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Madhya Pradesh High Court · body

2014 DIGILAW 1557 (MP)

R. S. Bansal v. Union of India

2014-11-28

PRAKASH SHRIVASTAVA

body2014
JUDGMENT : Prakash Shrivastava, J. 1. This arbitration application under Section 11 of the Arbitration and Conciliation Act, 1996 (for short "the Act") is for appointment of the arbitrator. 2. In brief, the case of the applicant is that the applicant who is a building contractor, was awarded contract for construction of GO's Mess at CISF, Barwaha vide agreement No. 91/EE/I.C.D.-II/2003-2004 for a period of 14 months commencing from 29.3.2004 revised date 14.10.2004 to 13.12.2005, whereas on account of some problems by the respondents, the work was delayed and the same was completed by the applicant on 17.7.2007. The delay was attributable to the respondents and since the respondents had withheld a sum of Rs.9,16,849/-, the applicant had given the notice dated 1.9.2010 to the Chief Engineer to release the amount and stating that otherwise, the applicant will be constrained to approach the competent authority for appointment of an arbitrator for adjudication of his claim. The applicant thereafter had sent the notice dated 15.11.2010 to the Chief Engineer to appoint the sole arbitrator under Clause 25 of the General Conditions of Contract for CPWD works and since the sole arbitrator was not appointed, therefore, the present application has been filed. 3. The respondents have filed the replies dated 6.2.2013 and 25.3.2014 taking the stand that the delay was caused by the applicant himself and the amount in question has been withheld as compensation on account of the delay of 581 days in completing the work. Further plea has been raised that the applicant had made application dated 30.6.2008 for extension of time under Clause 2 of the agreement, which has been decided by the Superintending Engineer by the order dated 15.3.2011 levying compensation of the amount in question. Further plea has been raised that the case falls under the exception clause 2 of the agreement and that the prescribed procedure has not been followed before approaching this Court. The applicant has filed the additional documents on 22.7.2014. 4. I have heard the learned counsel for the parties and perused the record. 5. Further plea has been raised that the case falls under the exception clause 2 of the agreement and that the prescribed procedure has not been followed before approaching this Court. The applicant has filed the additional documents on 22.7.2014. 4. I have heard the learned counsel for the parties and perused the record. 5. The agreement and the arbitration clause 25 is not in dispute, which reads as under :- "CLAUSE 25 Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, design, drawings and instructions here-in before mentioned and as to the quality of workmanship or 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 works or the execution or failure to execute the same whether arising during the progress of the work or after the cancellation, termination, completion or abandonment thereof shall be dealt with as mentioned hereinafter:- i. If the contractor considers any work demanded of him to be outside the requirements of the contract, or disputes any drawings, record or decision given in writing by the Engineer-in-Charge on any matter in connection with or arising out of the contract or carrying out of the work, to be unaccepted, he shall promptly within 15 days request the Superintending Engineer in writing for written instruction or decision. Thereupon, the Superintending Engineer shall give his written instructions or decision within a period of one month from the receipt of the contractor's letter. If the Superintending Engineer fails to give his instructions or decision in writing within the aforesaid period or if the contractor is dissatisfied with the instructions or decision of the Superintending Engineer, the contractor may, within 15 days of the receipt of Superintending Engineer's decision, appeal to the Chief Engineer who shall afford an opportunity to the contractor to be heard, if the latter so desires, and to offer evidence in support of his appeal. The Chief Engineer shall give his decision within 30 days of receipt of contractor's appeal. The Chief Engineer shall give his decision within 30 days of receipt of contractor's appeal. If the contractor is dissatisfied with this decision, the contractor shall within a period of 30 days from receipt of the decision, give notice to the Chief Engineer for appointment of arbitrator failing which the said decision shall be final finding and conclusive and not referable to adjudication. ii. Except where the decision has become final, binding and conclusive in terms of Sub Para (I) above disputes or difference shall be referred for adjudication through arbitrator by a sole arbitrator appointed by the Chief Engineer, CPWD, in charge of the work or if there be no Chief Engineer, the administrative head of the said CPWD. If the arbitrator so appointed is unable or unwilling to act or resigns his appointment or vacates his office due to any reason whatsoever another sole arbitrator shall be appointed in the manner aforesaid. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is a term of this contract that the party invoking arbitrator shall give a list of disputes with amounts claimed in respect of each such dispute alongwith the notice for appointment of arbitrator and giving reference to the rejection by the Chief Engineer of the appeal. It is also a term of this contract that no person other than a person appointed by such Chief Engineer CPWD or the administrative head of the CPWD, as aforesaid should act as arbitrator and if for any reason that is not possible, the matter shall not be referred to arbitration at all. It is also a term of this contract that if the contractor does not make any demand for appointment of arbitrator in respect of any claims in writing as aforesaid within 120 days of receiving the intimation from the Engineer-in-charge that the final bill is ready for payment, the claim of the contractor shall 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. The arbitration shall be conducted in accordance with the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) or any statutory modifications or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceedings under the clause." 6. The additional documents filed by the applicant reveal that the Executive Engineer had examined the case relating to the delay and has considered the justification of the hindrances claimed by the applicant and calculated the delay in completion of work, which had no justification. The Superintending Engineer vide communication dated 15.3.2011 had given the intimation regarding levy of compensation under Clause 2 communicating the compensation of Rs.9,16,849/- determined by him. 7. There is nothing on record to show that against the decision of the Superintending Engineer any appeal was preferred to the Chief Engineer in terms of Clause 25(i), therefore, the decision of the Superintending Engineer had become final and the applicant cannot invoke Clause 25(ii) of the Agreement. Even otherwise, under clause 2 of the clauses of contract, the decision of Superintending Engineer on compensation for delay is final and binding. 8. Counsel for the applicant has placed reliance upon the judgment of the Supreme Court in the matter of M/s. J.G. Engineers Pvt. Ltd. Vs. Union of India and Anr. reported in AIR 2011 SC 2477 wherein it is held that even if quantification of liquidated damages for delay/breach of contract is falling within 'excepted clause', question as to who was responsible for delay is arbitrable, since right to levy liquidated damages would arise only when contractor is responsible for delay, but in the present case not only there is finality to the decision of the Superintending Engineer attached under Clause 2, but the applicant has failed to disclose that he had followed the procedure prescribed under Arbitration Clause 25. 9. In these circumstances when the applicant has failed to comply with the requirement of procedure prescribed for appointment of arbitrator in the arbitration clause, it cannot be said that the respondents have failed to act as required under the agreed procedure. Thus, since the requirement of Section 11(6)(a) of the Act is not satisfied, therefore, no case for appointing the arbitrator at this stage is made out. 10. The application is accordingly rejected.