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2001 DIGILAW 1588 (RAJ)

MAHESH CHAND v. UNION OF INDIA.

2001-09-28

H.R.PANWAR

body2001
JUDGMENT H. R. PANWAR, J. 1. This appeal is directed against the order dated 06.04.1998 passed by learned District Judge, Jodhpur in Arbitration Case No. 2A/1998 whereby the learned District Judge dismissed the petition filed by the appellant under Section 11 of the Arbitration and Conciliation Ordinance, 1996 (hereinafter referred to as 'the Ordinance of 1996'). 2. I heard learned counsel for the parties. Perused the order impugned and the record. 3. It is submitted by the learned counsel for the appellant that the appellant was granted contract Agreement No. 4/EE/ICD/94-95 by the respondents for construction of CPWD Office Building and Inspection Bungalow Building at Jodhpur. He submitted that after the payment of final bill, certain items remained undecided for which a dispute arose, which was required to be decided by the arbitrator, therefore, the appellant filed an application under Section 11 of the Ordinance of 1996 before the learned Trial Court seeking for appointment of arbitrator. The said application was rejected by the Trial Court on the ground of being filed beyond the period of limitation provided under Clause 25 of the said contract agreement. The Trial Court further held that there is no arbitrable dispute between the parties and on that count also the application filed by the appellant under Section, 11 of the Ordinance of 1996 was rejected. It was contended by the learned counsel for the appellant that while making the payment of final bill on 30.01.1997 a sum of Rs. 55,000 were withheld under different heads by the respondents and were kept in abeyance for subsequent decision and thus, the payment made on 30.01.1997 cannot be said to be a payment of final bill. He further contended that in view of this, the period of limitation as provided in Clause 25 of the said contract agreement would not run from the date of payment of final bill i.e. 30.01.1997. He further contended that the items which were withheld and not on merits at the time of publication of final bill were required to be considered subsequently and on its non-consideration, dispute arose between the parties. Thus, according to him there is arbitrable dispute. He further contended that the items which were withheld and not on merits at the time of publication of final bill were required to be considered subsequently and on its non-consideration, dispute arose between the parties. Thus, according to him there is arbitrable dispute. Clause 25 of the Agreement No. 4E/E/Jcb/94-95 reads as under : "Except where otherwise provided in the contract all questions and dispute relating to the meaning of the specifications, designs, drawings and instructions hereinbefore mentioned and as to the quality of workmanship of materials used on the work or as to any other question, claim, right matter or thing whatsoever in any way arising out of or relating to the contract designs, drawings specifications, estimates, instructions, orders or these conditions or otherwise concerning the words or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the person appointed by the Chief Engineer, CPWD incharge of the work at the time of dispute or if there be no Chief Engineer the administrative head of the said CPWD at the time of such appointment. It will be no objection to any such appointment that the arbitrator so appointed is a Government servant that he has to deal with the matters to which the contract relates and that in the course of his duties or difference. The arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, such Chief Engineer or administrative head as aforesaid at the time of such transfer, vacation of office or inability to act, shall appoint another person who shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other than a person appointed by such Chief Engineer or administrative head of the CPWD as aforesaid should act as arbitrator and if for any reason, that is not possible the matter is not to be referred to arbitration at all. In all cases where the total amount of all the claim in dispute is Rs. 75,000 (Rs. In all cases where the total amount of all the claim in dispute is Rs. 75,000 (Rs. Seventy Five Thousand Only) and above the arbitrator shall give reasons for the award." Subject as aforesaid the provisions of the Arbitration Act, 1940 or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceedings under this clause. 4. It is also term of the contract that the party invoking arbitration shall specify that dispute or disputes to be referred to arbitration under this clause together with the amount or amounts claimed in respect of each such disputes. 5. It is also a term of the contract that the contractor(s) do/does not make any demand for arbitration in respect of any claim(s) in writing within 90 days of receiving the intimation for the Government that the final bill be deemed to have been waived and absolutely barred and the Government shall be discharged and released of all liabilities under the contract in respect of these claims. 6. The arbitrator(s) may from time to time with consent of the parties enlarge the time, for making and publishing the award. 7. The decision of the Superintending Engineer regarding the quantum of reduction as well as justification thereof in respect of rates or sub-standard work which may be decided to be accepted will be final and would not be open to arbitration. 8. The learned counsel for the appellant relied upon the judgment of Hon'ble Supreme Court in Union of India and another vs. M/s. L.K. Ahuja and Company, AIR 1988 SC 1172 = 1988 (1) Arb. LR 375 (SC). In this case, the Hon'ble Supreme Court considered whether there was any valid claim for reference under Section 20 of the Act, and, secondly whether the claim to be adjudicated by the arbitrator, was barred by lapse of time. The second is a matter which the arbitrator would decide unless on admitted facts, a claim is found at the time of making an order under Section 20 of the Arbitration Act, to be barred by limitation. In order not be entitled to ask for a reference under Section 20 of the Act, there must be an entitlement to money and a difference or dispute must exist in respect of the same. In order not be entitled to ask for a reference under Section 20 of the Act, there must be an entitlement to money and a difference or dispute must exist in respect of the same. It is true that on completion of the work, right to get payment would normally arise and it is also true that on settlement of the final bill, the right to get further payment gets weakened but the claim subsists and whether it does subsist, is a matter which is arbitrable. 9. The learned counsel for the respondents supported the order impugned. He contended that in case of Union of India and another vs. M/s. L.K. Ahuja and Company (supra), there was no clause like Clause 25 of the contract agreement provided in the instant case. He contended that Clause 25 provides in clear terms that if the contractor does not make any demand for arbitration in respect of any claim in writing within 90 days of receiving the intimation from the Government that the final bill is ready for payment, the claim of the contractor will be deemed to have been waived and absolutely barred and the Government shall be discharged and released of all the liabilities under the contract in respect of those claims. He further contended that the appellant had accepted the payment of final bill in respect of the work of subject-matter in full and final settlement without any dispute or protest on 30.01.1997. At the time of accepting the full and final payment of final bill on 30.01.1997, the appellant did not raise any dispute in as much as the amount of final bill was accepted by the appellant even without any protest or reserving any right to raise a dispute. Thus, according to Clause 25 if at all any claim was to be made by the appellant then it could have been made within 90 days of receiving the intimation or the payment of the final bill otherwise as per the contract agreement, all claims would be deemed to have been waived and the respondents shall be discharged and released of all the liabilities under the contract in respect of any such claim. 10. There is no dispute with regard to the terms of Clause 25 of the contract agreement. 10. There is no dispute with regard to the terms of Clause 25 of the contract agreement. Undisputedly, the appellant received full and final payment of the final bill on 30.01.1997 without protest or reserving any right to raise a dispute. Application for appointment of arbitrator was filed by the appellant for the first time on 09.07.1997 much after the expiry of period of 90 days, which commenced from 30.01.1997. The learned counsel for the respondents relied on the judgment of Hon'ble Supreme Court in Wild Life Institute of India, Dehradun vs. Vijay Kumar Garg reported in (1997) 10 SCC 528 . In this case identical matter was under consideration before the Hon'ble Supreme Court and their Lordships held as under : "It is also necessary to refer to the arbitration clause under the contract which clearly provides that if the contractor does not make any demand for arbitration in respect of any claim in writing within 90 days of receiving the intimation from the appellants that the bill is ready for payment, the claim of the contractor will be deemed to have been waived and absolutely barred and the appellants shall be discharged and released of all liabilities under the contract in respect of these claims. The liability, therefore, of the appellants ceased if no claim of the contractor is received within 90 days of receipt by the contractor of an intimation that the bill is ready for payment. This clause operates to discharge the liability of the appellants on expiry of 90 days as set out therein and is not merely a clause providing a period of limitation. In the present case, the contractor has not made any claim within 90 days of even receipt of the amount under the final bill. The dispute has been raised for the first time by the contractor 10 months after the receipt of the amount under the final bill." 11. In view thereof, that Hon'ble Supreme Court set aside the order of High Court by which dispute was referred to arbitration. The dispute has been raised for the first time by the contractor 10 months after the receipt of the amount under the final bill." 11. In view thereof, that Hon'ble Supreme Court set aside the order of High Court by which dispute was referred to arbitration. In the case of Wild Life Institute of India, Dehradun vs. Vijay Kumar Garg (supra), there was clause under the contract agreement which provides that if the contractor does not make any demand for arbitration in respect of the claims arising out of the contract within 90 days of receiving the intimation from the Government that the bill is ready for payment, the claim of contractor will be deemed to have been waived and absolutely barred and the Government shall be discharged and released of all liabilities under the contract in respect of those claims. Clause 25 of the contract agreement in the instant case is exactly identical to that of the contract in the case of Wild Life Institute of India vs. Vijay Kumar Garg (supra). 12. In the case of the Union of India and another vs. M/s. L.K. Ahuja (supra), the controversy was not identical to that which is raised in the present case. In that case also the Hon'ble Supreme Court held that the matter which arbitrator would decide unless on admitted facts a claim is found at the time of making an order under Section 20 of the Arbitration Act, to be barred by limitation. In the instant case, even on admitted facts, the claim of the appellant is found to be barred by time as envisaged under Clause 25 of the contract agreement noticed above. 13. In this view of the matter, I do not find any error in the order impugned. Consequently, this appeal fails and it is hereby dismissed. No order as to costs.