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M/S Arsh Construction vs Central Public Works Department on 13 July, 2022

Author: V. Kameswar Rao

Bench: V. Kameswar Rao

                              $~7
                              *     IN THE HIGH COURT OF DELHI AT NEW DELHI

                              +     ARB.P. 600/2021

                                    M/S ARSH CONSTRUCTION                       ..... Petitioner
                                                    Through: Mr. Anil Mittal and Ms. Komal
                                                             Aggarwal, Advs.
                                             versus

                                    CENTRAL PUBLIC WORKS DEPARTMENT ..... Respondent
                                                 Through: Mr. Niraj Kumar, Sr. Central Govt.
                                                            Counsel for CPWD
                                    CORAM:
                                    HON'BLE MR. JUSTICE V. KAMESWAR RAO
                                                 ORDER

% 13.07.2022

1. This petition has been filed by the petitioner for appointment of an Arbitrator.

2. On October 30, 2013 vide an agreement executed between the parties, the work of construction of Administrative, Training Block including providing of electrical installation and fans at BSF Campus, Bhondsi, Gurgaon was allotted to the petitioner. The total cost of the project was ₹2,29,87,455/-. The date of completion of the project was April 27, 2013.

3. It is the case of the petitioner that performance guarantee of ₹11,50,000/- was furnished by the petitioner to the respondent. The agreement also contemplated vide clause 25 that disputes and differences between the parties shall be adjudicated through process of arbitration by a Sole Arbitrator appointed by the Chief Engineer.

4. It is the admitted case of the parties that work could not be completed within the time stipulated.

5. It is the case of the petitioner that the delay in completing the work was attributable to the respondent.

6. In any case, the work was completed on May 19, 2014. After the completion of the work, the petitioner submitted its final bill for payment, on January 15, 2015. The respondent made part payment against the final bills.

7. It is the case of the petitioner that on May 9, 2018, the petitioner requested the respondent to release the withheld amount of the final bill.

8. It is also the case of the petitioner that in the years 2018-2019 certain amounts which were withheld from the final bills were paid, though not complete. This resulted in the petitioner sending a further letter dated November 30, 2019 for the payment of the withheld amounts. The case of the petitioner is also that on July 20, 2020, the petitioner, apart from seeking payment of the withheld amounts, had also raised a claims for ₹1,33,90,668/- or in the alternative, the petitioner has sought the redressal of the dispute by appointment of an Arbitrator.

9. This request of the petitioner was rejected by the respondent vide letter dated August 24, 2020 by stating, the claims are time barred. Further correspondence was made between the parties. Finally the respondent rejected all the claims of the petitioner vide letter dated December 22, 2020.

10. The submission of Mr. Anil Mittal, learned counsel appearing for the petitioner is, the stand taken by the respondent that all the claims being time barred, is clearly untenable. According to him, as the payments made from time to time, (though not complete), the claims made by the petitioner are live claims and can be adjudicated through the process of arbitration. Even otherwise, the issue of limitation is a mixed question of fact and law and as Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Signing Date:16.07.2022 17:01:41 such the same need to be adjudicated by the learned Arbitrator. He has relied upon the judgment of the Supreme Court in the case of Bharat Sanchar Nigam Ltd. & Anr. v. M/s Nortel Networks India Pvt. Ltd., Civil Appeal Nos.843-844/2021, March 10, 2021, wherein the Supreme Court has said „unless the claims are ex-facie barred by time and if there is a little doubt with regard to the aspect of limitation, the matter should be referred to the Arbitration‟.

11. On the other hand, Mr. Niraj Kumar, Sr. Central Govt. Counsel, appearing for the respondent CPWD would contest the submission made by Mr. Mittal by contending that in the initial communication the petitioner had only sought for amounts withheld from the final bills. Cleverly, vide letter dated July 20, 2020, petitioner has for the first time increased claims to an extent of ₹1,33,90,668/-, which claims are clearly barred by time and cannot be adjudicated by the learned Arbitrator. He states, the Judgment of the Supreme Court in the case of Bharat Sanchar Nigam Ltd. & Anr. (supra) lays down that the claims which are ex-facie barred by time, should not be referred for arbitration. He seeks the dismissal of the petition.

12. Having heard the learned counsel for the parties, there is no dispute that work was completed in the year 2014. A final bill was raised by the petitioner in the month of January, 2015. The payment against the said bill was made immediately thereafter. Till 2018, no claim was made by the petitioner with regard to the final bill or even otherwise. Even letter dated May 9, 2018 clearly demonstrate, the claims of the petitioner were approximately for ₹8 - 9 Lacs. In a subsequent letter dated November 30, 2019, the claim was only for ₹5½ Lacs (approx.). At no point of time, did the petitioner made claims for ₹1,33,90,668/-. The said claims were made Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Signing Date:16.07.2022 17:01:41 for the first time only in the year 2020, i.e., after almost six years of the completion of the work or after 5 years of the payment of the final bill (though partially). Hence, the claims depicted in the letter dated July 20, 2020 cannot be referred to arbitration being ex facie barred by time. The only claims which can be referred to, are those made vide letter dated November 30, 2019. Whether these claims are within time shall be decided by the learned Arbitrator.

13. The Supreme Court in the case of Bharat Sanchar Nigam Ltd. & Anr. (supra) in paragraphs 47 and 53.2 has held as under: -

"47. It is only in the very limited category of cases, where there is not even a vestige of doubt that the claim is ex facie time-barred, or that the dispute is non-arbitrable, that the court may decline to make the reference. However, if there is even the slightest doubt, the rule is to refer the disputes to arbitration, otherwise it would encroach upon what is essentially a matter to be determined by the tribunal.

xxx xxx xxx 53.2. In rare and exceptional cases, where the claims are ex facie time-barred, and it is manifest that there is no subsisting dispute, the Court may refuse to make the reference."

14. Accordingly, claims at document A-5 of page No.11 of the documents filed by the petitioner i.e., on account of balance payments not released, i.e., quality control, withheld on account of completion certificate, non working of window and electrical security for ₹5,57,450/- are only liable to be referred for arbitration. Accordingly, this Court refers the parties to Delhi Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Signing Date:16.07.2022 17:01:41 International Arbitration Centre (DIAC), who shall appoint an arbitrator from its panel. The appointment of the learned Arbitrator shall be as per Rules framed by the DIAC. The Arbitrator shall give his disclosure in terms of Section 12 of the Arbitration and Conciliation Act, 1996.

15. It is made clear that all pleas of parties in respect to the claims which have been referred for arbitration both on facts and in law are left open for consideration of the learned Arbitrator.

16. The petition stands disposed of.

V. KAMESWAR RAO, J JULY 13, 2022/jg Signature Not Verified Digitally Signed By:ASHEESH KUMAR YADAV Signing Date:16.07.2022 17:01:41