Delhi District Court
M/S Dscl Fengshun Wabag Consortium vs Gyan Chand Goel Proprietor Of M S Gyan ... on 11 September, 2025
IN THE COURT OF MS SAVITA RAO, DISTRICT JUDGE
COMMERCIAL COURT-01, SOUTH,
SAKET COURTS, DELHI
OMP (COMM) No. : 12/2023
DLST010019342023
In the matter of :-
M/s DSCL-FENGSHUN-WABAG Consortium
Through its Authorized Representative
Having its Office at :
E-9, 3rd Floor,
South Extension Part - II,
New Delhi - 110049
..............Petitioner
Vs.
Gyan Chand Goel (Proprietor of M/s Gyan Chand Goel)
Having its Office at :
172-A, DDA (LIG) Flats
Motia Khan, Rani Jhani Road,
New Delhi - 110055
..............Respondent
Date of institution of the petition : 25.02.2023
Date of final arguments : 11.03.2025, 04.06.2025,
03.07.2025, 19.07.2025,
29.07.2025, 22.08.2025 and
02.09.2025
Date of Order : 11.09.2025
ORDER
1. This order shall dispose off petition u/s 34 of Arbitration and Conciliation Act, filed by the petitioner seeking setting aside of impugned award dated 08.10.2022 passed by Ld. Arbitrator.
OMP (COMM) No. : 12/2023 1/732. Facts giving rise to present petition are that respondent's firm is registered Class-II Contractor with North Delhi Municipal Corporation which was registered as a Joint Venture in 2014 and specializes in building construction, road construction, bridge construction, installation of sewage treatment plants etc. Due to large scale pumping of untreated sewage water into the Yamuna River in Delhi and the deplorable water quality, Govt. of NCT of Delhi in 2006, launched a project to tap the drains carrying sewage from colonies not connected to the city sewers to the river. Under the said project, sewage interceptors were to be laid to protect the untreated water from being dumped into the Yamuna River. Govt. of NCT of Delhi had entrusted the execution of the above stated project to Delhi Jal Board (DJB), which in turn, had engaged the services of Engineer India Limited (EIL) for Project Management Consultancy Services (PMC).
3. Accordingly, DJB though EIL, invited tenders for " Laying of interceptor sewer along the three major dams (Najafgarh, Supplementary and Shahdara) for Package- 4", which work was awarded to petitioner herein. Execution of the said work was being monitored by National Green Tribunal which issued directions for fast tracking of the project and to ensure its timely completion. EIL proposed to engage the claimant/respondent as the sub-contractor for execution of the works envisaged in the principle contract between the petitioner and DJB. Petitioner also granted its approval for appointment of the claimant in its capacity as the sub-contractor for execution of the aforesaid work. Pursuant to such approval of petitioner, two work orders dated 28.10.2014 and 24.05.2015 were issued to the OMP (COMM) No. : 12/2023 2/73 respondent/claimant for execution of the works on the basis of the terms and conditions contained therein. However, claimant/respondent, as alleged, indulged in various breaches of the contract which position was continuously made known to it during various site meetings held at regular intervals. However, claimant/respondent in addition to committing other breaches under the contract, failed to complete the project in time and it was delayed beyond the timelines stipulated in the work orders in addition to being left incomplete. Quality control and quality assurances requirements of the contract were also compromised.
4. Respondent/claimant submitted bills to the petitioner for payment, however, payments were initially delayed and no payment was released to respondent/claimant against the last bills, for the work done despite various letters, emails etc. Hence, respondent was constrained to initiate arbitral proceedings. Claim/dispute was referred for arbitration, wherein impugned award dated 08.10.2022 was passed by Ld. Arbitrator, which is under challenge before this court.
5. Petitioner challenged the award and filed objections under secton 34 of Arbitration and Conciliation Act on the ground of limitation as well as on merits.
6. Ld. counsel for petitioner made following submissions on the point of limitation:
(a) The Claimant in its statement of claim (SOC) has referred to different dates as date of invocation of the arbitration.
The date of invocation of arbitration, as per the petitioner, was 28.06.2019. The petitioner in its Statement of Defence (SOD) mentioned the same. Apart from the Statement of Defence, OMP (COMM) No. : 12/2023 3/73 petitioner took a similar position in its application under section 16 of the Arbitration and Conciliation Act, 1996.
(b) The claimant has wrongly taken letters dated 26.4.2019 and 07.06.2019 as the invocation notices. Claimant vide its letters dated 26.4.2019 and 7.6.2019 was only seeking payments. Further, the claimant in its said letters had categorically mentioned that in case no payment is made, then it would have no option but to invoke arbitration.
(c) It was only vide letter dated 28.6.2019, that the claimant said that since no payment has been made, disputes have arisen between the parties and therefore it is issuing notice under clause 30 of the Contract, seeking appointment of Arbitrator. Further, the claimant also said that if no response was received by the claimant to the said letter dated 28.6.2019, it would file a petition under section 11 of the Act.
7. Reliance was placed upon Satender Kumar Vs. Municipal Corporation of Delhi & Anr. 2010 SCC Online Del 424, wherein it was observed that " The letters or reminders which simply either asked for payments or asked for finalization of the bills or at best informed the Respondent that if the respondent does not resolve the matter, then, the petitioner would go for arbitration"
are different from a specific notice invoking arbitration under the Act and the Contract.
8. Ld. counsel for respondent submitted that petitioner has wrongly claimed invocation of arbitration vide letter dated 28.06.2019. In fact, there is no specific and categorical proforma/format U/s 21 of Arbitration and Conciliation, 1996. Thus, letter dated 26.04.2019, 07.06.2019 and 28.06.2019 are to be reckoned with as invocation.
OMP (COMM) No. : 12/2023 4/739. According to petitioner, the date of invocation of arbitration was 28.6.2019, whereas last two bills i.e. RA Bill no. 5 for work order no.1 and RA bill no.2 for work order no.2 are dated 08.10.2015. Therefore, the invocation of arbitration as on 28.6.2019 was beyond the period of limitation of three years.
Ld. Counsel for petitioner further submitted that:
(a) As per the claimant, 5th RA Bill under Work Order No. 1 and 2nd RA Bill under Work Order No. 2 were final Bills which became due in October, 2015. However, the arbitration was invoked much after 3 years, i.e. on 28.06.2019.
(b) With regard to claim for Retention Money (Rs. 11,14,770.63/-), as per the Claimant, it completed the work & submitted the bills dated 08.10.2015, and Retention money was due & payable on 20.04.2016. As per the Work Order, the Retention money was to be released within 6 months of completion of work. However, the Arbitration was invoked after 3 years i.e. on 28.06.2019. All the said position on record was not considered by the Ld. Sole Arbitrator.
10. As per record, respondent/claimant had been repeatedly calling upon the petitioner to clear the payment of bills. Vide letter dated 26.4.2019, respondent issued notice for invocation of arbitration (misspelt as revocation of arbitration). Following was mentioned in the abovenoted letter dated 26.4.2019:
" In case of no payment within 30 days, from the date of issue of this letter, I have no other option, except to revoke arbitration clause no.30 of general conditions of work order. Non receipt of payment or non appointment of arbitrator wuithin 30 days, the action under section 11 of Arbitration and Conciliation Act shall be intiated with further litigation before the Hon'ble court for appointment of arbitrator".OMP (COMM) No. : 12/2023 5/73
11. Letter dated 26.4.2019 was followed by another letter dated 7.6.2019 wherein it was mentioned that claimant had already given the notice of invocation (misspelt as revocation) of arbitration and again called upon for release of payment. Again vide email communication dated 28.6.2019, claimant/respondent issued final notice for appointment of arbitrator wherein respondent reiterated that the amount of bills had not been cleared by the petitioner and sought processing and payment of the bills. It was further mentioned that:
" 5. Since I have not been paid for the dues stated above, hence dispute arose. It is, therefore, notice under clause 30 of the contract is again issued to appointment of the arbitrator to resolve the disputes within 10 days after the issue of this letter.
6. In case of no response I have no option except to approach the appropriate authorities under section 11 of the Indian Arbitration and Conciliation Act 1996 (Amended). The list of claims are enclosed herewith as Annexure-A. This may be treated final notice under clause 30 of the Contract."
12. Perusal of above noted specifically indicate towards intention of respondent seeking appointment of arbitrator if the payment was not cleared by the petitioner. Respondent had specifically and categorically worded his intentions in the letter dated 26.4.2019 for invocation of arbitration and sought appointment of arbitrator within 30 days if the payment was not cleared. In letter dated 7.6.2019, he reiterated with regard to invocation of arbitration referred in his previous letter, in case of non payment of dues by the petitioner. Having not received any response or payment or appointment of arbitrator, subsequent to issuance of letters dated 26.4.2019 and 07.06.2019, seemingly respondent was constrained to notify petitioner vide letter dated 28.6.2019, that in case of no response, he had no option except to approach the appropriate authority under section 11 of Arbitration and Conciliation Act. Contention of Ld. Counsel for OMP (COMM) No. : 12/2023 6/73 petitioner, therefore, is not sustainable that vide letters dated 24.4.2019 and 7.6.2019, respondent was only seeking payments and had not invoked the arbitration .
13. Ld. Counsel for petitioner sought to draw much of the benefit from the statement of CW1 whereby he had conceeded that the claimant invoked the arbitration clause vide letter dated 28.6.2019 and not any date prior to the same and also from the observation of Ld. Arbitrator whereby the interest was awarded under claim no.1 & 2 w.e.f. 28.6.2019.
14. Ld. counsel for petitioner further made following submissions:
(a) The sole Arbitrator returned no finding on the aspect of the date of invocation. Ld. Sole Arbitrator merely observed to believe the submission of the Claimant and failed to pass any reasoning, much less a finding and further made following submissions:
(b) It is settled position of law that expression of mere agreement by an Arbitral Tribunal with the submission of a party, without having to state its own reasons for finding favour in the said submissions and passing an award thereupon, vitiates such an award. An Arbitral Tribunal is obliged to give reasons upon which its award is based. Mere recital of and reference to the pleadings, evidence and arguments do not constitute reasons. In the absence of the Arbitral Tribunal passing its own reasons, its award would be legally flawed and contrary to section 31 (3) of the Act, and therefore, liable to be set aside.
Reliance was placed upon NTPC Vidyut Vyapar Nigam Ltd. Vs. Oswal Woolen Mills Ltd. 2018 SCC Online Del 11558, wherein it was observed that :
OMP (COMM) No. : 12/2023 7/73" 44. I have considered the submissions made by the parties. A reading of the above findings of the Majority Arbitral Tribunal would show that the Arbitral Tribunal has expressed its agreement with the submissions made by the counsel for the respondent and has stated that no useful purpose would be served merely by repeating the said submissions, however, a reading of the submissions of the respondent as recorded by the Arbitral Tribunal would show that there were various submissions made in alternative to each other and, therefore, it cannot be deciphered which of these alternative submissions have been accepted by the Arbitral Tribunal for passing of the Impugned Award or are all accepted.
45. Section 31(3) of the Act reads as follows:
"31. Form and contents of arbitral award.
(1) xxxxxxx (2) xxxxxxx (3) The arbitral award shall state the reasons upon which it is based, unless--
(a) the parties have agreed that no reasons are to be given, or
(b) the award is an arbitral award on agreed terms under section 30."
46. In Som Datt Builders Ltd. vs. State of Kerala, (2009) 10 SCC 259, the Supreme Court has held as under:-"25. The requirement of reasons in support of the award under Section 31(3) is not an empty formality. It guarantees fair and legitimate consideration of the controversy by the Arbitral Tribunal. It is true that the Arbitral Tribunal is not expected to write a judgment like a court nor is it expected to give elaborate and detailed reasons in support of its finding(s) but mere noticing the submissions of the parties or reference to documents is no OMP (Comm.) No.495/2016 Page 20 substitute for reasons which the Arbitral Tribunal is obliged to give. Howsoever brief these may be, reasons must be indicated in the award as that would reflect the thought process leading to a particular conclusion. To satisfy the requirement of Section 31(3), the reasons must be stated by the Arbitral Tribunal upon which the award is based; want of reasons would make such award legally flawed."
47. In MKU Ltd. vs. Union of India MANU/DE/2510/2017, this Court, after considering various judgments of the Supreme Court on this issue, has held that a mere recital of the pleadings, evidence or arguments do not constitute reasons and in the absence of the same, the Award, being contrary to Section 31(3) of the Act, shall stand vitiated".
(c) While deciding the " Claim of Interest" i.e. Claim nos. 3 & 4, the Ld. Sole Arbitrator awarded interest from 28.6.2019, OMP (COMM) No. : 12/2023 8/73 by having to state the said date as being " Date of Invocation of Arbitration".
15. Although Ld. Arbitrator did mention that he did not find any reason to disbelieve the contention of the respondent, however, Ld Arbitrator also referred to the letter dated 26.4.2019 whereby respondent had requested the petitioner for appointment of arbitrator in case of non payment. Subsequent to the issuance of formal notice dated 28.6.2019, respondent appointed the arbitrator. While accepting the contention of respondent with regard to first date for invocation of arbitration as 26.4.2019, the award of interest w.e.f. 28.6.2019, terming the same as date of invocation of arbitration by Ld. Arbitrator, cannot have the effect of nullifying the earlier observations and the conclusion with regard to first date of invocation of arbitration as 26.4.2019. Similarly, oral testimony of CW1 whereby he conceeded with regard to date of invocation of arbitration as 28.6.2019, ought not be read contrary to the contents of the documents which unerringly point out towards the invocation of arbitration at the first instance in case of non payment by the petitioner vide letter dated 26.4.2019.
16. Ld. Counsel for petitioner referred to letters dated 18.08.2015 & 04.01.2016 which had been filed by the respondent/ Claimant along with Reply to the Petitioner's Application under Section 16 of the Act and further submitted that:
(a) the Claimant relied upon the said letters to allegedly show that by virtue of alleged admission in these letters, the period of limitation stood extended. Said Documents were filed OMP (COMM) No. : 12/2023 9/73 along with Reply to Application under Section 16 of the Act and thus could not be read. Said Documents were an afterthought, forged & fabricated. Petitioner objected to the said documents being tendered in CW-1's evidence. Claimant also filed an Application dated 07.10.2020 to summon Sh. Shishupal Singh and S h . Harvinder Singh to prove the said two documents.
After hearing the arguments on the said Application dated 07.10.2020, the Ld. Arbitrator vide Order dated 25.02.2021 directed the Claimant to produce Sh. Shishupal Singh and Sh. Harvinder Singh. Pursuant to Order dated 25.02.2021, claimant filed another Application dated 17.03.2021 seeking permission for recording the statement of Witness namely Sh. Shishupal through Video Conferencing. Ld. Arbitrator heard arguments by both the Parties on the said Application, on 18.03.2021, and directed the Claimant to file the Affidavit of Sh. Shishupal by 28.03.2021. Claimant, however, failed to file the said Affidavit and the opportunity to produce Sh. Shishupal as a witness was closed vide Order dated 26.04.2021 Therefore, the Claimant failed to prove these documents being letters dated 18.08.2015 & 04.01.2016. Further, these documents were not mentioned in any alleged correspondence filed by the Claimant.
(b) Ld. Sole Arbitrator in the Arbitral Award said that the Petitioner herein (Respondent in the Arbitral proceeding) did not produce the aforementioned witnesses, Sh. Shishupal Singh and Sh. Harvinder Singh. It may be mentioned that claimant had filed & relied upon the said documents, therefore, the onus was on the Claimant to prove the said documents. In fact, as brought out above, the said persons were sought to be adduced by the Claimant itself, for which it was also afforded an opportunity by OMP (COMM) No. : 12/2023 10/73 the Ld. Sole Arbitrator. Petitioner on the other hand had expressly stated that the said two persons were not the employees of the Petitioner. Therefore, adverse inference was to be drawn against the Claimant.
(c) Alleged Letters dated 18.08.2015 and 04.01.2016 do not constitute acknowledgment of liability . These two letters are of the Claimant and not the Petitioner herein. No fresh period of limitation begins simply because letters & reminders are issued. Reliance was placed upon Satender Kumar v. Municipal Corporation of Delhi & Anr., 2010 SCC OnLine Del 424, wherein it was oberved that :
"18. A summary of the conclusions on reading of the aforesaid relevant clauses of the contract in question and the judgments as dealt with above, bring out the following salient points:
(v) No fresh period of limitation can arise simply because letters and reminders are written time and again, attempting to keep the claim alive, although the claim by virtue of Article 18 of the Limitation Act, has become clearly time-barred."
(d) Alleged Letter dated 04.01.2016 carries an alleged endorsement which has been denied by the Petitioner herein. Further, as aforementioned, the Claimant has also failed to prove the said alleged document. Sh. Shishupal was not even authorized to make the said alleged endorsement.
(e) That, Letter dated 04.01.2016 says:
"Put up for consideration and processing"
and "...subject to NOC from the concerned department and officers and adjustments if any as per contract"
Claimant itself averred that its alleged bills were being verified by the officials of the Petitioner, therefore, there was no OMP (COMM) No. : 12/2023 11/73 acknowledgement, which has to be unqualified and statements made to attempt to resolve the controversy and/ or examine claims or accounts, do not constitute acknowledgment of liability.
(f) Reliance was placed upon following:
Micrographics India v. Government of NCT of Delhi & Anr., 2018 SCC OnLine Del 8448 :
"7.9. As per Section 18 ·of Limitation Act, If before expiration of the prescribed period or limitation, any acknowledgement or liability In respect of the right/property Is made In writing, signed by the party against whom such right/property Is claimed, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed.
However, such a writing has to be unqualified, as it creates a fresh cause of action to the plaintiff to base his claim upon. Mere statement expressing jural relationship between parties does not constitute acknowledgement. The defendant department by letter dated 22.01.1999 Ex PW1/77 has not acknowledged that it was liable to pay the amount as per the invoices dated 22.09.1995, 08.09.1995, 03.01.1997, rather in the said letter the department has stated that the plaintiff is not entitled to payment @ Rs. 3.50 per card, as the plaintiff has micro-filmed four cards in one exposure. There is absolutely ·no admission in the said letters that the defendant department was liable to pay for microfilming of 368222 cards @ Rs. 3.50 per card."
Rajiv Khanna v. M/s Sunrise Freight Forwarders Pvt. Ltd. & Anr., 2016 SCC OnLine Del 3359:
"20. I am otherwise also of the opinion that the communication dated 28th May, 2009, even if were to be considered, does not contain an acknowledgement of liability of any right claimed by the appellant/plaintiff. I have in Deepak Mehta v. Yashi Multimedia Pvt. Ltd. (RFA(OS) No. 123/2014 preferred where against was dismissed on 7th July, 2015) relying upon S.F. Mazda v. Durga Prasad AIR 1961 SC 1236 held that the words used in the acknowledgement must indicate the existence of jural relationship between the parties such as that of debtor and creditor and it must appear that the statement is made with the intention to admit such jural relationship. It was further held that the acknowledgement of liability within the meaning of Section 18 of Limitation Act has to be clear, unambiguous, unequivocal and unconditional. It was yet yet further held that willingness to adjust the advance received in subsequent transactions on certain terms cannot be said to be an acknowledgement of liability within the meaning of Section 18 of the Act and that statements made for an attempt to resolve the OMP (COMM) No. : 12/2023 12/73 controversy and rather placing the blame on the other party cannot be construed as an acknowledgement."
(g) Acknowledgement of liability has to be specifically pleaded, whereas there was no such pleading in Statement of Claim. Reliance was again placed upon Rajiv Khanna v. M/s Sunrise Freight Forwarders Pvt. Ltd. & Anr., 2016 SCC OnLine Del 3359 (supra), wherein it was observed that :
"17. I may in this regard notice that Order 7 Rule 6 of the CPC requires the plaintiff, where the suit is instituted after the expiration of the period prescribed by law of limitation, to show the ground upon which exemption from such law is claimed. A perusal of the plaint shows the appellant/plaintiff to have utterly failed to do so. The argument now raised, of acknowledgement of liability contained in communication dated 28th May, 2009 does not find any mention in the plaint. A mere reference in the plaint of the communication dated 28th May, 2009 without pleading the same to be an acknowledgement of liability, does not amount to a pleading within the meaning of Order 7 Rule 6 of the CPC. Rather, the appellant/plaintiff, in the plaint, has pleaded the said communication as 'not denying the non-payment of dues of the plaintiff' and as 'making counter allegation (against the plaintiff and trying to scuttle the real Issue'. The counsel for the respondents/ defendants is correct in his contention that the appellant/plaintiff at the time of institution of the suit was perhaps oblivious of the law of limitation and for this reason only no computation in that regard was made and the argument of acknowledgment of liability is being taken only after realising that the suit filed was beyond time.
19. Supreme Court, as far back as in Sant Lal Mahton v . Kamala Prasad 1951 5CC 1008 : AIR 1951 SC 477 held that if the plaintiff's right of action is apparently barred under the statute of limitation, Order VII Rule 6 of CPC makes it his duty to state specifically In the plaint the grounds of exemption allowed by the Limitation Act upon which he relies to exclude. its operation and that to claim exemption the plaintiff must have alleged and proved such ground of limitation. This Court also in Ms. Susanne Lenatz v. C.J. International Hotels Ltd. (2005) 125 DLT 498 (FAO(OS) No. 373/2007 where against was dismissed by the Division Bench on 21 st September, 2007) held that though a suit may be instituted after the expiration of the period prescribed by the law of limitation but the plaintiff is required to show in the plaint itself the grounds upon which exemption from such law Is sought and that if no such ground is indicated or no such exemption is OMP (COMM) No. : 12/2023 13/73 claimed, then the plaint, if it is beyond the period prescribed by the law of limitation, would be liable for rejection straightway under Order VII Rule 11(d) CPC. Again, in Alliance Paints and Varnish Works Pvt. Ltd. v. Hari Kishan Gupta (2010) 168 DLT 59 1, relying on the judgments of the High Courts of Madras and Himachal Pradesh, it was held that where the plaintiff in the plaint has not pleaded an exemption from the Limitation Act, it would not be open to the plaintiff to rely on an exemption not specifically pleaded in the plaint. (I must however notice that Single Judges of the Madras High Court in Indo International Ltd. v. Continental Carriers Private Ltd. and in Swarna Paper Cutting Works v. Indian Express (Madurai) Pvt. Ltd., Madras have taken a different view on the basis of the Proviso to Order VII Rule 6 of CPC)."
17. Ld. Counsel for respondent submitted that judgments of the cases Micrographics India v. Government of NCT of Delhi & Anr. And Rajiv Khanna v. M/s Sunrise Freight Forwarders Pvt. Ltd. & Anr. (supra) are not applicable in the facts and circumstances of the instant case. Firstly, because CPC and strict rules of evidence are not applicable on arbitration proceedings in view of Section 18 and 19 of Arbitration Act. Secondly, the respondent has clearly pleaded and clarified the issue of limitation in its pleadings as well as evidence. Moreover, the Arbitrator has to apply its mind on the material on record as per Section18 and 19 of Arbitration Act who has returned detailed findings thereof.
18. Ld. Counsel for petitioner submitted that:
(a) The Ld. Sole Arbitrator gave no findings at all on the above-mentioned aspect, and merely recorded the submissions of the Claimant & proceeded on the same. Merely recording the pleadings & submissions of a party and saying "I agree with the said Party", without giving any reasoning of its own, vitiates the Arbitral Award. The said position of law was well established by OMP (COMM) No. : 12/2023 14/73 the Hon'ble High Court of Delhi in NTPC Vidyut Vyapar Nigam Ltd. v. Oswal Woolen Mills Ltd. (Supra).
(b) Without prejudice, assuming if the alleged letters dated 18.08.2015 & 04.01.2016 constitute an acknowledgment of liability, even then the claims are barred by limitation. The alleged Endorsement date on the alleged letter is 04.01.2016.
However, the Arbitration invoked was on 28.06.2019, which is much beyond 3 years.
19. Ld. counsel for respondent submitted that the judgments relied upon by petitioner are not applicable in the present facts and circumstances. It was submitted that the limitation is mixed question of facts and law and findings thereof, have been dealt with by Ld. Arbitrator in detail, which are not open to intereference under section 34 of Arbitration and Conciliation Act. Ld. counsel for respondent submitted that " rather the judgments cited i.e Uttarakhand Purv Sainik Kalyan Nigam Ltd. V/s Northern Coalfield Limited and Kalpana Trading V/s Executive Officer (Madras High Court), (supra) support the case of the respondent as there was express, categorical and specific admission on the part of petitioner qua the dues, claims and demands of the respondent in the letter dated 10.07.2019 sent by the petitioner. Moreover, the respondent has specifically raised the plea of fraud in its pleadings in SOC as well as subsequent affidavit by way of evidence. The same remained unrebutted. Nothing contrary was filed by the petitioner to the same before the Ld. Arbitrator".
20. Ld. counsel for respondent further stated that the issue pertaining to last payment of Rs. 5 lacs on 9.2.2016 has also been OMP (COMM) No. : 12/2023 15/73 dealt with by Ld. Arbitrator in detail. The said admitted part payment of Rs.5,00,000/- on 09.02.2016 by the petitioner to the respondent duly extended the limitation as per applicable provisions of Limitation Act, 1963 read with Section 25 of the Contract Act.
21. Claimant/respondent had contended with regard to part payment of Rs. 5 lacs "on account" by petitioner on 09.02.2016. Ld. Arbitrator noted the submission of the claimant that the starting point of the limitation in the matter will also be after the completion of the defect liability period and in view of the part payment of Rs. 5 lacs, which was 'on account' basis, did not show to be payment towards any specific bill. Ld. Arbitrator thereby did not find any reason to disbelieve the contention of claimant/respondent herein.
22. Ld. Counsel for petitioner submitted that the said payment has been reflected and accounted by the Claimant itself against RA Bill No. 1 under Work Order No. 2 (dated 28.05.2015) .The Claimant has raised no claim for RA Bill No. 1, and only raised an alleged claim for RA Bill No. 2 (Re' Work Order dated 28.05.2015). Therefore, as per the Claimant itself, the payment of Rs. 5,00,000/- has nothing to do with RA Bill No. 2. In light of the same, the observation of the Ld. Arbitrator is perverse.
23. Ld. Counsel for petitioner further submitted that :
(a) without prejudice to the above, the Claims of the Claimant would still be time barred. Even if 09.02.2016 was taken as starting point of limitation, 3 years would expire on 08.02.2019. The arbitration was invoked only on 28.06.2019, making the claims barred by limitation.OMP (COMM) No. : 12/2023 16/73
(b) regarding Claimant's reliance upon Article 1 of the Limitation Act, 1963, Ld. Arbitrator recorded that "further cause of action/limitation starts running from the date of the said payment made on 09.02.2016 and subsequently also from 31.12.2016 by virtue of Item 1 of Schedule of Limitation Act, 1963 i.e. the end of that year". Whereas, no pleading to this effect was taken by the Claimant in its Statement of Claim and therefore, the Claimant could not have, later on, during the course of arguments reliy upon the said Article of the Limitation Act. Reliance was again placed upon Rajiv Khanna v. M/s Sunrise Freight Forwarders Pvt. Ltd. & Anr. (Supra) . Article 1 of the Limitation Act concerns mutual, open & current account, which is not applicable in the present case.
(c) Petitioner's letter dated 10.07.2019 is not an acknowledgment. The Claimant's submission (which has been merely agreed by the Ld. Arbitrator without having to pass its own reasoning), that in letter dated 10.07.2019, whereby the Petitioner appointed an Arbitrator, the Petitioner never disputed the Claimant's Claim and that in the said letter, the Petitioner categorically & clearly admitted all the correspondences/ claims/ bills of the Claimant, including its alleged liability to pay retention money to claimant, is wholly erroneous & misconceived.
(d) Perusal of the said letter, which was filed by the Claimant along with its SOC would show that the Petitioner had come to categorically deny the Claimant's claims. Reference in this regard is cited to the following opening para of letter dated 10.07.2019:
OMP (COMM) No. : 12/2023 17/73"This is in reply to your Notice dated 28.06.2012 Ref No. GCG / DFW/ DSC/05-12/2019/DIR(P) and all the previous notices, whereby you are referring Proceedings to Arbitration. I would like to tell you that as per our records and information, there are no dues pending towards you by our clients. And as far as alleged liability towards unpaid Bills nothing is payable by us and allegations you are putting are denied and unacceptable specifically, it is only the way to raise illegal demand and put vague allegations upon us which is unethical on your part. The contents of your present demand notice are all denied vehemently unless specifically admitted."
(e) Further, in para 2 of the said letter dated 10.07.2019, the Petitioner, apart from quoting clauses of the contract, had stated as under:
"It was made clear that the you are supposed to have completion certificate from the Engineering and same was to be submitted to the Employer, which you have failed to provide to the Employer, therefore the undersigned is liable to pay the said retention money as allegedly demanded by you in the aforesaid notice. Therefore there is a dispute now."
"It was made clear that the you are supposed to have completion certificate from the Engineering and same was to be submitted to the Employer, which you have failed to provide to the Employer, therefore you are liable to pay damages to the Employer for breach of said clause. Therefore there is a dispute."
"On repeated persuasion, requests and reminders the abovesaid disputes or other disputes have not been resolved between the parties. This has given rise to claims and disputes in connection with the Terms and Conditions of the Said Contract/Work Order."
(f) Wholesome reading of the aforesaid contents of letter dated 10.07.2019 would show that the Petitioner had clearly & categorically stated of "there being no dues pending, and further of the Claimant, having committed breach of the contract and being liable to pay damages to the Petitioner. The said letter of the Petitioner nowhere admitted to any liability on its part towards the alleged claims of the Claimant and in fact categorically stated of "there being a dispute between the parties". For the aforesaid reasons, petitioner's letter dated 10.07.2019 cannot be treated as an acknowledgement of liability.
OMP (COMM) No. : 12/2023 18/73(g) It is settled position of law that the words used in the acknowledgment must indicate the existence of jural relationship between the parties such as that of debtor and creditor and it must appear that the statement is made with the intention to admit such jural relationship. The acknowledgment of liability within the meaning of Section 18 of the Limitation Act has to be clear, unambiguous, unequivocal and unconditional. The Petitioner's letter dated 10.07.2019, however, does not fall within the contours of being an acknowledgment of liability. Reliance was again placed upon Rajiv Khanna v. M/s Sunrise Freight Forwarders Pvt. Ltd. & Anr. (Supra).
(h) The Claimant has not pleaded the said letter to be an acknowledgment of liability in the Statement of Claim. As per the law laid down by the Hon'ble High Court of Delhi in Rajiv Khanna v. M/s Sunrise Freight Forwarders Pvt. Ltd. & Anr. (Supra), the Claimant has to specifically plead the said letter dated 10.07.2019 to be an acknowledgment of liability in its pleading. In absence of the said pleading, the Claimant cannot orally plead the said letter to be an acknowledgment of liability by the Petitioner.
(i) The said letter is otherwise also not relevant for the purpose of limitation. As per Claimant, the RA Bills of the Claimant became due in October, 2015 and the Retention Money became due in April, 2016. Therefore, the period of limitation of 3 years, in case of RA Bills (which as per the Claimant, became due in October, 2015), was October, 2018 and in case of Retention Money (which as per the Claimant, became due in OMP (COMM) No. : 12/2023 19/73 April, 2016) was April, 2019. However, the Petitioner's letter dated 10.07.2019 was much after the expiry of 3-year period.
(j) Ld. Arbitrator gave no finding on the above-mentioned aspect, and merely recorded the submissions of the Claimant & proceeded on the same. As aforementioned, merely recording the pleadings & submissions of a party and saying I agree with the said Party, without giving any reasoning of its own, vitiates the Arbitral Award.
(k) With regard to the Claimant's plea that the Petitioner never raised objection of limitation, it may be mentioned that limitation is a jurisdictional issue. Hon'ble Supreme Court of India in Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coalfield Limited, held that:
"7.13. In view of the provisions of Section 16, and the legislative policy to restrict judicial intervention at the pre-reference stage, the issue of limitation would require to be decided by the arbitrator. Sub-section (1) of Section 16 provides that the Arbitral Tribunal may rule on its own jurisdiction, 'including any objections' with respect to the existence or validity of the arbitration agreement. Section 16 is as inclusive provision, which would comprehend all preliminary issues touching upon the jurisdiction of the Arbitral Tribunal. The issue of limitation is a jurisdictional issue, which would be required to be decided by the arbitrator under Section 16, and not the High Court at the pre-reference stage under Section 11 of the Act. Once the existence of the arbitration agreement is not disputed, all issues, including Jurisdictional objections are to be decided by the arbitrator."
Therefore, the Principle of waiver/ acquiescence and/ or estoppel would not apply to issue of limitation. Further, law of limitation bars the remedy. Therefore, objection regarding limitation can be taken when such remedy is sought to be availed.
24. Claimant/respondent herein had stated about its submissions/requests/letters demanding payments which had OMP (COMM) No. : 12/2023 20/73 remained pending before petitioner herein and DJB for consideration . Ld. Arbitrator noted that this contention was also not seriously disputed by way of any contrary material by the petitiner herein which led to extension and continuation of limitation during this period.
25. Ld. Counsel for petitioner submitted that :
(a) Ld. Arbitrator committed a grave perversity and patent illegality in having to refer & rely upon the Claimant's alleged correspondences, more so, for the purposes of limitation. The Ld. Arbitrator took note of the Claimant's reference of its own alleged correspondences basis which the Claimant sought to submit that by virtue of the said correspondences, the limitation period kept on extending in favour of the Claimant, in view of Section 17 and 18 of the Limitation Act, 1963.
(b) The aforesaid reference & reliance upon the Claimant's own correspondences for purpose of extending the period of limitation, that too under Section 17 and 18 of the Limitation Act, 1963, is grossly perverse and patently illegal. It is settled position of law that no fresh period of limitation can arise simply because letters and reminders are written time and again, attempting to keep the claim alive, although the claim by virtue of Article 18 of the Limitation Act, has become clearly time barred. Reliance was placed upon Satender Kumar v. Municipal Corporation of Delhi & Anr. (Supra).
(c) Section 17 of the Limitation Act deals with the aspect when a suit is based upon the fraud of the Defendant or relief from the consequences of a mistake. The said provision, is wholly inapplicable in the present case, in as much as, inter-alia, OMP (COMM) No. : 12/2023 21/73 the claim of the Claimant is not premised on any such fraud or mistake as contemplated under Section 17 of the Limitation Act.
In fact, the Claimant has not pleaded any such exemption under Section 17 of the Limitation Act in its SOC, so as to assert that its claims are within the period of limitation.
(d) Section 18 of the Limitation Act which has been relied upon by the Claimant, and merely agreed to by the Ld. Arbitrator without assigning any reason of its own, deals with an acknowledgement of liability in writing by a party against whom a claim is made. The said provision does not cover communications of the Claimant raising claims. The said position of law is clear from the above-referred judgment of the Hon'ble High Court of Delhi.
(e) As per Section 31(3) of the Act, "the arbitral award shall state the reasons upon which it is based, unless - (a) the parties have agreed that no reasons are to be given, or (b) the award is an arbitral award on agreed terms under section 30."
(f) Without prejudice to the above, it is submitted that the Ld. Arbitrator has merely referred to the submission of the Claimant on the aforementioned aspect concerning the Claimant's reliance upon its own alleged correspondences, without furnishing any of its own reasons. It is a settled position of law that expression of mere agreement by an Arbitral Tribunal with the submission of a party, without having to state its own reasons for finding favour in the said submissions and passing an award thereupon vitiates such an award. An Arbitral Tribunal is obliged to give reasons upon which its award is based. Mere recital of & reference to the pleadings, evidence and arguments OMP (COMM) No. : 12/2023 22/73 do not constitute reasons. In the absence of the Arbitral Tribunal passing its own reasons, its award would be legally flawed & contrary to Section 31(3) of the Act, and therefore, liable to be set aside.
(g) It was incumbent upon the Ld. Arbitrator to have passed a finding and to have come to a conclusion on the aforementioned factual and legal aspects concerning the Claimant's reliance upon its own alleged correspondences, more so, while adjudicating and deciding upon the issue of limitation. Having not so done, the award passed by the Ld. Arbitrator is grossly perverse & patently illegal, and which merits being set aside.
26. Ld. counsel for respondent submitted that the correspondence of the respondent to the petitioner and other concerned authorities have been duly admitted by it throughout. Those communications were further admitted by the Respondent vide its letter dated 10.07.2019. This issue has been dealt with and considered by the Ld. Arbitrator. The admitted meetings were in continuation of the representations/communication of the respondent to the petitioner. The same is also by way of admission on the part of the petitioner.
27. Ld. counsel for respondent Relied upon OPG Power Generation V/s Enexio Power Cooling - Supreme Court- MANU /SC/1040/2024, wherein it was observed that:
" Section 18 of the 1963 Act deals with the effect of acknowledgement in writing. Sub-section (1) thereof provides that where, before the expiration of the prescribed period for a suit or application in respect of any right, an acknowledgement of liability in respect of such right has been made in writing signed by the party against whom such right is OMP (COMM) No. : 12/2023 23/73 claimed, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.
The Explanation to this Section provides that an acknowledgment may be sufficient though it omits to specify the exact nature of the right or avers that the time for payment has not yet come or is accompanied by a refusal to pay, or is coupled with a claim to set off, or is addressed to a person other than a person entitled to the right".
28. Ld. counsel for petitioner sought to distinguish the said judgment from the facts of the instant case, submitting that:
(a) the claim in this case was not with respect to non-payment of any specific bill or invoice during execution of the contract. Rather, the claim was for outstanding principle amount due to the Claimant on discharge of his obligations under the Contract. The court further noted that it was not a case where any date, or period of credit, for payment of the balance amount was fixed. The court noted that the limitation for the claim would be governed by Article 55 of the Schedule of the Limitation Act,1963.
(b) The court found that the period of limitation in the said case started to run from 19.03.2016, being the deemed date by which the Claimant had fulfilled its liability under the contract relating to guaranteed performance of the Unit concerned. The court further noted of there being an acknowledgment of liability on 19.04.2018, which extended the period of limitation for a period of three years from the said date, as per Section 18 of the Limitation Act,1963. The court held that the invocation of arbitration was made on 02.05.2019, which was well within the said period of the limitation.
(c) In the present case, however, neither Article 55 of the Limitation Act, 1963 is applicable nor is there any acknowledgement of liability, on the part of the Petitioner, much less within three years of October, 2015 (being the start date for the Respondent's purported claim under the RA Bills) or within three years of April, 2016 (being OMP (COMM) No. : 12/2023 24/73 the start date for the Respondent's purported claim for retention money). Therefore, the present judgement does not advance the case of the Respondent herein.
29. Ld. Arbitrator had noted submission of claimant that he kept on meeting the concerned officials of the petitioner herein and EIL and lastly he attended the meetings with the concerned officials at EIL office, Bikaji Cama Palace on 9.12.2019 where he was offered an amount of Rs. 18 lacs . Ld. Arbitrator though observed that the said contention of claimant/respondent herein could not be accepted without any evidence, nevertheless, noted that these contentions of the claimant had not been disputed by the petitioner nor any contrary evidence had been led to rebut these contentions. Ld. counsel for petitioner submitted that rather respondent did not lead any evidence to prove any of its factual contentions. Ld. Counsel for petitioner referred to the deposition of claimant recorded before Ld. Arbitrator wherein claimant had conceeded with regard to non availability of minutes of any such meetings.
30. Ld. Counsel for petitioner further submitted that :
(a) Ld. Arbitrator in the Arbitral Award has taken note of the pleas made by the Claimant in its SOC & Rejoinder that after the last transaction and till the date of invocation of arbitration, the Claimant was allegedly in constant touch with the Petitioner, and the Claimant was allegedly made to believe by the Petitioner that the alleged payments will be made in due course & time. The Claimant also pleaded that the Petitioner played fraud on the Claimant as it kept the negotiation channels open and assured the Claimant that the bills will be settled.OMP (COMM) No. : 12/2023 25/73
(b) Ld. Arbitrator has perversely observed that the said pleas remained unrebutted by the Petitioner as no contrary material was placed on record and the Claimant's Witness was also not confronted during the Cross Examination. The Ld. Arbitrator, on this basis, accepted the aforementioned contentions/ pleas of the Claimant.
(c) The averments of the Claimant regarding the alleged meetings, are wholly vague & unsubstantiated. Perusal of the Rejoinder would show that the averments contained therein are bereft of any particulars and details with regards to the alleged meetings, as claimed to have taken place between the Claimant and the Petitioner (viz. being the date of such meetings, including the decision/ outcome and minutes thereof). In this regard, it would be relevant to mention that the Petitioner had put pointed questions with regard to the alleged meetings. Upon being so cross-examined, the Claimant failed to prove the said alleged meetings, and in fact stated that there was no minutes of such alleged meeting available.
(d) Despite the aforesaid position, the Ld. Arbitrator sought to shift the onus of having to disprove such alleged meetings upon the Petitioner. Claimant having failed to prove its own assertions regarding the alleged meetings, there was no occasion for the Petitioner to seek to disprove the same. With the Claimant having failed to discharge the onus of proof, the same could not have been shifted to the Petitioner. Therefore, the observations of the Ld. Arbitrator of seeking to draw adverse inference against the Petitioner, is wholly perverse and patently illegal.OMP (COMM) No. : 12/2023 26/73
(e) It is a settled position of law that merely sending letters or having meetings to discuss the claims, without having to expressly and categorically admit any liability, would not extend the period of the limitation. Reliance was placed upon Kalpana Trading Co., Coimbatore v. Executive Officer, Town Panchayat, Tiruchipalli & Anr., AIR 1999 Mad 371.
(f) Even if it was to be assumed that the alleged meetings, as claimed by the Claimant, had taken place (which alleged meeting are otherwise denied, and which alleged meetings the claimant failed to prove), even then the same would be wholly in consequential for the purpose of limitation. The said aspect is fortified by the fact that the Claimant failed to aver, much less, prove the specifics of such alleged meetings, inter alia, being the date of such meetings, including the decision/ outcome and minutes thereof.
(g) For all the aforesaid reasons, reference & reliance by the Claimant upon the alleged meetings, averments regarding which have been merely agreed to by the Ld. Arbitrator without having to pass any reasoning thereupon, is wholly inconsequential for the purposes of limitation. Accordingly, the Award of the Ld. Arbitrator is liable to be set aside for being grossly perverse & patently illegal.
(h) It was incumbent upon the Ld. Sole Arbitrator to have passed a finding and to have come to a conclusion on the aforementioned factual and legal aspects concerning the Claimant's reliance upon its own alleged correspondences, more so, while adjudicating and deciding upon the issue of limitation.
Having not so done, the award passed by the Ld. Sole Arbitrator OMP (COMM) No. : 12/2023 27/73 is grossly perverse & patently illegal, and which merits being set aside.
31. Ld. Counsel for petitioner further submitted that as per the claimant's own admission, there is no proof that the alleged meetings or the alleged meeting dated 09.12.2019 took place as there are no minutes for any of the alleged meetings, however, without prejudice to the above, the alleged meeting was beyond 3 years. Therefore, the same would not come to the rescue of the Claimant/respondent for the purpose of Limitation.
32. Ld. Arbitrator referred to the claimant's submission with regard to defect liability period which ended on 3.1.2017 as per the endorsement and acknowledgment from the officials concerned of petitioner dated 4.1.2016 and vide clause 32 of the agreement, claimant became entitled for his final due payment. It was noted that as per Article 24 and 26 of Limitation act, limitation for raising his claim for appointment of arbitrator within three years would also start from 3.1.2017 onwards. Ld. Arbitrator further noted that by virtue of this reason, claim of the claimant was within limitation and not at all time barred in any manner whatsoever by accepting the said reason.
33. Ld. Counsel for petitioner submitted that :
(a) As per the Claimant, in its Reply to Application under Section 16 of the Act , on the basis of alleged endorsement dated 04.01.2016, the DLP commenced on 04.01.2016 and expired on 03.01.2017 (as per Clause 25 of the Agreement dated 28.10.2014). Therefore, as averred by the Claimant, the claims were within 3 years thereof. However, the Claimant's reference OMP (COMM) No. : 12/2023 28/73 to DLP, for claims of unpaid Bills and retention money is wholly erroneous & misleading.
(b) The payments of running bill and final bill were to be made within the time mentioned in the said Work Orders dated 28.10.2014 & 28.05.2015 (being 12 days & 45 days respectively from the date of submission) .Therefore, the cause of action, at best, towards such bills would commence on expiry of the said prescribed period of payment.
(c) The payment of running bill and/ or final bill has no relation/ relevance with the DLP. DLP is the period for removing defects (without additional costs on the client) .
34. Ld. Counsel for petitioner referred to deposition of CW1 wherein the claimant had claimed interest from 25.10.2015 onwards for Claim No.1 and for Claim No. 2 ( Re' Retention Money), interest was claimed from 20.04.2016 onwards i.e. 6 months after completion of work while claimant conceded that claims had no relation with the DLP and also that no claim had been raised concerning the said DLP.
35. Respondent had raised the Fifth RA Bill under Work Order no.1 dated 28.10.2014 and Second RA Bill under Work Order no. 2 dated 28.5.2015 which were also referred as 'Final Bills' dated 8.10.2015,submitted on 13.10.2015. Amount was payable against the bills within a period of 12 days of submission or in any case, within a maximum period of 30 days after deduction of Retention Money. Retention money was to be released after six months of the completion of work, as certified by Engineer, subject to provisions of clause pertaining to rectification of defects. Thereby, the retention money was due and payable on 20.4.2016, OMP (COMM) No. : 12/2023 29/73 as so claimed by respondent. Arbitration, according to Ld. Counsel for petitioner, was invoked after three years i.e. on 28.6.2019, which contention though has been discarded in view of the discussion made herein above. The invocation of arbitration in terms of discussion (supra), was at the first instance on 26.4.2019. Claimant/Respondent herein relied upon letters, meetings, acknowledgment of liability by petitioner, payment of Rs. 5 lacs and non raising of issue of limitation (in any of the correspondence between the parties or even in reply to the letter dated 28.6.2019), subsequent to which the arbitrator was appointed by the petitioner.
36. Although it is correct that the objection pertaining to limitation is the legal and jurisdictional question and also the mixed question of law and facts in the instant matter . It is also correct that as per the observation in Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coalfield Limited (supra), that "in view of the provisions of Section 16, and the legislative policy to restrict judicial intervention at the pre-reference stage, the issue of limitation would require to be decided by the arbitrator and not the High Court at the pre-reference stage under Section 11 of the Act". Once the existence of the arbitration agreement is not disputed, all issues, including Jurisdictional objections are to be decided by the arbitrator. Therefore, as rightly submitted by Ld. Counsel for petitioner the principle of waiver/ acquiescence and/ or estoppel would not apply to issue of limitation and also that law of limitation bars the remedy, therefore, objection regarding limitation can be taken when such remedy is sought to be availed.
OMP (COMM) No. : 12/2023 30/7337. Ld. Counsel for respondent referred to M/s Zillon Infraprojects Pvt. Ltd. V/s Bharat Heavy Electricals Limited - MANU/WB/0742/2023, Fortune Builders Pvt. Ltd. V/s Blue Star Ltd. - MANU/DE/1139/2022, Arif Azim Co. Ltd. V/s Aptech Ltd. - MANU/SC/0151/2024 and M/s Shakti Bhog Food Industries Ltd. Vs. The Central Bank of India MANU/SC/0468/2020 and quoted the following relevant observations in Judgments (supra):
M/s Zillon Infraprojects Pvt. Ltd. V/s Bharat Heavy Electricals Limited - MANU/WB/0742/2023 :
" 31. Nonetheless, on receipt of the aforesaid notice, the respondent again called for meeting between the parties to discuss the matter and the said meeting was held on March 06, 2019. The written claims were submitted by the petitioner later that month, and the same was duly acknowledged by the respondent with a request to withdraw the said legal notice.
Once again the discussion between the parties did not lead to any success. In my opinion, the final breakdown of any chances of amicable settlement happened vide respondent's email dated October 24, 2019 wherein the petitioner was asked to bifurcate its claims despite petitioner's earlier communication dated October 14, 2019 elaborating its inability to do so.
The ensuing emails by the respondent were merely reminders of its email dated October 24, 2019. It is to be noted here that final bills could never be issued by the petitioner as the project was on 'Hold', and in fact, there existed pending dues for the bills previously raised bills by the petitioner.
32. Therefore, after a careful perusal of the aforesaid facts, it would not be incorrect to state that the cause of action herein has been of a 'continuous' nature. The claims of the petitioner never attained finality, and remained a 'live claim' as the parties were in mutual discussion to resolve the disputes between them.
The arbitration petition was filed on July 28, 2021 that is within a period of one and half years from the respondent's last communication vide email dated January 09, 2020, and within a period of two and half years from the issuance of Section 21 notice dated January 16, 2019".OMP (COMM) No. : 12/2023 31/73
Fortune Builders Pvt. Ltd. V/s Blue Star Ltd. -
MANU/DE/1139/2022:
"Tested on the principles enunciated in the two decisions noticed above, it is evident that the disputes between the parties before this Court ultimately crystallised and came to be raised by the respondent in its legal notice.
The claim as raised was negated by the revisionist when it replied to the aforesaid notice. It is this which would constitute the "breaking point" as was explained by the Supreme Court in Geo Miller. It becomes relevant to note that here too while the project was abandoned and left unfinished, parties were yet to settle their differences. This was not a case where the work had been duly finished at the time when the last invoice was raised by the respondent.
Both sides have raised competing claims of why the project could not be completed. The legal notice and the reply of the revisionist disputing the claim in essence not only constituted a positive assertion of the claim by the respondent but also a point of no return in the dealings between the parties. It would thus constitute the crucial point in time from which the period of limitation would be liable to be viewed as having commenced".
Arif Azim Co. Ltd. V/s Aptech Ltd. - MANU/SC/0151/2024 :
"...Some more emails were exchanged between the parties on the issue however it can be seen that vide email dated 28.03.2018, the Respondent clearly showed unwillingness to continue further discussions regarding payments related to the ICCR project.
Thus, it can be said that the rights of the Petitioner to bring a claim against the Respondent were crystallised on 28.03.2018 and hence the cause of action for invocation of arbitration can also said to have arisen on this date".
M/s Shakti Bhog Food Industries Ltd. Vs. The Central Bank of India MANU/SC/0468/2020:
"13. It is well established position that the cause of action for filing a suit would consist of bundle of facts. Further, the factum of suit being barred by limitation, ordinarily, would be a mixed question of fact and law. Even for that reason, invoking Order VII Rule 11 of the CPC is ruled out. In the present case, the assertion in the plaint is that the appellant verily believed that its claim was being processed by the Regional Office and the Regional OMP (COMM) No. : 12/2023 32/73 Office would be taking appropriate decision at the earliest. That belief was shaken after receipt of letter from the Senior Manager of the Bank, dated 8.5.2002 followed by another letter dated 19.9.2002 to the effect that the action taken by the Bank was in accordance with the rules and the appellant need not correspond with the Bank in that regard any further. This firm response from the respondentBank could trigger the right of the appellant to sue the respondentBank. Moreover, the fact that the appellant had eventually sent a legal notice on 28.11.2003 and again on 7.1.2005 and then filed the suit on 23.2.2005, is also invoked as giving rise to cause of action. Whether this plea taken by the appellant is genuine and legitimate, would be a mixed question of fact and law, depending on the response of the respondents.
14. Reverting to the argument that exchange of letters or correspondence between the parties cannot be the basis to extend the period of limitation, in our opinion, for the view taken by us hitherto, the same need not be dilated further. Inasmuch as, having noticed from the averments in the plaint that the right to sue accrued to the appellant on receiving letter from the Senior Manager, dated 8.5.2002, and in particular letter dated 19.9.2002, and again on firm refusal by the respondents vide Advocate's letter dated 23.12.2003 in response to the legal notice sent by the appellant on 28.11.2003; and once again on the follow up legal notice on 7.1.2005, the plaint filed in February, 2005 would be well within limitation. Considering the former events of firm response by the respondents on 8.5.2002 and in particular, 19.9.2002, the correspondence ensued thereafter including the two legal notices sent by the appellant, even if disregarded, the plaint/suit filed on 23.2.2005 would be within limitation in terms of Article 113.
16. The respondents had also relied on the dictum of this Court in Fatehji And Company & Anr. vs. L.M. Nagpal & Ors. 11. Indeed, in that case, this Court upheld the order of rejection of plaint on the finding that the suit was barred by limitation under Article 54 of the 1963 Act, in the fact situation of that case. The Court was dealing with a suit for specific performance of a written agreement of sale dated 2.7.1973 and as per the terms, the performance of the contract was fixed for 2.12.1973. In that background, the Court noted that the subsequent letters exchanged between the parties cannot be the basis to extend the period of limitation. Moreover, the Court dealt with the case governed by Article 54 of the 1963 Act, which stipulates the timeline for commencement of period of limitation, being the date fixed for the performance, or, if no such date is fixed, when the plaintiff has notice that performance is refused. In cases governed by Article 113 of the 1963 Act, such as the present case, however, what is required to be noted is - "when the right to sue accrues" (and not when the right to sue "first"
accrues). 11 (2015) 8 SCC 390.
21. Taking overall view of the matter, therefore, we are of the considered opinion that the decisions of the trial Court, the first appellate Court and the High Court in the fact situation of the present case, rejecting the plaint in question under Order VII Rule 11(d) of the CPC, cannot be sustained. As a result, the same are quashed and set aside.
OMP (COMM) No. : 12/2023 33/7338. Ld. counsel for petitioner filed the submissions on record distinguishing the above noted judgments from the facts of instant matter as follows:
Zillion Infraprojects Pvt. Ltd. Vs. Bharat Heavy Electricals Limited, MANU/WB/0742/2023:
(a) The issue before the Court was as to whether the Petition under Section 11 of the Arbitration & Conciliation Act, 1996, had been filed within the period of limitation.
(b) The Court took note that on 18.03.2013 the project was kept on hold; on 16.05.2015, the contract was short closed; in April, 2017 exhaustive meetings took between the parties wherein certain commitments in relation to the pending work at site and bill payments had been made; Arbitration was invoked on 16.01.2019; On 06.03.2019, a meeting took place between the parties, wherein the claims were acknowledged and request was made to withdraw the legal notice; On 24.10.2019, the amicable settlement broke down. In all such view, the Court observed that the cause of action was of a continuous nature, and that the Section 11 Petition, which was filed on 28.07.2021, was within the period of limitation i.e. within two and a half years of issuance of the invocation notice dated 16.01.2019.
(c) The Court also took note that CIRP proceedings had commenced against the Petitioner company under the Insolvency and Bankruptcy Code, 2016 , with the order of the moratorium having been passed on 05.02.2019. The Court held that the limitation period would not be operative from 05.02.2019 onwards, and as such for such reasons as well the Petition under Section 11 was not barred by limitation.
OMP (COMM) No. : 12/2023 34/73(d) The present case, however, is not concerned with any issue relating a Petition under Section 11 of the Arbitration & Conciliation Act, 1996 being time barred or not.
Fortune Builders Pvt. Ltd. Vs. Blue Star Ltd.,
MANU/DE/1139/2022:
(a) The Court was considering a Petition against rejection of an Application under Order VII Rule 11 of the Civil Procedure Code, 1908, moved with respect to a counter claim instituted by the Defendant.
(b) The Court noted that Article 14 of the Schedule of the Limitation Act,1963 was applicable to the said case since the contract was not only for supply of goods per se. The Court further noted that Article 18 was also not applicable, since the works had not been completed by the Defendant.
(c) The Court noted that while the date of the invoice was 17.04.2014, there was a payment made thereafter, which extended the period of limitation. Even after the said payment, issues relating to execution of the contract simmered and festered between the parties, with the rival claims having been crystalized only in the legal notice and reply exchanged thereafter. The Court noted that in such circumstances the actual dispute arose only then between the parties.
(d) The Court held that since both Articles 14 and 18 of the Limitation Act,1963 were not applicable, the issue of limitation would have to be considered on the anvil of Article 113 of the Limitation Act,1963. Applying the said test, the Court held that the period of limitation would have to be concluded from the repudiation of the claim, which in the said case was the reply to the legal notice.
(e) In the present case, however, the Respondent laid its claim for its purported RA bills and its purported claim for retention money, on the premise of it having completed the works, and further having to OMP (COMM) No. : 12/2023 35/73 claim the said purported monies from the respective dates as referred to in the subject Work Orders. Therefore, the present case is not covered by Article 113 of the Limitation Act,1963.
Arif Azim Co. Ltd. Vs. Aptech Ltd., MANU/SC/0151/2024 :
(a) The issue before the Court in the said case was - as to when does the right to apply under Section 11 (6) of the Arbitration & Conciliation Act,1996 accrue, in context of determining the period of limitation for filing an application under the said provision for appointment of an Arbitrator.
(b) The Court held that the limitation period of filing an application for seeking appointment of an Arbitrator commences only after a valid notice invoking an arbitration has been issued by one of the parties to the other party and there has been either a failure or refusal on part of the other party to make an appointment as per the appointment procedure agreed upon between the parties.
(c) The Court noted that in the said case that the notice requesting for appointment of an Arbitrator was delivered to the other party on 29.11.2022, and that the period of one month to respond to the same ended on 28.12.2022.The Court held that it was from the said day that the clock of limitation for filing the Petition under Section 11(6) of the Act, would start to tick. The Petition in the said case was filed on 19.04.2023, which was well within the period of the said date, and as such the Petition under Section 11(6) was not barred by limitation.
(d) In the present case, however, the issue is not regarding determining the limitation of a Petition under Section 11(6) of the Arbitration & Conciliation Act,1996. The present case, concerns determination of the issue of limitation of the Respondent's substantive claims. It is settled position of law that claim of a party on merits being time barred cannot be confused with that of a Petition OMP (COMM) No. : 12/2023 36/73 under Section 11 of the Arbitration & Conciliation Act,1996 being barred by limitation.
Shakti Bhog Food Industries Ltd. Vs. The Central Bank of India & Ors., MANU/SC/0468/2020 :
(a) The Court was considering the issue as to whether the Plaint was barred by the law of limitation, i.e. whether it was filed beyond the period of three years prescribed in Article 113 of the Limitation Act, 1963.
(b) The Court noted that if a Plaint does not contain necessary averments related to limitation, the same is liable to be rejected.
(c) The Court held that the period of limitation under the residuary Article 113 of the Limitation Act, 1963 would be reckoned from the last date when the cause of action arose, which was different from Article 58, 59, 104 where the limitation was to be reckoned from the first date when the cause of action arose.
(d) The Court noted that in the said case, the Plaintiff with respect to the financial facility availed from the Defendant bank, had, upon noticing unilateral charging of interest/commission, issued a letter dated 21.07.2000 calling upon the bank to corrective steps. The bank in its response 09.07.2001 informed the Plaintiff that comments had been invited from the concerned branch office and an appropriate decision would be taken on the Plaintiff's representation soon.
Thereafter, on 08.05.2002, the Defendant bank informed the Plaintiff that the cheques were being purchased at the prevailing rate , and thereafter vide another communication dated 19.09.2002, informed the Plaintiff that it should not carry out any further correspondence with the bank relating to the subject matter.
(e) The Court held that in the said case, the period of limitation was to be reckoned from 08.05.2002 and in particular 19.09.2002, OMP (COMM) No. : 12/2023 37/73 wherein the bank had firmly refused the Plaintiff's representation. The Court further held that the suit was filed on 23.02.2005, the same was within limitation in terms of Article 113 .
(f) The facts of the present case, however, are wholly separate and distinct. In the present case, the Respondent had in its Statement of Claim specifically pleaded its purported claims towards RA bills and retention money to be due & payable from October, 2015 and April, 2016 respectively. The invocation of Arbitration was done much after expiry of three years from the said respective dates i.e. in June, 2019.
39. Ld. counsel for petitioner referred to Bharat Sanchar Nigam Limited and Ors. Vs. Nortel Networks India Pvt. Ltd. (2021) 5 SCC 738, Secunderabad Cantonment Board v. B. Ramachandraiah & Sons, (2021) 5 SCC 705, ENEXIO Power Cooling Solutions India Pvt. Ltd. v. Gita Power and Infrastructure Pvt. Ltd. and Ors., (2021) 6 MLJ 545 and Satyanarayan Rajaram Chinta and Ors. v. Marvel Realtors & Developers Ltd. and Ors., 2019 SCC OnLine Bom 2292 . Ld. counsel for petitioner submitted that limitation for filing application under section 11 arises upon failure to make appointment of arbitrator within a period of 30 days from issuance of notice invoking arbitration. This period of limitation cannot be confused or conflated with the period of limitation applicable to the substantive claims made in the underlined commercial contract, the two are necessarily distinct. It was submitted that citing reference to Geo Miller and owing to the vacuum in law to provide limitation under Section 11 of A&C Act, 1996, the Apex court in Bharat Sanchar Nigam Limited and Ors. Vs. Nortel Networks India Pvt. Ltd. (supra) took note that OMP (COMM) No. : 12/2023 38/73 the courts had taken recourse to the position that the limitation period would be governed by Article 137 of the First Schedule to the Limitation Act, 1963. Further, Geo Miller laid down law on the specific point as to when time begins to run for the purpose of filing an application under Section 11 of A&C Act, 1996, with reference to Secunderabad Cantonment Board v. B. Ramachandraiah & Sons (supra) and BSNL v. Nortel Networks India Pvt. Ltd., [(2021) 5 SCC 738.
40. In ENEXIO Power Cooling Solutions India Pvt. Ltd. v. Gita Power and Infrastructure Pvt. Ltd. (supra), it was noted that Geo Miller judgment was in context of request under Section 11 of A&C Act. 1996 and a judgment must be seen to have decided exactly what it did and not the larger conspectus which it may deemed to have. Further, only the period during which the parties were bona fide negotiating towards an amicable settlement at best, may be excluded for the purpose of computing the period of limitation for reference under Section 11 of A&C Act, 1996 and that too in cases where the entire negotiation history between the parties is specifically pleaded and placed on record. While it cannot be said that a special period of limitation has been carved out by the Apex court in Geo Miller, in addition to what is already provided under the Limitation Act.
41. Letters written by respondent, the inquiries made by him or the meetings attended without acknowledgment and admission of liability by the petitioner, would not extend the period of limitation. Payment of Rs. 5 lacs though was admittedly made on 9.2.2016. However, Ld. Counsel for petitioner referred to the own mention of respondent in claim petition wherein payment of OMP (COMM) No. : 12/2023 39/73 Rs. 5 lacs had been adjusted against RA Bill no.1, pertaining to work order no. 2 and that there was no payment as claimed by respondent herein against work order no. 1 subsequent to 12.10.2015. Ld. Counsel for petitioner seems to be right in his submission that irrespective of the factum of payment having been made only against the second work order, payment of Rs. 5 lacs made on 9.2.2016 may extend the period of limitation only till 08.02.2019 and not beyond thereto.
42. With regard to letter dated 10.7.2019, Ld. Arbitrator although noted that "in para 2 onwards thereof, it has been categorically and clearly accepted and admitted in all the correspondence, bills, claims etc. of the claimant and its liability towards the claimant", thereby held that the cause of action continued and subsisted in favour of claimant throughout. Vide letter dated 10.7.2019, petitioner conveyed to respondent that :
" 2.. As per the said contract, certain terms and conditions, we have agreed upon to execute the said contract. Following are the relevant clauses, according to to which you the 'contractor' held liable for breach of said contract, such as:
Clause 24 Retention of Money ........
"It was made clear that the you are supposed have completion certificate from the Engineering and same was to be submitted to the Employer, which you have failed to provide to the Employer, therefore the undersigned is liable to pay the said retention money as allegedly demanded by you in the aforesaid notice. Therefore there is a dispute now."
Clause 29 Termination ....................
It was made clear that the you are supposed have completion certificate from the Engineering and same was to be submitted to the Employer, which you have failed to provide to the Employer, therefore you are liable to pay damages to the employer for breach of the said clause. Therefore there is a dispute ".
OMP (COMM) No. : 12/2023 40/7343. Besides the above noted, it was also replied that :
"As per our records and information, there are no dues pending towards you by our clients. And as far as alleged liability towards unpaid biils, nothing is payable by us and allegations you are putting are denied and unacceptable specifically".
44. Though Ld. Counsel for petitioner did not clarify, albeit, the word ' not' seems to be missing from 'undersigned is liable to pay the retention money' . While reading the entire contents of the reply dated 10.7.2019, wherein the only response was with regard to denial of any liability and also with regard to arising of the disputes, for which reason, arbitrator was appointed by petitioner. Thereby admission of liability/claim/bills cannot be interpreted, due to some typing/writing omission.
Ld. Counsel for respondent made the following
submissions:
(a) That the defect liability period pertaining to work
orders ended on 03.01.2017 and thereafter vide clause 32 of the Agreement, claimant became entitled for final due amount of its bills. Limitation for raising his claim for appointment of arbitrator within three years shall also start from 3.1.2017 onwards as per Article 24 and 26 of Limitation Act. By virtue of this reasoning, claim of claimant was well within the limitation.
(b) That as per the contract, end of defect liability period after the completion of project on 20.5.2015 will be 20.5.2016 only. On that date, all the contractual obligations of the cliamant came to an end and the agreement concluded. As such, the starting point of limitation will be 12.10.2018 and three years thereafter shall be 12.10.2021.
OMP (COMM) No. : 12/2023 41/7345. Ld. Counsel for respondent placed reliance upon Ashish Mohan Gupta V/s Hind Inn and Hotels Ltd. & Ors. -
MANU/NL/0111/2020 wherein the operational creditor had awarded the work and the retention money, as noted, could not be treated as separate money . It was observed that :
" 17. ..........The retention money is a part of main bill which was retained by the Corporate Debtor as per the terms of the Work Order and the same shall be released after completion of the work and issuance of the Completion Certificate. Further the Defect Liability Period completed on 01.04.2015 and thereafter the Operational Creditor had requested the Corporate Debtor to release money. We are of the view that it is not barred by limitation. Learned Adjudicating Authority rightly observed and held that the debt fell due from 27.07.2015 when the mail was sent by Ginjar Hotel of the Corporate Debtor stating that the Operational Creditor had attended to all the concerns and rectified the same..........".
46. Reliance was also placed upon M.L. Dalmia and Company Vs. Union of India, wherein it was noted that:
"... I apprehend, it is the duty of the Government, after doing the work departmentally, to give the contractor a certificate of completion. Till such certificate is given, the contractor cannot submit his bill and get payment and the cause of action for payment, in terms of the contract, does not arise. Looked at from this point of view, in the matter of presentation and determination of the contractor's claim, there are reciprocal obligations on either party.
In such cases where there are reciprocal obligations for submitting or scrutinising of bills before payment can be received, the cause of action for payment does not arise on the completion of works and time cannot run till the cause of action accrues".
47. Ld. Counsel for petitioner sought to distinguish the judgment Aashish Mohan Gupta Vs. Hind Inn and Hotels Ltd. & Ors. by submitting that in the Judgment (supra), the issue was as to whether the initiation of proceeding under the Insolvency and Bankruptcy Code , 2016 was within the period of limitation. The claim in the said proceeding was with respect to release of retention money under the contract. The Court noted that as per the tender document, release of retention money to the contractor OMP (COMM) No. : 12/2023 42/73 was to be after expiry of the Defect Liability Period, and after rectification of all defects etc. The Court noted the Defect Liability Period started from 31.03.2014 and stood completed on 01.04.2015. After the said expiry, the Operational Creditor addressed a letter dated 10.04.2015 requesting release of retention money. Thereafter, correspondences were exchanged between the parties regarding certain defects, which ultimately came to be accepted by the Corporate Debtor as having been rectified vide its email of July, 2015.The court held that debt concerning retention money, therefore, fell due on July, 2015.The court noted that, the demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 was sent in March, 2018, and the application under Section 9 of the Code was filed in April,2018. Accordingly, the Court found that the proceedings were not barred by limitation. In the present case, however, the Respondent's purported claim for retention money had no relation with the Defect Liability Period since as per the Respondent itself, its claim for retention money fell under Clause 24 of the work orders and which purported claim, as per the Respondent, became payable six months after its purported completion of work.
48. Ld. Counsel for petitioner further sought to distinguish the the judgment M.L. Dalmiya and Co. Vs. Union of India (UOI), by submitting that :
(a) The Court noted that the period of limitation for intermediate or running bills would arise when there is a breach in payment thereof. The Court noted that if the claim of such intermediate or running bills is barred by lapse of time, the payment of the same can be enforced, as part of payment of the final bill.OMP (COMM) No. : 12/2023 43/73
(b) The Court noted that the period of limitation as regards a deduction made from a running bill of the price of materials not supplied at all, would begin from the date of such deduction and the aspect of the final bill would be an irrelevant consideration in this respect.
(c) The Court noted that while the final bill had been passed on 18.02.1949, but the same did not contain the contractor's signature.
The contractor submitted his claim on 09.05.1952, and it was only on 28.04.1954 that the contractor was informed that his bills for works had been passed. The Court noted that, in the said case, as per the conditions of the contract, the contractor could not claim payment till the certificate of completion was issued to it. In such light, the Court noted that till the contractor was not intimated of the government's decision, the period of limitation did not begin to run. Accordingly, the Court held that the contractor had only been intimated on 28.04.1954, and that reference of dispute to arbitration had been made shortly thereafter, being well within three years of the said date.
(d) The facts of the present case are whole separate and distinct from the said case. In the present case, the Respondent raised his purported RA bills (treating them as final bills) and claiming monies thereunder from October, 2015. Further, the Respondent claimed retention money from April, 2016 on the pretext of having completed works in October, 2015. The invocation of Arbitration was made much after three years i.e. in June, 2019.
49. Relevant clauses of the work Order pertaining to the controversy herein are as follows:
Clause 23.2 : Final Bill: The Payment for the final bill shall be made on the basis of measurements recorded and approved by the Engineer-In- Charge after making deductions for Income Tax, WCT ( Work Contract Tax), labour cess, Retention money and balance mobilization advance with interest. Bill will be verified within 15 days of submission and payment OMP (COMM) No. : 12/2023 44/73 shall be made within 30 days of certification by Engineer-In-Charge and check by Technical Audit Cell".
Clause 24 : Retention Money: Retention money will be 5 % (Five percent) of the amount of bill, which shall be deducted from each running/final bill. The retention money shall be released after six months of the completion of work as certified by Engineer subject to provisions of clause pertaining to rectification of defects.
Clause 25 : Rectification of Defects: In case any defect is noticed in the executed work within defect removal period which will be one year after the date of completion of work as certified by Engineer, the same shall have to be rectified by the Contractor within the time specified by the Engineer. In case the contractor fails to rectify the defect within reasonable period as decided by Engineer, the same shall be got rectified by the employer after giving a written notice to the Contractor.
Clause 32 : Defect Liability: A period of 12 months, including one Monsoon period, shall be considered as defect liability from the day you obtain a completion certificate from us. During this period, if any damage occurs or defect is noticed to the abovesaid work, you shall rectify the same without any additional cost to us. Also, if any defect is observed during rainy season, the same shall be set right by you without any additional cost to us. If you don't take any action for rectifying the defects, DFWC shall carry out the rectification at your cost, which will be adjusted against your final dues.
50. While the reference of Ld. Counsel for petitioner to the deposition of CW1 is correct as complainant himself conceded that defect liability period had nothing to do with the payment of running bill or final bills nor the claimant/respondent had made any claim pertaining to defect liability, fact remains that the mention in clause 32 with regard to adjustment of the defect liability from the final dues, benefits the contention of respondent with regard to the consideration/computation of limitation period. Further, the retention money was also liable to be released only after six months of the completion of work, as certified by Engineer, subject to provisions of clause pertaining to rectification of defects. Whereas the defect liability was to be adjusted against the final dues after the period of one year.
OMP (COMM) No. : 12/2023 45/7351. Ld. Arbitrator noted that the clause of defect liability period in both the work orders clearly stipulated that the due/final payments will be paid to the claimant by the respondent after completion of defect liability, thereby it was clear that the said claims and demands of the claimant were alive throughout and being entertained, considered, processed by the respondent (petitioner herein) without any demur, dispute, complaint or objections.
52. As submitted by Ld. Counsel for petitioner, in case of RA Bills which became due in October 2015, the period of limitation of three years was till October 2018 and in case of retention money, was till April 2019 as claimed by respondent, although the period of limitation would begin from the date of invoices. Though it is correct that limitation period for claim for recovery of outstanding dues is three years. Defect Liability period is the period, during which contractor is responsible for rectifying any defects which appear in the completed work. The clauses pertaining to retention money and defect liability also do not automatically extend the period of limitation but may have the effect of altering the start of the limitation period. In a situation where unpaid bills are closely tied to final certifications , the start of the limitation period may be indirectly effected if the final payment is delayed due to unresolved issues.
53. Despite the claim of the petitioner with regard to deficiency in quality control and quality assurances and incomplete work, no notice or communication was made to the respondent to cure the defects or to call upon the respondent to complete the work to the satisfaction of petitioner, whereas the OMP (COMM) No. : 12/2023 46/73 bills remained unpaid. Petitioner at the same time stated about the excess payment made to the respondent. On the query put to Ld. Counsel for petitioner, he referred to letter dated 21.12.2015 issued by petitioner with reference to RA Bills (5th RA Bill and 2nd RA Bill). It was mentioned that the site was physically verified and the work executed by respondent was found to be incomplete. Respondent was informed that he was not entitled to the amount as claimed in the said RA bills and that those RA bills could not be treated as final bills. Petitioner thereby declined to issue completion certificate since the work had not been finished as per site requirements and provisions of the contract.
54. Ld. Counsel for petitioner also drew the attention of the court to the letter dated 11.04.2016 issued by respondent, wherein respondent had mentioned that final bill was yet to be submitted. Petitioner admittedly made payment in sum of Rs. 5 lacs to respondent as on 09.02.2016. Subsequent to the alleged communication by petitioner to the respondent, with regard to work remaining incomplete, there was no reason for the petitioner to make the excess payment to the respondent (as claimed), that too after the submission of bills and alleged rejection of the same vide the above noted communication dated 21.12.2015. Although Ld. Arbitrator had taken note of the above communication dated 21.12.2015 and also opined that in view of the failure of the petitioner to lead any evidence and there being no proof of dispatch, delivery or receipt thereof by claimant, the letter could not be relied upon.
55. Claimant/respondent herein had relied upon letters dated 18.8.2015 and 04.01.2016 and claimed that the bills raised by OMP (COMM) No. : 12/2023 47/73 him had been duly verified, confirmed and admitted by respondent. Letter dated 18.8.2015 is the request to the site incharge of petitioner for release of outstanding payment of running bill with endorsement of 'receiving' of the even date. Vide letter dated 04.01.2016, respondent requested for issuance of formal completion certificate for the work orders and release of all the pending payments. Letter dated 4.1.2016 is addressed to the Site Incharge of petitioner with 'kind attention' to Mr. Shishupal (Site Incharge ) and Sh. S.K. Sharma (Project Manager). This letter contains the following endorsement from Mr. Shishupal at the bottom of the letter:
" Received and acknowledged as per instructions of Sh. S.K.Sharma ( Project Manager) to site processing. Due amount of bill has to be paid after expiry of Defect Liability Period starting from today and subject to NOC from the concerned department and officers and adjustments, if any as per contract".
56. Ld. Counsel for petitioner insisted that for failure of the respondent to summon Sh. Shishupal Singh and Sh. Harvinder Singh despite the opportunities permitted, the documents could not have been relied upon, which were an afterthought, forged and fabricated documents. Ld. Counsel for petitioner also submitted that the said two persons were not the employees of the petitioner. Nevertheless, Ld. Arbitrator noted that the factum of appointment and working/supervising the site of respondent by its officials Sh. Shishupal and Sh. S.K. Sharma was not disputed by the respondent. As per Ld. Arbitrator, best evidence was available with the petitioner, which could have examined the officials, who were under its control and supervision and rather it was bounden duty of the petitioner to produce these officials as OMP (COMM) No. : 12/2023 48/73 its witnesses if it sought to belie the claims and contentions of the claimant. Nothing of this sort was done by the respondent.
57. While it may be correct that the above named persons were not the employees of the petitioner but as rightly noted by Ld. Arbitrator there was no denial that claimant was working under the supervision of the above noted officials from the side of the petitioner and despite the failure of the respondent to examine the witnesses, petitioner had more authority , control and possibility to bring the best evidence on record, disproving the submission of the claimant, so made before Ld. Arbitrator.
58. Letter dated 04.01.2016 alongwith the above noted endorsement, thereby found credence before Ld. Arbitrator which clearly stipulated with regard to payment of due amount of bill after expiry of defect liability period subject to NOC from the concerned department and adjustments, if any, as per contract. Defect liability thereby was ending on 03.1.2017 upon which the due amount of bill after adjustments as stipulated above was payable. Submission of Ld. Counsel for petitioner that the respondent himself had conceded vide letter dated 11.4.2016 that the final bill was yet to be submitted, had been considered by Ld. Arbitrator. Respondent had mentioned in the same letter with regard to his repeated requests to the officials of petitioner for release of the payment. Ld. Arbitrator believed the version of the respondent/claimant that he was requested by official of the petitioner to not raise any further bill and to treat the RA no. 5 and RA no.2 as final bills. Resultantly, the final dues payable to the respondent could be worked out at the end of the defect liability period. For the bills dated 25.10.2015, upon completion OMP (COMM) No. : 12/2023 49/73 of work on 20.10.2015 and upon expiry of defect liability period, the limitation period stretched to begin after 20.10.2016 and in view of the endorsement by the officials of petitioner dated 4.1.2016, the limitation period for recovery of unpaid amount further stretched to 03.01.2017 i.e. upon expiry of the defect liability period.
59. Ld. Arbitrator also accepted the plea of claimant that from the date of completion of work i.e. 20.10.2015, the end of defect liability period will be till 20.10.2016. By virtue of clause 32 of the contract, the final dues of claimant shall be paid and settled by petitioner after completion of said defect liability period. Ld. Arbitrator accepted the submission of claimant/respondent finding no reason to disbelieve the same.
60. As already observed, petitioner having invoked the arbitration vide letter dated 6.4.2019, claim filed by petitioner was within the limitation period which was available upto 20.10.2019 i.e. after the expiry of defect liability period, even if the date of invocation of arbitration is considered as 28.6.2019 and by virtue of the endorsement upon letter dated 04.01.2016, the limitation period upon the expiry of defect liability was till 03.01.2020. The claim filed by respondent, therefore, was within the period of limitation. Conclusion drawn by Ld. Arbitrator with regard to claim being within the period of limitation, therefore, cannot be said to be suffering from any perversity.
61. On merits, Ld. counsel for petitioner referred to claim of the claimant/respondent wherein, it had alleged delays on the part of the Petitioner herein, in supply of earth for filling, in supply of drawings, in deployment of sewerage pumps for dewatering OMP (COMM) No. : 12/2023 50/73 from existing manholes, in issuing permission for pouring the concrete for raft and delay in payments and also the claim that claimant had completed 100% of the work as per the requirements and to the entire satisfaction of the Petitioner in October, 2015.
62. It was further claimed that petitioner had not cleared the outstanding dues of the claimant despite various letters, emails, SMS etc. sent by claimant to petitioner. Ld. Counsel for petitioner submitted that onus to prove all these aspects was upon the claimant itself which was not discharged. Ld. Counsel for petitioner further referred to deposition of CW1 wherein he had conceded that there was no requirement for petitioner to supply earth for filling under the Work Orders, to deploy sewerage pumps etc. under the Work Orders and it was the Claimant who was required to carry out the construction & connection works of large interceptor chamber and all associated civil works in all respects under the Work Orders as well as the Claimant was not required to seek any permission from the Petitioner herein for pouring concrete for raft. On the strength of above, Ld. counsel for petitioner submitted that the Ld. Sole Arbitrator committed a gross perversity in having to completely ignore the aforesaid vital evidence on record while passing the impugned Arbitral Award.
63. Ld. counsel for petitioner further made following submissions:
(a) The claimant admittedly had not raised the RA Bills as per the Work Orders and had failed to complete the works.
Clause 23.3 of Work Order dated 28.10.2014 and Clause 23.3 of OMP (COMM) No. : 12/2023 51/73 Work Order dated 28.05.2015 laid down the stages at which the RA Bills were to be raised by the Claimant. CW-1 in cross examination stated that the Claimant had raised its RA Bills 'absolutely' in terms of the Work Orders, more specifically as per the stage wise payment clause mentioned in the said Work Orders. However, upon being cross-examined, CW-1 failed to prove its aforesaid deposition. CW-1 stated that there were 6 stages of payments provided under Work Order dated 28.10.2014 and Claimant had raised only 5 RA Bills, and that the 5 th RA Bill was treated by the Claimant as the final bill. CW-1 further stated that the Claimant had requested the Petitioner herein to treat the 5th RA Bill as the final bill under Work Order dated 28.10.2014 . Regarding Work Order dated 28.05.2015, CW-1 stated that the RA Bills were to be raised at different stages i.e. upon completion of certain milestones/ works, 5 RA Bills were to be raised under Work Order dated 28.05.2015, whereas only one RA Bill and one Final Bill was raised by the Claimant under Work Order dated 28.05.2015.
(b) The aforesaid aspects have been completely ignored by the Ld. Sole Arbitrator who perversely observed that the Petitioner herein had requested the Claimant to treat the 5 th RA Bill (under Work Order No. 1) and 2 nd RA Bill (under Work Order No. 2) as the final bills.
(c) The Claimant had failed to complete the works. Claimant in letter dated 11.04.2016 itself stated that "Final Bill yet to be submitted", which corroborates & proves the contents of the Petitioner's letter dated 21.12.2015 ,wherein petitioner notified the Claimant of the work not being complete; and the OMP (COMM) No. : 12/2023 52/73 request to treat the alleged RA Bills as Final Bills was 'Rejected' by the Petitioner.
(d) Claimant failed to obtain Completion Certificate. As per Clause 24 of the Work Orders, the Retention Money was to be "released after six months of the completion of the works as certified by Engineer subject to provisions of clause pertaining to rectification of defects", and further as per Clause 32 of the Work Orders, a period of 12 months, including one monsoon period, was to be considered as defect liability period from the day the Claimant obtains a Completion Certificate from the Petitioner. CW1 in cross examination stated that the Claimant was required to obtain Completion Certificate and that Claimant had made a request for issuance of Completion Certificate, which was by way of a written communication in 1st week of January 2016. However. he could not find the said alleged communication on record and also stated that the Claimant does not have a Completion Certificate. All of the aforesaid, was perversely ignored by the Ld. Arbitrator while passing the Arbitral Award.
(e) As per the Clause 23.2 of the Work Orders, the Measurement Sheets & Bills were to be certified by the Engineer-in-Charge for purpose of claiming payment. CW-1 admitted that the alleged abstract sheets, measurement sheets, RA Bill 5 (under Work Order dated 28.10.2014 & RA Bill 2 (under Work Order dated 28.05.2015) do not bear the required certification from the Engineer-in-Charge.
(f) In the alleged Statement/working filed by the claimant alongwith Statement of Claim, the Claimant mentioned the amounts against RA Bill Nos. 1 to 4 (under Work Order No. 1) & OMP (COMM) No. : 12/2023 53/73 RA Bill No. 1 (under Work Order No. 2) as being certified and no certified amount whatsoever was mentioned against the alleged 5th RA Bill (under Work Order No. 1) & the alleged 2 nd RA Bill (under Work Order No. 2). Relevant column, being Column No. 4 of the said alleged statement, qua the said alleged bills was left out 'blank' by the Claimant itself.
(g) Ld. Arbitrator's observation that the Claimant's alleged RA Bill No. 5 (under Work Order No. 1) & the alleged RA Bill No. 2 (under Work Order No. 2) had been certified, and that the Claimant's alleged Statement reflected the said certified amounts, is wholly perverse and contrary to the aforementioned admitted position on record.
(h) The claimant has failed to prove its alleged correspondences. The Claimant along with its SOC filed alleged correspondences being alleged letters, emails and SMSs which were expressly and categorically denied by the Petitioner in its Affidavit of Admission Denial of documents. Claimant, at the time of filing of the SOC, filed a purported Affidavit under Section 65B of the Indian Evidence Act, 1972 ('IEA') with reference to the alleged emails, alleged SMSs and alleged ledger. The said purported Affidavit, however, was not even relied upon by CW-1 in his Affidavit of Evidence, much less tendered during his Examination-in-Chief. Objection with regard to mode of proof of the documents, as relied upon in the Affidavit of Evidence (which included the aforementioned alleged emails, alleged SMSs and alleged ledger), was duly taken by the Petitioner at the time of recording of CW-1's Examination-in- Chief.
OMP (COMM) No. : 12/2023 54/73(i) Principles of the Indian Evidence Act, 1872 as also the Code of Civil Procedure, 1908 along with Principles of Natural Justice apply to Arbitral Proceedings, and that an Arbitral Tribunal cannot consider unproved documents, which are inadmissible in evidence. Reliance was placed upon Bombay Slum Redevelopment Corporation Limited v. Samir Narain Bhojwani, wherein it was observed that:
"172. Though, the arbitral tribunal is not bound by the provisions of the Evidence Act, principles of natural justice applies even in the arbitral proceedings. The learned arbitrator cannot consider an unproved documents, which is inadmissible in evidence. This Court in case of ONGC Ltd. (supra) after adverting to the judgment of Supreme Court in case of Bareilly Electricity Supply Co. Ltd. v. The Workmen - (1971) 2 SCC 617, judgment of Supreme Court in case of Narbada Devi Gupta v. Birendra Kumar Jaiswal - (2003) 8 SCC 745 and judgment of Division Bench of this Court in case of Bi-Water Penstocks Ltd. v. Municipal Corporation of Gr. Bombay - 2011 (3) Mh.L.J. 706 has held that though the arbitral tribunal is not bound by the Civil Procedure Code, 1908 and Indian Evidence Act, 1872, the arbitral tribunal is still bound by the principles of Indian Evidence Act, 1872 and Code of Civil Procedure, 1908 and also the principles of natural justice".
(j) The alleged correspondences do not prove the Claimant's case. The alleged correspondences filed by the Claimant along with its SOC, even otherwise, do not prove compliance of the subject work orders and execution & completion of works thereunder by the Claimant. The Claimant could have proved its alleged case only on the basis of duly certified & proved measurements and bills, which, as aforementioned, the Claimant had failed to show, much less prove. Therefore, reliance upon the said alleged correspondences by the Ld. Sole Arbitrator in his impugned Award is wholly perverse and untenable.
(k) Non-response by the Petitioner cannot be considered as proof of contents of the alleged letters. Non-response to a OMP (COMM) No. : 12/2023 55/73 communication is at best a presumptive evidence, which by its very nature is weak evidence. Quality of evidence led to prove the case positively and its probative value has always to be kept in mind and given primacy. The party asserting a claim, in this case being the Claimant, has to prove its own case and stand on its own legs. Reliance was placed upon Harish Mansukhani v. Ashok Jain, wherein it was observed that:
"22. No doubt, not responding to a legal notice is a piece of evidence wherefrom an adverse inference can be drawn against the noticee. But, the said adverse inference is no more than presumptive evidence which by its very nature is .weak evidence. Where the totality of the evidence weighs in favour of the person issuing the notice, non response to a notice by the noticee can be put in the scales to reassure the Court that contemporaneously the noticee kept silent evidencing a kind of acquiescence, But, the quality of evidence led to prove the case positively and its probative value has always to be kept in mind and given primacy.
23. A plaintiff has to prove his case and stand on his own legs. No doubt, the defendant did not produce his books of account but that does not mean that the plaintiff must succeed on said account."
(L) The onus of proof of the Claimant's claims cannot be shifted upon the Petitioner, as sought to be done by the Ld. Sole Arbitrator by having to hold deemed acceptance and proof of the contents of the alleged correspondences as filed along with the SOC, for mere non-response.
(m) It was for the Claimant to prove its claims by having to prove compliance of the subject Work Orders and execution & completion of works thereunder basis duly certified and approved - measurements and bills, which, however, was not done by the Claimant.
(n) Ld. Arbitrator observed that in the letter dated 10.07.2019, the petitioner had admitted to the receipt of all the alleged correspondences of the Claimant, including the alleged contents thereof, and that the Petitioner admitted to the OMP (COMM) No. : 12/2023 56/73 Claimant's alleged dues. Whereas, petitioner nowhere admitted to the receipt, much less the contents, of the alleged correspondences filed by the Claimant along with its SOC. Petitioner herein had clearly & categorically stated of there being no dues pending, and further of the Claimant having committed breach of the contract and being liable to pay damages to the Petitioner.
(o) CW-1 was not competent to prove the case of the Claimant. The alleged documents allegedly relating to execution of the works in question, as filed by the Claimant along with its SOC (which otherwise have been denied by the Petitioner in its Affidavit of Admission/Denial), did not involve CW-1 herein.
(p) As per Clause 1 of the Work Orders, the Claimant was required to submit completion programme indicating the details of resources needed to be deployed at all stages of work till completion and handing over. For Work Order dated 28.05.2015, the Claimant admittedly did not submit any Completion Programme. With regard to Work Order dated 28.10.2014, the alleged completion programme referred to by CW-1 was not for the said Work Order, in as much as, inter-alia, the said alleged document was not only, not with reference to the subject works under Work Order dated 28.10.2014; but the same was also dated 01.07.2015, being much after the scheduled completion under Work Order dated 28.10.2014, being 31.01.2015 . Further, the said alleged documents bear no receiving whatsoever of the Petitioner. Therefore, there was no completion programme on record of the arbitral proceedings to show execution of works, much less completion thereof.
OMP (COMM) No. : 12/2023 57/73(q) CW-1 attempted to link both Work Orders . The aforesaid attempt of CW-1 was against the express terms of the Work Orders, both of which separately & expressly required the Claimant to submit Completion programmes and complete the works thereunder. Further, CW-1's assertion of the Work Orders being linked, also came to be nullified by his own following deposition during cross-examination and position of record. Completion dates under both Work Orders were separate. While the works under Work Order No. 1 dated 28.10.2014 was with regards to construction of the interceptor chamber, the works under Work Order No. 2 dated 28.05.2015 was Connecting the Interceptor Chamber.
(r) CW-1, attempted to link the said works, by having to state that some part of the construction work of the interceptor chamber (under Work Order No. 1) was required to be carried out under Work Order No. 2. However, upon being further probed, he described the works under Work Order No. 2 as being 'joining' works, and not construction works. In other words, CW-1 came to admit of the works under Work Order No. 2 being that of connecting/joining the interceptor chamber and not of constructing the same, which construction, was to be so done & completed as per and under Work Order No. 1.
(s) As per Clause 1(a) of the Work Orders, the Claimant was required to submit a programme, as per which it was to mobilise all construction machinery and equipment at site for smooth execution of work. Admittedly, as per CW-1, no such programme concerning mobilization was submitted by the Claimant under the two Work Orders.
OMP (COMM) No. : 12/2023 58/73(t) With regard to ' Work Order dated 28.10.2014, as per Clause 20, period of Completion under the Work Order was 31.01.2015 . As per Clause 23.2, work was to be carried out in 6 stages and qua each of which, the Claimant was to raise its RA Bill upon completion of the specified work concerning such stage. CW-1 in Cross-Examination stated that the 1 st RA Bill under Work Order dated 28.10.2014 was raised before 26.01.2015 and there was no delay on part of the Claimant in raising the RA Bills. However, the Claimant raised its 1 st RA Bill only on 26.01.2015 i.e. just before expiry of the period of completion, by which date, as aforementioned, the Claimant was to complete all six stages and raise 6 RA Bills.
(u) With Regard to Work Order dated 28.05.2015, as per Clause 20, Period of Completion under the Work Order was 30.06.2015. CW-1 in Cross-Examination stated that the said Period remained intact . As per Clause 23.3, work was required to be carried out in 5 stages and qua each of which, the Claimant was to raise its RA Bill upon completion of the specified quantum of work concerning such stage. Admittedly, the Claimant did not submit its Bills within the said period of completion, much less submit Bills for each of the 5 stages of work.
(v) Rates stipulated under the Work Order were firm , which is clear from Clause 11 of the Work Orders and Cross- Examination of CW1. However, the Claimant sought to claim extra rates. Ld. Arbitrator, however, failed to consider all of the aforesaid factual & legal aspects concerning the Claimant having failed to prove its case and discharge the onus thereof. Rather, the Ld. Arbitrator though having admitted to there being OMP (COMM) No. : 12/2023 59/73 'discrepancies' in the Claimant's case, sought to find fault in the Petitioner by having to state that the Petitioner sought to pick put the 'minor gaps' in the Claimant's case, and further sought to observe that the Petitioner had unreasonably withheld the Claimant's alleged dues.
(w) The Petitioner had in compliance of the Ld. Arbitrator's order dated 08.03.2022 filed an Affidavit dated 09.04.2022 giving the 'details of work executed' by the Claimant as also the 'details of payments' received by the Claimant. Along with the said Affidavit, the Petitioner had also filed in Ledger Account along with specific details of the RA Bills under the two Work Orders. There were no alleged pending dues of the Claimant, and that in fact, the Claimant had been overpaid by the Petitioner. However, considering that claims concerning the said over payments, had become time barred, no counter claim was raised by the Petitioner against the Claimant. The aforesaid Affidavit has not been referred to, much less discussed and considered, by the Ld. Arbitrator while considering the alleged claims of the Claimant.
(x) The payment of Rs. 5,00,000/- dated 09.02.2016 had been reflected and accounted for by the Claimant itself against RA Bill No. 1 under Work Order No. 2 dated 28.05.2015. No claim whatsoever was raised by the Claimant concerning the said RA Bill No. 1. The only alleged claim raised by the Claimant concerning Work Order No. 2 was with respect to the alleged RA Bill No. 2. Therefore, the observations by the Ld. Arbitrator in in the Arbitral Award is wholly perverse. Payment done on 09.02.2016, as per the Claimant itself, as aforementioned, had no relation whatsoever with the alleged RA Bill No. 2 and which OMP (COMM) No. : 12/2023 60/73 payment was rather concerning RA Bill No. 1, for which no claim admittedly was raised by the Claimant.
(y) The Ld. Arbitrator, without any basis whatsoever, sought to take it upon itself to estimate the amount of allegedly verified bill. There was no occasion for the Ld. Arbitrator to do so, more so in view of the Claimant itself having failed to prove its own case. No basis/reasoning whatsoever has been furnished by the Ld. Arbitrator in having to estimate amount of alleged verified bill. Admittedly no certified measurements, bills etc. on record - for the Ld. Arbitrator to rely upon. No reasoning and/or basis has been furnished by the Ld. Arbitrator whatsoever, in having to take and assume 90% of the alleged amount claimed by the Claimant, and to award the same.
(z) Ld. Arbitrator committed a patent illegality and gross perversity in having to award interest to the Claimant on its alleged Claim Nos. 1 & 2. With the Claimant having failed to prove its alleged claims, there was no occasion whatsoever, for the Ld. Arbitrator to have awarded any interest. It would also be relevant to mention that while deciding the Claimant's Claim of Interest (under Claim Nos. 3 & 4), and having to erroneously award the same, the Ld. Arbitrator sought to award interest from 28.06.2019, by having to state the date as being the "Date of invocation of arbitration".
(a1) The Ld. Arbitrator committed a patent illegality and gross perversity in having to pass a declaratory award in favour of the Claimant with respect to GST claimed by it on its claimed alleged outstanding dues. With the Claimant having failed to prove its alleged claims, there was no occasion whatsoever, for the Ld. Sole Arbitrator to have passed a declaratory award in OMP (COMM) No. : 12/2023 61/73 favour of the Claimant with respect to GST claimed on such alleged claims. GST was otherwise not applicable at the relevant time. The said aspect was admitted by the Claimant in his Cross- Examination . The same was also so duly acknowledged by the Ld. Arbitrator in the Arbitral Award The Ld. Arbitrator had also come to observe and hold that "The Claimant has already paid its liability of taxes at the time of purchase of material etc."
(b1) Observation of the Ld. Arbitrator that the Claimant would not be able to claim any input credit on any component of work allegedly done earlier, is wholly unfounded, in as much as, inter-alia, no such case was pleaded by the Claimant in its SOC. The award of interest on such GST by the Ld. Arbitrator in Arbitral Award is wholly perverse and not tenable. In view of all the facts and submissions, with the Claimant not being entitled to award of any alleged claims, there was no occasion whatsoever, for the Ld. Arbitrator to have awarded the Arbitration Costs in favour of the Claimant.
(c1) The Ld. Arbitrator failed to take note, much less consider the circumstances as stipulated under Section 31A(3) of the Act, which are required to be taken into account, while determining as to whether costs relating to the Arbitration Proceedings were liable to be awarded in favour of the Claimant. The Ld. Arbitrator also failed to consider that CW-1 had failed to depose and prove its alleged claim towards costs of arbitration .
64. Ld. Counsel for respondent also submitted that respondent had never been told of any alleged breaches. Petitioner has not filed any letter or document or warning or claim for so called damages, if it is presumed without admitting that there was any OMP (COMM) No. : 12/2023 62/73 problem in the working, functioning, executed work of the respondent. It was further submitted that:
(a) the pleadings of the petitioner before the Ld. Arbitrator by way of its SOD etc. were full of inconsistencies, bogus, highly vague, baseless and unsubstantiated. Unfortunately, it tried its best to locate the so called/alleged gaps and holes (non-existent) in the case/claims of the respondent.
(b) The respondent's witness was extensively cross examined by way of asking 137 questions and it continued for 6 days before the Ld. Arbitrator. However, nothing adverse in favour of the petitioner herein, came out during that cross examination of respondent proprietor.The said witness categorically, specifically and clearly replied to all the questions during the said cross examination and clarified the actual factual position.
(c) In rebuttal thereof, the petitioner failed to produce any documents and /or evidence and/or witness for examination. It filed a bogus affidavit of its so called witness who despite multiple opportunities given, sensing the falsity of his contentions and case put up, did not appear before the Ld. Arbitrator for his cross examination. As such the bogus contentions of the petitioner remained unproved and are liable to be rejected.
(d) All the contentions being raised here by the petitioner have been dealt with by the Ld. Arbitrator in detail, elaborately, on the basis of pleadings of the parties, documentary evidence and evidence etc. led by the respondent and judgments in support thereof.OMP (COMM) No. : 12/2023 63/73
(e) The retention money is admittedly withheld by petitioner despite completion of the work. There is no notice and/or any communication by the petitioner to the respondent thereby it is conveyed to the respondent that its retention money is forfeited and/or shall not be refunded. In its letter dated 10.07.2019, in award and in Section 34 petition, factum of refund of retention money is clearly admitted by the petitioner.
65. In statement of claim, with reference to both the work orders, claimant/respondent herein mentioned in tabular form with regard to RA bills, due date of payments, due payment thereof by the petitioner herein and the number of days of delay in payment. While the different number of days of delayed payments were mentioned against RA Bills no. 1,2, 4 (against work order no.1) and RA bill no.1 (against work order no.2), payment against RA bill no.5 and RA Bill no.2 remained pending. As clarified by respondent on record, RA bill no. 5 against work order no.1 and RA bill no. 2 against work order no.2 were sought to be treated as final bills. Petitioner herein, in statement of defence before Ld. Arbitrator, disputed the allegation of any delay on its part and also disputed any amount being due.
66. As submitted by Ld. Counsel for petitioner itself, that petitioner was directed to file Affidavit submitting the 'details of work executed' by the Claimant as also the 'details of payments' received by the Claimant. Along with the said Affidavit, the Petitioner had also filed Ledger details along with specific details of the RA Bills under the two Work Orders. In the details of the payments furnished on record by petitioner, rather the excess payment having been made, was claimed. While Ld. Counsel for petitioner stated about not filing of the counter claim, the over OMP (COMM) No. : 12/2023 64/73 payments having become time barred, however stated about the said affidavit, having not been referred to, much less discussed and considered, by the Ld. Arbitrator.
67. In terms of record, petitioner herein had chosen not to lead evidence before Ld. Arbitrator, thereby, petitioner itself also failed to prove its assertions and the details of the payments or any excess payment made as mentioned in the affidavit or ledger details. Though it is correct that with regard to the claims of the respondent/claimant, onus was upon the claimant to establish and prove its assertions. Claimant had specifically deposed about outstanding dues and repeated demands of the same by him, supported by the documents on record.
68. Ld. Counsel for petitioner stated that claimant/respondent in addition to committing other breaches under the contract, failed to complete the project in time and it was delayed beyond the timelines stipulated in the work orders in addition to being left incomplete as well as quality control and quality assurances requirements of the contract were also compromised. In terms of own affidavit of the petitioner, though not referred by Ld. Arbitrator, as so stated by Ld. Counsel for petitioner, excess payment had been made. Despite the allegations of breaches of contract, failure to follow the timelines, deficiency in quality control and quality assurance requirements, yet the petitioner had made the excess payment to the respondent. No iota of evidence was brought on record with regard to any such intimation or communication to the petitioner while payment in sum of Rs. 5 lacs admittedly was made by respondent as on 09.02.2016. Letter dated 21.12.2015 was held to be not proved on record.
OMP (COMM) No. : 12/2023 65/7369. Ld. Counsel for petitioner submitted that claimant failed to obtain Completion Certificate which was mandatory. He referred to cross examination of CW1 wherein he had admitted that he was required to obtain Completion Certificate but also conceded that he did not have the same. Ld. Counsel for petitioner also submitted that premise taken by the Ld. Sole Arbitrator for allowing the said claim is of the works allegedly completed by the Claimant, the alleged final bills having been proved by the Claimant, and of there being no objection with regard to the quality and completion of works.
70. Completion Certificate was also required to be issued by Engineers of petitioner. Numerous letters written by respondent/claimant are part of record whereby he had been continuously requesting for release of his payment. None of the letters were responded by the petitioner nor at any point of time, respondent was informed with regard to non submission of completion certificate or any other defects justifying withholding of amount of bills. Rather part payment in sum of Rs. 5 lacs was paid for work order dated 28.5.2015 on 09.02.2016, which was after submission of the bills dated 08.10.2015. Even during this period nor subsequent thereto, petitioner ever conveyed with regard to non submission of the completion certificate or pointing out any defect in performance of work by claimant/respondent, while the only letter dated 21.12.2015 did not find any credence before Ld. Arbitrator. Claimant's request for issuance of completion certificate and for verification of the bills was also not adhered to, as so noted by Ld. Arbitrator.
OMP (COMM) No. : 12/2023 66/7371. Ld. Arbitrator referred to the payment detail sheet Annexure CD-8 which was duly verified by the concerned official of the petitioner, according to which, the due amount was Rs. 4856719.67 . Respondent had repeatedly asked petitioner to clear the outstanding bills vide letters and vide emails. No dispute pertaining to the correctness of email address and the contact details of official concerned of the petitioner, upon which respondent had been writing emails and sending SMSs, seems to be part of record. Ld. Arbitrator noted that:
" 9.4.3.11 respondent/petitioner herein had not issued any letter objection/communication to the claimant disputing the doing of work by it, quality and quantity thereof its objections to the pending bills of the claimant, any loss caused to it because of alleged non completion of work by the claimant at site, non-imposition of liquidated damages as per contract terms, there being o counter claim by the respondent qua the claimant and responding not filing any documents or leading any evidence to prove its contentions whatsoever or leading any evidence to show that the said work was not completed by the claimant. Thus, any such contention by the respondent seems an afterthought.
9.4.3.12 The respondent has failed to show any material on record by virtue of which it can claim that claimant's bills are disputed and objected to by it or remained unverified or the work was not handed over by the respondent to Delhi Jal Board etc. clearly indicate that the contentions of the respondent in this regard are not established".
72. Ld. Counsel for respondent further submitted that retention money was admittedly withheld by petitioner despite completion of the work. There is no notice and/or any communication by the petitioner to the respondent whereby, it was conveyed to the respondent that its retention money is forfeited and/or shall not be refunded. Further, petitioner in its letter dated 10.07.2019 had admitted non refund of retention money.
73. As already noted, reading the contents of letter dated 10.7.2019 in its entire context, the admission of petitioner with regard to payment of retention money seem to be the typing/writing mistake. Nevertheless, petitioner had not refunded OMP (COMM) No. : 12/2023 67/73 the retention money, is the admitted fact on record. Ld. Arbitrator also noted that the security deposit was admittedly deducted by the respondent from running bills of claimant in terms of contract/work orders, however despite completion of the said work, receipt of bills, there being no correspondence, objection etc. pertaining to the allegations of poor quality/incomplete work, respondent/petitioner herein ought to have refunded the said amount to claimant. Ld arbitrator also noted that there was nothing on record to support the illegal withholding of this amount of claimant for so many years without any correspondence and any notice to the claimant.
74. Submission of Ld. Counsel for petitioner is correct that Arbitrator ought to assign the reasons for arriving at the conclusion and that merely recording the pleadings & submissions of a party and saying "I agree with the said Party", without giving any reasoning of its own, vitiates the Arbitral Award. It is also correct that an arbitrator is obligated to consider submissions of both the parties and to provide impartial and independent reasoning. Simply rubber stamping one party's case without examining the evidence or other party's arguments, may lead to violation of due process of natural justice. Arbitral award that is unreasoned and based solely on agreeing to the claimant's submissions without the arbitrator making independent findings, will lead to being unsustainable and un-enforceable.
75. Section 31(3) of the Act requires the arbitral award to state its reasons, except when the parties agree otherwise or it is an award on agreed terms under section 30. An unreasoned award, when not justified by a waiver, can be considered a patent OMP (COMM) No. : 12/2023 68/73 illegality. In Som Datt Builders Ltd. vs. State of Kerala, (2009) 10 SCC, Hon'ble Apext Court observed that:
" 25. The requirement of reasons in support of the award under Section 31(3) is not an empty formality. It guarantees fair and legitimate consideration of the controversy by the Arbitral Tribunal. It is true that the Arbitral Tribunal is not expected to write a judgment like a court nor is it expected to give elaborate and detailed reasons in support of its finding(s) but mere noticing the submissions of the parties or reference to documents is no substitute for reasons which the Arbitral Tribunal is obliged to give. Howsoever brief these may be, reasons must be indicated in the award as that would reflect the thought process leading to a particular conclusion. To satisfy the requirement of Section 31(3), the reasons must be stated by the Arbitral Tribunal upon which the award is based; want of reasons would make such award legally flawed."
76. Ld. Counsel for respondent submitted that the provisions of section 34 (2) of the Act limit the grounds on the basis of which an award can be set aside. The impugned award is reasoned award, based on documentary evidence and the law applicable at the relevant time, therefore, no interference is required. Reliance was placed upon South Delhi Municipal Corporation Vs. Anand Prakash Gupta & Ors.
MANU/DE/2704/2021, N. Jayamurugan Vs. Saravana Global Holdings Ltd. MANU/TN/5862/2024, The state of Jharkhand & Ors Vs. HSS Integrated SDN and Ors. MANU/SC/1438/2019 and MMTC Ltd. Vs. Vedanta Ltd. MANU/SC/0221/2019, wherein interalia it was observed that:
" It is settled law that the Court should generally not interfere unless it is apparent that the perversity of the arbitral award goes to the root of the case, without a possibility of alternative interpretation that might sustain the award".
77. Ld. Arbitrator discussed the material available on record, respective submissions of the parties and arrived at the conclusion for passing of award in favour of claimant. Though, it is correct that Ld. Arbitrator at some places referred to the submissions of the Claimant/respondent and accepted the same, OMP (COMM) No. : 12/2023 69/73 reaching to extent of erroneous application of law. However, the conclusion drawn by Ld. Arbitrator neither suffers from perversity nor lack of application of mind. As noted by Hon'ble Apex court in Dyna Technologies Pvt. Ltd. Vs. Crompton Creaves (2020) 1 ARBILR 1, " If the Court can deduce from the award and the materials before it, which may include extracts from evidence and the transcript of hearing, the thrust of the tribunal's reasoning then no irregularity will be found. Equally, the court should bear in mind that when considering awards produced by non lawyer arbitrators, the court should look at the substance of such findings, rather than their form, and that one should approach a reading of the award in a fair, and not in an unduly literal way".
78. Following was also observed in the authority (supra):
"35. The mandate under Section 31(3) of the Arbitration Act is to have reasoning which is intelligible and adequate and, which can in appropriate cases be even implied by the Courts from a fair reading of the award and documents referred to thereunder, if the need be. The aforesaid provision does not require an elaborate judgment to be passed by the arbitrators having regards to the speedy resolution of dispute.
36. When we consider the requirement of a reasoned order three characteristics of a reasoned order can be fathomed. They are: Proper, intelligible and adequate. If the reasoning in the order are improper, they reveal a flaw in the decisionmaking process. If the challenge to an award is based on impropriety or perversity in the reasoning, then it can be challenged strictly on the grounds provided under Section 34 of the Arbitration Act. If the challenge to an award is based on the ground that the same is unintelligible, the same would be equivalent of providing no reasons at all. Coming to the last aspect concerning the challenge on adequacy of reasons, the Court while exercising jurisdiction under Section 34 has to adjudicate the validity of such an award based on the degree of particularity of reasoning required having regard to the nature of issues falling for consideration. The degree of particularity cannot be stated in a precise manner as the same would depend on the complexity of the issue. Even if the Court comes to a conclusion that there were gaps in the reasoning for the conclusions reached by the Tribunal, the Court needs to have regard to the documents submitted by the parties and the contentions raised before the Tribunal so that awards with inadequate reasons are not set aside in casual and cavalier manner. On the other hand, ordinarily unintelligible awards are to be set aside, subject to party autonomy to do away with the reasoned award. Therefore, the courts are required to be careful while distinguishing between inadequacy of reasons in an award and unintelligible awards".OMP (COMM) No. : 12/2023 70/73
79. Award passed by Ld. Arbitrator is neither unintelligible nor perverse. Scope of jurisdiction under section 34 of the Arbitration Act is limited and is not open for appellate analysis. The court cannot sit in appeal while adjudicating a challenge to an Award. In terms of well settled law, the arbitral awards should not be interfered with, in a casual and cavalier manner, unless the court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. The courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act.
80. Reliance is placed upon National Highway Authority of India Vs. IRB Goa Tollway Pvt. Ltd. 2022 (288) DLT 533, wherein it was observed that:
" 77. The position in law, as regards the scope of interference by a count, exercising jurisdiction under section 34 of the 1996 Act, with an arbitral award is, by now, fossilised through a number of judicial authorities, of which one may take due stock of the judgments in Sangyong Engineering & Construction Co. Ltd. Vs. NHAI (2019) 15 SCC 131: 2019 LAWPACK (SC)62532:2019 (3) R.A.J. 323 and Delhi Airport Metro Express Pvt. Ltd. Vs. DMRC (2022) 1 SCC 131 : 2021 LAWPACK (SC)65432: 2021 (5) R.A.J. 54. These decisions clearly hold that the court, exercising jurisdiction under section 34, is to interfere only in cases of "
patent illegality" or perversity in the Award under challenge. Mistakes of fact or law, or the predilection of the section 34 court to incline to a view contrary to that expressed by the Arbitral Tribunal, cannot consitute a basis for interference. Section 34 Court does not substitute its subjective view in place of the view of the arbitral tribunal".
81. Ld. Counsel for petitioner also stated about the claims not being duly and properly instituted, having been filed by OMP (COMM) No. : 12/2023 71/73 proprietorship firm, for which reliance was placed upon M/s Arora Enterprises v. M/s Vijay Power Generator Limited, wherein it was observed that :
"15....A corporation being a juristic person can file a suit in its own name and such suit may be signed or verified by the secretary or director or any other principal officer of the corporation. As per Order 30, Rule 1 & 2 CPC, a partnership firm may sue or be sued through its partner and pleadings on behalf of a partnership firm may be signed and verified by any such partner.
16. In the case in hand, admittedly Mr. Rohit Arora through whom the suit has been filed is not the proprietor of plaintiff concern. As per PW1 himself, one Sh. H.C. Arora is the sole proprietor of plaintiff firm. There is no averments in the plaint as to who is the proprietor of the firm. Proprietorship firm is not a legal entity and therefore, cannot sue in its own name; whereas in the instant case, the memo of parties does not find mention of either the proprietor's name or even of the alleged authorized representative of the plaintiff firm. Although, as per PW1, plaintiff is a registered proprietorship firm of which Sh. H.C. Arora is said to be the sole proprietor. But, no certificate of registration has been placed on record.
17. It is apparent that Sh. H.C. Arora who is claimed to be sole proprietor of plaintiff firm has not instituted the plaint. His name is nowhere mentioned either in the memo of parties or even in the plaint. In view of the fact that plaintiff firm is a sole proprietorship firm and is not a legal entity, it cannot sue in its own name. Furthermore, Mr. Rohit Arora, who has signed and verified the plaint is neither the proprietor nor he is even the authorized representative of the sole proprietor. Admittedly, PW1 through whom the suit has been filed, did not file any authority letter executed by Mr. H.C. Arora, the alleged sole proprietor authorizing him (Mr. Rohit Arora) to institute the suit on behalf of M/s. Arora Enterprises. Even otherwise, as already observed above, M/s. Arora Enterprises being a sole proprietorship firm cannot sue in its own name. Reliance is placed on the decisions of the Hon'ble Delhi High Court in the matter of Miraj Marketing Corporation v. Vishaka Engineering; 115 (2004) DLT 471 and also in the matter of Svapn Constructions v. IDPL Employees Co-operative Group Housing Society Ltd.; (2006) 127 DLT 80.
18. Considering the above position, plaintiff firm being a non-legal entity was having no right to sue in its own name for claiming any alleged dues against the defendant/appellant herein. Hence, the suit was liable to be dismissed on this very count.
19. Assuming for the sake of arguments, that present suit was filed in the correct name and was maintainable, even in that case, the deposition of PW1 is without any authority as neither he was the proprietor of the firm nor he placed any document showing his authority to depose on behalf of proprietor. Furthermore, the deposition in affidavit Ex. PW1/A is also OMP (COMM) No. : 12/2023 72/73 lacking to show that PW1 was having any personal knowledge about the facts of the case being the employee of the plaintiff firm or otherwise.
20. The contention raised by learned counsel for respondent that during pendency of appeal, respondent has placed on record SPA dated 24.10.2013 executed by the proprietor of plaintiff firm in favour of PW1 is of no help to him for the simple reason that the subsequent SPA dated 23.10.2013 allegedly executed in favour of PW1 cannot ratify the previous acts of PW1 done during pendency of suit before learned Trial Court."
82. It is correct that proprietorship firm is not a legal entity , therefore, the legal proceedings are required to be instituted in the name of proprietor and not the proprietorship firm. Reliance placed by Ld. counsel for petitioner on M/s Arora Enterprises Vs. M/s Vijay Power Generator Limited refers to the abovenoted legal proposition. However, the arbitral proceedings have been conducted with the title of claimant as 'M/s Gyan Chand Goel' and the award has been passed with the title of claimant as 'Gyan Chand Goel, Govt. Contractors and Engineers' . Apparently, Ld. Arbitrator has taken care of this aspect and titled the proceedings as above noted.
83. Having discussed as above, it is concluded that the award passed by Ld. Arbitrator does not suffer from any patent illegality, perversity, neither is against the public policy nor is ignoring the vital evidence, calling for any interference from this court in objection petition u/s 34 of Arbitration and Conciliation Act. Accordingly, instant petition stands dismissed. File be consigned to record room after completion of necessary formalities.
Digitally signedsavita by savita rao Date: rao 2025.09.11 16:11:44 +0530 Announced in the open (SAVITA RAO) court on this 11th day DISTRICT JUDGE of September 2025 (COMMERCIAL COURT)-01 (SOUTH) SAKET COURTS,DELHI OMP (COMM) No. : 12/2023 73/73