M/S Sri Bala Gopal Constructions Ltd vs Union Of India on 21 April, 2009

[Cites 3, Cited by 0]
Karnataka High Court

M/S Sri Bala Gopal Constructions Ltd vs Union Of India on 21 April, 2009

Bench: S.Abdul Nazeer

v4...R.epId,.v.»B--y V 

IN THE HIGH COURT OF KARNATAKA AT BANGALORE

DATED THIS THE 2}". DAY OF APRIL 2009

BEFORE

THE HON 'BLIE MRJUS TICE S. A131) UL Nxiziixin J  .

CIVIL MISCELLANEOUS PETIT:I,0N;'N£§;62;f2?)'dc5f'   

Between:

M/s Sri Bale: Gopal C0nst1'uctibn,s Ltclti " _' V 
(Formeriy M/s Shree IugaiinathConsLi'uc%;iens§"--Igtd, 
Reptd. By its Managing Diieczioi',   V   "
6-3-1 105, Rajbhavan Road, So.1"i":a1j»i.gi';(Ja;*  _ «V :
Hyderabad M 500    _.    ff-.__..,§'Petiti0:1er.

And : V' A z T

Union of_!--n.dia,

 ~  'The Genera}'?s/1_z1nagc:1',

' ix)

 V.S0u'ih.iWeS:::iiLnV'Railway,
* A Hub} i, K~a"i:'na'1iaka.

T1ie..Chiei* Administrative 0-i'i'i_cei- (C),
' A Sou{h..Wes{ern Railway,
 V. '  Miller Road.
'  V'--B:1i1ga1(>re.



re

3 The Chief Engineer (C),
South Western Railway,
Hubli, Karnataka.

(By Sri N.S. Sanjay Gowda, Adv.)   ._

This Civil Misc. Petition is fiiieptlimtnder'Section 1l.v.1.(5~)__ot' the
Arbitration and Conciliation Act, i996:.praying to~.appoint  Soie
Arbitrator with regard to the dispute bet'wjeenthe pet.itioner and the
respondent, etc. V  *  . 

This Civil Misc. Petititincorniithgion fo1=..2\di_i;i.s£3ion this day,
the Court made the io_iitswing:." V V   - « "

The'peti.ti'on.er"Visifa."Company incorporated under the

Companies Ac't..__lit1v.i:1g' its're;gist_ered office at Hyderabad. it was

 Vpf€Vi(}L1f3.5§':y known as "{"SI'j_'JagE'ti111E1lh Constructions Limited' and its

V"n_Vame"has beenpC«h_ang_ed to the present name. It has been executing

W01'§(S oi? 'vai*it)a.':g -.Cje=nVtra1 and State Governments Organisations and

theit: inst1jurn.e:itaiities. The second responcient had called for
 A tei:ajei'si"for execution of earthwork in widening of existing cutting

 "and einbank:.nent, forming trolly refugees, side drains, c:onstrt:ction

it

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of retaining walls, ballast retainers and protective works in R..€'-t1C.h'ﬁV

V111 between KM 57/1 and KM 66/} (excluding K0d'Ei:é2.if&'l,IV;1:il.lF 

yard) between Dongal and Yedakumari stations thimjgit 

10.11.1998. The otter made by the pet1.;1on.¢.r.}&u;is;..,.i'1ir.: "1§wese:.,_ 

Therefore, the second respontfentil' the t)i'i.e1'.;.e£f_L
petitioner through his letter dated  ietitet at
Annextire 'B'. In terms of initial value 01'
the work was  should be
completed   tlieijétitilteiolhaeeeptanee letter
ie. the   10.11.1999. The
said   the petitioner to deposit an

amount o1'Rs.3.lakhs  Sé{:'~Urlly deposit and the said amount

__has sinee been 1*eeeve1'ed fl"()11"i the running bills of the petitioner

"'~7:'1n(ﬁ the 1*e:spon.Cie1it:~.yliave the said amount lying with them.

1  tE1eie._ets.se of the petitioner that on receiving the

1  acceptance lt:*.te1*.'..--i't commenceti the work. As the work had to be

1' -'««_ex~eeuted iiighat section where plying of vehicles will he very

('=31 {



difficult more particularly in rainy season. To ply the V€3i1i_Lf'vi{')$"-i_l'1K'~.,

the forest area, the respondents should obtain pe1'in.is_sjion'front";.

Karnataka Forest Departinent. Due to peculiar site cond_i'tti.on':;.:'th_e

petitioner had executed works beyond the gagreen1'c«.nt'tquafntiti.e-sV'that  _ 7

were reguiarised belatedly due to gwhichii'p_ayi.nents .i:_i_<)i*d'.inatei=yi"~

delayed. Even after executing the wt}-.tR"*tt) the "e2t.terit..Ap€3_ssiV't3le','the

respondents did not pay the amountsgyand" "e«ve'n.. on date',-an ainount
of about Rs.7.25 lakhs is due.._tt'~wards ;i_'i11ai*~..E_jivll'amount and Rs.3
lakhs towards security deposit is "yet tube re'leasejd. {Due to breach

of contract C0l1"1l1'1.i{_it3d"i)'_'y'. the] i'es:poTndents~;'_tlie hpetitionei' sustained

huge iosses thro'ug.h  onaccount of loss of business.

It is further comencied that 'consequent upon issuing the acceptance

__letter,  ag~reement"'--.was» entered into bearing No.525/AM/99*

 dateyd"'*E8.6. 1999. The agreement came to be executed

neariyhaftea' three. rréontlis after executing part of the quantities due

to noit--alE.ocVa.t.it)'niof funds to the subject work. The respondents did

 V'  furiiisli the copy of the agreement to the ;:ietitioner even on date

 =d>ue'"{;o tyltich it is not in a gﬁgitititi to file the copy of the said

G'



agreernent before this Court. However, the respondents 23ccepite._(;li'-.

the work executed by the petitioner and periodical payinents'"w'ei"e.eh 

made though belatedly, Although the petitioner had"eX'eciuteld'=thc.V

work to the extent possible, the 2"" respo'itdeiit' 'o_n'~83.2ft)l)'3¢."*1./_A

(Annexure 'C') requested the petitionerto increase the  
3. It is further contended that th"e._agifeeineiit'-isgugovernfzd by

the General Conditions ol"co'n_trztc_tA gt)Vu€'fllll}.vvg"«I'llt3 Engineering
Department of South--Western Rai'lwayiV_ar-id tilevSpiec.ial Conditions

of Contract appent_le'dh"e;to' the".agre'en1ent._Clat:ses 63 and 64 of

General Conditions of7"'Cor;ttra'ct_deal 'with resolution of disputes

through arbitr'ation, Since'. theiljresporidents were not xnaking

_.pay.tnen,t:s§ "petitioner"eddi'essed a letter dated l9.6.2007 calling

npontheg 2'19 .t'espon'd.ent to pay certain arnounts as stated i.n the said

letter;  iespolrtdeiits did not pay the amounts demanded, the

pet.it.ioner invol<e'<:l Clause 651 of the General Conditions of Contract

 requested the 1" respondent to constitute an arbitral Trihuital

 for resolxling the dispute betwjﬁcgn the parties as per its notice at

{



Annexure 'G'. Since the procedure has failed, petitioner has fii"e--r..i

this petition under Section E 1(6) of the A1'bitration and Conciiiaititinf. *

Act, 1996 ('Act" for short) for appointment of a sole E1'i'hi:[1'2Zti.:()'I". to

resoive the dispute and the outstanding is;§uies"h'etweei1.;th.e_"psi.a'ties" 

in accordance with the provisions of, the agreefiiieiiiti' in

No.S25/AM'/99-00/GC/BNC dated 1s;caiis99. 3

4. The respondents have ﬁled tviteiit st_:1te'tn.ent"i0't' objections
contending that t!1e..p'e.tvit;ionei1_ouight't<>'«.!itix€e-.conii)leted the work

within at perioci offeight'i"in(>4ﬁ't§'.'-:3A}1s;.i:stiotilated in the letter of

acceptanceieglated '.:'i.£:):9t';3.t.bi'"F.h:é""'i)etitioner did not complete the

work though eiglititegtteiisioaas"were granted and the East extension

was up--,to'A 3V0."3.2()03i Asoper AI]I1€XUi'6f\\ 601 anti 'Es, petitioner has

'n1ade"his fii"st.Vc.laiim__ in June, 2007 i.e. 4 years after the last

extension,'There€foreT;= the ciztim is stale and barred by time.

2  A' .'5.--~.TheHpetitioi1er has filed rejoinder contending that there is

 a.i.'.--ch2tnge of name of the petitioner from 'M/s Sri J'ztgan.nath

ii



Constructions' to 'Sri Balagopai Constructions Limited' and it 

further contended that petitioner has been re1n.indin~g..¢'th.e' 

respondents on various occasions to record final ineasu1fC.1'ncnts.arid

prepare the final bill. In spite of coinpletion <)f':_ngorl<l"ijrt 

respondents have not recorded the final._rncastlr_e.rnents anttr,li'd 'not:

prepare the final bill. So long as the final'i>i_lVl isllrtotljpavicl.  

terms of the agreement remain ialive 2iI}5C'.V'l1C.1_1i3§§."il,' cannot be said
that the claims raised by the petitioner are t.stt1'lc:V V

6. lVl1avee li'e.a1"cl lithe lea_rned'Counsel for the parties.

'7. It  in dis_pnt.e that. the agreement between the parties

 gV_o'€:erned by 'Generalv Conditions of contract governing

V'-,Enwgiiiee1'ln_gaDefjartment oi' South~ Western Railway and the

special condilti<;)nsl of the contract appended to the agreement.

lq_'Clauses.. 63. and 64 of the Geneifal Conditions of the contract

'1;i*VoVi'des for the settlement of the dispute through arbitration. which

are as under:

it



 

"Settlement ofD1'sputes:

63. Matters ﬁnally determined by the Railway: Al.}_m~. 

disputes and difference of any kind whatsoever a1*i:__4ing'  » " '

out of or in connection with the eomraci, w_hiether:f~

during the progress of the work or «':l-i't'é1T"-it?-2'CO!§1]pl.€tlOI§._ ' A

and whether before or after the de:te1'm.,i'nial'ion1'0f"the   

contract shall be referred by' the CenL_1'$;iet01'  

Railway and the Railway shalliV"w:ili1in 120" ~day's--Vé:f'Iei";:

receipt of the C0n{rac;--'uqi"s l'('"3p'l""E$.*'ir'5'.i:':1"iia["l"\').1'1 makeikmd
notify decision on all rﬁatlters forifwliieihi/VVi3i'evision has

been.vméieleeiiiiﬁeleiilﬁjes;  l8,  39, 43(2), 45m),
55,  M2) and 62(l)(b) of
GenereivVCenclii.ienis"nf €.lie'----eeni{1"aet or in any clause fo
the.special'L0i1d'i:iens.i0fifhe eoniraet shall be deemed

af$':"'e>§.Ce;3l.ed mziiiier:s'--'--«sl2all stand specifically excluded

~ :"f1'QI1;._the p_urview of the arbitration clause and not

 . '15efe1'1'e«:l°i<)_ 21i'h'i'£i5ati0n.

64(1')(i);:. Demand for Arbirratioiu In the event of any

 AA dispute or difference between the parties here to as to

 lil'1t;'AC0HS{fUCfiOI} or operation of this ecmtraet, or the

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respective rights and liabilities of the parties on any

matter in question, dispute 0}' difference on any  2

account or  to the withholding by the Railwayspi' 

any certificate to which the Contractor may claiit1.to~ " 

entitled to, or if the Railway fails towrnake 

within £20 days, then and in any such case,;bit.tj except' --. 

in any 0.!' the 'excepted tnatters' i*et'erred_to in chtuse '~

63 of these conditions, the C>()£vlil'i1§3E()l', "afteri.1.20-tdays" 

but within 180 days of his preseiitingg his final claim on?
disputed matters, sl1all4"ti.eina'iAid pin" --wri.tii'i'ig that then
dispute or difference be rel'er1'ed=to arb.itrati.on; 

(ii) - The deinand for arb.i.tration' i.s'i1:1_1l ifspeeify the

rnatiiers w_hich:are_ in qu.es'tion or subject of the dispute
or dif§7ere'nce as arse Ih'3__A'E.I'1'I'.t5uill of claim item--wise.
Only such d'ispute(s;; oir~.-"difference(s) in respect of

\'.ihichi'~the dernand has been made, together with

A «.pcic:t1nt'erclai":tt_s or set or shall be referred to arbitration

and 'iv"i7I'3é3.:5;[(€i'S shalt not be included in the

i A re't'erence)-  

V . yi(§i)(a)"'-- The arbitration proceedings shall be assumed

" .t_o_,i'1ave commenced from the day, a written and valid

 demand for arbitration is received by the railway.

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(b) The claimant shall submit his claim stating that the

facts supporting the claims alongwitli all rele\.rant"--i  ''

documents and the relief or remedy sought ag:ii_ns't"'

each claim within a period of 30 days from 

appointment of the Arbitral Tribunal;

(c) The Railway shall submit its del'e4ncei'statenientand '

counter claim(s). if any, within.t__a'"periodvof 60. S

receipt of copy of claims frotniii'-TVri.biunal therefafterf
unless otherwise exte_nsionhasVi"t3eenVy"'granted by

Tribunal.

(il'£')i.:_ N_o_ne'w_'vc]aiVi'nyshall'be added during proceedings
by eithei'-- party.'  party may amend or

st1lJ})leme'nt [113 r,?ri2inal~.--"iclaim or defence thereof

during~tl1e coiursevof arbitration proceedings subject to

' « _ accetitaaiceby Tribunal; having due regarci to the delay

 Vein' i:1,aki,n g it.--._ 

  Contractor(s) does/do not prefer his/their

' .. ;specific and final claims in writing, within a period of

*  of i'eceivi.ng the intimation from the Railways

 that the final bill is ready for payment, he/they will be

lit



 

"I1

deemed to have waived his/their elaim(s) and the

Railway shall be dischtirged and released of all

liabilities under the contract in respect of 

claims."

8. It is evident from Clause 64(l)(iv) that if theﬁeoiitraetor:A

does not prefer his specific and final el;1irn'i1i.w1i'.itin.;g Witliin 

period of 90 days after receiving the intimz1tio_n:'froni Rzii_iwt;ys'~ '

the final bill is ready for payment, "h.ex"will be'-.cfeeme'.:.i  hiive
waived his claim and the Rz1ii<w;1y shtillliiibevjidiseinirged and released

of all liabilities under the cont1'z1c.tf.in re'spet:t of ithef claim.

9. His not the";-:tse«ot"the" respondents that they have issued

an intimation' thzitlithe finz't'lAi't,i,ll"'i.sV ready for payment. The case of

the respondents is ii"i3.{_ petitioner has made his first claim in June,

V'?.20O7'«  :1l't"er i"c)u"r'...yet1rs after the last extension and therefore, the

chiinji b2t1*;*e'd,_h34i'VV'it.inie. The provisions of the Limitation Act

V an liesto a1i=bitrat'i'on as it it lies to other roeeedintzs of the Court,
LP A PP P ..

Vr'i"S star from Section 43 of the Act. Article :37 of the

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4_ . by 1im.i.ta§ti()nI~

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Limitation Act makes it obligatory for claims to be filed 

three years from the date of accrual of cause of action. .»"Fhe_A':;.ai6.7.j' , A'

Article lays down that any other application for which nolpeitied "(iii a 

limitation is provided elsewhere in the Artiel»es,thre'.e ype4arsiI.t}eriod;p.

is allowed when the right to apply acci'ties:i"*As7'peri:c.laﬁsep"G6l(

of the General Conditions of the'rit_oi';~tyract, it is 
contractor does not prefer his  final  writing
within a period of 90 days  from the
Railways that the finalbill is  jforv  lwill be deemed

to have waived his2p'claiin.' It is. not the   respondents that

they have sent  inVtiir1*=::1't.iAoisi_tha--t_tlrie final bill is ready for payment.

Therefore, p1'.l1;1*k£1__'f£1Cie,iiI_at1'l..0i'w[l;l_t3 View that the claim is not barred

lo.  Apex cider' in SHREE RAM MILLS LTD. VS.

 (P) LTD. ---- (2007) 4 SCC 599, has held that

 while c'o_nsidei"in§_j~i'an application under Section ll of the Act, the

-.  justice. or his designate has to decide about the teri'itorial

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jurisdiction and also whether there exists an arbitration agi'eem_enti'~.

between the parties and whether such party has 21ppi'o2fehed"--.tlje.i i"

Court for appointment of the arbitrator.  (_3_hiei"--'J'tisti'ee'; 

examine as to whether the claim is a dead 'e"ne~"orliin  

whether the parties have already  
have recorded sat.isfnction of their gins and tibliitgativeiiis or
Whether the parties   satisfaction
regarding the fina11cialA'el;-iirnst.'i'ii'exiiimii.ni.iﬁi  parties have
recorded their _the" there will
he no questionVof"i:1riyii--s;s_uVe   in this sense that the
Chief Justice has  there remains anything

to be decided between iiheii);trtiefs= in respect of the agreement and

_Vaiiything_§.&«to 'he decidedv between the parties in respect of the

'a_gi'ee1'ne_nt ai1d.wyhiet.h_ei' the parties are still at issue on any such

Iilallt';-['A.'.i"f~ the Chief';lt1stice does not, in the strict sense, decide the

issue, in 'li'1El{l"€3'VCl}[, it is for him to locate such issue and record his

 i':~;ati.sliaetio:1 that such issue exists between the parties. It is only in

~th:1t  that the finding on a live issue is given. The same thing



I4

is about the limitation, which is aiways a mixed question of

and fact. The Chief Justice only has to record his sa.!§isféeti§;--:i_f  _

that prima facie the issue has not becometlead hy"ti"1e.::ia;5se of

time or that any party to the agree111erit has not slept to-aetV:i't._s_A in

rights beyond the time per111ittedwt$_y'<-lgiw ~-agiitate 
covered by the agreement. All   his
satisfaction that the p£ll'ilCSvi"i~.£ll~':€"ntV)t rights and the
matter has not been hai'i'ed  I am of the
View that the   VVtoWV'zi'trhit1'21ti(in under
Section ll(v6)__Vo:f to a coneiusion
that the pJ:O.Cee.dir.tisiV"es*e- by'time.. The said question is a

mixed questioii tofiawxandi i7ac'ti,iy=hieh has to be re--examined by the

_. fc1i'blti."3E.O_ilf along with the other questions.

 «V hi' I'. Fl7cnce,..¢l pass thewfollowingz
ORDER
A Civii _M'iscelianeous Petition is allowed. it 15
b). Horfbie Justice Sri M.P.Chinnappa, Retired Judge of this Court is appointed as the S016 Arbitrator to resoive the dispute between the parties ariseing out of the agreement dated 18.6. E999.___ C). The question of limitaiion is 21130 kept open 1'01' arbitrator to decide.
(1). Registry is directed £0 send 3. cgp.y.__Qf {1:i$§"OV'rdei§»t(i5"tiieV learned Arbitrator.
e). The parties are directed to b_ei1::Vtheir.(3w11 <'Qsi:~:, BMM/--
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