (a) Any grounds as stated in the Fifth Schedule either direct or indirect, of any past or present relationship of any kind with any of the parties or in relation to the subject-matter in disputewhich is likely to give rise to doubts as to his independence or impartiality; and also (b) which are likely to affect his ability to devote sufficient time to the arbitration and complete entire arbitration within a period of twelve months. Conduct of Arbitral Proceeding Sec-18 – Equal Treatment of Parties The parties shall be treated with equality and each party shall be given a full opportunity to present his case. Sec-19 Determination of Rules of Procedure The arbitral tribunal shall not be bound by the Code of Civil Procedure or the Indian Evidence Act. Parties are free to agree on the procedure to be followed by the Arbitrator in conducting proceedings. Failing any agreement, Arbitrator may conduct the proceedings in the manner it considers appropriate and shall have the power to determine the admissibility, relevance, materiality and weight of any evidence. Sec-20- Place of Hearing (i) Parties are free to agree on the place of Arbitration. (ii) Failing any agreement, place of arbitration shall be determined by Arbitrator as appropriate considering the circumstances of the case and convenience of the parties. Sec-23- Statement of claim and defense (i)Within the time period agrees or so determined by the Arbitrator, claimant shall submit statement of facts supporting his claim and relief sought and respondent shall submit his statement of defense. Parties may submit with their statement all documents they consider to be relevant. The respondent may also submit a counterclaim or plead a set-off, which shall be adjudicated upon by the arbitral tribunal, if such counterclaim or set-off falls within the scope of the arbitration agreement. (ii)Either party may amend or supplement his claim or defence during the course of proceedings, unless the tribunal considers it inappropriate to allow having regard to the delay in making it. (iii)The statement of claim and defence under this section shall be completed within a period of six months from the date the arbitrator or all the arbitrators received notice, in writing of their appointment. Sec-24 – Hearings and written proceedings (i) Unless agreed by the parties, Arbitrator shall decide whether to hold oral hearing or to decide on the basis of documents. (ii) Arbitral tribunal shall, as far as possible, hold oral hearings for the presentation of evidence or for oral argument on day-to-day basis, and not grant any adjournments unless sufficient cause is made out, and may impose costs including exemplary costs on the party seeking adjournment without any sufficient cause.] (iii) Parties shall be given sufficient advance notice of any hearing or inspection of records, goods or property. (iv)All statements, documents or applications made to Arbitrator by one party shall be communicated to other party. Any expert report or evidence on which Arbitrator may rely in making its decision shall be communicated to the parties. Sec-25 Default of a party (a) If without sufficient cause, claimant fails to communicate his statement of claim, Arbitrator shall Terminate the Proceedings. (b) If respondent fail to communicate his statement of defense, Arbitrator shall continue the proceedings without treating failure in itself as on admission of the allegation by the claimant and shall have the discretion to treat the right of the respondent to file such statement of defence as having been forfeited. (c) If a party fails to appear at an oral hearing or to produce documentary evidence, Arbitrator may continue the proceedings and make the arbitral award on the evidence before it. Section 29. Decision making by panel of arbitrators.— (i) Unless otherwise agreed by the parties, in arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made by a majority of all its members. If so authorised by the parties or all the members of the arbitral tribunal, questions of procedure may be decided by the presiding arbitrator. Section 29A Time limit for arbitral award.— (1)The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings. (2) If the award is made within a period of six months, the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree. (3) The parties may, by consent, extend this period specified in sub-section (1) for a further period not exceeding six months. (4) If the award is not made within the period specified in sub-section (1) or the extended period specified under sub-section (3), the mandate of the arbitrator(s) shall terminate unless the Court has, on application of any party, either prior to or after the expiry of the period so specified, extended the period on the basis of sufficient cause, on such terms and conditions as may be imposed by the Court. Till such application is pending, the mandate of the arbitrator shall continue. Such application filed to be disposed of by the Court within a period of sixty days from the date of service of notice on the opposite party (5) While extending the period, if the Court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, it may order reduction of fees of arbitrator(s) by not exceeding five per cent for each month of such delay and/or substitute any or all arbitrators. The arbitrator shall be given an opportunity of being heard before the fee is reduced. Court may also impose actual or exemplary costs upon any of the parties. (6) If one or all of the arbitrators are substituted, the arbitral proceedings shall continue from the stage already reached and on the basis of the evidence and material already on record, and the arbitrator(s) so appointed shall be deemed to have received the said evidence and material and the arbitral tribunal thus reconstituted shall be deemed to be in continuation of the previously appointed arbitral tribunal. Section 29B. Fast track procedure (1) The parties may, at any stage either before or at the time of appointment of the arbitral tribunal, agree in writing to have their dispute resolved by fast track procedure specified in sub-para (3). (2) The parties while agreeing for resolution of dispute by fast track procedure, may agree that the arbitral tribunal shall consist of a sole arbitrator who shall be chosen by the parties (3) The arbitral tribunal shall follow the following procedure while conducting arbitration proceedings under sub-section (1):— (a) The arbitral tribunal shall decide the dispute on the basis of written pleadings, documents and submissions filed by the parties without any oral hearing; (b) The arbitral tribunal shall have power to call for any further information or clarification from the parties in addition to the pleadings and documents filed by them; (c) An oral hearing may be held only, if, all the parties make a request or if the arbitral tribunal considers it necessary to have oral hearing for clarifying certain issues; (d) The arbitral tribunal may dispense with any technical formalities, if an oral hearing is held, and adopt such procedure as deemed appropriate for expeditious disposal of the case. (4) The award under this section shall be made within a period of six months from the date the arbitral tribunal enters upon the reference. If the award is not made within six monthsperiod, the provisions of section 29A shall apply with regard to extension of the period. (5) The fees payable to the arbitrator and the manner of payment of the fees shall be such as may be agreed between the arbitrator and the parties. Sec-30 Settlement (a) Arbitrator may use mediation or conciliation during arbitral proceedings to encourage settlement (b) If, during arbitral proceedings, the parties settled the dispute, the Arbitrator shall terminate the proceedings and, if requested by the parties, Arbitrator may record the settlement in the form of an Arbitral Award on agreed terms. (c) An Arbitration award on agreed terms shall have the same status and effect as any other arbitral award. Sec-31 Form and Contents of Arbitral Award (i) Arbitration award shall be in writing and shall be signed by Arbitrator/ Arbitrators. (ii) Arbitral award shall state the reasons upon which it is based unless it is on agreed terms or parties have agreed that no reasons are to be given. (iii) The Arbitral award shall state date and place of Arbitration and award deemed to have been made at that place. (iv) A signed copy shall be delivered to each party. (v) Arbitrator may make an interim arbitral award. (vi) (Sub-Sec-7a) Arbitrator may award Interest as deems reasonable on the whole or party of money, for whole or part of period between the date on which the cause of action arose and the date on which the award is made (Pre- reference Period + Pendent elite Interest) (vii) (Sub-Sec-7b) In Arbitration award, interest on the amount of award is to be paid as directed or otherwise Award shall carry interest at the rate of two per cent higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment. Explanation. —The expression “current rate of interest” shall have the same meaning as assigned to it under clause (b) of section 2 of the Interest Act, 1978 (14 of 1978). Section 31A. Regime for costs.— (1) In relation to any arbitration proceedings, the Court or arbitral tribunal shall have the discretion to determine— (a) whether costs are payable by one party to another; (b) the amount of such costs (c) when such costs are to be paid. “Costs” here means reasonable costs relating to— (i) the fees and expenses of the arbitrators, Courts and witnesses; (ii) legal fees and expenses; (iii) any administration fees of the institution supervising the arbitration; and (iv) any other expenses incurred in connection with the arbitral or Court proceedings and the arbitral award. (2) If the Court or arbitral tribunal decides to make an order as to payment of costs,— (a) the general rule is that the unsuccessful party shall be ordered to pay the costs of the successful party; or (b) the Court or arbitral tribunal may make a different order for reasons to be recorded in writing. (3) In determining the costs, the Court or arbitral tribunal shall have regard to all the circumstances, including— (a) the conduct of all the parties; (b) whether a party has succeeded partly in the case; (c) whether the party had made a frivolous counterclaim leading to delay in the disposal of the arbitral proceedings; and (d) whether any reasonable offer to settle the dispute is made by a party and refused by the other party. (4) The Court or arbitral tribunal may make any order under this section including the order that a party shall pay— (a) a proportion of another party’s costs; (b) a stated amount in respect of another party’s costs; (c) costs from or until a certain date only; (d) costs incurred before proceedings have begun; (e) costs relating to particular steps taken in the proceedings; (f ) costs relating only to a distinct part of the proceedings; and (g) interest on costs from or until a certain date. (5) An agreement which has the effect that a party is to pay the whole or part of the costs of the arbitration in any event shall be only valid if such agreement is made after the dispute in question has arisen. Sec-32 Termination Proceedings (i) The arbitral proceedings shall be terminated by the Final ArbitrationAward. (ii) Arbitrator shall issue an order for termination of Arbitral Proceedings where:(a) The claimant withdraws his claims. (b) Parties agree on the termination of proceedings (c) Arbitrator finds that the continuation of the proceedings for any reason becomes unnecessary or impossible. The mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings. Sec-33-Correction and interpretation of award, Additional Award (i) Within thirty days from the receipt of the arbitral award: (a) A party, with notice to the other party, may request the arbitral tribunal to correct any computational error, any clerical or typographical errors or any other errors of similar nature occurring in the award; (b) A party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award. If the arbitral tribunal considers such request to be justified, it shall make the correction or give the interpretation within thirty days from the receipt of the request and the interpretation shall from part of the arbitral award. (ii) The arbitral tribunal may correct any error of above type, on its own initiative, within thirty days from the date of the arbitral award. (iii) A party with notice to the other party may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award. If the arbitral tribunal considers such request to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request. (iv) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, give an interpretation or make an additional arbitral award under above sub-sections. Recourse against Arbitration Award Sec-34 Application for setting aside arbitral award (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award. (2) An arbitral award may be set aside by the Court only if— (a) The party making the application establishes on the basis of the record of the arbitral tribunal that— (i) A party was under some incapacity; or (ii) The arbitration agreement is not valid under the law (iii) The party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: or (v) The composition of the arbitral Tribunal or the arbitral procedure was not in accordance with the agreement of the parties. (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral Tribunal. If the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the period of three months it may entertain the application within a further period of thirty days, but not thereafter. Finality and Enforcement of Arbitral Awards Sec-35 Finality of arbitral awards Subject to this Part an arbitral award shall be final and binding on the parties. Sec-36 - Enforcement Where the time for making an application to set aside the arbitral award under section 34 has expired, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court. Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award on a separate application made for that purpose. Section No. 37 :- Appealable orders:- (1)An appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:— (a) refusing to refer the parties to arbitration under section 8; (b) granting or refusing to grant any measure under section 9; (c) setting aside or refusing to set aside an arbitral award under section 34. (2) Appeal shall also lie to a court from an order of the arbitral tribunal— (a) accepting the plea referred to in sub-section (2) or sub-section (3) of section 16 regarding arbitral tribunal exceeding its scope or jurisdiction; or (b) granting or refusing to grant an interim measure under section 17. (3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court. Sec-40-Arbitration agreement not to be discharged by death of party thereto An arbitration agreement shall not be discharged by the death of any party thereto either, but shall in such event be enforceable by or against the legal representative of the deceased.The mandate of an arbitrator shall not be terminated by the death of any party by whom he was appointed. Section No. 42A Confidentiality of information. - The arbitrator, the arbitral institution and the parties to the arbitration agreement shall maintain confidentiality of all arbitral proceedings except award where its disclosure is necessary for the purpose of implementation and enforcement of award. CONCILIATION Sec-62 Commencement of conciliation proceedings (i) The party initiating conciliation shall send to the other party a writteninvitation to conciliate. (ii) Conciliation proceedings shall commence when the other party accepts in writing the invitation to conciliate. If the other party rejects the invitation, there will be no conciliation proceedings. (iii) If the party initiating conciliation does not receive a reply within thirty days from the date on which he sends the invitation, he may elect to treat this as a rejection of the invitation to conciliate. Sec-66The conciliator is not bound by Code of Civil Procedure or the Indian Evidence Act. Sec-67 Role of conciliator (i) The conciliator shall assist the parties to reach an amicable settlement of their dispute. (ii) The conciliator may, at any stage of the conciliation proceedings, make proposals for a settlement of the dispute. Such proposals need not be in writing and need not be accompanied by a statement of the reasons thereof. Sec-73 - Settlement agreement (i). If the parties reach agreement on a settlement of the dispute, they may draw up and sign a written settlement agreement. The conciliator shall authenticate the settlement agreement and furnish a copy thereof to each of the parties. (ii). When the parties sign the settlement agreement, it shall be final and binding on the parties and persons claiming under them respectively. Sec-74 Status and effect of settlement agreement The settlement agreement shall have the same status and effect as if it is an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral Tribunal under section 30. 76. Termination of conciliation proceedings.— The conciliation proceedings shall be terminated— (a) by the signing of the settlement agreement by the parties on the date of agreement; or (b) by a written declaration of the conciliator, after consultation with the parties, to the effect that further efforts at conciliation are no longer justified, on the date of the declaration; or (c) by a written declaration of the parties addressed to the conciliator to the effect that the conciliation proceedings are terminated, on the date of the declaration; or (d) by a written declaration of a party to the other party and the conciliator, if appointed, to the effect that the conciliation proceedings are terminated, on the date of the declaration. Sec-77 - Resort to arbitral or judicial proceedings The parties shall not initiate, during the conciliation proceedings, any arbitral or judicial proceedings in respect of a dispute that is the subject-matter of the conciliation proceedings V. CONCLUSION A company communicates through its contracts. The most important and reassuring experience for the various stakeholders of an organization is when they ink new contracts. Yet, a simple misplaced comma can alter the contractual meaning of a complex business arrangement. Then, there are the various procedural and cumbersome practical aspects of managing a contractual relationship. A robust contract management system which includes contract strategizing, vetting, versioning, storage and effective retrieval system, aided by prompting tools that highlight critical dates and events go a long way in managing a contractual relationship. An important aspect of contract management is the categorization of contracts for effective internal and centralized control and every robust contract management system should address the key elements for central and decentralized controls for contract execution.