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2012 DIGILAW 655 (CAL)

Build Fab v. Airport Authority of India

2012-07-19

SANJIB BANERJEE

body2012
JUDGMENT Sanjib Banerjee, J. 1. Though the respondent is not represented even at the second call, it does not appear that the present request under section 11 of the Arbitration and Conciliation Act, 1996 is in order. The petitioner was awarded a contract which the petitioner claims to have executed successfully. The petitioner says that after the work was completed following the extension of the period of completion, the respondent purported to deduct a sum in excess of Rs. 31 lakh out of the security deposit furnished by the petitioning contractor to the employer. 2. Clause 25 of the general conditions governing the contract provides for the mechanism for resolution of disputes and arbitration. Such clause requires the contractor to lodge a claim within ninety days of receiving any intimation from the respondent that any bill is ready for payment or else the amount certified for payment would be treated as having been accepted. Though the clause does not apply strictly in the present context, what is relevant is that the clause requires the dispute to be raised by the contractor within ninety days of a bill being made ready for payment or of any claim being made by the respondent. 3. Following the liquidated damages being imposed unilaterally, the petitioner complained to the member (planning) of the respondent by a letter of February 10, 2011. It may also be accepted that such letter was received by the relevant official and it was made within ninety days of the imposition of liquidated damages. Clause 25(b) of the general conditions governing the contract recognises arbitration of only such disputes that are not resolved by the dispute resolution board set up under the agreement. The initial part of Clause 25 vests the authority to appoint such dispute resolution board in the member (planning) of the respondent. Clause 25(a) (ii) stipulates that if the contractor does not make any demand for the dispute resolution board being set up within ninety days of receiving an intimation of any claim from the employer, the contractor would be deemed to have waived the right to object to the claim. It is of significance that the dispute resolution board is required to be set up by the member (planning) of the respondent and the clause does not say that such official himself would be the single-member dispute resolution board. 4. It is of significance that the dispute resolution board is required to be set up by the member (planning) of the respondent and the clause does not say that such official himself would be the single-member dispute resolution board. 4. The petitioner suggests that in the petitioner having sought a review or reconsideration of the respondent's decision to impose liquidated damages, the letter of February 10, 2011 should be regarded as a request for the constitution of the dispute resolution board. However, even the most charitable reading of the letter would not permit it to be seen to be a request for the dispute resolution board being set up. In view of Clause 25 (a) (ii) of the general terms and since it does not appear that any request for the constitution of the dispute resolution board was made by the petitioner, the petitioner could not have invoked the arbitration clause in respect of the matters complained of in the letter dated February 10, 2011. There may not be any great prejudice to the petitioner since all that the petitioner may now not be able to do is to have the disputes adjudicated in a reference. But the regular remedy, de hors arbitration, will still be available to the petitioner. 5. An agreement to go to arbitration is consensual. The parties are free to restrict the applicability of the arbitration agreement to certain circumstances and not allow the arbitration agreement to govern all disputes between them. In the instant case, the arbitration agreement has to be construed to apply to only the unresolved disputes following the setting up of a dispute resolution board. Since no dispute resolution board was set up in the instant case and none was sought to be set up by the petitioning contractor, the arbitration agreement has not come into effect and, as a consequence, the petitioner cannot have the reference that it seeks. 6. AP No. 121 of 2012 is dismissed on such ground without any order as to costs. Urgent certified photocopies of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities. Appeal dismissed