Punjab-Haryana High Court
Sharma And Associates vs State Of Punjab And Ors. on 28 October, 2005
Equivalent citations: (2006)142PLR325
Author: Hemant Gupta
Bench: D.K. Jain, Hemant Gupta
JUDGMENT Hemant Gupta, J.
1. The present writ petition is directed against communication dated 10.5.2005 whereby, Superintending Engineer, Upper Bri Doab Canal Division, Amritsar has closed an arbitration case as sought by the petitioner.
2. On March 15, 1985 a contract agreement was signed between the petitioner and the respondent State for the work of Sutlej Yamuna Link Project Punjab (earth work, drainage behind lining and cement concrete lining) Reach RD 78.0 KMS to 78.5 KMS and similar adjoining works. The said work was completed by the petitioner somewhere in the year 1988. The petitioner raised a claim for extra items and loss to Executive Engineer etc. for payment on 11.3.1988. Since the dispute arose between the parties, the matter was referred to an Arbitrator at the instance of the petitioner. The award given by the Arbitrator was published on 12.6.1995. The proceedings to make the award as "Rule of the Court" is pending before this Court in Civil Revision No. 757 of 2002 filed by the State. In the claim petition in the year 1992 giving rise to said award, as Annexure P. 17, the petitioner has raised dispute inter-alia regarding delay in handing over exclusive clear reach uninterrupted and unimpeded, delay in handing over the exclusive site, delay in supply of basic data. The petitioner has also made grievance of non-supply of electric power, delay in making running payments as well as non issuance of cement and other materials for preliminary and enabling works. The petitioner has also made grievance of delay in payment of mobilisation and other advances, non provision of open drain for dewatering of water on one side of Canal, non providing complete instructions for execution of work etc. raising claim of 42 items in a claim petition running into 59 pages.
3. The petitioner on 27.11.2003 for the first time agitated its claim for the release of the final bill as it was the case of the petitioner that the respondents have failed to prepare the final bill. It is the case of the petitioner that he made a reference to the Executive Engineer in terms of the contract agreement. Since the Executive Engineer failed to convey any decision on the representation, the petitioner appealed to the Superintending Engineer, Construction Division, Sutlej Yamuna Link Canal Project (Punjab). Thereafter, the petitioner invoked the arbitration as per the contract agreement. Since the security and the payment of the final bill was not being released, the petitioner filed a Writ Petition No. 19962 of 2003 before this Court for issuance of writ of mandamus directing the respondents to prepare the ultimate final bill. On 18.12.2003, this Court directed the respondents to take final decision on the representation. The respondents denied the claim of the petitioner on 12.2.2004 while declining the representation of the petitioner.
4. The petitioner, thereafter, sought appointment of arbitrator in terms of Clause 63 of the Contract Agreement on 17.3.2004. In the said communication addressed to Chief Engineer, Construction Division, Sutlej Yamuna Link Canal Project (Punjab), the petitioner sought list of 3 officers of the rank of Superintending Engineer or higher so that the petitioner is able to select one of the officers to act as sole arbitrator. In response to the said letter, the Chief Engineer on 7.4.2004 communicated that the Arbitrator has already announced the award and has decided all the claims and that there exist no other dispute. The petitioner was also informed that in terms of the orders of the High Court, the representation of the petitioner was considered and rejected on 12.2.2004, thus, the Arbitrator cannot be appointed under Clause 63 of the Contract Agreement and the petitioner has no right to seek appointment, of the arbitrator. But on 27.4.2004, the petitioner sought selection of one of the officers out of 3 names communicated by the petitioner. The Chief Engineer, in response to the said letter on 6.5.2004 informed the petitioner that the previous arbitrator passed an award on 12.6.1995 and the appointment of another arbitrator after the lapse of 9 years is barred by limitation and in terms of the Contract Agreement another arbitrator cannot be appointed either by the respondents or by the petitioner. But the petitioner, selected and appointed Shri A.S. Sohi, Superintending Engineer as the sole arbitrator which appointment was resisted again by the Chief Engineer on 28.5.2004. It was pointed out that appointment of another arbitrator is barred by law of res judicata and law of limitation and is not in terms of the agreement. On the other hand, the Department also informed Shri A.S.Sohi, Superintending Engineer not to proceed with the arbitration since his appointment has been cancelled by the Chief Engineer on 4.7.2004. On 20.4.2005, the respondents informed Shri A.S.Sohi that he has not been appointed as arbitrator by the Chief Engineer nor with the consent of the Chief Engineer and therefore, the arbitration proceedings be closed immediately. It is in response of this letter, the Arbitrator Shri A.S.Sohi has closed the arbitration proceeding on 10.5.2005 which communication is being disputed by the petitioner in the present writ petition.
5. Learned counsel for the petitioner has vehemently argued that in terms of the contract agreement, the final bill was to be prepared by the respondents. Since the final bill has not been prepared, therefore, the petitioner has a right to seek adjudication of the dispute arising out of non-preparation of the final bill. It is argued that the respondents repudiated the framing of final bill only on 12.2.2004, therefore, the plea sought to be raised that the claim is barred by limitation is not sustainable in law. Reliance is placed upon Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority, to contend that the period of limitation has to be computed from the date of the claim is asserted and payment is. denied. Reliance is also placed on M.L. Dalmiya and Co. v. Union of India, to contend that the claim made in final bill cannot be defeated on the ground that it was included in the previous running bill which is now time barred.
6. After hearing learned counsel for the petitioner at length, we do not find any merit in the present writ petition. The work was completed by the petitioner prior to 11.3.1988 thereafter the dispute between the parties has been referred to an Arbitrator and voluminous claim petition has been preferred by the petitioner raising claim against 42 heads. The Arbitrator has given its award though the proceedings to make the award a rule of the Court are still subjudice before this Court. The question which arises is whether the petitioner can now raise a dispute of non-preparation of final bill after 15 years of completion of work.
7. Learned counsel for the petitioner has produced Clause 41 of the Agreement during the course of argument. The said Clause reads as under:-
41. PAYMENTS AND CERTIFICATES Payment for the work done by the Contractor will be based on measurement recorded at various stages of the work. The Contractor or his authorised agent or representative shall be present at the time of recording of each set of measurements and sign the measurement book or level field book in token of their acceptance.
If for any reason, the contractor or his authorised agent is not available and the work is suspended by the Executive Engineer to avoid recording of measurement during the absence of the contractor or his authorised representatives, Govt. shall not entertain any claim from the contractor for any loss incurred by him on this account. If the contractor or his authorised agent or representative does not remain present at the time of such measurement after the contractor has been given a three days notice in writing such measurements may be taken in his absence and shall be deemed to be accepted by the contractor.
Payment will be made to the contractor at suitable intervals. The contractor shall submit his bills or the work done to the Executive Engineer. The Executive Engineer shall thereafter verify the claims in the Bill by taking requisite measurements and arrange for admissible payments as early as possible of the presentation of the bill, after deducting therefrom all the amounts as per the terms of the contract.
Within one month of date fixed for the completion of the entire work, the contractor will submit his final bill otherwise the certificate of the measurement of Executive Engineer and the total amount payment for the work accordingly shall be final and binding on all parties. Payment of this bill shall not be considered conclusive evidence as to the sufficiency of any work of material is of correctness of measurements to which it relates, nor shall it relieve the contractor from his liabilities arising from any defects.
All interim payments shall be treated as advance payments against the final payment only. All payments will be made by cheque.
Receipts for payment made on account of any work shall be signed by the contractor (s) or any person having the powers of attorney to receive payments on behalf of the contractor.
8. On the basis of above said Clause it is the case of the petitioner that the measurement book if any prepared by the Executive Engineer is without notice to the petitioner. Since the contents of the Measurement Book has not been communicated to the petitioner nor the final bill has been prepared by the Department, the denial to claim payment alone on 12.2.2004 will confer right to get the dispute adjudicated by an arbitrator.
9. The agreement contemplated completion of project within 18 months. The petitioner has earlier raised claim for delay in completion of project upon the respondents. After the completion of the work, the contractor is to submit his in final bill. It is only in the absence of final bill submitted by the petitioner, the certificate of measurement of the Executive Engineer is final and binding on all the parties. As per the averment made in the second claim application filed before Shri A.S.Sohi, Annexure P18, the petitioner has submitted the claim for extra items/damages; losses and their rates etc. to the Executive Engineer on 11.3.1988. It is asserted that in the absence of record, the final joint measurements were not agitated or adjudicated therefore, the petitioner claims that the second arbitration is the only way to adjudicate Finally the dispute between the parties.
10. In Panchu Gopal Base v. Board of Trustees for Port of Calcutta, the question arose "when the cause of arbitration" arises in the absence of issuance of a notice or omits to issue notice for a long time or contract to the contrary". The said question arose as in pursuance of an agreement dated 27.5.1978 the contractor was to execute the work within 9 months. While executing the work, the contractor sent the bills on 12.7.1979 but the payment was not made. The notice was sent only on 28.11.1989 for reference to the arbitration. The said action was resisted by the State by moving an application under Sections 5, 12 and 33 of the Arbitration Act, 1940. The Hon'ble Supreme Court held that the period of limitation for commencing the arbitration runs from the date on which the cause of arbitration accrued, that is, to say when the claimant first acquired either a right of action or a right to require that an arbitration take place upon the dispute concerned. The Court held thus:
11. Therefore, the period of limitation for the commencement of an arbitration runs from the date on which, had there been no arbitration clause, the cause of action would have accrued. Just as in the case of actions the claim is not to be brought after the expiration of a specified number of years from the date on which the cause of action accrued, so in the case of arbitrations, the claim is'not to be put forward after the expiration of the specified number of years from the date when the claim accrued.
11. Still further, "action" and "cause of action" in the Limitation Act was held to be construed as arbitration and cause of arbitration. The cause of arbitration, therefore, arises when the claimant becomes entitled to raise the question, that is, when the claim-ant acquires the right to require arbitration. It was held to the follows effect:-
13. The Law of Arbitration by Justice Bachawat in Chapter 37 at p.549 it is stated that just as in the case of actions the claim is not to be brought after the expiration of a specified number of years from the date when the claim accrues, so also in the case of arbitrations, the claim is not to be put forward after the expiration of a specified number of years from the date when the claim accrues. For the purpose of Section 37(1) 'action' and 'cause of action' in the Limitation Act should be construed as arbitration and cause of arbitration. The cause of arbitration, therefore, arises when the claimant becomes entitled to raise the question, i.e. when the claimant acquires the right to require arbitration. The limitation would run from the date when cause of arbitration would have accrued, but for the agreement.
14. x x x x.... Section 3 of the Limitation Act applied by way of analogy to arbitration proceedings and like interpretation was given to Section 14 of the Limitation Act. The proceedings before the arbitration are like civil proceedings before the Court within the meaning of Section 14 of the Limitation Act. By consent the parties have substituted the arbitrator for a court of law to arbiter their disputes or differences. It is, therefore, open to the parties to plea in the proceedings before him of limitation as a defence.
12. The Hon'ble Supreme Court concluded that the Courts below have justifiably exercised discretionary power and jurisdiction under Section 5 and 12(2)(b) to permit the respondent to rescind the arbitration agreement.
13. The Hon'ble Supreme Court in State of Orissa and Anr. v. Damodar Das, quoted Russell on Arbitration by Author Walten, wherein it is stated that the period of limitation to commence an arbitration runs from the date on which the "cause of arbitration" accrued, that is to say from the date when the claimant first acquired either a right of action or a right to require that an arbitration take place upon the dispute concerned. The period of limitation for the commencement of an arbitration runs from the date on which, had there been no arbitration clause, the cause of action would have accrued. Interpreting Section 37 of Arbitration Act, 1940, the Court found that the cause of arbitration arise when the claimant becomes entitled to raise the question, that is, when the claimant acquire the right to require arbitration. A claim for arbitration must be raised as soon as cause for arbitration arises as in the cause of action arising in a civil action.
14. The principles laid down in the aforesaid judgment though arising out of Arbitration Act, 1940 holds good for arbitration even after the commencement of Arbitration and Conciliation Act, 1996 in view of Section 43(1) of the said Act. The Limitation Act, 1963 has been made applicable to arbitration as it applies to proceedings in Court in the said Act as well.
15. In view of above principles of law, the cause of arbitration arose to the petitioner when the work was completed somewhere in the year 1988 or when the petitioner raised a claim against the respondents for delay in execution of work etc. in the year 1992. But by no stretch of imagination, the claim of the petitioner raised in the year 2003 can be said to be within the period of limitation only on the basis of demand raised in that year.
16. Reliance on Inder Singh Rekhi's case (supra) is misplaced. In the said case, the Court found that a period of limitation cannot be postponed by sending reminders, but where the bill has not been finally prepared, the claim made by the claimant is the accrual of cause of action. The dispute arises where there is claim and denial of repudiation of claim. The said judgment is not applicable to the facts of the present case in view of Clause 41 of the Agreement which enjoins a duty on the contractor to submit his final bills within one month from the date fixed for completion of the entire work. The consequence of non-submission of the final bill are that certificate of the measurement of the Executive Engineer are. treated to be final and binding on all the parties. It, therefore, shows that the final bill was to be sent by the Contractor within one month of the date fixed for the completion of the project which could not be postponed for 15 years by the petitioner. In additional thereto, the petitioner has raised elaborate claims under 42 different heads in the year 1992. Such claims have been adjudicated upon by an arbitrator. The cause of arbitration in respect of final bill was available to the petitioner in the year 1992 as well.
17. Therefore, the dispute sought to be raised in respect of non-preparation of final bill after 15 years of completion of project of the work is patently beyond the period of limitation and thus, the termination of proceedings by the Arbitrator cannot be said to be suffering from any patent illegality or material irregularity warranting interference in exercise of the powers of judicial review of this Court.
18. Dismissed in limine.