Rajasthan High Court - Jaipur
M/S Sanwaria Construction vs Union Of India Thr Dir Gen (W) And Ors on 16 March, 2018
Author: M.N. Bhandari
Bench: M.N. Bhandari
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Arbitration Application No. 69/2017
M/s. Sanwaria Construction, Government Building Contractor,
Plot No. 239, Subhash Colony, Shastri Nagar, Jaipur Through Its
Partner Babulal Sanwaria.
----Petitioner
Versus
1. Union Of India Through Director General (W), Central
Public Works Department, Nirman Bhawan New Delhi-
110011.
2. Chief Engineer, North Zone-III, Central Public Works
Department, Vidhyadhar Nagar Sector No. 10, Jaipur-
302023.
3. Executive Engineer (Civil) Jaipur Central Division I, (PWD)
Room No. 110, Central Public Works Department, Sector
No. 10, Vidhyadhar Nagar, Jaipur- 302023.
----Respondents
For Petitioner(s) : Mr. Devidutt Sharma For Respondent(s) : Mr. Anand Sharma with Mr. Saurabh Tiwari HON'BLE MR. JUSTICE M.N. BHANDARI Order 16/03/2018 This Arbitration Application has been filed under Section 10 and 11 of the Arbitration and Conciliation Act, 1996.
The learned counsel for the applicant submits that after entering into agreement, the work was performed, however, pursuant to the audit objection, recovery of Rs.4,69,332/- was made. The applicant raised objection against it as the order for (2 of 7) [ARBAP-69/2017] recovery was passed without an opportunity of hearing by the audit party. The applicant preferred an appeal before the Chief Engineer, which was not decided. The applicant thus sent a notice for appointment of Arbitrator but when no action was taken, the present application was filed. The prayer is to appoint an independent Arbitrator.
Learned counsel for the non-applicant submits that the application is premature because compliance of the Clause 25 of the Agreement has not been made prior to a request for appointment of the Arbitrator. In absence of compliance, the application would not be maintainable. A reference of the judgment of this Court in the case of Simpark Infrastructure Pvt. Ltd. Versus Jaipur Municipal Corporation reported in 2013 (1) W.L.N. 111 has been given. There, in the similar circumstances, application was held to be premature. The prayer is accordingly to dismiss the application holding it to be premature or not maintainable.
I have heard submissions of learned counsel for the parties and perused the record.
A reference of Clause 25 has been given. For ready reference, it is quoted hereunder:-
Clause 25 "Except where otherwise provided in the contract, all questions and disputes relating to the meaning of the specifications, design, drawings and instructions here-in before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out (3 of 7) [ARBAP-69/2017] of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after the cancellation, termination, completion or abandonment thereof shall be dealt with as mentioned hereinafter:
(i) If the contractor considers any work demanded of him to be outside the requirements of the contract, or disputes any drawings, record or decision given in writing by the Engineer-in-Charge on any matter in connection with or arising out of the contract or carrying out of the work, to be unacceptable, he shall promptly within 15 days request the Superintending Engineer in writing instruction or decision. Thereupon, the Superintending Engineer shall give his written instructions or decision within a period of one month from the receipt of the contractor's letter. If the Superintending Engineer fails to give his instructions or decision in writing within the aforesaid period or if the contractor is dissatisfied with the instructions or decision of the Superintending Engineer, the contractor may, within 15 days of the receipt of Superintending Engineer's decision, appeal to the Chief Engineer who shall afford an opportunity to the contractor to be heard, if the latter so desires, and to offer evidence in support of his appeal. The Chief Engineer shall give his decision within 30 days of receipt of contractor's appeal. If the contractor is dissatisfied with the decision, the contractor shall within a period of 30 days from receipt of the decision, give notice to the Chief Engineer for appointment of arbitrator on prescribed proforma as per Appendix XV, failing which the said decision (4 of 7) [ARBAP-69/2017] shall be final binding and conclusive and not referable to adjudication by the arbitrator.
(ii) Except where the decision has become final, binding and conclusive in terms of Sub Para (i) above, disputes or difference shall be referred for adjudication through arbitration by a sole arbitrator appointed by the Chief Engineer, CPWD, in charge of the work or if there be no Chief Engineer, the Additional Director General of the concerned region of CPWD or if there be no Additional Direction General, the Direction General of Works, CPWD. If the arbitrator so appointed is unable or unwilling to act or resigns his appointment or vacates his office due to any reason whatsoever, another sole arbitrator shall be appointed in the manner aforesaid. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor.
It is a term of this contract that the party invoking arbitration shall give a list of disputes with amounts claimed in respect of each such dispute alongwith the notice for appointment of arbitrator and giving reference to the rejection by the Chief Engineer of the appeal.
It is also a term of this contract that no person, other than a person appointed by such Chief Engineer CPWD or Additional Director General or Director General of works, CPWD, as aforesaid, should act as arbitrator and if for any reason that is not possible, the matter shall not be referred to arbitration at all.
It is also a term of this contract that if the contractor does not make nay demand for appointment or arbitrator in respect of any claims in writing as aforesaid within 120 days of receiving the intimation from the Engineer-in-charge that the final bill is ready for payment, the claim of the (5 of 7) [ARBAP-69/2017] contractor shall be deemed to have been waived and absolutely barred and the Government shall be discharged and released of all liabilities under the contract in respect of these claims.
The arbitration shall be conducted in accordance with the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) or any statutory modifications or re-enactment thereof and the rules made thereunder and for the time being in force shall be apply to the arbitration proceeding under this clause.
It is also a term of this contract that the arbitrator shall adjudicate on only such disputes as are referred to him by the appointed authority and give separate award against each dispute and claim referred to him and all cases where the total amount of the claims by any party exceeds Rs.1,00,000/-, the arbitrator shall give reasons for the award.
It is also a term of the contract that if any fees are payable to the arbitrator, these shall be paid equally by both the parties.
It is also a term of the contract that the arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties calling them to submit their statement of claims and counter statement claims. The venue of the arbitration shall be such place as may be fixed by the arbitrator in his sole discretion. The fees, if any, of the arbitrator shall, if required to be paid before the award is made and published, be paid half and half by each of the parties. The cost of the reference and the award (including the fees, if any, of the arbitrator) shall be in the discretion of the arbitrator who may direct to any by whom and in what manner, such costs or any part thereof shall (6 of 7) [ARBAP-69/2017] be paid and fix or settle the amount of costs to be so paid."
The Clause 25, quoted above, provides how the matter should proceed before a request for appointment of Arbitrator. The learned counsel for the applicant submits that complete procedure was undertaken before a request for appointment of an independent Arbitrator. I find no document on record to show compliance of Clause 25.
Learned counsel for the applicant has made reference of the pleading to demonstrate compliance of Clause 25 but I find no pleading for the steps required to be taken before a request for appointment of Arbitrator. As per the procedure given under Clause 25, whenever, a dispute exists, then party would sent it within fifteen days to Superintending Engineer for its decision. The Superintending Engineer to decide it within thirty days of receipt of dispute by the parties to the contract. If Superintending Engineer fails to give instructions on decision in writing within the period of thirty days or if contractor is dissatisfied then within thirty days, an appeal can be preferred to the Chief Engineer. If contractor remain dissatisfied with the decision, a demand for appointment of Arbitrator can be made. The pleading to the application does not show any representation in writing to the Superintending Engineer against recovery of the amount.
The pleading is only for filing of an appeal to the Chief Engineer but no documents to this effect have been filed. The applicant has filed a copy of the legal notice by which a request for appointment of an Arbitrator was made but, therein also, facts pertaining to compliance of Clause 25 of the agreement has not been referred. Accordingly, I find present application to be (7 of 7) [ARBAP-69/2017] premature. My view is supported by the judgment of this Court in the case of Simpark Infrastructure Pvt. Ltd. (supra).
Accordingly, the application is dismissed. The applicant would, however, be at liberty to take steps, as envisaged under the agreement, before seeking appointment of Arbitrator, if so permissible.
(M.N. BHANDARI),J Manish/21