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2022 DIGILAW 1477 (AP)

Vishwakna Enterprises v. Sree Rayalaseema Hi-strength Hypo Ltd. , Kurnool

2022-12-15

R.RAGHUNANDAN RAO

body2022
JUDGMENT R.Raghunandan Rao, J. - The case of the applicant is as follows: 2. The applicant had entered into an agreement with the respondent for executing certain Civil, Structural and Plumbing works in the establishment of the respondent at Kurnool by way of an agreement, which is contained in the work order awarded by the respondent dated 22.09.2010. 3. The applicant states that it took up the work and executed the work. However, payments due to the applicant were not made. The applicant was due for Rs.19,55,580/- towards the unpaid dues and a sum of Rs.7,22,541/- towards non returning of retention money to the applicant. In all, the applicant claims Rs.26,78,127/-being the amounts due on account of non settlement of these amounts. The applicant further contends that material of the applicant, lying at the works place, was used by the respondent company without reimbursing the applicant. The applicant claims that a sum of Rs.78,28,600/- has to be paid to the applicant on this account. The applicant also contends that the respondent would be liable to pay a sum of Rs.31,13,344/- as the amount of the rents liable to be paid by the respondent for using the material in the construction. In all, the applicant claims an amount of Rs.1,28,97,530/- as being due to the applicant. 4. The applicant raised the issue of payment of these dues in its legal notice dated 24.04.2014 sent to the respondent. The said notice also stated that if the amounts are not settled within 15 days and the applicant is not allowed to retrieve its material, the matter should be referred to an Arbitrator consented by both parties. As the respondent neither paid the said amounts nor referred the matter for arbitration, the present application has been filed under Section 11 of the Arbitration Conciliation Act, 1996 for appointment of an arbitrator. 5. The respondent has filed a counter affidavit stating that a work order was placed on the applicant on 17.09.2010 for construction of Multi Storied Industrial Calcium Hypo Chlorite Building. According to the said work order, work was to be commenced on 22.09.2010 and completed by 22.07.2011. The said work was not executed completely and the applicant started making unsustainable claims to avoid liquidated damages. The respondent denied any liability to pay any amount of money to the applicant. According to the said work order, work was to be commenced on 22.09.2010 and completed by 22.07.2011. The said work was not executed completely and the applicant started making unsustainable claims to avoid liquidated damages. The respondent denied any liability to pay any amount of money to the applicant. The respondent also contended that the claim for the alleged use of material of the applicant and the rent claimed on the said use of the material would be outside the purview of the work order dated 17.09.2010 and as such, the applicant cannot seek reference of the said claims to arbitration. 6. The respondent has taken the stand that it is the applicant who was due to the respondent and the applicant had in fact requested the respondent to waive the said debit balance. The respondent has disputed the maintainability of the present application on the ground that the legal notice dated 24.04.2014 is barred by limitation as the schedule date of completion was 22.07.2011. The respondent also contends that there was final accord and satisfaction in view of the letters of the applicant dated 14.03.2014 and the subsequent E-mails dated 12.06.2014 and 17.06.2014. 7. The respondent contends that the letter dated 14.03.2014, given by the Managing Director of applicant requests the respondent to remove the debit balance and to allow the applicant to take back the material at the site and that this would be the final settlement arrived between the parties. The E-mails exchanged between the applicant and the respondent between 12.04.2014 and 26.004.2014 shows that the respondent treated the letter dated 14.03.2014 as full and final settlement of all dues and claims between the parties. However, the E-mail of 26.04.2014 shows that the applicant had disputed this view of the respondent apart from disputing the fact stated by the respondent in the E-mails sent by the respondent to the applicant. 8. Sri N.Pramod learned counsel appearing for the applicant would submit that the claims made by the applicant have been denied by the respondent and as such, disputes have arisen between the parties. He relies upon special condition clauses 42 and 43 to contend that all disputes between the parties would have to be resolved by way of arbitration if resolution, by mutual consultation, does not happen. 9. He relies upon special condition clauses 42 and 43 to contend that all disputes between the parties would have to be resolved by way of arbitration if resolution, by mutual consultation, does not happen. 9. Sri S.S.Bhatt learned counsel appearing for the respondent reiterates the objections raised in the counter affidavit, about the maintainability of the application itself. 10. The question of whether any amounts are due from the respondent to the applicant and whether any amounts are due from the applicant to the respondent are matters of dispute which would have to be resolved, as per the terms of the work order, which provides for reference to Arbitration. The respondent has raised objections as to whether such reference is permissible. 11. The first objection of the respondent is that the claim is barred by limitation. The execution of the contract was to be completed by 22.07.2011. The applicant had issued a legal notice dated 24.04.2014 setting out its claims and asking for reference to arbitration. This letter is within three years from the schedule date of completion. Section 21 of the Arbitration Act stipulates that issuance of a notice requesting arbitration would be treated as the date on which the arbitral proceedings have commenced. It is not clear as to which period of limitation is to be applied and how the claim and request for Arbitration is barred. In any event, without taking a final view on this aspect, the fact remains that the question of limitation is a mixed question of law and fact and the same can be referred to the arbitral Tribunal for a decision. 12. The second objection raised by the respondent is that there is a final settlement in relation to the work order and consequently the present application is not maintainable. The learned counsel for the applicant relies upon the following decisions to support his contention. 1) M/s. P.K Ramaiah and Company vs Chairman & Managing Director, national Thermal Power Corporation. 1994 Supp (3) SCC 126 2) Union of India and Others vs. Master Construction Company (2011) 12 SCC 349 3) Sri Matha Manikeshwari Enterprises vs. General Manager, South Central Railway, Secunderabad and Others 2015 (1) ALD 431 4) Indian Oil Corporation Limited vs. NCC limited 2022 SCC online SC 896 5) Secunderabad Cantonment Board vs Ramachandraiah and Sons (2021) 5 SCC 705 . 13. 13. In all these Judgments, the Court had taken the view that, where there is full accord and satisfaction of the claims, further arbitral proceeding including applications for appointment of an Arbitral Tribunal would not be maintainable. However, the question that would still remain before this Court is whether there was such final settlement of dues between the parties. 14. The case of the respondent is that the letter dated 14.03.2014 given by the Managing Director of the applicant amounts to a final settlement. The applicant disputes this contention. 15. The E mail communications between the applicant and the respondent between 12.06.2014 and 17.06.2014 reveals that the letter of 14.03.2014 is treated, by the respondent, as an offer of full and final settlement. However, the applicant states in his E-mail dated 26.06.2014 that there was no final settlement. The Applicant also contends that, even otherwise, nothing has been shown to demonstrate that the respondent, in pursuance of the alleged final offer of the applicant, had taken the necessary steps to return all the material of the Applicant. This has itself become a disputed question of fact which would have to be looked into by the arbitrator. 16. The Respondent also contends that the claim of compensation for alleged consumption of the material of the Applicant and the rents claimed on that account fall outside the purview of the contract and the arbitration clause in clauses 42 and 43 of the special conditions set out in the work order. The said clauses read as follows: 17. In these circumstances, this is a fit case for the dispute to be referred to Arbitration. 18. Accordingly, this Arbitration Application is allowed and Justice Smt. Kongara Vijaya Lakshmi, Former Judge of the High Court of Andhra Pradesh, Plot No.9/B, Road No.7, Filmnagar, Jubilee Hills, besides Filmnagar Cultural Center, Hyderabad is appointed as the Arbitrator to decide the claims made by the applicant in the legal notice dated 24.04.2014. The learned Arbitrator shall fix her fees in accordance with the 4th schedule to the Arbitration and Conciliation Act, 1996. The arbitration shall proceed in accordance with clauses 42 and 43 of the work order dated 17.09.2010. There shall be no order as to costs. Miscellaneous petitions, pending if any, shall stand closed.