Gauhati High Court
Arb.P./30/2020 on 27 June, 2022
Author: N. Kotiswar Singh
Bench: N. Kotiswar Singh
Page No.# 1/13
GAHC010129012020
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : Arb.P./30/2020
1. M/S. C C CONSTRUCTION,
A PARTNERSHIP FIRM, HAVING ITS PRINCIPAL PLACE OF BUSINESS AT
5006, RAMKUMAR ARCADE, 4TH FLOOR,
CHATRIBARI ROAD, GUWAHATI-781001.
2: SATYA NARAYAN CHOUDHURY,
S/O. LT. CHIMNIRAM CHOUDHURY,
OBERON APARTMENT,3RD FLOOR, LAMB ROAD,
AMBARI,GUWAHATI-781001.
3: SUSHIL KR. CHOUDHURY,
S/O. SRI SATYA NARAYAN CHOUDHURY,
R/O. SUBHAM GARDEN, 2ND FLOOR,
KALAPAHAR, GUWAHATI-781018.
4: RINKOO CHOUDHURY,
W/O. SRI SUDHIR CHOUDHURY,
OBERON APARTMENT, 3RD FLOOR
LAMB ROAD, AMBARI
GUWAHATI-781001.
5: SANJAY CHOUDHURY
S/O. SHRI SATYA NARAYAN CHOUDHURY,
R/O. HARI APARTMENT, 2ND FLOOR,
BHARALUMUKH, GUWAHATI-781001.
6: SUDHIR CHOUDHURY,
S/O. SHRI SATYA NARAYAN CHOUDHURY,
OBERON APARTMENT, 3RD FLOOR,LAMB ROAD,
AMBARI, GUWAHATI.
Petitioners
Page No.# 2/13
-VERSUS -
1. UNION OF INDIA,
REP. BY THE GENERAL MANAGER,
N. F. RAILWAY, MALIGAON, GUWAHATI-781011.
2:THE CHIEF ENGINEER/CONSTRUCTION-8
N. F. RAILWAY, MALIGAON GUWAHATI-781011.
Respondents
BEFORE
HON'BLE Mr. JUSTICE N. KOTISWAR SINGH
Advocate for the Petitioners : Mr. R. Hussain, Advocate,
Mr. S. Roy, Advocate.
Advocate for the Respondent : Mr. S. Chakraborty,
Standing Counsel, N.F. Railway.
Date of Hearing & Judgment : 27.06.2022
JUDGMENT AND ORDER (ORAL)
Heard Mr. R. Hussain, learned counsel appearing for the petitioners. Also heard Mr. S. Chakraborty, learned Standing Counsel, N.F. Railway appearing for the respondents.
2. In this petition, the petitioner No.1 is a partnership firm carrying on business of construction works for different Government Departments including Railways under the name and style of M/S CC Construction having its principal place of office at Chatribari Road, Guwahati and the petitioner Nos.2 to 6 are the partners of the petitioner No.1.
3. In this petition, the petitioners have sought for appointment of an Arbitrator by Page No.# 3/13 invoking Section 11(6) of the Arbitration and Conciliation Act, 1996.
4. Learned counsel for the petitioners submits that the petitioner No.1 had entered into an Agreement on 28.09.2010 for execution of certain works with the Railways relating to Earthwork in forming embankment, rebuilding and strengthening of major bridges including work in super structure of Br. No.12 (2x45.7 + 2x12.2), rebuilding and strengthening of minor bridges, construction/renovation of Station Building, RBG Room, Platform, Level Crossing and BG track linking work including dismantling of existing MG track, remodeling of existing station yard, supply & spreading of ballast and all other connected ancillary works as per approved plan in connection with Gauge Conversion from New Mal Jn. to Maynaguri road of N.F. Railway (Ex.C/L of New Mal Jn. Station Ch.0.00, Total Length: 42.1 Km).
5. According to the learned counsel for the petitioners, after the petitioner firm had entered into Agreement with the Railways, and started the work, because of non-cooperation from the Railway authorities, they could not execute the work properly resulting in slow progress of the work. However, the authorities themselves without appreciating the difficulties faced by the petitioner firm, partially terminated the work by issuing the termination notice dated 07.06.2011. According to the petitioners, subsequently, the work was finally terminated on 08.12.2011 on the ground that the petitioners had not been able to execute the work properly, which the petitioners denied.
6. Be that as it may, according to the petitioners, for the work already executed before the partial termination order was issued, the petitioners made a claim that a dispute arose about partial termination of contract on 21.09.2012 leading to appointment of Arbitrators by the Railway authorities from their own office and the said Arbitrators passed an Arbitral Page No.# 4/13 Award dated 25.09.2014 which is now the subject matter of challenge before the Additional District Judge No.1, Kamrup (Metro), Guwahati vide Misc. (Arb) Case No.57/2014 which is still pending. However, as mentioned above, the work was subsequently terminated finally on 08.12.2011.
7. According to the learned counsel for the petitioners, after the final termination of the contract, the petitioners had represented to the Railway authorities on various dates including on 10.12.2011, 13.12.2011, 01.03.2011, 20.04.2011, 24.04.2012, 04.05.2012, 22.06.2012, 26.06.2012, 29.06.2012, 11.07.2012, 20.07.2012, 25.07.2012, 26.07.2012, 09.08.2012, 21.08.2012, 24.08.2012, 27.08.2012, 06.09.2012, 10.09.2012, 27.09.2012, 09.10.2012, 11.10.2012, 26.10.2012, 30.10.2012, 03.11.2012, 06.11.2012, 04.01.2013, 22.01.2013, 24.01.2013, 24.01.2013, 01.02.2013, 4/14.06.2013 and 30/31.12.2014 making a demand for final measurement so as to enable him to make his final claim, as the petitioners could not make the final claim unless the final bill is prepared by the Railway authorities. According to the learned counsel for the petitioners, however, as the Railway authorities had not done so, the petitioner submitted a notice on 26.02.2019 for raising the final claim. Thereafter, on failure of the Railway authorities to respond to the same, the petitioners served a notice for final claim to the General Manager, N.F. Railway on 29.04.2019. The same was also not responded and accordingly, the petitioner was compelled to issue notice for appointment of an Arbitrator vide notice dated 07.09.2019 in respect of various portions of the works involved.
According to the petitioners, as there was no response thereafter also, the petitioners have approached this Court by filing this petition under Section 11 of the Arbitration and Conciliation Act, 1996.
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8. This petition, however, has been resisted by Mr. S. Chakraborty, learned Standing Counsel, N.F. Railway on the following grounds.
First of all, it has been submitted by Mr. Chakraborty that the conditions precedent for appointment of arbitrator have not been fulfilled. He submitted that the arbitration clause is to be found in Clause 64 (1)(I) of the Agreement which reads as follows, "64(1)(i) Demand for Arbitration :
In the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to the withholding by the Railway of any certificate to which the contractor may claim to be entitled to, or if the Railway of any certificate to which the contractor may claim to be entitled to, or if the Railway fails to make a decision within 120 days, then and in any such case, but except in any of the 'excepted matters' referred to in clause 60 of these conditions, the contractor, after 120 days but within 180 days of his presenting his final claim on disputed matters, shall demand in writing that the dispute or difference be referred to arbitration.
64(1)(ii) The demand for arbitration shall specify the matters which are in question or subject of the dispute or difference as also the amount of claim item wise. Only such dispute(s) or difference(s) in respect of which the demand has been made, together with counter claims or set off, given by the Railways, shall be referred to arbitration and other matters shall not be included in the reference.
64(1)(ii) (a) The arbitration proceedings shall be assured to have commenced from the day, a written and valid demand for arbitration is received by the Railways.
b. The claimant shall submit his claim stating the facts supporting the claims along with all relevant documents and the relief or remedy sought against such claim within a period of 30 days from the date of appointment of the Arbitral Tribunal.
c. The railway shall submit its defence statement and counter claim(s), if any, within a period f of 60 days of receipt of copy of claims from Tribunal thereafter, Page No.# 6/13 unless otherwise extension has been granted by tribunal.
d. Place of arbitration:- The plae of arbitration would be within the geographical limits of the Division of Railway where the cause of action arose or the Headquarters of the concerned Railway or any other place with the written consent of both the parties.
64(1)(iii)- No new claim shall be added during proceedings by either party. However, a party may amend or supplement the original claim or defense thereof during the course of arbitration proceedings subject to acceptance by Tribunal having due regard to the delay in making it.
64(1)(iv)-If the contractor(s) does/do not prefer his/their specific, and final claims in writing, within a period of 90 days of receiving the intimation from the Railways that the final bill is ready for payment, he/they will be deemed to have waived his/their claim(s) and the Railway shall be discharged and released of all liabilities under the contract in respect of these claims".
9. Referring to Clause 64(1)(i) of the aforesaid clause, it has been submitted by Mr. Chakraborty, learned Standing Counsel, N.F. Railway that demand for arbitration will arise only on the following conditions that, the contractor has to make a claim of the entitled amount and if the Railways fails to make a decision within 120 days, in such a case, the contractor after 120 days but within 180 days of his presenting final pay on the disputed matters shall demand in writing that the dispute or difference be referred to arbitration.
10. Mr. Chakraborty submits that in the present case, the petitioner made the final claim only on 26.02.2019 which is barred by limitation inasmuch as though the contract was terminated on 08.12.2011, he made the final claim only on 26.02.2019 and as such, being more than 3(three) years of the cause of action having arisen, it is hit by limitation.
It has been also submitted that assuming that the petitioners had submitted the said claim on 24.04.2019 as provided under Arbitration Clause 64(1)(i), he should have raised the Page No.# 7/13 demand for reference to Arbitration within 180 days of the date of notice i.e. 26.02.2019. However, the petitioner raised the notice for appointment of arbitrator only on 07.09.2019 which is beyond 180 days as provided under Clause 64(1)(i) and as such, the said demand issued by the petitioner on 07.09.2019 is dehors the said Clause 64(1)(i) and hence, not actionable.
11. Mr. Chakraborty submits that in order to invoke under Section 11(6) of the Arbitration and Conciliation Act, 1996 the parties must see that the procedure for appointment of arbitrator provided under the Agreement had been scrupulously followed.
It has been submitted that in the present case, the petitioner had submitted the notice for appointment of Arbitration beyond 180 days and as such, it is not valid as per the procedure as mentioned under Clause 64(1)(i) and as such, the present petition will not lie.
12. Learned Standing Counsel, N.F. Railway further submits that the demand for arbitration has to specify the matter which are in question or the subject of the dispute or the difference, as also the amount of claim item wise, as provided under Clause 64(1)(ii). Therefore, unless the petitioner makes the specific claim with specific amounts, such a claim or dispute arisen cannot be referred to arbitration.
Mr. Chakraborty submits that the specification of the claim and amounts is necessary for the reason that if there is any claim which is more than 20% of the value of the contract, it will be beyond arbitration as provided under Clause 16.2 of the General Conditions of Contract which is a part of the contract.
Further, Clause 16.3 of the aforesaid General Conditions of the Contract provides that the contractor shall not be entitled to ask for reference before completion of the work Page No.# 8/13 assigned to him under the contract and since the work was not completed by him, the arbitration will not lie.
13. The said Clause 16.3 of General Conditions of Contract further provides that the contractor shall seek reference to arbitration to settle dispute only once within ambit of condition 16.2.
Clauses 16.2, 16.3 and 16.4 of the General Conditions of Contract read as follows, "16.2 The provision of Clauses 63 and 6 to the General Conditions of Contract will be applicable only for settlement of claims or disputes between the parties for values less than or equal to 20% of the value of the contract and when claims of disputes are of value more than 20% of the value of the contract, provisions of Clauses-63 & 64 and other relevant clauses of the General Conditions of Contract will not be applicable and arbitration will not be a remedy for settlement of such disputes. 16.3 The contractor shall not be entitled to ask for reference to arbitration before completion of the work assigned to him under this contract. The contractor shall seek reference to arbitration to settle the dispute only once within the ambit of condition 16.2 above. 16.3 These special conditions 16.2 & 16.3 shall prevail over existing Clauses 63 & 64 of the General Conditions of Contract."
14. It has been also submitted that since the petitioners had already invoked the arbitration clause earlier, in which an award has been made, which is now a subject matter of consideration before the Court of Additional District Judge No.1, Kamrup (Metro) as mentioned above, any subsequent arbitration proceeding will not lie and as such, the question of appointment of an arbitration again does not arise.
15. Mr. S. Chakraborty, learned Standing Counsel, N.F. Railway also submits that the reference for appointment of an Arbitrator as mentioned above was made after the termination of the contract finally on 08.12.2011 and the said arbitration clause was invoked Page No.# 9/13 at the first instance on 18.02.2012. Thus, the petitioner was fully aware of the final termination of the contract when he invoked the arbitration proceeding at the first instance and having invoked the arbitration proceeding after part termination of the contract, he could not invoke this arbitration clause again in respect of the remaining works because of Clause 16.3 of the General Conditions of Contract referred to above.
16. In response, Mr. Hussain, learned counsel for the petitioners submits that it is not correct that the petitioners had raised the final claim only on 26.02.2019. He submits that the claim was made to the Chief Engineer/Construction, N.F. Railway, Maligaon at the first instance on 29.11.2018. However, having elicited no response from the authorities, the petitioner submitted the claim again to the higher authority, i.e. General Manager, N.F. Railway, Maligaon on 29.04.2019.
It is the case of the petitioners that if the final claim is treated to be made on 29.04.2019, in that event, the notice served by the petitioner on 07.09.2019 for appointment of the arbitrator is within the aforesaid 180 days as contemplated under clause 64(1)(i) and as such, it has been submitted that the present petition would lie.
17. Learned counsel for the petitioners submits if the Railway authorities have any issue regarding the limitation or as to whether in absence of final claim relating to certain claim, specially claim No.1 where the petitioner could not make the final claim because of the failure of the Railways to prepare the final bill, these are questions which can be looked into by the Arbitrator.
18. In this regard, Mr. Hussain, learned counsel for the petitioners has referred to the decision of the Hon'ble Supreme Court in Uttarakhand Purv Sainik Kalyan Nigam Page No.# 10/13 Limited Vs. Northern Coal Field Limited, (2020) 2 SCC 455 . In the aforesaid case, Hon'ble Supreme Court after discussing the law relating to appointment of Arbitrator has held that the law as on today is that there should be minimum adjudication by the Court and the Court should ordinarily refer the dispute to arbitration if there is existence of arbitration clause and dispute and any other related issues may be dealt with by the Arbitrator and as also held by the Hon'ble supreme Court in paras 7.10 and 7.12 of aforesaid Uttarkhand Purv Sainik Kalyan Nigam Limited (supra) which is quoted hereinbelow.
"7.10 In view of the legislative mandate contained in Section 11(6-A), the Court is now required only to examine the existence of the arbitration agreement. All other preliminary or threshold issues are left to be decided by the arbitrator under Section 16, which enshrines the kompetenz-kompetenz principle.
7.12. The legislative intent underlying the 1996 Act is party autonomy and minimal judicial intervention in the arbitral process. Under this regime, once the arbitrator is appointed, or the tribunal is constituted, all issues and objections are to be decided by the Arbitral Tribunal."
19. Having heard the learned counsel for the parties and on perusal of the records, this Court has to decide as to whether the petition filed by the petitioner is maintainable for the purpose of arbitration in terms of the arbitration clause referred to above.
20. As far as existence of the arbitration clause is concerned, there is no dispute between the contesting parties and as such, the subsequent exercise which is required to be undertaken by this Court is whether the said arbitration clause has been properly invoked by the petitioners for the purpose of appointment of the Arbitrator.
As regards this, there is some amount of difference of opinion between the petitioners as well as the respondents as to the applicability of Clause 64 (1)(i) which is the principal clause for appointment of arbitrator which lays down the procedure for seeking reference of the dispute to arbitrator.
Page No.# 11/13 The said clause makes it very clear that the contractor has to make a claim about the reference and if the reference had not been responded within 120 days, the contractor within 180 days of making final claim of disputed matters can demand in writing for reference of the dispute to arbitration.
21. It has been submitted by the learned Standing Counsel for the Railway authorities that in the present case, the demand for reference to arbitration has been made beyond 180 days of the final claim on the disputed amount. On the other hand, learned counsel for the petitioners submits that the final claim was made on 29.04.2019 and not on 26.02.2019 as submitted by the learned Standing Counsel, Railway as per Clause 63.
22. This Court is not deciding at this stage in this proceeding as to whether the final demand was actually made on 26.02.2019 as contended by the Railway authorities or on 29.04.2019 as contended by the petitioners as this is essentially a question of fact which would be required to be ascertained on the basis of various materials that may be produced and relied on by the parties. If the final claim was made on 26.02.2019, obviously, it may fall short of requirement of clause 64(1)(i). On the other hand, if it is found that the petitioners had made the final claim on 29.04.2019, it will fall within the requirement of Clause64(1)(i).
23. This issue, in my opinion, can be decided by the arbitrator in the light of the decision of the Hon'ble Supreme Court in Uttarakhand Purv Sainik Kalyan Nigam Limited (supra) that even an ancillary issue can be denied by the Arbitrator. This Court is however, satisfied that there is an arbitration clause which is not disputed by the parties. As to whether the various parameters of the arbitration clause have been satisfied or not can be certainly also examined by the Arbitrator himself.
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24. Accordingly, for the reasons discussed above, the matter is referred to the Arbitrator.
25. The Arbitrator will be accordingly required to be appointed under Section 11 of the Arbitration and Conciliation Act, 1996 who will determine all the issues including the competence of the arbitrator to act on this, which has been raised by the railway authorities as well as the issue relating to limitation.
26. This Court would like to make an observation as regards the issue of limitation that at the first glance the claim of the petitioner appears to be barred by limitation inasmuch as the contract was terminated in the year 08.02.2011 and the petitioners had submitted the final bill after more than 8 years, though according to him the claim was made on 29.04.2019. However, it is the case of the petitioners that they could not make the final claim in absence of final bill prepared by the Railway authorities which they did not do so in spite of repeated demands being made by the petitioners as mentioned in the correspondences in the notice dated 26.02.2019 and on the various other dates as mentioned above in para 7 to prepare the final bill.
Thus, the issue as to whether there has been a delay or not, is also required to be decided by the Arbitrator.
27. Accordingly, as also agreed by the parties, this Court appoints Mr. P.C. Barpujari, Retired District and Sessions Judge of Assam Judicial Service as the sole Arbitrator, subject to the declarations to be made under Section 12 of 1996 Act (as amended) with respect to the independence and impartiality of the arbitrator, and the ability to devote sufficient time to complete the Arbitration within the period specified by Section 29-A of the 1996 Act.
28. Parties will accordingly, appear before the learned Arbitrator on 02.08.2022 and thereafter, the learned Arbitrator will proceed with the matter in accordance with law.
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29. The Registry is directed to furnish a copy of this order to Mr. P.C. Barpujari, Retired District and Sessions Judge of Assam Judicial Service, the learned Arbitrator for doing the needful.
30. With the above observations and directions, the present petition stands disposed of.
JUDGE Comparing Assistant