M/S Asha Singhal vs Union Territory Of Chandigarh And ... on 3 July, 2024

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Punjab-Haryana High Court

M/S Asha Singhal vs Union Territory Of Chandigarh And ... on 3 July, 2024

1. Instant petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996, (for short "the Act"), for appointment of an independent Arbitrator to decide the claim of the petitioner.

2. Counsel for the petitioner submits that the petitioner was allotted work of construction of Community Centre at Model Jail, U.T., Chandigarh, vide allotment letter dated 20.12.2012, Annexure A-1. He submits that the general conditions of the contract for C.P.W.D. works -

1 of 9 ::: Downloaded on - 21-07-2024 07:37:00 ::: Neutral Citation No:=2024:PHHC:082203 ARB-119-2022 -2- 2010 formed a part and parcel of the contract agreement and Clause 25, thereof, provides for settlement of disputes by way of arbitration. He submits that the petitioner completed the work on 31.07.2016, but the final bill remained unpaid and a communication dated 18.02.2021, Annexure A-3, was sent to the respondent for balance payment, which was followed by communications, Annexures A-4 and A-5. He submits that vide memo dated 09.07.2021, Annexure A-7, respondents intimated that no final bill or claim is pending with them. Petitioner by communication dated 31.07.2021, Annexure A-8, sent a copy of the measurement bill and requested for payment. When no response was received, petitioner invoked the arbitration clause by serving a notice dated 20.11.2021, Annexure A-9, which remained unattended.

3. Upon notice, petition has been contested by the respondents by filing a reply, wherein it has been submitted that the petitioner was unable to complete the work, which was withdrawn from him vide letter dated 18.07.2016, Annexure R-1, and the remaining work was assigned to another agency. It has been submitted that a gross amount of Rs.1,17,58,159/- was sanctioned and after making deductions, the balance amount was released to the petitioner. A categoric stand has been taken that the measurement bill refer to by the petitioner was paid in November, 2015, and the petitioner has raised a claim after the expiry of the period of limitation.

4. Counsel for the respondents submits that as the claim is barred by time, the petition deserves to be dismissed. He has placed reliance 2 of 9 ::: Downloaded on - 21-07-2024 07:37:00 ::: Neutral Citation No:=2024:PHHC:082203 ARB-119-2022 -3- upon a judgment of the Supreme Court in Secunderabad Cantonment Board Versus M/s B. Ramachandraiah & Sons 2021 AIR (SC) 1391.

5. I have heard counsel for the parties and considered their respective submissions.

6. At the outset, arbitration clause deserves to be noticed and is reproduced hereunder:-

"CLAUSE 25 Settlement of Disputes & Arbitration 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 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 3 of 9 ::: Downloaded on - 21-07-2024 07:37:00 ::: Neutral Citation No:=2024:PHHC:082203 ARB-119-2022 -4- request the Superintending Engineer in writing for written 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 this 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 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 4 of 9 ::: Downloaded on - 21-07-2024 07:37:00 ::: Neutral Citation No:=2024:PHHC:082203 ARB-119-2022 -5- Additional Director General, the Director 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 along with 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 any demand for appointment of 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 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 5 of 9 ::: Downloaded on - 21-07-2024 07:37:00 ::: Neutral Citation No:=2024:PHHC:082203 ARB-119-2022 -6- 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 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 appointing authority and give separate award against each dispute and claim referred to him and in 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 of 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 of 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 be paid and fix or settle the amount of costs to be so paid."

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7. A perusal of the clause reproduced above shows that a contractor is required to raise a claim within 120 days of receiving intimation from the Engineer In-charge that the final bill is ready for payment, failing which, it shall be deemed that he has waived his right. Document appended by the respondents with reply, Annexure R-4, shows the details of the running bills raised by the petitioner and the payments made against them. Its perusal makes it apparent that the final bill was never prepared. It cannot, therefore, be said that the petitioner at any stage received any information from the Engineer In-charge that the final bill has been prepared for payment. In any case, the period of 120 days as specified in the above reproduced clause is hit by Section 28 of the Contract Act as has been held by the Supreme Court in Grasim Industries Ltd. Versus State of Kerala, (2018) 14 SCC 265.

8. Coming to the objection of limitation raised by the respondents, suffice is to mention that Supreme Court in Bharat Sanchar Nigam Ltd. & Anr. Versus M/s Nortel Networks India Pvt. Ltd. (2021) 5 SCC 738, has held that the issue of limitation pertains to the maintainability or admissibility of the claim, which has to be decided by the arbitral tribunal. As to whether the claim is barred by time or is prohibited because of non-fulfillment of some condition in the arbitration clause has to be decided by the arbitral tribunal either as a preliminary issue or at the final stage after evidence is led by the parties.

9. This Court is, therefore, of the view that the petition deserves to succeed. To be fair to the counsel for the respondents, it deserves to be 7 of 9 ::: Downloaded on - 21-07-2024 07:37:00 ::: Neutral Citation No:=2024:PHHC:082203 ARB-119-2022 -8- noted that the judgment in Secunderabad Cantonment Board's case (supra), would not be of any help to them as in the said matter, after invoking the arbitration clause vide letter issued in November, 2006, the claimant had filed a petition seeking appointment of an Arbitrator in the year 2013. In this background, Supreme Court held that the petition seeking appointment of an Arbitrator is barred by time. This judgment is not applicable to the facts of the present case.

10. Consequently, petition is allowed. Mr. Sanjeev Kaushik, former Member Judicial, Central Administrative Tribunal, Kothi No.1033, Sector 12-A, Panchkula, Mobile No.9417233385 is appointed as the sole Arbitrator to adjudicate the dispute between the parties, subject to declaration to be made by him under Section 12 of the Act with regard to his independence and impartiality to adjudicate the dispute between the parties.

11. Parties are directed to appear before the learned Arbitrator on 05.08.2024 or on any day, time and place to be fixed and communicated by the learned Arbitrator at his convenience.

12. The arbitrator shall be paid fee in accordance with the Fourth Schedule of the Act, as amended.

13. The arbitrator is requested to complete the proceedings as per time limit specified under Section 29-A of the Act.

14. Needless to mention that all the questions arising between the parties in this matter shall remain open for determination in the arbitral proceedings and any observation made hereinabove will not be binding on 8 of 9 ::: Downloaded on - 21-07-2024 07:37:00 ::: Neutral Citation No:=2024:PHHC:082203 ARB-119-2022 -9- the learned Arbitrator.

15. Copy of the order be sent to the learned arbitrator.



03.07.2024                                        (SUVIR SEHGAL)
sheetal                                               JUDGE

          Whether Speaking/Reasoned            Yes/No
          Whether Reportable                   Yes/No




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Punjab-Haryana High Court