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1985 DIGILAW 477 (DEL)

MADAN MUKESH v. UNION OF INDIA

1985-12-18

M.K.CHAWLA

body1985
M. K. Chawla ( 1 ) BY moving the present petition under Sections 8 and 20 of the Arbitration Act the petitioner M/s. Madan Mukesh prayed for the issuance of directions to respondent No. 1 for filing the agreement and the appointment of an arbitrator in terms of the contract to decide the following disputes :- 1. Claim being 10% profit of the tune of Rs. 1,42,5 74. 00on account of breach of contract committed by the Department. 2. Claim payment to the tune of Rs. 5,000. 00per day on account of infructuous expenditure for a period of 4 months due to the act and defaults of the Department. 3. Claim interest @ 18% per annum and with cost. ( 2 ) AS per the averments, the petitioner entered into a contract for the construction of Supplementary Drain from R. D. 11435 to P. D. 11935 Mtrs. under the jurisdiction of Executive Engineer VI, Flood Control and Drainage Divn. VI, Delhi Administration. A formal agreement to this effect was executed between the parties. In term; of the contract the date of commencement of the aforesaid work was 6. 10. 80 and the stipulated time was 4 months. In terms of the letter of acceptance, the petitioner was obliged to undertake the work immediately. The petitioner made all arrangements for execution of the work and also deployed regular establishment in terms of the contract. The petitioner firm also intimated the respondents of their having arranged labour for the execution of the work. In the said letter it was also intimated to the respondents that the petitioner is incurring an expenditure of Rs. 5,000. 00 per day for which the respondents shall be liable to compensate w. e. f. 1. 10. 81. The respondents, however, did not permit the petitioner to commence the work, as a result of which the petitioner firm has incurred heavy losses. It is the case of the petitioner that respondents thus committed the breach of the agreement and as such are liable for damages. By virtue of clause 25 of the agreement, the petitioner invoked the arbitration clause. Inspite of the service of the said notice, the respondents have not cared to go ahead with the appointment of an arbitrator. Left with no other option the petitioner has filed the present petition. By virtue of clause 25 of the agreement, the petitioner invoked the arbitration clause. Inspite of the service of the said notice, the respondents have not cared to go ahead with the appointment of an arbitrator. Left with no other option the petitioner has filed the present petition. ( 3 ) IN the written statement, the respondents raised the preliminary objections by alleging that the disputes referred to in para No. 18 of the petition are not covered by the arbitration clause and as such the petition is liable to be dismissed. Furthermore, the firm of the petioner is unregistered partnership and as such cannot file the present petition. On merits, however, the respondents did not dispute the execution of the agreement centaining an arbitration clause. They, however, denied the petitioner having arranged for the labour or any other material for the execution of the contract work. They also denied having received any letter from the petitioner invoking the arbitration clause. The work in question was kept in abeyance due to some administrative reasons, the information of which was duly given to the petitioner firm. The disputes mentioned in the petition do not relate to or arise out of the agreement as alleged. The petition being false to the knowledge of the petioner merits dismissal. ( 4 ) DURING the course of hearing arguments learned counsel for the respondents, raised only one objection to the maintainability of the present petition. According to the learned counsel, Clause 25 of the agreement is not attracted to the disputes now sought to be referred to the arbitrator. According to him, the work, in fact, has not yet commenced and by virtue of clause 25 the only those disputes can be gone into by the arbitrator which arise during the progress of the work or after the completion or abandonment thereof. In the present case, as the work has not yet sparted, the clause 25 of the agreement is not attracted. This argument is not to the liking of the petitioner. According to the learned counsel for the petitioner, clause 25 is very wide to cover all claims, rights, matter and things whatsoever arise and in relation to the contract in controversy. The claims referred to in the petition are arbitrable. This argument is not to the liking of the petitioner. According to the learned counsel for the petitioner, clause 25 is very wide to cover all claims, rights, matter and things whatsoever arise and in relation to the contract in controversy. The claims referred to in the petition are arbitrable. His further contention is that the time was the essence of the contract and in case the petitioner has not made preparations for the start of the contract work, he would have been liable to penalty and damages and in this case the respondents failed to honour the obligcations and as such must be held guilty of the breach of the contract. ( 5 ) AFTER giving my careful consideration to the arguments advanced at the Bar by the learned-counsel for the parties, I am of the prima facie view that arbitration clause 25 of the agreement is very wide and will cover the will cover the claims sought to be referred to an arbitrator. The expressions such as "arising out of" or "in respect of" or "in connection with" or "in relation to" or "in consequence of" or "concerning" or "relating to" the contract are of the widest amplitude and content and include even questions as to the existence, validity and effect (scope) of the arbitration agreement. In this case, it is the respondents stand that due to some administrative reasons the contract work in question was kept in abeyance. In the agreement the time was made the essence of the contract and with a view to complete the work the petitioner was required to make necessary arrangements before the start of the work, the intimation of this was duly conveyed to the respondents but inspite of that they did not care to revoke the contract or allowed him to proceed with the contract. In fact, the site was not handed over to the petitioner for completing the contract. Once the respondents admit the execution of the agreement containing an arbitration clause, there is every reason to hold that the disputes now sought to be referred to arbitration do arise out of the contract and are referable disputes. ( 6 ) NO other point has been urged. Once the respondents admit the execution of the agreement containing an arbitration clause, there is every reason to hold that the disputes now sought to be referred to arbitration do arise out of the contract and are referable disputes. ( 6 ) NO other point has been urged. As a result of the above discussion, I accept the petition and direct respondent No. 2 to appoint an arbitrator within two months from today and to enter upon the reference and decide the disputes mentioned in the petition and publish his award within the statutory period of 4 months.