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2018 DIGILAW 3800 (PNJ)

Dharam Pal Maddar v. Union of India

2018-09-14

KRISHNA MURARI

body2018
JUDGMENT KRISHNA MURARI, J. 1. This is an application made by the applicant-petitioner under section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') for appointment of an arbitrator. 2. In pursuance to a tender notice issued by the respondent-railways for improvement of flooring of second class waiting hall at Amritsar and repair of badly damaged flooring of platform No.2 at Beas Railway Station in the section of SSE/ML/ASR under ADEN/ASR, the bid offered by the applicant-petitioner was accepted and it was awarded contract vide letter dated 26.06.2012 with the estimate cost of work Rs. 3,66,672/-. An agreement dated 06.08.2012 was duly entered into between the parties. Under the terms of the contract the stipulated date of commencement of the work was 21.06.2012 and the stipulated date of completion was 21.10.2012. According to the petitioner-applicant, although the date of commencement of the work was 21.06.2012 but the acceptance letter was prepared on 26.06.2012 and dispatched on 03.07.2012 which was received by the applicant-petitioner on 05.07.2012. 3. It is also submitted that with a malafide intention, a condition was imposed in the acceptance letter ultimately with respect to supply of cement of 27% of the total value to be stored at the initial stage in the storage of the railways. The railways also violated the contractual obligation on their part with respect to providing of the site free from all type of hindrances and supplying of drawing and design without any further delay. After receiving the acceptance letter on 05.07.2012, the petitioner-applicant immediately submitted representation dated 06.07.2012 through registered post raising an objection with respect to incorporation of the condition regarding supply of cement to the extent of 27% of the total costs of the value in the storage of the railways. With the intention to complete the work in time, the petitioner-applicant arranged JCB machine and tractor-trolley for the purpose of demolishing and removing the material. However, he was not allowed to carry out the demolition mechanically but was directed to carry out the said work manually and the removal was also not permitted to be done by the tractor trolley but manually. Even the electric connection was not provided to the applicant-petitioner for execution of the work and various representations made by the petitioner pointing out the above anomalies were not heeded to. 4. Even the electric connection was not provided to the applicant-petitioner for execution of the work and various representations made by the petitioner pointing out the above anomalies were not heeded to. 4. Without discharging their part of obligation under the contract and providing site free from all hindrances, the respondent-railways issued a letter dated 16.04.2013 giving seven days notice to complete the work which was duly replied to. It is also pleaded that the authorized representative of the applicant-petitioner who was handling the work died on 27.02.2014 and without any notice or knowledge of the heirs, the respondent-railways got the remaining work executed from other agency without any consent of the heirs of the deceased. 5. Vide representation dated 03.12.2015 the applicant-petitioner bringing all the aforesaid facts to the notice of the railways made in total 10 claims and also claimed costs. By the same representation a prayer was also made to appoint an arbitrator to decide the claims made therein. The following prayer was made in the said representation "in the light of above noted facts, it is therefore prayed that an arbitrator may kindly be appointed to decide the above said claims in the interest of justice and equity and fair play". 6. However, since the respondent-railways failed to refer the claims raised by the applicant-petitioner for adjudication to arbitrator despite expiry of more than 30 days from the date of receipt of representation dated 03.12.2015, the present petition under section 11(6) of the Act has been filed for appointing an arbitrator. 7. Respondent-Railways have contested the petition by filing written statement pleading inter-alia that the claim made by the applicant petitioner is pre-mature inasmuch as the procedure agreed to between the parties as per the General Conditions of Contract (GCC) has not been followed. Learned counsel appearing for the respondent-railways placing reliance on clauses 63 and 64 of the said GCC submits that as per clause 63, before making a demand for arbitration, it was necessary for the applicant petitioner to make a reference of disputes/claims to the railway authorities and in case even after receipt of the disputes/claims the railway authorities failed to take any decision within 120 days or if the decision was not acceptable to the petitioner the demand of arbitration could be made in accordance with clause 64 thereof. Clauses 63 and 64 as contained in the GCC are being reproduced herein-under:- "63. Clauses 63 and 64 as contained in the GCC are being reproduced herein-under:- "63. Matters Finally Determined By The Railway : All disputes and differences of any kind whatsoever arising out of or in connection with the contract, whether during the progress of the work or after its completion and whether before or after the determination of the contract, shall be referred by the contractor to the GM and the GM shall, within 120 days after receipt of the contractor's representation, make and notify decisions on all matters referred to by the contractor in writing provided that matters for which provision has been made in Clauses 8, 18, 22(5), 39, 43(2), 45(a), 55, 55-A(5), 57, 57A,61(1), 61(2) and 62(1) to (xiii)(B) of Standard General Conditions of Contract or in any Clause of the Special Conditions of the Contract shall be deemed as 'excepted matters' (matters not arbitrable) and decisions of the Railway authority, thereon shall be final and binding on the contractor; provided further that 'excepted matters' shall stand specifically excluded from the purview of the Arbitration Clause. 64. Demand For Arbitration : 64.(1) (i) In the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to the withholding by the Railway of any certificate to which the contractor may claim to be entitled to, or if the Railway fails to make a decision within 120 days, then and in any such case, but except in any of the "excepted matters" referred to in Clause 63 of these Conditions, the contractor, after 120 days but within 180 days of his presenting his final claim on disputed matters shall demand in writing that the dispute or difference be referred to arbitration." 8. A reading of the aforesaid two clauses make it clear that the dispute is first to be raised and considered by the railway authorities. Under clause 63 all disputes and differences of any kind whatsoever arising out of the contract are to be referred to by the contractor to the General Manager who shall take a decision within 120 days of the receipt of the same and the said decision shall be final and binding on the contractor. Under clause 63 all disputes and differences of any kind whatsoever arising out of the contract are to be referred to by the contractor to the General Manager who shall take a decision within 120 days of the receipt of the same and the said decision shall be final and binding on the contractor. It is only in case decision is not taken within 120 days or if the contractor is aggrieved with the decision so taken and the same is not acceptable to him, he would be entitled to make a demand for arbitration in accordance with clause 64 of the Northern Railways General Conditions of Contractor Regulations and Instructions. 9. In the case in hand, categorical averments have been made in paragraph-3 of the preliminary objections in the written statement which reads as under:- "3. That it is submitted that prior to the demand for appointment of Arbitrator raised by the applicant on 03.12.2015, vide letter Annexure P-3, the applicant has never presented his final claim on any alleged disputed matter between the parties hereto as to the construction or operation of contract/agreement Annexure P-1, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to the withholding by Railway of any certificate to which he may claim to be entitled to. It is submitted that prior to the demand for appointment of arbitrator vide letter dated 03.12.2015, Annexure P-3, the applicant has never presented his final claim, thereby giving the answering respondents an opportunity, as stipulated in clause 63 and 64 (i.e. 120 days) to verify and reply to the claims/disputes raised by the applicant contractor. As such, the present petition is pre-mature and is liable to be dismissed. A bare reading of Annexure P-3 also makes it abundantly clear that no final claim was ever presented earlier by the applicant. In the light of the matter, the present petition is untenable and misconceived and is liable to be dismissed, as such." 10. As such, the present petition is pre-mature and is liable to be dismissed. A bare reading of Annexure P-3 also makes it abundantly clear that no final claim was ever presented earlier by the applicant. In the light of the matter, the present petition is untenable and misconceived and is liable to be dismissed, as such." 10. The reply to the aforesaid averments is contained in paragraph-3 of the rejoinder submitted by the applicant-petitioner to the preliminary objections to the written statement which reads as under:- "That para No.3 of the preliminary objection is replied in this manner that the present petition is well within the period of limitation under the provisions of Article 137 of the Limitation Act and even otherwise representation dated 31.07.2015 through registered post was sent to the office Sr. DEN III, DRM office, Northern Railway, Ferozepur thereby requesting the said authority that on one hand various contractual default has been committed by the department and on the other hand the department is not releasing the payment of the executed work. The petitioner is entitled to interest @ 18% p.a. on the delayed payment of Rs. 5,50,614/- besides entitled to the over head charges due to prolongment of work for 494 days. Likewise the respondent department has wrongly and illegally deducted a sum of Rs. 108385-33 and petitioner is entitled to that amount besides also entitlement of the payment of extra work of lifting of the malba manually and for taking the material through excess lead. The said representation was duly received but this fact has been concealed by the department in reply. It is incorrect that the petitioner has never presented his claim on the disputed matter between the parties to the contract. It is incorrect that the contractor is not demanded for appointment of arbitrator. It is incorrect that present petition is premature and is liable to be dismissed. That para is replied in this manner that all the mandatory provisions of the General Conditions of Contract have been duly complied by the petitioner before filing the present petition. The facts of the present case are totally differ from the facts of the case of M/s Trehan Construction Company v. Union of India as relied by the Union of India in the present case. This citation is not applicable to the facts of the present case." 11. The facts of the present case are totally differ from the facts of the case of M/s Trehan Construction Company v. Union of India as relied by the Union of India in the present case. This citation is not applicable to the facts of the present case." 11. A bare reading of the aforesaid reply makes it abundantly clear that there is no denial of the fact that no reference was made by the applicant-petitioner under Clause 63 of the GCC and straightaway claims were made with a request to appoint an arbitrator vide representation dated 03.12.2015. 12. Although a reference has been made in paragraph-3 of the rejoinder affidavit quoted hereinabove that a representation dated 31.07.2015 through registered post was sent to the office of Senior DEN III, DRM Office, Northern Railway, Ferozepur requesting the said authority that on one hand various contractual defaults have been committed by the department and on the other hand the department is not releasing the payment of the executed work and the petitioner-applicant is entitled to interest at the rate of 18% per annum on delayed payment of Rs. 5,50,614/- besides entitled to the over head charges due to prolongment of work for 494 days. However, except for making bald allegations, the alleged representation dated 31.07.2015 has not been brought on the record of the case to demonstrate that it satisfies the condition of clause 63 of the GCC. In the absence of the said document having been brought on record, the Court is at a total loss to find out that the said representation conforms to the requirement of clause 63 of the GCC. Thus circumstances lead to the conclusion that straightway provisions of clause 64 of GCC have been invoked by making an application setting out claims and appointment of an arbitrator. 13. The issue as to whether in such circumstances where the rigours of clause 63 have not been followed, the contractor would be entitled to make a demand for appointment of an arbitrator and on failure to invoke the provisions of Section 11 of the Act is no longer res-integra and stands settled by the decision of the Hon'ble Apex Court in the case of M/s Shetty s Construction Company Pvt. Ltd. V. M/s Konkan Railway Corporation Ltd., (1999) 8 SCC 604 . Following the said judgment similar view has been taken by the learned Single Judge of this Court in case of M/s Trehan Construction Engg. & Government Contractor v. Union of India and another, (2013) 1 RCR(Civ) 699. 14. In view of the above facts and discussion, this petition being pre-mature is not liable to be entertained and accordingly stands dismissed. However, the petitioner shall be at liberty to take recourse to clause 63 of the GCC and in case the provisions thereof are not complied with by the respondent-railways, it shall be open to him to avail the remedy of seeking appointment of an arbitrator under clause 64 of the GCC. However, in the facts and circumstances, there shall be no order as to costs.