Delhi High Court - Orders
Office For Alternative Architecture vs Ircon Infrastructure And Services Ltd on 6 September, 2023
Author: Yogesh Khanna
Bench: Yogesh Khanna
$~2
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 1425/2022, I.A.21374/2022
OFFICE FOR ALTERNATIVE ARCHITECTURE
..... Petitioner
Through: Mr.C.M.Gopal, Advocate with
proprietor of petitioner in person.
versus
IRCON INFRASTRUCTURE AND SERVICES LTD
..... Respondent
Through: Mr.Abir Phukan, Mr.Vedant Goel,
Ms.Swechha Chettri, Advocates.
CORAM:
HON'BLE MR. JUSTICE YOGESH KHANNA
ORDER
% 06.09.2023
1. This petition is filed by the petitioner under Section 11 of the Arbitration and Conciliation Act for appointment of an arbitrator. It is alleged by the learned counsel for the petitioner, the petitioner was declared as a successful bidder in tender dated 29.09.2017 for the work of preparation of DER/DPR for construction of Vishwakarma Skill University at Dudhola, Palwal, Haryana and an agreement dated 30.01.2018 was executed between the parties.
2. It is alleged the petitioner carried the work in accordance with the terms and conditions of the contract to the fullest thereby completing 95% of work and the pending 5% of work was on account of non-submissions of delays by the respondent. It is submitted the project head of the respondent changed the summary sheets where deduction in cost was proposed with summary sheets by the petitioner, and replaced with unapproved summary sheets whereby the respondent had escalated the cost of Rs.32.88 crores.
3. It is stated the respondent had also unauthorizedly got encashed the This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/09/2023 at 17:07:34 bank guarantee for a sum of Rs.4,12,500/- and had issued a termination notice dated17.02.2022 which in fact is an illegal termination and the petitioner vide its legal notice dated 03.08.2022, invoked the arbitration wherein he had raised various disputes. Clause 73.2 of the agreement dated 31.01.2018 contains an arbitration clause as under:
"73.2 CONCILIATION/ARBITRATION 73.2.1 It is a term of this contract that conciliation/ Arbitration of disputes shall not be commenced unless an attempt has first been made by the parties to settle such disputes, within 120 days of submission of monthly statement of such claim, through mutual settlement.
73.2.2 In the event of failure to resolve any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to the withholding by the Employer of any certificate to which the contractor may claim to be entitled to, through mutual settlement, the Contractor may refer such matters to the Chairman and Managing Director in writing within 60 days from the date of failure of amicable settlement of such disputes or differences for settlement through Conciliation.
If the efforts to resolve all or any of the disputes through Conciliation fails, the Contractor may refer to the Chairman and Managing Director of the Employer for settlement of such disputes or differences through Arbitration. No disputes or differences shall be referred to Arbitration after expiry of 60 days from the date of notification of the failure of Conciliation. 73.2.3 The demand for Conciliation or Arbitration shall specify the matters which are in question, or subject 'of the dispute or difference as also the amount of claim item wise. Only such dispute(s) or difference(s) in respect of which the demand has been made, together with counter claims or set off, given by the Employer, shall be referred to Conciliation or Arbitration and other patters shall not be included in the reference. 73.2.3.(a) The Arbitration proceeding shall be assumed to have commenced from the day, a written and valid demand for arbitration is received by the Employer.
(b) The claimant shall submit his claim stating the facts supporting the claim along with all relevant documents and the relief or remedy sought against each claim within a period of 30 days from the date of appointment of the Arbitral Tribunal.
(c) The employer shall submit its defence statement and counter claim(s), if any, within a period of 60 days of receipt of copy of claim from Tribunal thereafter unless otherwise extension has been granted by Tribunal.
(d) Place of Arbitration:
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/09/2023 at 17:07:34 The conciliation/ arbitration proceedings shall be held at a place decided by Conciliator / Arbitrator.
73.2.4 No new claim shall be added during proceedings by either party.
However, a party may amend or supplement the, original, claim or defence thereof during the course of arbitration proceedings subject to acceptance by Tribunal having due regard to the delay in making it.
73.2.5 If the contractor(s) does/do not present his/their specific and final claim in writing, within a period of 90 days of receiving the intimation from the Employer that the final bill is ready for payment, he/they will be deemed to have waived his/their claim (s) and the Employer shall be discharged and released of all liabilities under the contract in respect of these claims."
4. The learned counsel for the respondent rebuts the submission made by the learned counsel for the petitioner and submits certain claims as set out in the invocation notice dated 03.08.2022 are non-arbitrable and are excepted items. He refers to clause 73.0, as under:
"73.0 SETTLEMENT OF DISPUTES All disputes and differences of any kind whatsoever arising out of or in connection with the contract, whether during the progress of the work or after its completion and whether before or after the determination of the contract, shall be settled as under, provided that matters for which provision has been made in clauses 20.3, 36.5, 40.1, 40.2, 49.7. 50.0, 51.0, 59.0, 61.2 and 72.2 of General Conditions of Contract or in any clause the Special Conditions of Contract shall be deemed as (excepted matters' (matters not arbitrable) and decision of the Employer thereon, shall be final and binding on the contractor; provided further that 'excepted matters' shall stand specifically excluded from the purview of this clause."
5. It is submitted whole of the clause 50.0 of General Conditions of Contract is an excepted matter and it deals with conditions leading to the termination of the contract. Clause 50.2 is also relevant and it read as under:
"50.2 Entitlement of Employer/Engineer:
IN cases described in sub-clauses 50.1 (ii) above the Employer /Engineer be entitled to:
a. Forfeit the whole or such portion of the Performance Security amount, as he may deem fit, and b. To measure up whole or part of the work from which the contractor has been removed and get it completed by another contractor, the manner and method in which such work is completed shall be in the entire discretion of the Engineer whose decision shall be final."
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/09/2023 at 17:07:34
6. It is submitted not only the termination but the consequences following therefrom are all excepted and non-arbitrable matters, hence cannot be referred to arbitration.
7. Further it is submitted forfeiture of whole of the performance security amount is a non-arbitrable item per clause 50.2, hence also cannot be referred to arbitration. Reference was made to Emaar India Ltd. vs. Tarun Aggarwal Projects LLP and Another 2022 SCC OnLine SC 1328 to say in an application under Section 11(5) and (6) of the Arbitration and Conciliation Act, a preliminary enquiry/review on whether the dispute is arbitrable or not and/or whether the dispute falls within excepted items should be seen by the Court.
8. Considering the invocation notice dated 03.08.2022, the claims as stated in its para 48 (i), (v), (vi), (vii) can easily be referred to arbitration and whereas claims in para 48 (ii), (iii) and (iv) being directly covered under clause 50 and 50.2, are non-arbitrable/excepted matters, hence, cannot be referred to arbitration.
9. In the circumstances, Mrs.Madhurima Mridul, Advocate (Mob.No.9810175151) is hereby appointed as an arbitrator to adjudicate the disputes mentioned in para 48(i), (v), (vi) and (vii) of legal notice dated 03.08.2022, under the aegis of Delhi International Arbitration Centre (DIAC). The fee shall be under the IVth Schedule of the Arbitration and Conciliation Act. With these observations, the petition stands disposed of along with pending application(s).
YOGESH KHANNA, J.
SEPTEMBER 06, 2023/DU This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 16/09/2023 at 17:07:34