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2017 DIGILAW 1575 (RAJ)

A. Cube Associates v. Union of India

2017-07-14

SANGEET LODHA

body2017
ORDER : SANGEET LODHA, J. 1. This arbitration application has been filed by the applicant under section 11 (6) of the Arbitration and Conciliation Act, 1996 ("the Act") for appointment of Sole Arbitrator on account of the respondents failing in appointing the arbitrator in terms of the arbitration clause in the contract. 2. The applicant, a partnership firm, was awarded a contract by the respondent-North Western Railway, Jodhpur for the performance of the work-CTR (P) of 14.66 Kms. from 0.00 to 14.66 between MTD-MEC section under ADEN/MTD. A dispute having been arisen, the applicant invoking the arbitration clause by way of notice demanded for reference of the dispute to arbitration. On failure of the respondents to agree for appointment of arbitrator, the applicant approached this court by way of an application under Section 11 of the Act, for appointment of arbitrator. 3. As per clause 76 of the agreement, the provisions of clause 63 and 64 of the General Condition of Contract are applicable only for settlement of the dispute between the parties for the value less than or equal to 20% of the value of the contract. Since, the claim made by the applicant was more than 20% of the value, the authority designate of the Chief Justice held that no arbitrator can be appointed for adjudication of the dispute. However, while refusing the prayer, it was categorically observed that if applicant desires to restrict its claim to the extent of 20% of the contract value, it may do so by serving a fresh notice of claim with the prayer for appointment of arbitrator upon the respondents, subject to all legal objections. 4. In these circumstances, the applicant served the General Manager, North Western Railway, Jaipur with a notice dated 19.8.16 while restricting its claim for an amount less than 20% of the contract value, sought appointment of arbitrator. The request made for appointment for arbitrator has not been acceded to by the respondent-North Western Railway. Hence, this application. 5. Learned counsel appearing for the respondent while opposing the application, raised an objection that the prayer made on behalf of the applicant by way of first application having been declined by this court after due consideration, the second application preferred is barred by principle of res judicata. Hence, this application. 5. Learned counsel appearing for the respondent while opposing the application, raised an objection that the prayer made on behalf of the applicant by way of first application having been declined by this court after due consideration, the second application preferred is barred by principle of res judicata. Learned counsel submitted that the applicant has already been paid its dues and it had given a 'no claim certificate' in favour of the North Western Railway on 26.12.12, no arbitrable dispute exists and therefore, the applicant cannot be permitted to invoke the jurisdiction of the authority designate of the Chief Justice under Section 11 of the Act. In this regard, learned counsel has relied upon no claim certificate dated 26.10.12, photo state copy whereof is placed on record as Annexure 1 as also an agreement alleged to have been entered into between the parties showing the full and final settlement of the bills. In support of the contention, learned counsel has relied upon a decision of the Hon'ble Supreme Court in the matter of "New India Assurance Company Limited v. Genus Power Infrastructure Limited", (2015) 2 SCC 424 and an order dated 27.11.07 passed by the Hon'ble Supreme Court in the matter of "M/s. Sohan Lal Pugalia v. Union of India & Anr." in Leave to Appeal (Civil) No. 8256 of 2007. 6. On the other hand, the counsel appearing for the applicant submitted that the application earlier preferred by the applicant seeking appointment of arbitrator was rejected by the authority designate of the Chief Justice solely on the ground that the claim raised by the applicant exceeds 20% of the value of the contract which cannot be referred to arbitration by virtue of clause 76 of the agreement between the parties and that apart, the applicant was specifically given liberty to seek arbitration afresh after restricting the claim to the amount less than 20% of the value of the contract and thus, in no manner, the application preferred by the applicant can be treated to be barred by principle of res judicata. Learned counsel submitted that 'no claim certificate' placed on record in no manner could be construed to be full and final settlement of the claim inasmuch as, in the letter alleged to be 'no claim certificate', the applicant has specifically requested for release of its security deposit, earnest money deposit, final bill and PVC bill and thus, it is apparent that while submitting the certificate as aforesaid, the amount payable was outstanding. Learned counsel while drawing the attention of this court to the Description of the Claim with Specific Heads urged that the amount claimed by the applicant while giving the 'no claim certificate' still remains outstanding and therefore, the objection raised on behalf of the respondent-North Western Railway regarding the maintainability of this application, is devoid of any merit. Learned counsel submitted that 'no claim certificate' as aforesaid, was as a matter of fact given by the applicant inasmuch as, the Railway was not releasing the outstanding payments. 7. I have considered the submissions of the learned counsels for the parties and perused the material on record. 8. Indisputably, the application under Section 11 (6) of the Act, earlier preferred by the applicant was rejected by this court vide order dated 16.8.16 solely on the ground that the claim raised by the applicant by way of notice served upon the respondent-North Western Railway is of value more than 20% of the value of the contract and thus, by virtue of clause 76 of the agreement, the provisions of clause 64 of the General Condition of the Contract providing for reference of the dispute to arbitration is not applicable. A bare perusal of the order reveals that while declining the prayer of the applicant, it was specifically observed by the court that if the applicant desires to restrict its claim to the extent of 20% of the contract value, it may do so by serving a fresh notice of claim with the prayer for appointment of arbitrator upon the respondent, subject to all legal objections. In the considered opinion of this court, the application of the applicant under Section 11 was not rejected by the court on the ground that no dispute exists between the parties rather, the application was rejected inasmuch as, the claim as made was not covered by the arbitration clause. In the considered opinion of this court, the application of the applicant under Section 11 was not rejected by the court on the ground that no dispute exists between the parties rather, the application was rejected inasmuch as, the claim as made was not covered by the arbitration clause. In this view of the matter, the application preferred by the applicant while restricting its claim to the value less than 20% of the contract value, seeking appointment of arbitrator, cannot be said to be barred by principle of res judicata. 9. Coming to the objection regarding 'no claim certificate' being submitted by the applicant, it would be appropriate to reproduce the contents of the letter submitted by the applicant, which is alleged to be 'no claim certificate': "To Date:26/10/2012 Sr. DEN/E N.W. Rly Jodhpur Sub: No claim certificate (A.No. W-119 of 2990-10 Sir, I hereby submit an equivocal & unconditional my no claim certificate against Railway. Kindly release my S/D, E/MS , final bill & P.V.C. Bill. for A CUBE Associates authorized signatory" 10. A bare perusal of the letter dated 26.10.12 reproduced here-in-above makes it abundantly clear that as on the date of submitting of alleged 'no claim certificate', the amount payable to the applicant towards Security Deposit, Earnest Money Deposit, Final Bill and PVC Bill was outstanding. The agreement executed between the parties reveals that the disputed claims under principal agreement was settled by way of 13 final bill of Rs. 64,90,823/- through the final bill bearing voucher No. 425, 451, 456, but then, there is nothing on record suggesting that the entire dues of the applicant were released by the North Western Railways. 11. Further, from bare perusal of the description of the claim submitted by the applicant placed on record reveals that under the different heads including Final Bill, PVC Bill, Refund of Security Deposit, the applicant has claimed the amount while deducting the amount already paid and therefore, it is difficult to conclude that with the submissions of 'no claim certificate' as aforesaid, no amount remained outstanding. It may be true that after submission of the 'no claim certificate', certain claim included in the 'Description of the Claim' submitted may not be entertained keeping in view the 'no claim certificate' submitted by the applicant but then, such question can always be gone into and decided by the arbitrator. 12. It may be true that after submission of the 'no claim certificate', certain claim included in the 'Description of the Claim' submitted may not be entertained keeping in view the 'no claim certificate' submitted by the applicant but then, such question can always be gone into and decided by the arbitrator. 12. In New India Assurance Company Ltd.'s case (supra), relied upon by the respondent, the respondent-claimant after receiving payment under insurance policy from the insurer and signing letter of subrogation in favour of the insurer in full and final settlement of claim under the policy, sought appointment of arbitrator on the ground that it signed said letter due to extreme financial difficulties, under duress, coercion and undue influence exercised by the appellant-insurer. The court having arrived at the conclusion that discharge and signing of the letter of subrogation was voluntary and free from any coercion or undue influence proceeded to hold that upon execution of letter of subrogation, there was full and final settlement of the claim and no arbitrable dispute existed so as to exercise power under Section 11 of the Act. Keeping in view the facts and circumstances of the case noticed above, it cannot be said that there was full and final settlement of the claim in all respects and thus, the said decision of the Hon'ble Supreme Court does not help the respondent in any manner. 13. In M/s. Sohan Lal Pugalia's case (supra), the Hon'ble Supreme Court while rejecting an SLP observed that once the petitioner has accepted the money in full and final satisfaction of his claim without any protest, it should be deemed that he had no further claim. As noticed above, the fact situation in the present case is not identical and thus, for the parity of reasons, the said order of the Supreme Court also does not help the respondent. 14. In view of the discussion above, the application preferred by the applicant seeking appointment of the arbitrator for adjudication of the dispute deserves to be allowed. 15. Accordingly, the application is allowed. Mr. Mandal Prasad Bohra, District Judge (Retired), C-22, Krishna Nagar, Jodhpur, is appointed as Sole Arbitrator for adjudication of the dispute that has arisen between the parties in relation to contract in question. 15. Accordingly, the application is allowed. Mr. Mandal Prasad Bohra, District Judge (Retired), C-22, Krishna Nagar, Jodhpur, is appointed as Sole Arbitrator for adjudication of the dispute that has arisen between the parties in relation to contract in question. It will be open for the parties to raise all contentions on the facts and law including the question with regard to the claim being barred by law before the Sole Arbitrator. The parties are directed to appear before the Arbitrator on 25.8.17.