Chattisgarh High Court
M/S S. Narider Singh And Company vs South Eastern Coalfields Ltd on 2 September, 2022
Author: Arup Kumar Goswami
Bench: Arup Kumar Goswami
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NAFR
HIGH COURT OF CHHATTISGARH, BILASPUR
Arbitration Request No. 3 of 2022
M/s S. Narinder Singh And Company, Engineers And Government
Contractors Through Its Proprietor Manjit Singh, Aged About 70 Years, S/
o Late S. Narinder Singh, Address A-85, Power City Jamnipali , Korba,
Chhattisgarh , 495450, Email [email protected]
---- Applicant
Versus
1. South Eastern Coalfields Ltd Through Its Chairman And Managing
Director, Headquarter, Seepat Road, Bilaspur Chhattisgarh 495006
2. Area General Manager South Eastern Coalfields Limited,
Kusmunda Area, District Korba Chhattisgarh.
3. Engineer-In-Charge South Eastern Coalfields Limited, Kusmunda
Area, District Korba Chhattisgarh.
4. Chief Manager (Civil) T.A. Kusmunda Area, South Eastern
Coalfields Limited, Kusmunda Area, District Korba Chhattisgarh.
---- Respondents
(Cause Title taken from Case Information System) For Applicant : Mr. Bidya Nand Mishra, Advocate. For Respondents : Ms. Astha Shukla, Advocate.
Date of Hearing : 26.08.2022
Date of Order : 02.09.2022
_________________________________________________________ Hon'ble Shri Arup Kumar Goswami, Chief Justice CAV Order Heard Mr. Bidya Nand Mishra, learned counsel for the applicant. Also heard Ms. Astha Shukla, learned counsel, appearing for the respondents.
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2. This is an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, for short, 'A&C Act' for appointment of an Arbitrator.
3. The respondents had floated an e-tender notice dated 22.05.2017 for "Covering of space between Receipt section 1 and 2, side of Receipt section 1 and side covering of verandah of shed No.1, 2, 3, 4 and 5 with GI sheets at Regional store of Kusmunda Area" vide NIT No.: SECL/GM/KSM/CIVIL/e-Tender/17-18/044. The applicant, being the successful tenderer, was awarded the work valued at Rs.24,60,916.00.
4. It is pleaded in the application that as per the work order, scheduled date of commencement and completion of the work was 15.01.2018 and 14.03.2018, respectively. It is also stated that the respondents created obstacles by placing heavy machinery and equipments at the site of work, resulting in difficulties for the applicant to start the work at the earliest. Therefore, request was made by letters dated 12.02.2018, 16.10.2018, 06.12.2018 to clear the site. By another letter dated 06.12.2018, the applicant had prayed for extension of time. Subsequent thereto, by a letter dated 08.12.2018, the applicant requested for removal of drums from the work site. Despite the situation created, the applicant completed the work on 31.07.2019 and accordingly, had prayed for releasing the final bill vide his letter dated 26.02.2020. However, a letter dated 16.03.2020 was issued by the respondents extending the time up to 25.09.2020 increasing penalty amount from Rs.1,38,795.66 to Rs.1,88.013.98. Though a copy of the 3 revised estimate shows that actual date of completion of work was 31.07.2019, the revised estimate brought down the value of work order from Rs.24,60,916.00 to Rs.24,19,793.63. Despite repeated requests, as grievance of the applicant was not redressed, the applicant sent a legal notice on 16.08.2021, demanding the respondents a sum of Rs.24,97,761.00 towards final settlement and also requesting to refer the matter to Arbitrator as per the General Terms and Conditions of the Contract entered into between the parties. As no steps were taken by the respondents on the said letter, recourse was taken by way of filing of this application for appointment of an Arbitrator.
5. A reply-affidavit was filed on behalf of the respondents stating that the applicant had not exhausted the remedy of dispute resolution and settlement under Clause 16 of the General Terms and Conditions of the contract and that no arbitral dispute exists as all payments had been released by the respondents to the applicant by way of payment of fifth and final bill on 06.10.2020. The applicant had also certified that he had no claim outstanding against the department for the work in question and that the claim preferred through the bill was in full and final settlement. It is also pleaded that the dispute raised is an afterthought. The respondents denied that there was any hindrance in execution of the work of the applicant and as the applicant failed to complete the work within scheduled time, extensions had to be granted with penalty.
6. A rejoinder-affidavit was filed by the applicant, primarily, reiterating the averments made in the application. 4
7. Mr. Mishra submits that the applicant had raised dispute with regard to the grievances and as no steps were taken by the respondents in terms of Clause 16 of the General Terms and Conditions of the Contract, the applicant had no option but to approach this Court for appointment of an Arbitrator. Mr. Mishra has drawn the attention of the Court to the letters dated 12.02.2018, 18.10.2018, 06.12.2018 and 08.12.2018 to highlight that the work site was not free from encumbrances. It is submitted that under compulsion, the applicant had to acknowledge that there is no further claim against the respondents at the time of payment of fifth and final bill, as otherwise the respondents would not have released the payment, and therefore, such acknowledgment was not voluntary and it cannot be said that there is no arbitral dispute of the applicant with the respondents. Mr. Mishra placed reliance on a judgment of Hon'ble Supreme Court in Civil Appeal No.6400 of 2016 decided on 14.11.2019, parties being, "Union of India v. Pradeep Vinod Construction Company " to contend that the issue with regard to no claim certificate should be left open to be raised before the Arbitrator.
8. Ms. Shukla submits that the applicant had not raised any dispute as raised in the legal notice dated 16.08.2021 in terms of Clause 16 of the General Terms and Conditions of the Contract and a belated claim is made after final payment was made on 06.10.2020. It is further submitted that while accepting payment of fifth and final bill, the applicant had acknowledged that there was no claim outstanding against the department for the work in question. She places reliance in the decision of the Hon'ble Supreme Court in Union of India vs. 5 Parmar Construction Company, reported in (2019) 15 SCC 682, wherein the Hon'ble Supreme Court had observed that it is advisable for the Court to ensure that the remedy provided as agreed between the parties in terms of the agreement is first exhausted.
9. I have considered the submission of the learned counsel for the parties and perused the materials on record.
10. Clauses 16 and 16A of the General Terms and Conditions of the Contract, read as follows :
"16. Settlement of Disputes.
It is incumbent upon the contractor to avoid litigation and disputes during the course of execution. However, if such disputes take place between the contractor and the department, effort shall be made first to settle the disputes at the company level. The contractor should make request in writing to the Engineer-in-charge for settlement of such disputes/ claims within 30 (thirty) days of arising of the cause of dispute/claim failing which no disputes/claims of the contractor shall be entertained by the company. Effort shall be made to resolve the dispute in two stages :
In first stage dispute shall be referred to Area GM or GM/HoD(C). If difference still persist the dispute shall 6 be referred to a committee constituted by the owner. The committee shall have one member of the rank of Director of the company who shall be chairman of the committee.
If differences still persist, the settlement of the dispute shall be resolved in the following manner : Disputes relating to the commercial contracts with Central Public Sector Enterprises/Govt. Departments (except Railways, Income Tax, Customs & Excise) / State Public Sector Enterprises shall be referred by either party for Arbitration to the PMA (Permanent Machinery of Arbitration) in the department of Public Enterprises.
In case of parties other than Govt. Agencies, the redressal of the dispute may be sought through Arbitration (THE ARBITRATION AND CONCILIATION ACT, 1996 as amended by AMENDMENT ACT of 2015)."
"16A. Settlement of Disputes through Arbitration If the parties fail to resolve the disputes/differences by in house mechanism, then, depending on the position of the case, either the employer/owner or the contractor shall give notice to other party to refer the matter to arbitration instead of directly approaching 7 Court. The contractor shall, however, be entitled to invoke arbitration clause only after exhausting the remedy available under the clause 16. In case of parties other than Govt. agencies, the redressal of disputes/differences shall be sought through Sole Arbitration as under. Sole Arbitration :
In the event of any question, dispute or difference arising under these terms & conditions or any condition contained in this contract or interpretation of the terms of, or in connection with this Contract (except as to any matter the decision of which is specially provided for by these conditions), the same shall be referred to the sole arbitration of a person, appointed to be the arbitrator by the Competent Authority of CIL/CMD of Subsidiary Company (as the case may be). The award of the arbitrator shall be final and binding on the parties of this contract.
(a) In the event of the Arbitrator dying, neglecting or refusing to act or resigning or being unable to act for any reason, or his/her award being set aside by the court for any reason, it shall be lawful for the Competent Authority of CIL/CMD of Subsidiary Company (as the case may be) to appoint another arbitrator in place of the outgoing arbitrator in the 8 manner aforesaid.
(b) It is further a term of this contract that no person other than the person appointed by the Competent Authority of CIL/CMD of Subsidiary Company (as the case may be) as aforesaid should act as arbitrator and that, if for any reason that is not possible, the matter is not to be referred to Arbitration at all.
.................................."
11. A reading of the Clause 16 of the General Terms and Conditions of the Contract would go to show that if there is a dispute, effort shall be made to resolve the disputes at the company level and for that purpose the contractor should make request in writing to the Engineer-in-charge for settlement of such disputes/claims within 30 days of arising of the cause of dispute/claim failing which it is indicated that no disputes/claims of the contractor shall be entertained by the company.
12. A perusal of the legal notice dated 16.08.2021 goes to show that the applicant raised claim on account of, amongst others, for suffering physical, mental, economic and commercial damage because of the actions of the respondents. The claims made were as under:
"1. Penalty amount deducted 1,88,013.98
2. Amount payable at the rate of 12% 50,764.00 interest from the date of payment on 1,88,013.98
3. Amount payable for 02 days when 6,000.00 vehicle was parked without any work 9
4. Wages paid to workers without work 5,000.00
5. Unnecessary salary of Guard for 16 2,48,000.00 months from ______to ______ at the rate of Rs.15,500 per month
6. Increase in the price of construction 3,62,969.00 material during the period from the beginning to the end of the contract
7. Additional fuel amount of 16 months 56,000.00 3500 x 16
8. Compensation for mental, economic, 10,00,000.00 physical and commercial damage and delayed payment
9. Other legal expenses 2,00,000.00
10. Additional G.S.T. @ 18% 3,81,015.00 Total Amount :- Rs.24,97,761.00
13. There is no material on record to show that the applicant had raised any dispute with regard to the claims made in the legal notice dated 16.08.2021 to the Engineer-in-charge or to any authority at any point of time prior to 16.08.2021, i.e. date of legal notice. None of the documents referred to by Mr. Mishra is relatable to claims made by the applicant in the legal notice. It is also significant to note that after issuance of letter dated 16.03.2020, whereby total penalty of Rs.1,88,013.96 was levied while granting extension of time up to 25.09.2019, no dispute was raised by the applicant that the same is not permissible in law.
14. In the application, it is not even mentioned that the fifth and final bill was paid on 06.10.2020 and that at the time of receiving payment, no claim certificate was signed by him. Even in the rejoinder- 10
affidavit, no assertion was made that said no claim certificate was issued under compulsion and rather, it is stated that the claim is not against any running and final bill, but the dispute raised is under different heads.
15. A perusal of the judgment in Pradeep Vinod Construction Company (supra) would go to show that serious dispute was raised that the certificate was issued under compulsion and due to undue influence of the railway authorities. It is in that circumstance, it was observed by the Hon'ble Supreme Court that it was for the Arbitrator to consider the claim of the respondents and the stand of the railways. The factual matrix of the present case, as noticed, is entirely different.
16. As recourse was not taken to in-house dispute resolution mechanism by the applicant in terms of the Clause 16 of the General Terms and Conditions of the Contract and as no dispute was raised by the applicant prior to issuance of legal notice dated 16.08.2021, I am of the opinion that no case is made out for appointment of an Arbitrator.
17. Accordingly, the application is rejected.
Sd/-
(Arup Kumar Goswami) CHIEF JUSTICE Anu