Delhi High Court
Harcharan Dass Gupta vs Hindustan Pre-Fab Limited, & Anr. on 27 May, 2022
Author: Neena Bansal Krishna
Bench: Neena Bansal Krishna
NEUTRAL CITATION NO: 2022/DHC/002296
$~34
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 27th May, 2022
+ ARB.P. 790/2019
HARCHARAN DASS GUPTA .... Petitioner
Through: Mr. Virender Kumar Sharma, Adv.
versus
HINDUSTAN PRE-FAB LIMITED, & ANR .... Respondents
Through: Mr. Parveen Kumar Mehdiratta,
Advocate for R-1.
Ms. Astha Gupta and Mr. Vimal Raj,
Advocates for R-2.
CORAM:
HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA
NEENA BANSAL KRISHNA,J. (ORAL)
1. A petition under Section 11 of the Arbitration & Conciliation Act, 1996 for appointment of arbitrator, has been filed on behalf of the petitioner.
2. The petitioner was awarded a work regarding construction of Police Station at "C" Block, Janakpuri, New Delhi vide letter No. HPL/DGM(ENGG.)/DP/JP/2012-13/01 dated 31st October, 2012. According to the stipulated terms, the date of start of work was 14 th November, 2012 and was to be completed by 13th February, 2014 i.e. within a period of fifteen months. The work, however, got completed on 15 th November, 2016. The final bill as raised by the petitioner was not paid by the respondent No.1. It is asserted that a sum of Rs.2,81,78,727/- by way of pre-final bill of the undisputed items is due to the petitioner from respondent No.1.
3. It is submitted that the disputes arose between the parties. The procedure for appointment of arbitrator is laid down in Clause 27 of Special ARB.P. 790/2019 Page 1 of 8 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/002296 Conditions of Contract (hereinafter referred to as „SCC‟). In compliance to the same the petitioner has written to the DGM (Engg.) of respondent No.1. a letter dated 03rd April, 2019 putting him to notice to take a decision on the subject matter within one month but he failed to give any decision compelling the petitioner to approach CMD of respondent No.1 by way of an appeal and also for appointment of an arbitrator, who was also required to give a decision within one month of the receiving of the letter of the petitioner. However, he also failed to take any decision where upon the petitioner approached the CMD of respondent No.1 in terms of Clause 27 of SCC, but he also failed to give any decision. Hence, the petition has been filed for appointment of an arbitrator by this Court.
4. The respondent No.1 in his detailed reply has asserted that it is the agent of respondent No.2 appointed to execute the work of construction of Police Station at "C" Block, Janakpuri, New Delhi. On 07 th October 2011 the respondent No.1 had floated the tender for and on behalf of respondent No.2. All the acts done by respondent No.1 were, therefore, for and on behalf of respondent No.2 being its agent. Moreover, as per Clause 26 of SCC, the respondent No.1 is liable to make the payments only as and when the corresponding payments are received from respondent No.2. On 20 th September, 2016 the respondent No.1 handed over the building on completion of work to respondent No.2. A final bill for gross value of the work done of Rs.8,22,97,808.07 plus escalation of Rs.82,93,609/- total Rs.9,05,91,418.00 was raised. After adjustment of already paid amount upto 14th RA bill and statutory deductions, net payable was Rs.8,05,25,308.00 which was also paid on 13-07-2017. The respondent No.1 after the payment of final bill released the performance guarantee on 05th February, 2018 and ARB.P. 790/2019 Page 2 of 8 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/002296 refunded Rs.17,82,697/- towards security deposit deducted from RA Bill as per the agreed clauses. The contract was concluded to the satisfaction of the parties. The respondent No.1 has already made the payments and the contract had been fully discharged. It is also asserted that the final bills were fully settled and the present alleged claim is an afterthought and not maintainable. The petitioner had not raised any bills claiming Rs.l0,26,79,864/- as claimed in the Summary of Claims in the present petition. The petitioner ought to have submitted the bills in respect of the alleged claims along with tax invoice receipts as per Clause 12 of SCC which has not been done. It is asserted that the petition is not maintainable and is liable to be dismissed.
5. The respondent No.1 has further asserted that the present claim is barred by limitation. The contract was completed on 27 th August, 2016 while the arbitration is sought to be invoked after a lapse of three years and the claim is, therefore, barred by limitation. Furthermore, within the terms of Clause 21 of SCC the petitioner has not exhausted all the mechanism for settlement of claims and, therefore, this petition is not maintainable. Moreover, as per Clause 27.2 of SCC if the parties do not specifically agree on appointment of arbitrator, no person other than a person appointed by CMD, HPL can act as arbitrator. Also, as per the terms of the contract, fee, if payable, to the arbitrator shall be paid equally by the petitioner and respondent No.2. The respondent No.1 has no liability towards payment of the fee of the arbitrator. It is, therefore, stated that the present petition is liable to be dismissed.
6. The respondent No.2 in its detailed reply has stated that the petitioner is seeking appointment of the arbitrator in terms of Clause 27 of ARB.P. 790/2019 Page 3 of 8 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/002296 the SCC. It is explained by the Respondent No.2 that the project of construction of Police Post and staff quarters at "C" Block, Janakpuri was awarded by it to respondent No.1 M/s Hindustan Pre-Fab Limited and an Agreement dated 22nd February, 2010 was executed between respondent No.1 and respondent No.2. Rs.661.62 crores were sanctioned by Ministry of Home Affairs vide letter dated 26th October, 2012 which was subsequently revised to Rs.867.17 crores. After the submission of revised estimate by respondent No.1, the MHA sanctioned a revised AA/ES of Rs.9,53,00,000/- vide order dated 30th September, 2017.
7. It is further explained that respondent No.1 entered into an Agreement dated 23rd November, 2012 with the petitioner/ sub-contractor without the knowledge and consent of respondent No. 2 to which respondent No.2 is not a party. The disputes have arisen between the petitioner and respondent No.1 and respondent no.2 is in no way concerned with the disputes in the absence of any Agreement between petitioner and respondent no.2. The respondent No.2 is neither a signatory nor a party to the Agreement dated 23.11.2012. The existence of the Agreement dated 23 rd November, 2012 came to the notice of respondent No.2 only after filing of the present petition.
8. It is further asserted that full payment of Rs.9,50,19,357/- (after withholding 5% of the total fee as per clause 3.3 of the aforesaid agreement dated 22nd February, 2010) was made to respondent No.1 till 30th September, 2017. The respondent No.2 has completed his obligations in terms of the Contract dated 22.02.2010 and is not responsible for the acts of respondent No.1. Clause 27 in terms of the Agreement dated 23 rd November 2012 does not pertain to respondent No.2 and respondent No.2 is not bound to comply ARB.P. 790/2019 Page 4 of 8 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/002296 with the terms of the Agreement.
9. Moreover, Clause 12.1 of the Agreement dated 22nd February, 2010 between respondent No.2 and respondent No.1, clearly provided that Arbitration and Conciliation Act, 1996 shall not be applicable to the arbitration under this Clause. On the other hand, Clause 27.2 para 5 of the Agreement dated 23.11.2012 between the petitioner and Respondent No.1 clearly envisioned resolution of dispute by resorting to provisions of Arbitration and Conciliation Act,1996. Mere fact that respondent No.1 may have represented itself as an agent of respondent No.2 will not make respondent No.2 a party to the Arbitration Agreement in the absence of express approval, adoption, confirmation or ratification of the Agreement dated 23rd November, 2012. There is no privity of contract between Petitioner and respondent No.2. The petitioner can only sue respondent No.1 and not respondent No.2 and the petition for appointment of arbitrator is not maintainable against the respondent No.2.
10. The Section 11 petition of the petitioner interestingly does not refer or alleges the existence of any Arbitration Agreement between the petitioner and respondent No.2. The dispute is between the petitioner and respondent No.1 and the present petition is not maintainable against it.
11. Submissions heard.
12. The first objection taken on behalf of the respondent was that the contract was entered into between the petitioner and HPL, respondent no.1 and Respondent No.2 Delhi Police was not a party to the contract. Since there is no Arbitration Agreement between the petitioner and Respondent No.2, the present petition is not maintainable. Admittedly, an Agreement dated 26th February, 2010 was entered into between the Respondent No.2 ARB.P. 790/2019 Page 5 of 8 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/002296 Delhi Police and M/s HPL respondent No.1, wherein it was recorded that respondent No.1 M/s HPL was engaged as an executing agency for the project of construction of police post at C-Block, Janakpuri vide letter No.HPL/DGME(E)/09-10/0248 dated 13th January, 2010. The said Agreement further authorized the executing agency i.e HPL, respondent no.1 to discharge its duties and responsibilities of proper and timely completion of the project. The articles defining the scope of work included settlement of disputes and arbitration.
13 Clause 12 provide for settlement of disputes and arbitration. Clause 12.2 reads as under:
"12.2 For a Period of One Year from the date of handing over of Project, the Executive Agency shall redress/ resolve all disputes, if any, with Contractors/ Vendors etc. for and on behalf of Delhi Police and read with Clause 4.1 (E). The executing agency shall be responsible for settling disputes with Contractors for a period of one year."
14. It is clearly indicated that respondent No.1 was acting for and on behalf of respondent No.2 as an agent and was authorized to settle any dispute with the contractors or third parties which may arise in the execution of the contract.
15. Admittedly, the disputes have arisen in respect of the execution of the works between respondent No.1 i.e the executing agency and the petitioner. The respondent No.1 has been acting for and on behalf of respondent No.2 and, therefore, respondent No.2 is bound by the Agreement dated 23 rd November, 2012 entered into between respondent No.1 and the petitioner on the other hand in regard to execution of the contract. The Special Conditions of Contract(SCC) clearly stipulate for settlement of disputes and arbitration.
ARB.P. 790/2019 Page 6 of 8This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/002296
16. Clause 27 (ii) of Special Conditions of Contract provides as under:
"(i) Except when the decision has become final, binding and conclusive in terms of sub para (I) about disputes or differences shall be referred for adjudication through arbitration by a sole arbitrator appointed by the CMD-HPL on behalf of Delhi Police and with the consent of the Delhi Police. 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 its predecessor.
(ii) 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 along with the notice nor appointment of arbitrator and giving reference to the rejection by the CMD-HPL of the appeal. It is also a term of this contract that no person other than a person appointed by such CMD-HPL on behalf of Delhi Police and with the consent of the Delhi Police as aforesaid should act as arbitrator and if for any reason i.e not possible, the matter shall not be referred in arbitration at all."
17. This Agreement also clarifies that the person authorized to appoint the arbitrator is CMD-HPL for and on behalf of Delhi Police. Considering that the work had been executed by respondent No.1, the executing agency as an agent of respondent No.2 prima facie it is shown that there exists an arbitration Agreement between the petitioner and the respondents.
18. The other objection which has been taken is that the entire amount has already been paid by respondent No.1as received from respondent no.2 and therefore, there is no dispute between the petitioner and respondent No.1 and the arbitration clause cannot be invoked against it. The petitioner has raised a dispute in respect of the works that had been awarded to it by respondent No.2 through respondent No.1, its executing agency. The payments were to be made by the principle agency i.e respondent No.2 and respondent No.1 was merely an executing agency. The respondent No.1 may claim that it has paid the entire amount to respondent no.2, but the liability principally is that ARB.P. 790/2019 Page 7 of 8 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/002296 of respondent No.2 to settle the disputes in regard to payments and respondent No.1 being the agent of respondent No.2 cannot avoid the arbitration proceedings by claiming that it has already made payment to the respondent No.2.
19. The other objection is that the claims raised by the petitioner are barred by limitation as the work was admittedly completed on 21st October, 2016, while the present petition has been filed in November, 2019. The plea of limitation involved mix question of fact and law which cannot be determined in the present proceedings and the parties can raise this objection during the arbitration.
20. In view of the above discussion, the petition is allowed.
21. Accordingly, Mr. Justice D.K. Jain, (Retd. Judge of Supreme Court), Mobile No. 9999922288, is appointed as the Sole Arbitrator to adjudicate the disputes between the parties.
22. This is subject to the learned Arbitrator making the necessary disclosure as required under Section 12(1) of the Arbitration & Conciliation Act and not being ineligible under Section 12(5) of the Arbitration & Conciliation Act.
23. The parties are at liberty to approach the learned Arbitrator for further proceedings.
24. It is clarified that all rights and contentions of the parties are reserved.
25. The petition is disposed of in the aforesaid terms. All pending applications, if any, also stand disposed of.
NEENA BANSAL KRISHNA, J MAY 27, 2022/va ARB.P. 790/2019 Page 8 of 8 This is a digitally signed Judgement.