Rajasthan High Court - Jodhpur
M/S A Cube Associates vs Union Of India & Ors on 17 May, 2017
Author: Sangeet Lodha
Bench: Sangeet Lodha
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
S.B. Arbitration Application No. 1 / 2017
M/s A Cube Associates, 61, Nehru Park, Deepak Colony, Jodhpur
Through Its Partner Ajay Yaday S/o Shri R.P. Yadav, Aged About
46 Years.
----Petitioner
Versus
1. Union of India Through the General Manager,, North Western
Railway, Jaipur.
2. The Chief Engineer,, North Western Railway, Jaipur.
3. The Additional Divisional Railway Manager,, North Western
Railway, Jaipur.
4. The Senior Divisional Railway Engineer (Central), North Western
Railway, Jodhpur.
----Respondents
_____________________________________________________
For Petitioner(s) : Mr.K.K.Shah
For Respondent(s) : Mr.Kamal Dave
_____________________________________________________
HON'BLE MR. JUSTICE SANGEET LODHA
Judgment 17th May, 2017
1. This arbitration application under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (for short "the Act") has been filed by the applicant for appointment of Arbitrator on account of the respondent failing to appoint Arbitrator in terms of the arbitration clause in the contract.
2. The applicant was awarded a work of 'Casual Renewal of Sleeper, Casual Renewal of rail to replace worn out and wheel burnt rails in SWF-JU-MJ Section, replacement of glued joints in (2 of 8) [ARBAP-1/2017] SWF-JU-LN Section, through fitting renewal of 87.30 km. in MTD- JU-LN Section (km. 569.21 to 656.51)UNDER ADEN/LINE/JU" for Rs. 77,15,607 vide work order dated 11.11.13 issued by the Senior Divisional Engineer, North Western Railway, Jodhpur. The work was to be completed within a period of nine months. The agreement was executed between the parties for execution of the work on 16.12.13. The work could not be completed within the stipulated period, however, the respondent extended the date of completion as per requirement and the applicant completed the work on 30.4.16. As per the condition of the contract, the final bill was to be released within a period of 30 days from the date of completion. The applicant applied for completion certificate but the same was not issued and vide communication dated 3.6.16 issued by Senior Divisional Engineer, NW Railway, the applicant was informed that a few of the works have not been completed and accordingly, it was advised to got the completion period extended and complete the work. The applicant made a request for extension of time clarifying that though it is not bound to do the work, the extension is applied for completion as proposed taking into consideration the fact that its huge amount is at stake. The non applicants extended the date of completion without penalty vide letter dated 15.7.16. The dispute having arisen regarding the payment of the final bill, the applicant made representation dated 1.6.16 purportedly invoking clause 64 of General Conditions of Contract ('GCC') to nominate an independent and impartial Sole Arbitrator within 60 days for resolving the dispute referred to therein. The request made as (3 of 8) [ARBAP-1/2017] aforesaid was followed by yet another representation dated 24.11.16, made by the applicant invoking Clauses no. 63 & 64 of the GCC for appointment of Arbitrator but to no avail. Hence, this application.
3. Learned counsel appearing for the non applicant contended that Clause 63 of the GCC, in the first instance 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, whether before or after the determination of the contract are required to be referred by the Contractor to the General Manager, who in his turn is required to notify decision on all matters referred to by the contractor in writing within a period of 120 days except for the matters, which are specifically excluded from the purview of the arbitration clause. Learned counsel submitted that the demand of arbitration under Clause 64 is permissible to made if the Railway fails to make a decision within 120 days on the matters referred to by the contractor under Clause 63 of GCC. Drawing the attention of this court to the representation dated 1.6.16 made by the applicant, learned counsel submitted that the applicant instead of referring the dispute to GM under Clause 63 of GCC straight away invoked Clause 64 of GCC for appointment of Arbitrator. Learned counsel submitted that the subsequent representation dated 24.11.16 made by the applicant refers to Clause 63 & 64 of GCC which is not in conformity with the arbitration clause in the contract and thus, the applicant is not entitled to seek appointment of the Arbitrator. That apart, learned counsel drawing the attention of (4 of 8) [ARBAP-1/2017] this court to Clause 73 of the GCC, submitted that the contractor shall not be entitled to ask for reference to arbitration before completion of the work assigned to him under the contract and therefore, the representation made by the applicant for nomination of Arbitrator to resolve the dispute alleged to have been arisen between the parties, has rightly been not entertained by the Railway. Learned counsel submitted that as per Clause 72 of the GCC, Clauses 63 & 64 of GCC will be applicable only for settlement of claims of disputes between the parties for values less than or equal to 20% of the value of the contract and since in the instant case, the applicant who has raised the dispute for amount of Rs.15,50,000/-, which is more than 20% of value of the contract Rs.77,15,607/-, is not entitled to invoke the Clauses 63 & 64 of GCC and thus, the application preferred deserves to be rejected on this count alone.
4. I have considered the rival submissions and perused the material on record.
5. At the outset, the Clauses 63, 64, 71, 72 and 73 of General Condition of Contract, 1999 to the extent relevant may be beneficially quoted:
"63. Matters finally determined by the Railway.- 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 referred by the contractor to the Railway and the Railway shall within 120 days after receipt of the Contractor's representation make and notify decisions on all matters referred to by the contract in writing provided that matters for which provision has been made in clauses 8(a), 18, 22(5), 39, 43(2), 45(a), 55, 55-A(5), 57, 57A, 61(1), 61(2) and 62(1)(b) of General Conditions of Contract or in any clause of the Special Conditions of the Contract shall be deemed as 'excepted (5 of 8) [ARBAP-1/2017] matters' and decisions of the Railway authority, thereon shall be final and binding on the contractor provided further that 'excepted matters' shall stand specifically excluded from the purview of the arbitration clause and not be referred to arbitration.
64 (1)(i) Demand for Arbitration.- In the event of 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 Railway of any certificte to which the contractor may claim to be entitled to, or if the Railway fails to make a decision within 120 days, then and in any such case, but except in any of the 'excepted matters' referred to in clause-63 of these conditions, the contractor, after 120 days but within 180 days of his presenting his final claim on disputed matters, shall demand in writing that the dispute or difference be referred to arbitration. 64(1)(ii) The demand for arbitration shall specify the matters which are in question or subject of the dispute or difference as also the amount of claim itemwise. Only such dispute(s) or difference(s) in respect of which the demand has been made together with counter claims or set off shall be referred to arbitration and other matter shall not be included in the reference.
.xxxx........xxxx
71. Determination. 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 referred by the contractor to the Railway and the Railway shall within 120 days after receipt of the contractor's representation make and notify decisions on all matters referred to by the contract in writing provided that matters for which provision has been made in GCC, 1999 clause 8(a), 18, 22(5), 39, 43(2), 45(a), 55, 55-A(5), 57, 57(a), 61(1), 61(2) and 62(1)(b) or in any clause of the special conditions of the contract shall be deemed as "excepted matters" and decisions of the Railway authority, thereon shall be final and binding on the contractor provided further that "excepted matters" shall stand specifically excluded from the preview of the arbitration clause and not be referred to arbitration.
72. The provision of clauses 63 and 64 of the General Conditions of Contract will be applicable only for settlement of claims of disputes between the parties for values less than or equal to 20% of the value of the contract and when the claims or disputes are of value more than 20% of the value of the contract, provision of Clauses 63 and 64 and other relevant clauses of the General Conditions of Contract will not be applicable and arbitration will not be a remedy (6 of 8) [ARBAP-1/2017] for settlement of such disputes.
73. The contractor shall not be entitled to ask for reference to arbitration before the completion of work assigned him under the contract. The contractor shall seek reference to arbitration to settle the disputes only within ambit of condition above."
6. Indisputably, the representation dated 1.6.16 made by the applicant refers to Clause 63 of GCC, which relates to demand for arbitration but then, taking into consideration the request made, the same was responded by the Railway in terms that the work is not completed and the date of completion has been extended upto 10.11.16 so before completion, it is not possible to pay amount of final bill. Accordingly, the applicant was advised to approach Jodhpur Division of NW Railway for releasing of final bill after completion of the work. It was further informed that the applicant if dissatisfied with the Jodhpur Division response, may submit the application for demand of arbitration to General Manager, North Western Railway with clearly mentioning item wise claims and their amount and also to mention total claim which could be processed further appointment of Arbitrator. In this view of the matter, the respondent Railway having responded in the terms indicated above, the representation made by the applicant dated 1.6.16 and 24.11.16, in the considered opinion of this court, satisfy the requirement of Clauses 63 & 64 of GCC and mere error in referring the appropriate Clauses in the representations made, cannot be a ground for rejecting the application preferred seeking appointment of Arbitrator.
7. A bare perusal of clause 72 of the Agreement read with clause 64 of the GCC providing for reference of dispute or (7 of 8) [ARBAP-1/2017] difference to arbitration makes it abundantly clear that the arbitration clause for reference of the dispute is not applicable where the claims of the dispute between the parties are of value more than 20% of the value of the contract. Indisputably, in the instant case, vide representation dated 1.6.16, the applicant raised the claim for about Rs.15,50,000/- with interest for the period of illegal holding, however, later vide representation dated 24.11.16, the applicant has specified the amount of claim at Rs.15,32,785/- which comes to 19.86% and thus, the claim raised being less than 20% of the value of the contract, the contention sought to be raised by the non applicant regarding non applicability of the Clauses 63 & 64 of GCC by virtue of Clause 73 of GCC, is devoid of any merit.
8. It is true that as per Clause 73 of GCC, the contractor shall not be entitled to ask for reference to arbitration before the completion of the work assigned to him under the contract. But then, Clause 63 of GCC specifically provides that 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 contract shall be referred by the contractor to General Manager and the General Manager shall within 120 days after receipt of the contractor's representation make and notify decisions on all matters referred to by the contractor in writing except for the matters falling in excepted category. Further, Clause 64 provides that in the event of any dispute or difference between the parties as to the construction or operation of the contract or respective (8 of 8) [ARBAP-1/2017] rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to withholding by the Railway of any certificate to which contractor may claim to be entitled to or if the Railway fails to make decision within 120 days then in such case that dispute or difference shall be referred to arbitration. Thus, a conjoint reading of Clauses 63 & 64, makes it abundantly clear that even during the progress of the work or before completion of the work or in case of withholding by the Railway of any certificate to which contractor is entitled, the dispute shall be referred to the arbitration. In this view of the matter, the contention sought to be raised by the petitioner on the strength of Clause 73 independent of Clause 63 & 64 of GCC, is absolutely devoid of any merit.
9. In view of the discussion above, the application preferred by the applicant seeking appointment of Arbitrator deserves to be allowed.
10. Accordingly, the application is allowed. Mr. G.R. Bhansali, Retired C.E., D-48, Kamla Nehru Nagar, Jodhpur, is appointed as Sole Arbitrator to adjudicate the dispute between the parties. The fee and expenses payable to the Arbitrator shall be determined as per clause 34 of the Manual of Procedure for Alternative Dispute Resolution, 2009 as amended vide Manual of Procedure for Alternative Dispute Resolution (Amendment), 2016. The parties shall appear before the Arbitrator on 15.6.17.
(SANGEET LODHA), J.
aditya/