Andhra HC (Pre-Telangana)
Yelluru Mohan Reddy vs Rastriya Ispathnigam Ltd., ... on 9 November, 1990
Equivalent citations: AIR1992AP81, 1991(1)ALT515, AIR 1992 ANDHRA PRADESH 81, (1991) 2 CIVLJ 164, (1991) 1 APLJ 315, (1991) 1 ANDH LT 515, (1992) 1 ARBILR 46
ORDER
1. This civil revision petition raises a question of importance regarding the scope of arbitration clauses which also contains sub-clauses excluding certain matters from the purview of arbitration and also a question relating to the application of Section 8 (2) of the Indian Arbitration Act, 1940 (hereinafter referred to as the Act).
2. The facts of the case are as follows :--The petitioner entered into a contract with the respondent. The Visakhapatnam Steel Project, on 31-3-1986. Earlier the petitioner was awarded the work on 30-12-1985 in a sum of Rs.6,15,750/- and the work was to be completed in four months. It appears from the counter that certain meetings took place between the petitioner and the respondent on 7th, 21st and 28th March, 1986 and a revised programme has fixed up in which the petitioner agreed to complete the work by the end of May, 1986 which would mean that there will be a delay of one month in the completion of the work, it is the case of the petitioner that he could not proceed with the work inasmuch as contrary to an alleged assurance a reservoir was allowed to get filled up with water by the respondent and that the trenches which were dug by the petitioner got filled up with water and therefore it became impossible, to proceed with the contract without involving additional expenditure. The petitioner therefore addressed a letter on 26-5-1986 (Ex. A-1) stating that he had excavated 27000 cubic meters as against 15000 cubic metres and covered a length which was short of 3 KMs. out of the total length to be covered. He stated that unless the water is bailed out it is impossible to excavate the soil. Extra cement is required. As in spite of the request to amend the agreement to include the additional work and additional expenditure, the same was not done, he is not able to proceed further. This being not a matter covered by the special conditions which could be disposed of by the Engineer, the petitioner requested that the rate for excavation of the earth and pitching be enhanced by 50% over the original rate or in the alternative, the petitioner may be given water free area after dehydration is made by the respondent. The Deputy Chief Engineer (Civil) sent a letter, Ex. A2, dated 4-6-1986 which does not refer to Ex. A1. He stated that the work was awarded on 30-12-1985 for completion in four months, that in spite of the revised schedule it was not completed even by May, 1986, that the petitioner did not mobilise his resources and had stopped work already for 10 days. The petitioner was requested to resume work and complete it at the earliest. Otherwise the work will be got completed at the petitioner's risk. The same officer after receipt of Ex. A1 sent a further letter on 11-6-86 (Ex. A3) to the petitioner stating that the allegation that the site condition has become altered on account of the filling up of the water is incorrect. Under the General Conditions no change in unit rate is admissible for any variation in quantities-that the petitioner has not completed the work according to the revised schedule and did not even complete 25% of the pitching work. The item of earth work in the bill already included the so-called additional work. The cement consumption now claimed is contrary to the petitioner's letter dated 23-12-1985. The road is, in fact, dry. The claim for extra rate is accordingly rejected. Before receipt of Ex. A3 the petitioner wrote Ex. A4 dated 14-6-86 stating that the contents of Ex. A2 have surprised him. The petitioner was ready and willing to proceed with the work if the points raised in Ex. A1 are answered. In reply the Deputy Chief Engineer wrote a (letter) on 16-7-1986 as per Ex. A5 that the progress of work was poor in spite of 8 letters and therefore it is clear that the petitioner failed to complete the work and has abandoned the site. Therefore, on being satisfied with the certificate of the Engineer, the respondents were giving 7 days notice under Clause 14(1) of the General Conditions and thereafter the work will be entrusted to another contractor and suitable action taken, against the petitioner. The petitioner replied on 22-7-1986 as per Ex. A6 that there is a "dispute" pending which arose in regard to the non-settlement of the issue of change of rate on account of the respondents allowing water into the reservoir. The petitioner therefore requested the dispute to be referred to arbitration 'as mentioned in his earlier letter'. The petitioner gave one week's notice for appointment of arbitrator and then filed the present O.P. on 23-8-1986 u/S. 8(2) of the Act seeking appointment of an arbitrator. In para IV of the O.P. it is stated that the cause of action arose on 28-5-86 when the petitioner wrote to the Engineer in charge to 'decide the dispute' and give final certificate and when the latter gave the final certificate and again when the respondent sent the letter Ex. A5 dated 16-7-1986. In the body of the petition it is stated that the Engineer did not reply and that being a departmental Engineer the petitioner is not agreeable for a decision by the Engineer. It is stated that under Clause 16(2)(d) of the agreement the petitioner can move the arbitrator if he is dissatisfied with the Engineer.
3. In the counter filed by the Additional Chief Engineer, after referring to the above said correspondence it is stated that the petitioner has come forward with a false story, that no assurance was given that water will not be allowed into the reservoir, that the petitioner unreasonably abandoned the work on 25-5-1986 and claimed higher rate and that the rate has already been refused. It is stated that the petitioner has to put forward the actual claim before the Engineer for his decision under Clause 16(1) of the contract and his decision is final. The petitioner did not comply with the said clause and therefore the claim is not 'arbitrable'.
4. The Court below held that the alleged assurance is not incorporated in the contract, that in fact as per Ex. A-1 notice the petitioner wanted to execute a fresh contract with new rates, that the contract was not placed before the Court but that the respondents placed the General Conditions and clause 16.2(c) before the Court and that unless there is a clause in the contract entitling a higher rate the petitioner cannot make any claim. The Court said that there is some force in the plea that the question of amending the rate in the contract or entering into a fresh contract, is outside the purview of the contract. It also held that Ex. A-6 does not amount to 15 days clear notice contemplated by the last para of Sec. 8(2) of the Act. On these grounds the O. P. was dismissed.
5. Two points arise for consideration in this revision petition :
(1) Whether the petitioner has complied with the last para of Sec. 8(2) of the Indian Arbitration Act, 1940?
(2) What is the proper construction of the arbitration clause which also contains a sub- clause excluding certain matters which have to be referred to an Engineer for decision, from its purview and what are the general principles applicable to such clauses?
6. Point No. 1:-- It has been stated earlier that under Ex. A-6 letter dated 22-7-86 addressed to the respondents the petitioner gave one week's notice for appointment of respondents on 22-7-1986 itself as found by the lower Court. The O. P. was filed for appointment of the arbitrator on 23-8-1986 (impugned order states that the 0. P. was filed on 28-8-86). In any event the O. P. was filed at least 32 days after receipt of Ex. A-6 notice fixing one week's time for appointment of arbitrator. It is in this context Sec. 8(2) of the Act has to be considered. Under Sec. 8(1) of the Act it is stated that any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy. Sec. 8(2) reads :
"S. 8(2): If the appointment is not made within 15 clear days after service of the said notice, the Court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator ....."
7. On a plain reading of the above said provision it is clear that the statute does not require any particular time to be mentioned in the notice given by one party to the other party for appointment of an arbitrator as per the terms of the agreement. All that is required is that if the appointment is not made within 15 clear days after service of the said notice, the Court could be moved by the party who gave notice, seeking appointment of an arbitrator. The lower Court was not therefore justified in thinking that 15 days time must have been mentioned in the notice issued by the petitioner viz., Ex. A-6. As stated earlier the O. P. itself was filed 32 days after service of Ex. A-6 which," being more than the time required by the statute, the O. P. was clearly maintainable. I, therefore, disagree with the lower Court on this point. Point No. 1 is therefore held in favour of the petitioner.
8. Point No. 2:-- This is a more important point. In the tower Court the General Conditions of the contract were produced, as stated in the impugned order, though the same were not specifically marked. The same were again placed before me. I shall refer to the important provisions thereof.
9. The General Conditions of the contract contain various parts or sub-divisions. Part I deals with definitions, Part 2 with 'duties' of the Engineer. Clause 2.1 says that the Engineer can inter alia decide questions which arise in the execution of the work, unless otherwise, provided for in the contract and that 'the decision, opinion, certificates or valuation of the Engineer in respect of any matter under this clause' shall be final and conclusive and if the contractor is dissatisfied with the decision, he can refer the matter to the Employer to confirm, reverse or vary such decision. Part 3 deals with 'assignment and sub-letting', Part 4, 'extent and scope of contract'; Part 5 deals with 'contract documents', Part 6 with 'general obligations' generally or as per orders of the Engineer; Part 7 deals with 'Labour'; Part 8 with 'work materials and plant'; Part 9 with commencement time and delay and Para 9.4 deals with extension of time by the Engineer; para 9.8 with certificate of completion; Part 10 with 'maintenance and defects'; Part 11 with 'alterations, additions and omissions, para 11.1 enables the Engineer to vary the form, quality or quantity of the work that may be necessary and he can ask the contractor to do/omit to do or execute additional work, para 11.3 deals with 'valuations of variation and power of the Engineer to fix rates'; Part 12 with 'Measurements'; Part 13 with 'certificate of payment', monthly; Part 14 with 'termination of contract'; Part 15 is the 'War clause' and Part 16 with 'Settlement of Disputes'.
10. Part 16 dealing with 'Settlement of Disputes' is a lengthy one; Clause 16.1 deals with 'Disputes be finally determined by the Engineer'; Clause 16.2(a): 'Settlement of disputes by Arbitration'; Clause 16.2(b); 16,2(c); 16.2(d) are incidental provisions.
11. Clause 16.1 deals with what are called as 'Executed matters, in 16.2(a) and 16.2(b). 1 shall first set out Clause 16.1. It reads as follows :
"Cl. 16.1 : Disputes be finally determined by the Engineer:-- The decisions, opinion, certificate or valuation of the Engineer with respect of all or, any of the matters under Clauses 2.2.2, 4.5, 6.4 to 6.11, 6.5, 6.25. 8, 9.2, 9.4, 9.6 to 9.8, 10.2,10.6, 11, 13.6, 14.1 hereof (which matters herein referred to as Excepted Matters) shall be final and conclusive and binding on the parties hereto and shall be without appeal. Any other decision, opinion, direction, certificate or valuation of the Engineer or any of refusal of the Engineer to give any of the same shall be subject to the right of Arbitration and review in the same way in all respect (including the provisions as to opining the Reference) as if it were a decision of the Engineer under Clause 16.2."
Then we come to the other important clause 16.2(a) which reads :
"Cl. 16.2(a) : Settlement of disputes by Arbitration :-- All disputes and differences of any kind whatever arising out of or in connection with the Contract or the carrying out of the work (whether during the progress of the works or after their completion and whether before or after the determination, abandonment or breach of the Contract) shall be referred to and settled by the Engineer who shall state his decisions in writing. Such decision may be in the form of final certificate or otherwise. The decision of the Engineer with respect of any of the excepted matters shall be final and without any appeal as stated in clause 16.1 hereof. But if either the Employer or Contractor be dissatisfied with the decision of the Engineer or any matter, question or dispute of any kind (except on any excepted matters) or so to the withholding by the Engineer of any certificate to which the Contractor may claim to be entitled then and in any such case, either party (the Engineer or the Contractor) may within 28 days after receiving notice of such decision given a written notice to the other party through the Engineer, requiring that such matters in dispute be Arbitrated upon. Such written notices shall specify the matters which are in dispute and such dispute or difference of which such written notice has been given and no other shall be and is hereby referred to the arbitration and final decision of single arbitrator to be agreed upon and appointed by both the parties or in case of disagreement as to the appointment of a single Arbitrator to the arbitration of two arbitrators one to be appointed by each party which arbitrators shall before taking upon themselves the burden of Reference appoint an Umpire."
The clause further says :
"The Arbitrator; Arbitrators or the Umpire shall have power to open up; review and revise any certificate; opinion; "decision; requisition or notice, save, in regard to the excepted matters in dispute which shall be submitted to him or them and of which notice shall have been given as aforesaid."
The Clause further states that :
"Upon every or any such reference the cost of and incidental to the reference and award respectively shall be in the direction of the Arbitrator, Arbitrators or the Umpire who may determine the amount thereof or direct the same to be taxed as between Attorney and the Client or as between party and party shall direct by whom to whom and in what manner the same shall be borne and paid. This submission shall be deemed to be submission to Arbitration within the meaning of the Indian Arbitration Act, 1940 or any statutory modification thereof. The award of the Arbitrator, Arbitrators or Umpire shall be final and binding on the parties. Such reference except as to the withholding by the Engineer of any certificate under clause 13.4 to which the Contractor claims to be entitled shall not be opened or entered upon until, the completion or alleged completion of the works or until after the practical cessation of works arising from any cause unless with the written consent of the Employer and the Contractor."
The proviso thus requires the contractor to go ahead with the work pending decision of the Engineer or award of Arbitrator or Arbitrators or Umpire.
Clause 16.2(b) states:
"No claim for which settlement has been specifically provided for in the Contract i.e., excepted matters, should be referred to Arbitration."
I shall refer initially to some basic concepts. Arbitrator and the Engineer (or Certifier) --Distinction :--
12. It is necessary to keep in mind the distinction between the functions of the Arbitrator and the Engineer (or Certifier) dealt with in the same contract. Essentially, the Engineer or Certifier is performing an administrative rather than a judicial function. He has been described as a 'preventor of disputes' while the arbitrator is a person who comes into the scene after a 'dispute' (which could not be prevented) comes into existence. [Re Cams --Wilson and Greene, (1886) 18 QBD 7]. An Engineer or Certifier does not become an arbitrator merely because the words 'adjudge' or 'exclusive Judge' is used. The position may generally be different if, disputes are to be decided by a single person, and the words 'reference', 'dispute', 'decision' are used. (See Y. Parthasarathy v. State of A. P., (1988) 1 Andh LT 809 where the relevant Supreme Court and other decisions have been reviewed). It is also possible that in some contracts, the same person is described as an 'Engineer' or 'Certifier' at one stage and later as an 'Arbitrator'. [Eaglesham v. McMaster, (1920) 2 KB 169; Neale v. Richardson, (1938) 1 All ER 753]. An Engineer or Certifier who is to decide certain questions with reference to a contractor would be liable for negligence unless, of course, he is also clothed with judicial functions as an arbitrator. (Sutcliffe v. Thackrah, (1974) AC 724; Arenson v. Casson Beckman Rutley, (1977) AC 405. When Engineer's or Certifier's satisfaction or certificate is binding :
13. It is the duty of the Engineer or Certifier to apply the provisions of the contract strictly. Any evidence showing that he has taken extraneous or irrelevant matters into consideration, will deprive his certificate of validity. (Panamena Europea Navigacion v. Leyland, (1947) AC 428). He may become disqualified on ground of interest in the subject-matter not known to the party -- and not merely because of being employed by the opposite party; or on the ground of fraud and collusion before or after the contract; or because of undue interference by or improper pressure of the employer; conduct which falls short of the high standard or fairness, discreetness and impartiality expected of him in relation to the issue or refusal of the certificate or decision; unreasonable refusal to give consideration to the matter upon which he is requested to certify; breach of contract by employer having the effect of preventing the contractor from obtaining certificate. (Hudson, Building Contracts, 10th Ed. 1970, pp. 470-471; 498-499).
Excepted matters and Arbitrator's jurisdiction :--
14. In respect of matters within the purview of the Engineer, it is customary in contracts, to state that his decision is final and to also treat the same as an item excluded from arbitration. The Supreme Court has clearly ruled in Vishwanath Sood v. Union of India, that such excepted matters are outside the purview of arbitration and cannot be referred to the arbitrator. Therefore, the Engineer cannot be treated as a sub-arbitrator as done in Food Corporation of India v. B. Chitti Babu, (1983) 1 APLJ 91. In fact, the said decision was not accepted in Joint Manager, Food Corporation of India v. A. Kasiviswanadhan, C.M.A. No. 509 of 1983, dt. 18-7-1986. In that case Raghuvir, J. (as he then was) held that the excepted matters are outside the purview of arbitration and Kodandaramayya, J. (following Chitti Babu's case) differed. There was a reference, by an order dated 19-3-1984, which came up before me and I agreed with Raghuvir, J. (as he then was) and held further that Chitti Babu's case is not correctly decided. Thereafter the Division Bench, on receipt of the order on reference, accepted the same by judgment dated 18-7-1986. Of course after holding that excepted matters cannot be subject of arbitration, I held that, on facts, the case fell within the principle laid down in Lloyds v. Milward, (1895) 2 Hudson's B. C. 4th Ed. p. 262. Where the arbitration clause excludes certain matters in express terms and leaves them to the sole discretion of the architect, no arbitration can arise in respect of these matters except by agreement and in the absence of an allegation of fraud (or other grounds referred to earlier) neither the Court nor the arbitrator has jurisdiction to review the determination of the architect as to those matters.
15. On the other hand, where there is no express restriction of the scope of the arbitration clause, the jurisdiction of the arbitrator does not apparently extend to review the correctness of measurements and valuations where they are made 'conclusive' between the parties or conditions precedent to a right to payment. Where however the architect has only power to issue a certificate but it is neither made 'conclusive' between the parties nor is a condition precedent to payment, such certificate would be subject to an arbitration clause. If again, the certificate is refused, the arbitrator can go into the question.
16. Again, when there are two clauses giving similar jurisdiction either to the architect or to the arbitrator, the effect seems to be that when the architect has given his certificate before a dispute has actually arises, it is final and conclusive between the parties, but if a dispute has arisen (as in Lloyd's case (1895 (2) Hudsons B, C. 4th Ed. 262) before the architect has certified, then his power of certifying is destroyed, and the jurisdiction of the arbitrator arises and in case the matter goes to Court and is not stayed, the Court.can also go into the question. (See Halsbury's Laws of England, 4th Ed. Vol. 4 paras 1298, 1299; Hudson, Building Contracts 10th Ed. 1970 pp. 446 to 448) (Gujaria, Building and Engineering Contracts, 1985 pp. 536, 538, 549).
17. In certain cases, the Arbitration clause may itself expressly permit the Arbitrator to open up, review and revise any opinion or certificate of the architect or where the certificate is withheld.
Excepted matters and extras and variations and additions :
18. Works which are not expressly or impliedly included in the original contract and therefore not included in the contract prices, are generally termed variations, whether they represent a change or alteration of the original work or simply an addition to or omission from it and may be ordered by the employer or his architect. Contract normally contain provisions enabling the architect or Engineer to issue directions in this behalf so that the employer can act through these persons and the contractor may be able to recover for such extra work so directed. Or else, the contractor and the employer would be compelled to have a separate agreement. (Hudson's Building Contracts, 1970, 10th Ed. pp. 506-507).
19. The more difficult question however relates to whether particular items of work are in fact a variation of the actual work undertaken. The work may be described in a bill of quantities or specification or generally. A question might arise whether the work described is intended to include other ancillary work or processes indisputably necessary for the proper completion of the work described. This has to be decided on a construction of the contract which must often depend upon the circumstances of the parties. Several principles are laid down for resolving such dispute (ibid, p. 508 etc.)
20. But we are here concerned with the aspect of jurisdiction of the Arbitrator on the one hand and the decision or certificate of the Engineer or Certifier on the other. In Brodie v. Cardiff Corporation (1919) AC 337, Lord Shaw of Dunfermline, dealing with a case of extras, variation and additions referred to three categories of cases and the need for specific orders in writing, and stated as follows : (at pp. 359-360) :
"The first case is that of work admittedly within the contract. With regard to that it is, of course, conceded that no order in writing by the Engineer was required. The second case is that of work admittedly outside of the specified contract, and consisting of alterations, additions or deviations. With regard to these it is conceded that the Corporation is not liable unless an order therefor by the engineer had been given in writing. The third case is that of work with regard to which there is no admission, but on the contrary the parties are at issue upon the question whether the work ordered by the Engineer is within the contract or is an extra. This fundamental difference -- upon which the parties are at issue -- involves the other, namely, whether or not a written order is required."
It was held that the case fell in the third category of cases and that notwithstanding the absence of an order in writing by the Engineer which the contract otherwise required in respect of works outside the contract, the contractor could claim to be paid for the extras and seek before the arbitrator, a decision on the question as to whether the Engineer's decision was right or not.
Scope of Cl. II and C1.16 :
21. In the present case, the arbitration, clause 16.2 first states that 'disputes' and differences shall be 'referred' to and settled by the Engineer who shall state his 'decision' in writing, in the form of final certificate or otherwise. The decision of the Engineer with respect to excepted matters is final and there is 'no appeal'. By the words 'no appeal' is means that the decisions are not to be made rule of court as in an arbitration. (Wadsworth v. Smith (1871) LR 6 RB 332. But if the employer or contractor is dissatisfied with the decision of the Engineer except on any excepted matters or regarding withholding of any certificate, those matters could go for arbitration.
22. The words in the first part of Clause 16.2 do not on the facts of the case treat the Engineer as an arbitrator merely by the use of the words dispute, decision or reference. The words 'as stated in clause 16.1' in the first part of Clause 16.2 are clear indication that the words dispute, decision or reference are used without special significance and if they concern the 'excepted matters' they cannot be re-opened by the arbitrator while other decisions could be reopened. Of course, the decisions of the Engineer on the excepted matters would not be binding if the case falls within the various exceptions referred to above.
23. But the question then is whether the dispute in the present case falls within excepted clause 11.3 as contended for the respondent. For this purpose it is necessary to refer not merely to Clause 11.3 but to the entire clause 11 relating to variations. It reads as follows :
"Cl. 11.1 :-- Variations : The Engineer shall have the right to make any variation of that form, quality or quantity of the works or any part thereof that may in his opinion be necessary and for that purpose or if for any other reason it shall in his opinion be desirable, he shall have power to order the Contractor to do and the Contractor shall do any of the following :
(a) increase or decrease the quantity of any work included in the Contract.
(b) omit any such work.
(c) change the character of quality or kind of any such work.
(d) change the levels, lines, position and dimensions of any part of the works.
(e) execute additional work of any kind necessary for the completion of the work.
and no such variation shall in any way vitiate or invalidate the Contract but the value (if any) all such variations shall be taken into account in ascertaining the account of the Contract Price.
11.2 Orders for variations to be in writing :--
No such variation shall be made by the Contractor without an order in writing of the Engineer. Provided that no order in writing shall be required for increase or decrease in the quantity of any work where such increase or decrease is not the result of any order given under this Clause, but is the result of the quantities exceeding or being less than those stated in the Bill of quantities.
Provided also that if for any reason the Engineer shall consider it desirable to give any such order, verbally, the Contract shall comply with such order and confirmation by the Contractor in writing of such verbal order given by the Engineer shall be deemed to be an order in writing subject to Clause 4.3 hereof.
11.3 Valuations of variations and Power of the Engineer to fix rates : The Engineer shall determine the amount (if any) to be added to or deducted from the sum named in the tender in respect of any extra or additional work done or work omitted by his order. All such work shall be valued at the rates set out in the Contract if in the opinion of the Engineer the same shall be applicable. If in the opinion of the Engineer the contract does not contain any rates applicable to the additional, altered, omitted or substituted items then the rates shall be fixed by the Engineer for such items by deriving the rates from the analogous item, if any, in the agreement. In the absence of analogous items, the rates shall be fixed by the Engineer on the basis of basic rates and norms as available in standard schedules/ analysis of rates adopting approved rates of materials/ wages which shall be supported by vouchers and other relevant documents and the contractor shall submit the analysis on these lines. The cost element on account of provisions of profit including overheads shall not exceed 12 1/2% of the direct cost.
Provided also that no increase of the Contract Price and Clause 11.3 shall be made unless the Contractor notifies to the Engineer his intention to claim extra payment within one month from the (receipt of the Contract variation) date the work relating to the variation is taken up for execution."
24. It will be noticed that the purpose of Clause 11 is to authorise the Engineer to vary the form, quality or quantity of the works or any part thereof which may in his opinion be necessary or desirable. In other words, this clause deals with the power of the Engineer to ask the Contractor to do the extra work or omit the work or change the contract or quality etc. of the work. He is doing so on behalf of the employer and agreeing to pay for it as per the procedure indicated in Clause 11. In all cases of extra work, the work is 'outside the contract'. I have already referred to Hudson's Building Contracts (10th Ed., 1970 pp. 506-507) to say that extra work is to be ordered in writing and paid for while, so far as work otherwise implicdly included in the contract is concerned, the expense therefor, is included in the contract price and no extra amount can be claimed therefor. The position, in my view, however is different where the basic dispute is whether the work is extra work not contemplated by the contract or whether it is so included. Clause 11.3 does not deal with any decision by the Engineer to cover such a contingency. It merely deals with the mode of calculation of the amount to be paid to the contractor for work which is admittedly outside the contract. In my view the matter falls in the third category of cases referred to by Lord Shaw in Brodie's case (1919 AC 337).
25. I am therefore of the view that the dispute whether the work is new or not included in the contract as contended 6y the contractor or whether it is already included in the contract as contended by the Engineer is not a question covered by Clause 11.3 and therefore the matter is not an excepted matter under Clause 16.1. Under the first part of Clause 16.2 it is therefore a matter in regard to which any decision or certificate of the Engineer could be treated as not binding provided that, within 28 days after receiving notice of such decision, a written notice is given to the party through the Engineer requiring that such matter in dispute be arbitrated upon.
26. In the present case, the demand of the petitioner as per Ex. A-1 dated 26-5-1986 was rejected by the Engineer on 11-6-1986 as per Ex. A-3. The petitioner sought arbitration as per his letter dated 22-7-1986 marked as Ex. A-6. It is not clear as to when Ex. A-3 was received by the petitioner. The Court below had not gone into this question at all.
27. No objection was raised in the lower Court or in this Court by the respondent that the petition was barred in spite of S. 8(1) or that the petitioner has not sought for arbitration within 28 days after receiving notice of such 'decision' of the Engineer. Apart from the question whether S. 28 of the Contract Act becomes applicable for curtailing the period of limitation (vide Art. 137 of the Limitation Act), I may refer to Monmouth C. C. v. Costelloe & Kemple Ltd., (1965) 63 L.G.R. 429 (CA). (see Hudson Building Contracts, 10th Ed., 1970, page 820 and Empire Digest, 1979 Issue, para 2595) where reversing Mocatta, J. the Court of Appeal held that for limitation to start, the Engineer must make it clear that if his letter was intended as a 'decision' under the clause. As there was no 'express reference' to a decision under the terms of the clause, it was held that the letter was not a 'decision' of the Engineer but was only a rejection of claims. Harman L.J. Observed that such clause had to be construed strictly since they could have the effect of shutting out the right to go to the Courts. I therefore, hold that the bar of 28 days is not attracted.
28. For all the aforesaid reasons, the revision petition is allowed and the O.P. filed by the petitioner is also allowed. The Court below is directed to appoint an arbitrator in terms of the latter part of Clause 16.2 of the agreement and subject to the powers of the Court under S. 8 of the Arbitration Act, 1940. There shall be no order as to costs.
29. Petitions allowed.