M/S H.R. Builders vs National Highway Authority Of India on 22 August, 2022

[Cites 23, Cited by 0]

Delhi High Court

M/S H.R. Builders vs National Highway Authority Of India on 22 August, 2022

1. At the outset I may state, by this common order, I shall decide both Arb. P.1138/2021 and Arb. P. 1139/2021 as the issues involved in both petitions are identical. However, I shall be narrating the facts of both the petitions separately.

Arb. P.1139/2021

2. This is a petition filed under Section 11 (6) of the Arbitration & Conciliation Act, 1996 (for short, "A & C Act, 1996") with the following prayers:

"It is, therefore, most humbly prayed that your Lordship may graciously be pleased to: -

a) Appoint the Sole Arbitrator to adjudicate the dispute between the parties in terms of the contract; And/Or;

b) Cost of this petition may be allowed in favour of the Petitioner and against the Respondent; And/Or;

c) Pass such other order(s) as your Lordship may deem fit and proper."

3. It is the case wherein M/S H.R. Builder (hereinafter referred to as „petitioner‟) is a proprietorship firm. It has its office situated at B-37, Ashok Vihar, Phase-I, Delhi-110052. It primarily performs the construction works in various government departments pan India.

4. Whereas National Highways Authority of India (hereinafter referred to as „respondent‟) was constituted by an Act of Parliament in 1988 under the administrative control of the Ministry of Road Transport and Highways.

Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Arb. Pet. 1138/2021 and connected matter Page 2 of 29 Signing Date:25.08.2022 10:43:29

It has primarily been setup as a Central Authority to develop, maintain and manage the National Highways entrusted to it by the Government of India.

5. It is the case of the petitioner that it was awarded, specifically with the work of "Improvement of existing carriageway with widening and strengthening of Shahpura-Gulabpura section of NH-148D (Approx. Length 40kms) in the state of Rajasthan" vide Acceptance letter dated December 01, 2011 bearing no. NHAI/26011/1/2011- FOJ/New NHS/2628 on a total construction price of ₹ 26,17,50,879.20./-. The afore-said work was to be completed within the duration of 8 months and 28 days. Whereas, there was a maintenance period of three years from the date of the completion of the work.

6. Mr. Avinash Trivedi, Ld. Counsel appearing on behalf of the petitioner submitted that soon thereafter, an agreement dated January 10, 2012 was executed between the petitioner as well as the respondent and the latter issued a letter dated January 12, 2012 whereby the agreement dated January 10, 2012 executed between the parties was acknowledged and the petitioner was directed by the respondent to proceed with the work.

7. It was averred that immediately after the award of the work, the petitioner was willing to start the work however the respondent was not ready to discharge its contractual obligations. It was further submitted that the petitioner had even started the work on time and the same got delayed on account of delays and inactions by the respondent. According to the averments, it was the hindrances exclusively attributable to the respondent which impeded the petitioner from executing the work. Hence, as per Mr. Trivedi, the respondent failed to fulfill its contractual obligations.

8. Mr. Trivedi, then elaborated the grievances against the respondent by Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Arb. Pet. 1138/2021 and connected matter Page 3 of 29 Signing Date:25.08.2022 10:43:29 contending that the initial drawings on which the work was supposed to be carried-upon, were issued on December 29, 2011. However, when the petitioner started the work, as per the original drawings, on January 12, 2012, the petitioner was made to stop the work for the want of amended drawings. It was submitted that the amended drawings were issued by the Department only on March 22, 2012 and in the meanwhile, full machinery, manpower and staff stationed at the site were sitting idle, for the want of amended drawings.

9. In order to substantiate and crystallize his claims, it was then averred that because of delay at the end of the respondent, there was water-logging at the site of the work. For this, the petitioner was pressurized on multiple occasions to redo the work. Hence, the petitioner had to spend substantially on the repairing of the road.

10. It was then submitted that despite the impediments orchestrated by the respondent, the petitioner satisfactorily completed the work on October 31, 2013. He contended that the respondent had even approached the petitioner during the Defect Liability Period and sought rectification of the damage caused to the road. That the petitioner, in spite of the carelessness of the respondent, repaired the damaged roads on the assurances that the cost for repairing will be paid to the petitioner by the respondent.

11. Subsequently a completion certificate for the work was issued by the respondent on March 20, 2014 whereby the work completed by the petitioner on October 31, 2013 was certified. It was the case of the petitioner that the work done up to date was of ₹ 26,42,04,646/-. It was asserted that the respondent had also issued a completion certificate dated January 30, 2017 thereby certifying the work done by the petitioner to be of Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Arb. Pet. 1138/2021 and connected matter Page 4 of 29 Signing Date:25.08.2022 10:43:29 ₹ 26,72,90,945/- with the details of major items executed by the petitioner. Moreover, the respondent department, further granted extension of time of 415 days without levy of penalty to the petitioner, vide letter dated November 14, 2018.

12. The Ld. Counsel of the petitioner had vehemently argued that the respondent also promised to compensate for the cost spent by the petitioner on repairing. However, the respondent neither kept its promises nor paid any compensation to the petitioner. Hence, for the petitioner, the dispute had arisen and thereby, a letter dated June 26, 2020 raising disputes and seeking resolution by way of Arbitration was sent to the respondent. The petitioner submitted that in continuation of the letter dated June 26, 2020, another letter dated July 31, 2020 was sent by the petitioner.

13. Mr. Trivedi then explained and substantiated the process of invocation of arbitration by stating that the contract executed between the parties provided for the disputes to be sent to the Dispute Review Expert (hereinafter referred to as „DRE‟) in terms of clause 24 & 25 of the General Conditions of the contract (hereinafter referred to as „GCC‟). It was further stated that Clause 36.1 of ITB (Instruction to Bidders) provided for the appointment of the DRE as per the names mentioned in the Appendix to ITB. Hence, notice dated July 9, 2021 was sent with the categorical prayer for appointment of a DRE in terms of clause 24 & 25 of the GCC. The said notice was delivered on July 14, 2021 whereby the respondent was asked appoint the DRE. It was the grievance of the petitioner that in spite of the receipt of the said notice, neither the DRE was appointed nor any decision was conveyed to the petitioner within the stipulated period of 28 days prescribed under the GCC.

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14. Under these circumstances, the petitioner was constrained to send a legal notice dated September 07, 2021, thereby invoking Clause 25.3 of the GCC and proposed names for the appointment of the sole arbitrator. According to Mr. Trivedi, Clause 25.3(a) provides for the appointment of Arbitrator for adjudication of disputes arising out of the contract and it also gives liberty to the parties to agree on a sole arbitrator and if the said agreement is not arrived at, then there is also a provision to constitute Arbitral Tribunal consisting of three members. The above-mentioned legal notice was delivered to the respondent on September 10, 2021.

15. The relevant extract of the Arbitration Clause 25.3 of the GCC is as following:

"CLAUSE 25.3"

Arbitration "...25.3

(a) In case of Dispute or difference arising between the Employer and a domestic contractor relating to any matter arising out of or connected with this agreement, such disputes or difference shall be settled in accordance with the Arbitration and Conciliation Act, 1996. The parties shall make efforts to agree on a sole arbitrator and only if such an attempt does not succeed and the Arbitral Tribunal consisting of 3 arbitrators one each to be appointed by the Employer and the Contractor and the third Arbitrator to be chosen by the two Arbitrators so appointed by the Parties to act as Presiding Arbitrator shall be considered. In case of failure of the two arbitrators appointed by the parties to reach upon a consensus within a period of 30 days from the appointment of the arbitrator appointed subsequently, the Presiding Arbitrator shall be appointed by the * Council, Indian Roads Congress.

(b) The Arbitral Tribunal shall consist of three Arbitrators one each to be appointed by the Employer and the Contractor. The third Arbitrator shall be chosen by the two Arbitrators Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Arb. Pet. 1138/2021 and connected matter Page 6 of 29 Signing Date:25.08.2022 10:43:29 so appointed by the Parties, and shall act a presiding arbitrator. In case of failure of the two arbitrators appointed by the parties to reach upon a consensus within a period of 30 days from the appointment of the arbitrator appointed by the *Council, Indian Roads Congress.

(c) If one of the parties fails to appoint its arbitrator in pursuance of sub clause (a) and (b) above within 30 days after receipt of the notice of the appointment of its arbitrator by the other party, then the * Council, Indian Roads Congress shall appoint the arbitrator. A certified copy of the order of the Council, Indian Roads Congress, making such an appointment shall be furnished to each of the parties.

(d) Arbitration proceedings shall be held in India, and the language of the arbitration proceedings and that of all documents and communications between the parties shall be English.

(e) The decision of the majority of arbitrators shall be final and binding upon both parties. The cost and expenses of Arbitration proceedings will be paid as determined by the arbitral tribunal. However, the expenses incurred by each party in connection with the preparation, presentation, etc. of its proceedings as also the fees and expenses paid to the arbitrator appointed by such party or on its behalf shall be borne by each party itself.

(f) Performance under the contract shall continue during the arbitration proceedings and payments due to the contractor by the owners shall not be withheld, unless they are the subject matter of the arbitration proceedings."

16. Mr. Trivedi finally submitted that since the respondent neither replied and nor appointed the sole arbitrator or constituted the tribunal. Hence as a last resort, the petitioner has filed the present petition.

17. On the other hand, Mr. Santosh Kumar, Ld. Counsel for the respondent has countered the afore-mentioned contentions put forth by the Ld. Counsel of the petitioner.

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18. As per the case presented by Mr. Kumar, there was the delay of 415 days in completing the work assigned to the petitioner which was solely attributable to the petitioner. It was further averred that though the petitioner was granted extension of time of 415 days vide letter dated November 14, 2018, however, the said extension of time was granted ex post facto i.e., for the completion of work till October 31, 2013.

19. During the course of the proceedings, the Ld. Counsel for the respondent had further submitted that after the expiration of Defect liability period i.e., on October 31, 2016, the respondent on January 30, 2017 issued the Completion Certificate with the details of major items executed by the petitioner for an amount of ₹ 26,72,90,945/-. According to Mr. Kumar, the said completion certificate is generally given for future tender purposes and was only issued on the request of the petitioner. Thus, the said certificate does not affect the prescribed limitation for raising claims and as well as for seeking reference of the disputes to arbitration. It was further put forth that the work under the agreement was admittedly completed on October 31, 2013. Hence, limitation period should start running from this date only.

20. The Ld. Counsel of the respondent staunchly argued that it is only on June 26, 2020 i.e., after the expiry of almost 7 years from the completion of the work, the petitioner issued the purported arbitration notice alleging multiple issues.

21. It was then contended that the petitioner willingly accepted the final amount of ₹ 26,72,90,945/- as per the final bill dated January 12, 2017. Moreover, as per the respondent, the petitioner had also given an undertaking dated June 16, 2017, whereby the petitioner had affirmed to not to claim any escalation charges from the respondent.

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22. It is the case of the respondent that the petitioner never raised any issue, dispute, claim or any objection whatsoever at the time of the issuance of work completion certificate in March 2014. Furthermore, the petitioner did not invoke the DRE in terms of Clause 25.2 (Procedure for Disputes) even for once, during the construction period or the Defect Liability Period. According to the respondent, the reference to the DRE is the first step towards resolution of disputes and it is the decision of the DRE which may be further referred to the Arbitration. According to Mr. Kumar, the petitioner requested for nomination of DRE only on July 09, 2021 i.e., after the invocation of arbitration. It was also the contention of the respondent that after one year of sending the non- est letter dated June 26, 2020 (allegedly seeking appointment of the arbitrator), on July 09, 2021, the appointment of DRE was sought by the petitioner i.e., the petitioner had belatedly started the pre-arbitration procedure which should have been preceded by the purported arbitration notice. It was reiterated that the petitioner sought the appointment of the DRE after almost 8 years from the date of completion of work and the petitioner never sought the appointment of the DRE even during the Defect Liability Period.

23. Hence, the main contention of the respondent is that the petitioner‟s claim is ex facie barred by the limitation.

24. Furthermore, in the written submissions made by the petitioner, it was specifically averred that during the Defect Liability Period of three years, the petitioner on the assurances of the respondent, executed the repair work. However, the petitioner was never compensated despite the assurances made by the respondent. It was specifically averred that even though the Defect Liability Period got expired on October 31, 2016, the Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Arb. Pet. 1138/2021 and connected matter Page 9 of 29 Signing Date:25.08.2022 10:43:29 petitioner was granted a total extension of 415 days on November 14, 2018 without levy of penalty.

25. To prove that the case in hand is not ex-facie time barred, Mr. Trivedi, had relied upon the judgment of a coordinate bench of this Court in the case of M/S G4S Secure Solutions (India) Pvt. Ltd. vs. LI Consulting Pvt. Ltd., Arb. P. 192/2021 delivered on August 23, 2021. He substantiated his claim by stating that at the time of payment of the final bill, the respondent withheld an amount of ₹ 20,00,000/- on account of approval of extension of time and which was granted to the petitioner on November 14, 2018. It was then argued that the withheld amount of the final bill was paid to the petitioner only on January 4, 2019. Hence, the present petition is within the limitation period.

26. On the issue of issuance of no claim certificate (hereinafter referred to as „NCC‟) given by the petitioner, against the work in question, it was submitted that the issuance of NCC by the petitioner was mandated by the respondent which is a general practice followed by all the tenderees. It was argued that the NCC had been issued under protest and economic duress and was not a voluntary exercise. Reliance was placed upon the judgment of the Apex Court in „R.L. Kalathia & Co. vs State of Gujarat, Civil Appeal No. 3245/2003‟ to contend that the Court should not reject the claim merely because the contractor has issued a "No Due Certificate". Thus, it was argued that despite the issuance of NCC, the claim of the petitioner is substantially valid and subsisting.

27. On the other hand, Mr. Kumar in his written submissions primarily etched two defenses. Firstly, that the alleged claims sought to be raised by Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Arb. Pet. 1138/2021 and connected matter Page 10 of 29 Signing Date:25.08.2022 10:43:29 the petitioner are ex-facie barred by the limitation and secondly, that there is no dispute subsisting between the parties.

28. On the first line of defense, Mr. Kumar had relied upon the judgment passed by the Hon‟ble Supreme Court of India in Vidya Drolia vs. Durga Trading Corporation, 2021 (2) SCC 1, wherein, Mr. Kumar had heavily relied upon paragraphs 147.11 and 148 of the afore-said judgment to contend that the Court ought to undertake a primary first review to weed out „manifestly ex-facie non- existent, or non-arbitrable disputes‟.

29. Accordingly, it was stated that the facts of the present case demonstrate that the alleged claims are ex-facie barred by the limitation.

30. Mr. Kumar tried to crystallize the contention of limitation by submitting that the alleged claims of the petitioner were in nature of damages or loss or compensation arising out of alleged breach of contract. According to him, the cause of action, if any, qua the said claims, arose, at best on October 31, 2013, when the work was completed. Mr. Kumar then took the aid of Article 55 of the Schedule of the Limitation Act, 1963, and stated that limitation period, if any, at best, had to be of three years from the date of completion of work. Moreover, Mr. Kumar also emphasized upon Section 9 of the Limitation Act, 1963 to state that, once time has begun to run, no subsequent disability or inability to institute a suit stops it. Thus, it was the case of Mr. Kumar, that limitation period in the instant case commenced from October 31, 2013 and expired on October 31, 2016.

31. Mr. Kumar further emphasized upon the claim no.3 viz. "on account of repairing done for the road damaged due to water logging caused because of delay in decision & improper design" made in the legal notice dated September 7, 2021 sent by the petitioner. According to him, even the Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Arb. Pet. 1138/2021 and connected matter Page 11 of 29 Signing Date:25.08.2022 10:43:29 afore-said claim, if any, lied in the defect liability period. Hence, the cause of action, if any, arose either during the defect liability period or, at best, on the expiry of the defect liability period i.e., on October 31, 2016. Accordingly, the limitation period qua the defect liability period got expired on October 31, 2019. Therefore, as per Mr. Kumar, even the notice for the invocation received by the respondent on September 10, 2021 was substantially barred by limitation, being received after two years from the expiry of the limitation period.

32. Mr. Kumar had also relied upon various other judgments to assert that the petition filed by the petitioner was ex-facie time barred. He specifically relied upon the judgments of the Supreme Court in State of Gujarat vs. Kothari and Associates, (2016) 14 SCC 761 and Shanti Conductors Private Limited vs. Assam State Electricity Board and others, (2020) 2 SCC 677, and contended that the exemptions from the law of limitation should not have any import in the instant case. It was submitted that contention of the petitioner that its claims got extended on account of payments made by the respondent towards the final bill, has no legs to stand upon as the petitioner had not placed any documents on record to show that the payments were made by the respondent. Thus, as per Mr. Kumar, such contention by Mr. Trivedi, de hors the documents.

33. According to Mr. Kumar, the petitioner had impliedly sought to rely upon Section 19 of the Limitation Act, 1963 (an exception to the general law of the limitation). It was submitted that the rigors of Section 19 would not come into effect in the present case as it only applies when certain conditions are fulfilled. Such as, where the payment has been made within the prescribed period of limitation, payment has been acknowledged by Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Arb. Pet. 1138/2021 and connected matter Page 12 of 29 Signing Date:25.08.2022 10:43:29 some form of writing and also where payment is made towards an „existing debt‟. As per Mr. Kumar, the payment by itself is of no avail unless there is an acknowledgement in the required form and there is no acknowledgement by the respondent in the present case.

34. Mr. Kumar, further averred that the cause of action for the claims sought to be raised by the petitioner is separate and distinct from the payment of final bill. The final bill was towards the work done under the Contract and not for any damages or losses, allegedly suffered by the petitioner, due to alleged breach of the respondent. According to Mr. Kumar, the final bill did not contain any claims for damages or the work done during the defect liability period. Thus, the claims of the petitioner are claims for damages and the work done during the defect liability period, which are not „existing debt‟ and as such, the payment of final bill could not be construed to acknowledge the claims of damages and the work done in the defect liability period raised by the petitioner. Thus, as per him, the Claims of the petitioner are not on account of a debt or interest on legacy, but are claims of damages and therefore Section 19 has no applicability and would not extend the period of limitation.

35. It was then submitted that the effect of Section 19 would be to allow a fresh period of limitation with regard to existing debt in respect of which acknowledgment and payment has been made and thus it would not extend the limitation for any fresh claim, or any amount not accepted by the other party.

36. It was further submitted that in case the petitioner wanted to claim benefit of exception under Section 19, it was incumbent upon the petitioner to make specific pleadings adverting to the applicable Section, and how it Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Arb. Pet. 1138/2021 and connected matter Page 13 of 29 Signing Date:25.08.2022 10:43:29 extended the limitation from the date of which the cause of action had originally arisen. According to him, in absence of the same there can be no basis to save the time of limitation. Mr. Kumar, whilst submitting this, again relied upon Bharat Sanchar Nigam Ltd. & Anr. v. M/s. Nortel Networks India Pvt. Ltd., Civil Appeal No. 843-844/2021, to state that there is no pleaded case adverting to the applicable Section, and how it extends the limitation from the date of which the cause of action originally arose. According to Mr. Kumar, the petitioner has not pleaded about any event which would extend the period of limitation. Plus, there are no averments which manifest that the period of limitation got extended, when in the normal course, the Limitation got expired on October 31, 2016 for the claims of damages/prolongation/ escalation and on October 31, 2019 for the claim of work done during the defect liability period.

37. Moreover, as per the submissions of Mr. Kumar, the petitioner also sought to rely upon the letter dated November 14, 2018 vide which the respondent gave ex post facto extension of time to the petitioner i.e., beyond the original date of completion of work i.e., from September 11, 2012 till October 31,2013 which was the actual date of completion. As per Mr. Kumar, this line of argument was taken by Mr. Trivedi, only to contend that the limitation got extended. Mr. Kumar countered this line of argument by stating that the said argument was without pleading and it was not a pleaded case adverting to the applicable Section and it was also not shown that how it extended the limitation from the date, the cause of action originally arose. Hence, the said argument is liable to be rejected at the threshold. Mr. Kumar qualifies his argument by stating that the extension of time was granted to the petitioner, only at his request in view of the unconditional Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Arb. Pet. 1138/2021 and connected matter Page 14 of 29 Signing Date:25.08.2022 10:43:29 undertaking submitted by the petitioner and with the grant of extension of time, the delay in completion of the work was regularized by the respondent in order to favour the petitioner, since without the same, it would have been difficult for the petitioner to bid for future projects.

38. Apart from extensively arguing on the aspect of limitation, Mr. Kumar also submitted that there is no dispute subsisting between the parties i.e., the petitioner, voluntarily and unconditionally waived its claims for damages vide undertaking dated June 16, 2017 and thus, the Claims for damages and compensation on account of alleged breaches by the respondent, are barred. Furthermore, it is the case of the respondent that the petitioner acquiesced to the final bill and the amount received was without any demur objection/ protest. Thus, it was submitted that the Court, while relying upon Vidya Droila (supra) should refuse reference to arbitration for want of subsisting disputes between the parties.

Arb. P.1138/2021

39. This is also a petition filed under Section 11 (6) of the Arbitration & Conciliation Act, 1996 (for short, "A & C Act, 1996") with the following prayers:

"It is, therefore, most humbly prayed that your Lordship may graciously be pleased to: -

a) Appoint the Sole Arbitrator to adjudicate the dispute between the parties in terms of the contract; And/Or;

b) Cost of this petition may be allowed in favour of the Petitioner and against the Respondent; And/Or;

c) Pass such other order(s) as your Lordship may deem fit and proper."

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40. In this case also, the petitioner was awarded, specifically with the work of "Improvement of existing carriageway of Ladpura-Bhilwara of section of NH-758 (Approx. Length 51kms) in the state of Rajasthan" vide acceptance letter dated November 30, 2011 on a total contractual price of ₹ 19,12,92,089/- and the afore-said work was to be completed within the duration of six months.

41. Mr. Trivedi, Ld. Counsel for the petitioner submitted that soon thereafter, an agreement dated January 3, 2012 was executed between the petitioner as well as the respondent and the latter issued a letter dated January 4, 2012 whereby the agreement dated January 3, 2012 executed between the parties was acknowledged and further the petitioner was directed by the respondent to proceed with the work.

42. The Ld. Counsel of the petitioner further stated that immediately after the award of the work, the petitioner started the work in right earnest on January 4, 2012. The work was completed on December 25, 2012 and subsequently a completion certificate was issued by the respondent on March 20, 2013 and the total work done was certified of ₹ 20,32,79,922/- which was more than the contractual price.

43. It was the case of the petitioner that before the petitioner could complete its work, the work of Chambal-Bhilwara water supply project was sanctioned to the Public Health Engineering Department (herein after referred to as „PHED‟), Government of Rajasthan. It was further stated that the respondent had approved the proposal for laying of MS Pipeline of 1400/1300/1200 mm Dia, whereas M/s NCC was awarded the work of lying of pipeline by PHED.

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44. It is the case of Mr. Trivedi that M/s NCC while executing the work of laying pipeline, damaged the work executed by the petitioner. According to him, the damage done by M/s NCC whilst laying down the pipeline was not attributable to the petitioner. Mr. Trivedi, further submitted that even the respondent had the knowledge that the damage was done only by the M/s NCC and to this extent two letters dated June 11, 2013 and July 13, 2013 were written by the respondent department to the District Collector, Bhilwara whereby the District Collector was requested to direct the laying agency to not to further damage the road.

45. The respondent on September 4, 2013 again wrote a letter which was titled as "Final Notice" to the executive engineer, PHED, Chambal- Bhilwara Project and the copy was marked to the District Collector, Bhilwara, the Chief Engineer and the Superintendent Engineer, requesting the pipeline agency to not to damage the road. As a result, District Collector, Bhilwara vide its letter dated October 1, 2013 directed M/s NCC Ltd. to rectify the damage done by it within 15 days.

46. Mr. Trivedi then submitted that the petitioner was pressurized by the respondent to repair the damage caused by the M/s NCC and the petitioner, in good faith, even repaired the damage caused by the M/s NCC. However, the petitioner was shocked to observe that PHED did not stop damaging road. It was averred that even the respondent, after the joint inspection on October 1, 2013 wrote a letter dated October 28, 2013 to the PHED for rectifying the damage done by M/s NCC.

47. Despite knowing that the damage was done by M/s NCC, the petitioner repaired the damage as asked by the respondent as the petitioner was pressurized to repair on the pretext that the said repairing would come Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Arb. Pet. 1138/2021 and connected matter Page 17 of 29 Signing Date:25.08.2022 10:43:29 under the Defect Liability Period of three years (which started from December 25, 2012 and ended on December 24, 2015). Afterwards, the „Defect Liability Period Completion Certificate‟ was issued by the respondent on February 01, 2017 and total work done amounting to Rs. 21,98,61,484/- was also certified.

48. According to Mr. Trivedi, the petitioner was supposed to be compensated by the respondent since it acted only upon the assurances of the respondent. However, the respondent did not pay any compensation despite the assurances. As a result, the dispute had arisen and the petitioner wrote a letter dated June 18, 2020 seeking resolution of the dispute by way of arbitration.

49. Again the petitioner relied upon Clauses 24 and 25 of the GCC and Clause 36.1 of the ITB, justifying the invocation of the arbitration. As per the averments in the petition, the notice dated July 9, 2021 was sent with the categorical prayer for appointment of DRE. The said notice was delivered on July 14, 2021.

50. Since no reply came forth, the petitioner sent a legal notice dated September 7, 2021 invoking clause 25.3 of the GCC of the contract and proposed names for the appointment of sole arbitrator. It was then asserted that in spite of the receipt of the aforesaid legal notice on September 10, 2021, the respondent chose not to reply. Hence, the present petition was filed.

51. On the other hand, Mr. Santosh Kumar, Ld. Counsel for the respondent had submitted that the respondent duly acted in terms of the Agreement dated January 03, 2012 and the petitioner willingly accepted the final amount of ₹ 21,98,61,484/- on February 01, 2017.

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52. It was submitted by Mr. Santosh Kumar that the actual date of completion of the project was December 25, 2012 i.e., after the delay of 175 days. Furthermore, it was admitted by the respondent that after according the provisional approval for laying the pipeline on February 19, 2013, the respondent had issued a completion certificate for the afore-said project thereby certifying the total work done to the tune of ₹ 20,32,79,922/- way back on March 20, 2013. After that the respondent had taken-over the possession of the project as per Clause 56 of the Agreement and the same was handed over to one M/S Zignego-GHV [JV] way back on March 04, 2014 i.e., even prior to the Defect Liability Period of three years. Only thereafter, the respondent issued a Defect Liability Completion Certificate to the tune of ₹ 21,98,61,484/- way back on February 01, 2017.

53. It was submitted that the petitioner belatedly communicated to the respondent on June, 18 2020 and before that there were no objection/protest/grievance whatsoever from the side of the petitioner.

54. Mr. Kumar also argued that the respondent never promised to compensate the petitioner for the repair work as according to the respondent there was never any work for repairing.

55. Furthermore, even in the written submissions filed by the petitioner as well as respondent in this instant petition, same averments, as made in the afore-said petition, are being made. Therefore, the same have not been reiterated. Also, since the issues revolving around both the arbitration petitions are identical, thus same judgments have been relied upon by the Ld. Counsels in order to substantiate their respective contentions.

56. Having heard the learned counsel for the parties, two issues arise for consideration; (i) whether invocation of the arbitration clause is barred by Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Arb. Pet. 1138/2021 and connected matter Page 19 of 29 Signing Date:25.08.2022 10:43:29 limitation and; (ii) whether there is any subsisting disputes between the parties.

57. At the outset, I may state that Mr. Kumar has not contested the petition on any other ground. The plea of limitation urged by Mr. Kumar is on the following facts:-

Arb.P.1138/2021

                              (i)     The Date of Agreement = January 03, 2012;
                              (ii)    Date of completion = December 25, 2012 (after a delay of 175 days);

(iii) Certificate of completion issued = March 20, 2013;

(iv) Respondent takes over the project = March 04, 2014;

(v) Defect Liability Completion Certificate = February 01, 2017 Arb.P.1139/2021

(i) Date of execution of the Agreement = January 10, 2012;

(ii) Date of completion of work = October 31, 2013;

(iii) Issuance of work completion certificate= March 20, 2014;

(iv) Defect Liability Period expired = October 31, 2016;

(v) Completion Certificate issued = January 30, 2017;

(vi) Final extension of time of 415 days was granted on November 14, 2018.

58. Mr. Trivedi does not contest the above position. His only plea is that the respondent had withheld the consolidated amount of ₹ 38,00,000/- with respect to the works done by the petitioner as mentioned in both Arb.P.1138/2021 and Arb.P.1139/2021 on account of approval of extension of time and the said amount was paid to the petitioner only on January 04, 2019 (which is evident from the Bank Payment Voucher issued by the respondent in favour of the petitioner, dated January 04, 2019).

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59. Having noted the above facts, additionally, it is noted that the petitioner had, for the first time, wrote letters dated June 18, 2020 and June 26, 2020 raising disputes and seeking resolution by way of arbitration. The same was followed by letters dated July 31, 2020, July 09, 2021 and legal notices dated September 07, 2021 calling upon the respondent to appoint a Dispute Review Expert in terms of Clause 36.1 of ITB and also invoking arbitration clause under Clause 25.3 of the GCC. The first letter is of the year 2020 i.e. within three years of the last payment made by the respondent.

60. The plea of Mr. Kumar was that the petitioner has willingly accepted the final payment in the year 2017. It had also given an undertaking that it shall not claim any escalation charges from the respondent. That apart, he stated that the petitioner had sought reference to DRE for the first time in the year 2021, that too, after invocation of the arbitration clause.

61. This Court is of the view that the above submissions of the learned counsel for the parties require a careful consideration, inasmuch as whether the claim of the petitioner is barred by time; or whether the payments made in the year 2019 shall have the effect of extending the limitation. That apart, it is also to be adjudicated, whether the petitioner had accepted the final bill / completion certificate without demur and protest. It also needs to be adjudicated what would be the effect of the representation made by the petitioner that it shall not claim the escalation charges.

62. In effect, my above conclusion is, there is a doubt as to whether the claims of the petitioner are ex-facie barred by limitation. Further, mere acceptance of the final bill and representation that it shall not claim escalation charges would prima facie may not debar the petitioner from Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Arb. Pet. 1138/2021 and connected matter Page 21 of 29 Signing Date:25.08.2022 10:43:29 making any other claims which were made by the petitioner vide legal notices dated September 07, 2021 wherein the petitioner had raised the following claims: "1. On account of repairing done for the road damaged by NCC or due to mismanagement of other agency/ PHED; 2. On account of losses and damages occurred for keeping the staff, establishment, T & P machinery due to prolongation of work: A) From stipulated date of completion till the actual date of completion, B) Due to prolongation on A/c of PHED work; 3. Claim on A/c of illegal recoveries made from the bill; 4. On A/c of escalation due to market rise in man & materials; 5. Interest @18% p.a. on due amount of delay payment of R/A Bills, Final Bills, due to last release of PG, Security deposit, EMD etc. w.e.f. its due date till actual realization; 6. Interest @18% p.a. pendent-lite & future till actual date of payment; 7. GST @ 18%" and "1. On account of prolongation of contract with respect to plant & machinery because of- a) Wrong issuance of drawing, b) Wrong decision for the start of work, c) Delay for the decision of typical cross section, d) Changes in the decision of box cutting, e) Utility shifting at site; 2. On account of prolongation of contract with respect to idle manpower because of :- a) Wrong issuance of drawings, b) wrong decision for the start of work, c) delay for the decision of typical cross section, d) changes in the decision of box cutting, e) shifting of site; 3. On account of repairing done for the road damages due to water logging caused because of delay in decision & improper design; 4. On account of escalation due to market rise in man & materials; 5. Claim on account of interest due because of delay payment of R/A Bills, Final Bill, due to late release of PG, Security Deposit, EMD etc. but not limited to at 15% from the date the respective amount was due till realization; 6. The Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Arb. Pet. 1138/2021 and connected matter Page 22 of 29 Signing Date:25.08.2022 10:43:29 claim of interest pre-suit, pendent lite & future @15% p.a.; 7. The claim on account of GST to be realized; 8. The claim on account of B.G. Charges based on extended period and 9. Claim of cost of proceeding plus the fees to be paid to the arbitrator‟ in Arb. P.1138/2021 and Arb. P. 1139/2021 respectively.

63. The scope of examination under Section 11 of the "A & C Act, 1996"

is very limited confining to examining the existence of the Agreement to refer the disputes to the arbitration.

64. In Duro Felguera, SA [Duro Felguera, SA v. Gangavaram Port Ltd. (2017) 9 SCC 729 the Supreme Court has, in paragraphs 48 and 59 held as under:-

"48. Section 11(6-A) added by the 2015 Amendment, reads as follows: "11. (6-A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub- section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement."

From a reading of Section 11(6-A), the intention of the legislature is crystal clear i.e. the court should and need only look into one aspect--the existence of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement is the next question. The resolution to that is simple--it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement.

** ** ** **

59. The scope of the power under Section 11(6) of the 1996 Act was considerably wide in view of the decisions in SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618 and National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 :

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(2009) 1 SCC (Civ) 117. This position continued till the amendment brought about in 2015. After the amendment, all that the courts need to see is whether an arbitration agreement exists-- nothing more, nothing less. The legislative policy and purpose is essentially to minimise the Court's intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11(6-A) ought to be respected."

65. Similarly, the Supreme Court in Mayavati Trading Pvt. Ltd. v. Pradyuat Deb Burman (2019) 8 SCC 714 has in paragraph 10 held as under:-

"10. This being the position, it is clear that the law prior to the 2015 Amendment that has been laid down by this Court, which would have included going into whether accord and satisfaction has taken place, has now been legislatively overruled. This being the position, it is difficult to agree with the reasoning contained in the aforesaid judgment [United India Insurance Co. Ltd. v. Antique Art Exports (P) Ltd., (2019) 5 SCC 362 : (2019) 2 SCC (Civ) 785] , as Section 11(6-A) is confined to the examination of the existence of an arbitration agreement and is to be understood in the narrow sense as has been laid down in the judgment in Duro Felguera, SA [Duro Felguera, SA v. Gangavaram Port Ltd. :(2017) 9 SCC 729."

66. Similarly, in Vidya Drolia (supra) on which reliance has been placed by Mr. Kumar, the Supreme Court has in paragraphs 132, 133, 134, 140, 147, 147.5, 147.7 and 147.11 held as under:-

"132. The courts at the referral stage do not perform ministerial functions. They exercise and perform judicial functions when they decide objections in terms of Sections 8 and 11 of the Arbitration Act. Section 8 prescribes the courts to refer the parties to arbitration, if the action brought is the subject of an arbitration agreement, unless it finds that prima facie no valid arbitration agreement exists. Examining the term Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Arb. Pet. 1138/2021 and connected matter Page 24 of 29 Signing Date:25.08.2022 10:43:29 "prima facie", in Nirmala J. Jhala v. State of Gujarat [Nirmala J. Jhala v. State of Gujarat, (2013) 4 SCC 301 : (2013) 2 SCC (L&S) 270] , this Court had noted: (SCC p. 320, para 48) "48. „27. ... A prima facie case does not mean a case proved to the hilt but a case which can be said to be established if the evidence which is led in support of the case were [to be] believed. While determining whether a prima facie case had been made out or not the relevant consideration is whether on the evidence led it was possible to arrive at the conclusion in question and not whether that was the only conclusion which could be arrived at on that evidence.‟ [Ed.: As observed in Martin Burn Ltd. v. R.N. Banerjee, AIR 1958 SC 79, p. 85, para

27.] "

133. Prima facie case in the context of Section 8 is not to be confused with the merits of the case put up by the parties which has to be established before the Arbitral Tribunal. It is restricted to the subject-matter of the suit being prima facie arbitrable under a valid arbitration agreement. Prima facie case means that the assertions on these aspects are bona fide. When read with the principles of separation and competence- competence and Section 34 of the Arbitration Act, the referral court without getting bogged down would compel the parties to abide unless there are good and substantial reasons to the contrary.

134. Prima facie examination is not full review but a primary first review to weed out manifestly and ex facie non-existent and invalid arbitration agreements and non-arbitrable disputes. The prima facie review at the reference stage is to cut the deadwood and trim off the side branches in straightforward cases where dismissal is barefaced and pellucid and when on the facts and law the litigation must stop at the first stage.

Only when the court is certain that no valid arbitration agreement exists or the disputes/subject-matter are not arbitrable, the application under Section 8 would be rejected.

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At this stage, the court should not get lost in thickets and decide debatable questions of facts. Referral proceedings are preliminary and summary and not a mini trial. This necessarily reflects on the nature of the jurisdiction exercised by the court and in this context, the observations of B.N. Srikrishna, J. of "plainly arguable" case in Shin-Etsu Chemical Co. Ltd. [Shin- Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd., (2005) 7 SCC 234] are of importance and relevance. Similar views are expressed by this Court in Vimal Kishor Shah [Vimal Kishor Shah v. Jayesh Dinesh Shah, (2016) 8 SCC 788 : (2016) 4 SCC (Civ) 303] wherein the test applied at the pre-arbitration stage was whether there is a "good arguable case" for the existence of an arbitration agreement.

** ** ** **

140. Accordingly, when it appears that prima facie review would be inconclusive, or on consideration inadequate as it requires detailed examination, the matter should be left for final determination by the Arbitral Tribunal selected by the parties by consent. The underlying rationale being not to delay or defer and to discourage parties from using referral proceeding as a ruse to delay and obstruct. In such cases a full review by the courts at this stage would encroach on the jurisdiction of the Arbitral Tribunal and violate the legislative scheme allocating jurisdiction between the courts and the Arbitral Tribunal. Centralisation of litigation with the Arbitral Tribunal as the primary and first adjudicator is beneficent as it helps in quicker and efficient resolution of disputes.

** ** ** **

147. We would proceed to elaborate and give further reasons:

** ** ** ** 147.5. Sections 8 and 11 of the Arbitration Act are complementary provisions as was held in Patel Engg. Ltd. [SBP Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Arb. Pet. 1138/2021 and connected matter Page 26 of 29 Signing Date:25.08.2022 10:43:29 & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] The object and purpose behind the two provisions is identical to compel and force parties to abide by their contractual understanding. This being so, the two provisions should be read as laying down similar standard and not as laying down different and separate parameters. Section 11 does not prescribe any standard of judicial review by the court for determining whether an arbitration agreement is in existence. Section 8 states that the judicial review at the stage of reference is prima facie and not final. Prima facie standard equally applies when the power of judicial review is exercised by the court under Section 11 of the Arbitration Act. Therefore, we can read the mandate of valid arbitration agreement in Section 8 into mandate of Section 11, that is, "existence of an arbitration agreement".

** ** ** ** 147.7. Exercise of the limited prima facie review does not in any way interfere with the principle of competence competence and separation as to obstruct arbitration proceedings but ensures that vexatious and frivolous matters get over at the initial stage.

** ** ** ** 147.11. The interpretation appropriately balances the allocation of the decision-making authority between the court at the referral stage and the arbitrators' primary jurisdiction to decide disputes on merits. The court as the judicial forum of the first instance can exercise prima facie test jurisdiction to screen and knock down ex facie meritless, frivolous and dishonest litigation. Limited jurisdiction of the courts ensures expeditious, alacritous and efficient disposal when required at the referral stage."

67. Similarly, the Supreme Court in the case of Bharat Sanchar Nigam Ltd. & Anr. (supra), has in paragraphs 47 and 53.2 held as under: -

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"47. It is only in the very limited category of cases, where there is not even a vestige of doubt that the claim is ex facie time-barred, or that the dispute is non-arbitrable, that the court may decline to make the reference. However, if there is even the slightest doubt, the rule is to refer the disputes to arbitration, otherwise it would encroach upon what is essentially a matter to be determined by the tribunal.

xxx xxx xxx 53.2. In rare and exceptional cases, where the claims are ex facie time-barred, and it is manifest that there is no subsisting dispute, the Court may refuse to make the reference."

68. Insofar as the judgment in the case of State of Gujarat (supra) relied upon by Mr. Kumar, the same shall have no applicability to the facts of this case when this Court is concerned with a petition under Section 11 of the "A & C Act, 1996". The said case was primarily an appeal arising from a judgment/decree in a suit followed by appeals in the High Court of Gujarat. Similar is the judgment in the case of Shanti Conductors Private Limited (supra) which arises from a writ petition filed in the High Court. In both the cases, one of the issues was of limitation which was decided by the Courts below and the Supreme Court. The aforesaid judgments are after a proper adjudication by the Civil Court/Writ Court. Whereas in the case in hand, neither adjudicatory process has taken place nor such a process can be undertaken by this Court on the said issue. Surely, the Arbitrator is the proper authority to decide the same. The scope of Section 11 has already been stated above. Hence, the reliance placed is totally misplaced. Surely, the respondent would be within its right to rely upon the judgments before the learned Arbitrator.

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69. Noting the position of law and the facts as fall for consideration, which I have noted above, there is a doubt whether the claims are ex-facie barred by limitation. The Supreme Court has also stated, if there is even the slightest doubt, it shall be appropriate for the Court to refer the parties for adjudicatory process by an Arbitrator and as such in these cases the disputes between the parties are required to be referred to the adjudicatory process by an Arbitrator.

70. Hence, these petitions are allowed. Accordingly, I appoint Justice G. Rohini (Mob. No.8527027027), a former Chief Justice of this Court as the Sole Arbitrator in both the cases, who shall adjudicate the disputes between the parties. The fee of the learned Arbitrator shall be in terms of Fourth Schedule to the "A & C Act of 1996". She shall give disclosure under Section 12 of the "A & C Act of 1996". No costs.

71. Let a copy of this order be sent to Justice G. Rohini (Retd.).

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