Gujarat High Court
M/S.Jivanlal Joitaram Patel Patel ... vs Ahmedabad Municipal Corporation on 12 February, 2016
Author: Akil Kureshi
Bench: Akil Kureshi
O/IAAP/51/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
PETN. UNDER ARBITRATION ACT NO. 51 of 2015
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M/S.JIVANLAL JOITARAM PATEL PATEL ESTATE,STATION
ROAD,THASRA....Petitioner(s)
Versus
AHMEDABAD MUNICIPAL CORPORATION....Respondent(s)
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Appearance:
MR GT DAYANI, ADVOCATE for the Petitioner(s) No. 1
MRS KALPANAK RAVAL, ADVOCATE for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
Date : 12/02/2016
ORAL ORDER
1. The petitioner is a partnership firm and prays for appointment of an arbitrator to resolve the disputes between the petitioner firm and the Ahmedabad Municipal Corporation.
2. Brief facts are as under. As per the petitioner, the petitioner was awarded work of road construction by Ahmedabad Municipal Corporation vide work order dated 25.4.1998. The petitioner also deposited sum of Rs.22 lacs by way of security deposit. The work had to be completed within 18 months. According to the petitioner, such work was not completed due to reasons solely attributable to the respondent Corporation. Since it was simply not possible for the petitioner to work, at one point of time, the Page 1 of 9 HC-NIC Page 1 of 9 Created On Wed Feb 17 01:16:11 IST 2016 O/IAAP/51/2015 ORDER petitioner wrote to Ahmedabad Municipal Corporation on 24.12.1998 requesting to finalise the work on 'as is where is basis' and to relieve the petitioner for further execution of work. According to the petitioner several reminders and letters were issued on 8.5.2000, 28.8.2000, 1.11.2000, 19.7.2002, 11.3.2003 and 4.11.2006 without any response from the Corporation. The petitioner had in the meantime executed the work to the tune of Rs. 1.75 crores(rounded off). The Corporation however, paid only sum of Rs. 1.65 crroes and thus a total sum of Rs.10.70 lacs remained outstanding. The petitioner also has disputes about the unauthorised deductions from the running bills made by the Corporation authorities.
3. The work order contained dispute resolution mechanism in the following manner :
"SETTLEMENT OF DISPUTES If any dispute of difference of any kind of whatsoever other than those in respect of which, the decision of any person is by the contract, expressed to be final and binding shall arise between Employer and the Contractor in connection with or arising out of the contract or carrying out of the works (whether during the progress of the works or after their completion and whether before or after the termination: abandunment or breach of the contract) it shall be in the first place be referred to and settled by the Municipal Commissioner who within a period of 90 days after being requested to do so shall give written notice of his decision to the contractor. Save as herein provided such decision in respect of every matter so referred shall be final and binding upon both parties until the completion of the works, and shall forth with be given effect to by the contractor. whether he requires arbitration Page 2 of 9 HC-NIC Page 2 of 9 Created On Wed Feb 17 01:16:11 IST 2016 O/IAAP/51/2015 ORDER as here in after provides or not If the Commissioner has given written notice of his decision to the contractor and no claim to arbitration has been communicated within a period of 90 days from receipt of such notice the said decision shall remain final and binding upon the Contractor.
ARBITRATION : If the Commissioner shall fail to give notice of his decision as aforesaid within a period of 90 days after being requested as aforesaid. or if the contractor be dissatisfied with any such decision then and in any such case the contractor may within 90 days after receiving notice of decision or within 90 days after the expiration of the first named of 90 days (as the case may be) require that the matter or matters in dispute be referred to arbitration as hereinafter of which the decision (if any) of the Commissioner has not become final and binding as aforesaid shall be finally settled by arbitration as follows.
ARBITRATION SHALL BE EFFECTED :
(i) By a single arbitrator agreed upon by the parties of failing agreement upon such an arbitrator.
(ii) By three arbitrators, one to be appointed by the employer, another by the contractor and the third by the president of the International Chamber of Commerce, in the case of a Foreign Contractor and by the president of the Institution of Engineers, India in the case of a Domestic Contractor. If either party fail to appoint an arbitrator then the other party may request the President of the International Chamber of Commerce or the President of the Institution of Engineers. India (as the case may be) to make such appointments.Page 3 of 9
HC-NIC Page 3 of 9 Created On Wed Feb 17 01:16:11 IST 2016 O/IAAP/51/2015 ORDER The arbitration shall be conducted in accordance with the Rules and Procedures for Arbitration of the International Chamber of Commerce in the case of Foreign Contractor and in accordance with the provision of the Arbitration Act 1940 or any statutory modifications thereof in the case of Domestic Contractor and shall be held at such place and time within the area subject to Ahmedabad jurisdiction as the arbitrator or all the arbitrators may determine. The decision of the arbitrator or the majority of the arbitrators shall be final and binding upon the parties hereto and the expenses of the arbitration shall be paid as may be determined by the arbitrator or arbitrators. The said arbitrator or arbitrators shall have full power to certificate or valuation of the Commissioner and either party, shall be limited in the proceeding before such arbitrator or arbitrators to the evidence or arguments put before the Commissioner for the purpose of obtaining his said decision. No decision given by the commissioner in accordance with the fore going provisions shall disqualify him from being called as a withness and giving evidence before the arbitrator or arbitrators on any matters whatsoever relevant to the dispute or difference referred to the arbitrator or arbitrators as aforesaid."
4. In order to activate such dispute resolution mechanism, the petitioner issued the notice for the first time on 20.12.2014 under which the petitioner called upon the Corporation to prepare the final bill and release the security deposit along with unpaid dues of the petitioner. When there was no response to said letter, the petitioner issued notice dated 17.3.2015. In such notice, after elaborating its grievances the petitioner raised a total claim of 3.68 crores (rounded off), against the Corporation and called upon the Corporation to pay the same with interest, failing which, the petitioner would take appropriate steps Page 4 of 9 HC-NIC Page 4 of 9 Created On Wed Feb 17 01:16:11 IST 2016 O/IAAP/51/2015 ORDER before the appropriate Court for recovering such amount.
5. The petitioner issued further notice dated 13.5.2015 for appointment of arbitrator suggesting four alternative choices to the Corporation. Since to this notice also there was no reply from the Corporation, the petitioner filed this arbitration petition.
6. In response to the notice, the Corporation has appeared and filed reply dated 23.9.2015 in which it is pointed out that the work which was awarded on 27.2.1998 was abandoned on 24.12.1998 and that therefore, the notice for appointment of arbitrator which was issued on 17.3.2015, followed by filing of arbitration petition on 19.8.2015, was hopelessly barred by limitation. In fact, the respondents contend that they have no documents concerning the contract and in absence of any material documents, it is not even possible to respond to the petitioner's grievances. They relied on a reply dated 27.1.2015, from the Corporation in response to queries raised by the petitioner under the Right to Information Act in which it was conveyed that after 18 years, Corporation does not have the necessary documents.
7. Learned counsel Shri Dayani for the petitioner submitted that the final bill of the petitioner was not paid. The security deposit also was not released. The arbitration petition or the claim of the petitioner cannot be stated to be barred by limitation. In the present case, without leading evidence, the question of limitation cannot be decided. In that view of the matter, the Court should make reference Page 5 of 9 HC-NIC Page 5 of 9 Created On Wed Feb 17 01:16:11 IST 2016 O/IAAP/51/2015 ORDER and leave such question open for the arbitrator to judge. In this context, he relied on the decisions of the Supreme Court in case of Indian Oil Corporation Limited v. SPS Engineering Limited reported in (2011) 3 Supreme Court Cases 507 and in case of Schlumberger Asia Services Limited v. Oil and Natural Gas Corporation reported in (2013) 7 Supreme Court Cases 562.
8. On the other hand, learned counsel Shri Raval for the Corporation opposed the petition contending that the petitioner's claim is hopelessly barred by limitation, Even according to the petitioner's own account, the work order was issued in February 1998 and could not be executed beyond December 1998. Since then the petitioner has not taken any steps to agitate his grievances except for the first time issuing notice dated 20.12.2014 followed by two more notices in March and May 2015. He submitted that the Corporation has no records pertaining to the contract in question since more than 17 years have passed. Even the existence of arbitration agreement in the work order cannot be verified.
9. Even going by the petitioner's assertion, the work order in question was issued in February 1998 and became impossible to execute for the petitioner by December 1998. If that be so, I see no valid reasons stated on record to permit the petitioner to move the present arbitration petition sometime in September 2015. Formal notice for appointment of arbitrator came to be issued only on 13.5.2015. In the meantime, though the petitioner claim to have issued several letters to the Corporation, copies Page 6 of 9 HC-NIC Page 6 of 9 Created On Wed Feb 17 01:16:11 IST 2016 O/IAAP/51/2015 ORDER thereof are not produced on record and in any case last of such letter was issued on 4.1.2016. If therefore, the Corporation pleads total lack of documents on account of nearly 17 years having passed, the same is wholly understandable.
10. In case of SBP & Co. v. Patel Engineering and another reported in (2005) 8 Supreme Court Cases 618, the Constitution Bench of Supreme Court held that the Chief Justice or his designate when approached with an application under section 11 of the Arbitration and Conciliation Act, 1996, has to decide his own jurisdiction in the sense whether the party has approached the right High Court. He also has to decide whether there is an arbitration agreement as defined in the Act and whether the person who has made request is party to such agreement. He can also decide the question whether the claim was a dead one; or a long barred claim that was sought to be resurrected and whether the parties have concluded the transaction by recording satisfaction of their mutual rights and obligations or by receiving the final payment without objection. It was further observed that it may not be possible at that stage to decide whether the live claim made is one which comes within the purview of arbitration clause.
11. Thus in addition to essential requirement of making a reference to an arbitrator, the Chief Justice or his designate may also examine the question whether the claim made is a dead one or a long barred claim that was sought to be resurrected. This view has been reiterated in Page 7 of 9 HC-NIC Page 7 of 9 Created On Wed Feb 17 01:16:11 IST 2016 O/IAAP/51/2015 ORDER number of decisions since then. Elaborating such concept in case of Indian Oil Corporation Limited v. SPS Engineering Limited(supra), it is held that the Chief Justice or his designate is not expected to go into merits of the claim or examine maintainability or tenability of the claims either on facts or in law in application under section 11 of the Act. He can decide an apparent dead claim which is evidently and patently a long time barred claim and there is no need for any detailed consideration of evidence. While reiterating that it is optional upon the Chief Justice or his designate to refuse the request for appointment of arbitrator at the threshold where the claims are barred by limitation, it was further held that when delay in making petition for arbitration is not apparent, based on disputed facts, Court still will not enter into such disputed questions and leave it open to be decided by the Arbitration Tribunal.
12. Reverting back to the facts of the case, even going by the petitioner's assertion, work was discontinued in December 1998. Even if the say of the petitioner in the arbitration petition is accepted, last of the correspondence ended in the year 2006 till the petitioner revived the attempt in the year 2014. In the meantime, the Corporation has not maintained the documents. Sue to long passage of time, the Corporation is unable to verify the averment that clause of arbitration sought to be relied upon by the petitioner forms part of the original contract between the parties. Thus entire claim is long barred claim. The petitioner had given up the claim which is sought to be resurrected and raised after decades together.
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O/IAAP/51/2015 ORDER
13. Arbitration petition is therefore, dismissed (AKIL KURESHI, J.) raghu Page 9 of 9 HC-NIC Page 9 of 9 Created On Wed Feb 17 01:16:11 IST 2016