Fourth Dimension Infratech Pvt. Ltd v. Divija Construction
2025-01-03
SUDESH BANSAL
body2025
DigiLaw.ai
ORDER : SUDESH BANSAL, J. 1. Heard counsel for both parties and perused the pleadings so also documents placed on record by the respective parties. 2. Instant arbitration application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the A&C Act") has been filed by the applicant for appointment of an Arbitrator in terms of Clause (xi) and (xviii) of the agreement dated 11.01.2018 to resolve the dispute arisen between parties out of such agreement. The execution of agreement dated 11.01.2018 between the parties is an undisputed fact and the arbitration agreement contended therein reads as under:- "That in case of any dispute arises under this work order the same shall be referred to a panel of three arbitrators. One arbitrator shall be appointed by each party and the both these arbitrators would appoint the third arbitrator. The decision of the panel of arbitrators shall be final and binding on both the parties to this work order. The arbitrators shall deliver their decision within a period of three months from the date of their appointment. The provisions of the arbitration and conciliation act, 1996 as amended from time to time shall apply on the proceedings of the arbitration. The venue of the arbitration shall be mutually decided place at Jaipur and under the Jurisdiction of the courts at Jaipur." 3. It is not in dispute between parties that prior to entering into the agreement dated 11.01.2018 between the applicant-Company and respondent-Firm, a contract was awarded in favour of respondent No.1-Firm, which is a Government approved Contractor Firm, by the Rajasthan Urban Infrastructure Development Project 'RUIDP' to execute and complete the assigned work and in turn, respondent No.1-Firm entered into a sub contract and agreement with the applicant-Company to carry out such assigned contract for which a separate agreement between both parties was entered into on 11.01.2018.
The nature and scope of work assigned by the RUIDP to respondent No.1, which was agreed to be carried out by the applicant under the agreement dated 11.01.2018, is as under:- " Scope of work: That M/s 4TH DIMENSION INFRATECH PRIVATE LIMITED shall execute the complete work i.e. Providing laying jointing, testing and commissioning of left over sewer line network including completion of missing gaps in laid sewer network with its commissioning including laying, joining, testing, commissioning of house sewer connection, ancillary items at 10 MLD Waste Stabilization Ponds process with operation & maintenance 5 years in Jaisalmer (Packaged No. RUSDIP/JSL/WW/10) as per the contract agreement between 'Divija Construction' and 'RUIDP' for the above works on back to back basis in all respects both technically and commercially." 4. The applicant-Company has come up with a case that the assigned contract was completed by the applicant-Company by or before 14.08.2018 in terms of the agreement dated 11.01.2018, yet the respondents forfeited the performance security amount of Rs.17 lacs deposited by the applicant-Company in furtherance to agreement dated 11.01.2018 and further other dues of Rs.12,05,003/- and Rs.1,50,000/- are also outstanding against the respondents. Thus, applicant-Company claims Rs.30,55,003.23/- against the respondents. 5. It has been alleged by the applicant-Company that initially a Legal Notice dated 28.07.2023 was served upon the respondents, demanding the outstanding amount, but same was denied by the respondents under Reply Notice dated 15.09.2023, hence, in order to settle the claim of outstanding dues, the arbitration clause was invoked by the applicant vide Notice dated 28.12.2023 (Ann-6) and name of Arbitrator from the side of applicant was suggested to respondents but neither this Notice was replied nor respondents suggested any Arbitrator from their side, hence, the present arbitration application has been filed by the applicant on 05.03.2024 for constitution of an Arbitral Tribunal to resolve/ settle the dispute of claim of outstanding dues of the applicant against respondents. 6. On behalf of respondents, the arbitration application has been resisted fundamentally on the ground of limitation stating inter alia that the claim of outstanding dues has been raised after expiry of limitation as also the arbitration clause has too been invoked after lapse of limitation, therefore, the arbitration application is liable to be rejected, however, it appears that the respondents too made a counter claim of Rs.35,00,266/- against the applicant in the reply notice dated 15.09.2023. 7.
7. The contention of counsel for respondents is that the applicant was under obligation to complete the work including the operation and maintenance of the project for a period of 5 years, but he left the site without completing the scope of work, and the incomplete work has to be completed by the respondents, for which the respondents have a counter claim against the applicant- Company. Nevertheless, counsel for respondents contends that the claim of applicant-Company is barred by limitation, as such, instant arbitration application is not liable to be accepted. 8. In the rebuttal arguments, counsel for applicant has pointed out that as far as limitation for claiming outstanding dues by the applicant against respondent is concerned, respondents in their annual tax statement dated 30.09.2019 and 23.01.2020 have admitted the dues payable to the applicant-Company and further respondents also send an e-mail to the applicant on 17.12.2022, denying to refund the amount of performance security. The copy of e-mail dated 17.12.2022 has been shown to the Court, during course of arguments, which is taken on record. In addition, it has been pointed out that the period from 15.03.2020 to 28.02.2022 is liable to be excluded for computation of limitation, due to ongoing pandemic Covid-19 situation and exclusion of such period for computing limitation has been permitted by the Apex Court, taking suo moto cognizance of the unprecedented situation of Covid-19, granting extension of limitation and the judgment is reported in In Re: Cognizance for Extention of Limitation [ (2020) 19 SCC 10 ] . Hence, the arbitration application so also subject claim made by the applicant-Company is well within limitation. 9. Having considered the rival contentions of counsel for both parties and after going through the material available on record, this Court, prima facie, finds that as far as assigning of contract work by the respondents No.1-Firm to applicant-Company under the agreement dated 11.01.2018 is concerned, same is an admitted fact and indeed the dispute is in respect of completion of such work by the applicant. The applicant-Company states to have completed the work, whereas as per respondents, the applicant- Company left the site without completing the work.
The applicant-Company states to have completed the work, whereas as per respondents, the applicant- Company left the site without completing the work. It further, prima facie, appears that the applicant-Company claims outstanding dues of Rs.30,55,003.23/- against the respondents including refund of its performance security amount and per contra, respondents made a counter claim of Rs.35,00,266/- against the applicant on account of leaving the site without completing the assigned work. Thus, both parties have raised their claim and counter claim against each other, hence the dispute has certainly been arisen between the parties out of agreement dated11.01.2018. 10. This Court further finds that the agreement dated 11.01.2018 incorporates arbitration agreement, extracted hereinabove, to resolve/ settle the dispute between parties but the panel of arbitrators, as stipulated therein, could not be appointed with the mutual consent of the parties. 11. As far as objection of limitation is concerned, this Court is of the considered opinion that the issue in respect of subject matter of claim or counter claim is concerned, same is a mixed question of fact and law, which can be considered and decided by the Arbitral Tribunal after recording evidence of parties and after appreciating the documents and evidence adduced by the parties. Prima facie, it cannot be said that the subject claim has turned into a stale claim or tantamounts to a dead claim, considering the exclusion of period from 15.03.2020 to 28.02.2022 due to Pandemic Covid-19 and E-mail dated 17.12.2022 sent by the respondents refusing to refund performance security deposit. 12. As far as limitation for filing the arbitration application is concerned, same is well within limitation from date of invoking the arbitration clause vide Notice dated 28.12.2023 (Ann-6) since the arbitration application has been filed thereafter on 05.03.2024. 13. The scope of the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 is confined to the existence of an arbitration agreement.
13. The scope of the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 is confined to the existence of an arbitration agreement. The High Court, being a referral Court while dealing with the application for appointment of Arbitrator, exercises its jurisdiction within a narrow compass in the light of provision of Section 11(6A) of the A&C Act, 1996, which reads as under:- “(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub- section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.” 14. The issue of limitation in relation to the arbitration application under Section 11 of the A&C Act, 1996 came up for consideration before the Hon'ble Supreme Court in a recent case of Arif Azim Company Limited Vs. Aptech Limited [(2024) 5 SCC 313] . The Apex Court observed that since none of the articles in the schedule appended to the Limitation Act provide a time period for filing an arbitration application under Section 11(6) of the A&C Act, 1996, the limitation period would be governed by Article 137 of the Limitation Act, which is the residual provision and following Article 137, it was observed by the Apex Court that the limitation period for making an arbitration application is three years from the date when the right to apply accrues. 15. In a recent judgment dated 18 th July 2024 , delivered by the Apex Court in case of SBI General Insurance Co. Ltd. Vs. Krish Spinning: Civil Appeal No.7821/2024 , after considering the proposition of law of limitation in respect of arbitration application, expounded in case of Arif Azim Company Limited (Supra), it was held and observed in Para No.133 as under:- "133. Thus, we clarify that while determining the issue of limitation in exercise of the powers under Section 11(6) of the Act, 1996, the referral court should limit its enquiry to examining whether Section 11(6) application has been filed within the period of limitation of three years or not. The date of commencement of limitation period for this purpose shall have to be construed as per the decision in Arif Azim (supra).
The date of commencement of limitation period for this purpose shall have to be construed as per the decision in Arif Azim (supra). As a natural corollary, it is further clarified that the referral courts, at the stage of deciding an application for appointment of arbitrator, must not conduct an intricate evidentiary enquiry into the question whether the claims raised by the applicant are time barred and should leave that question for determination by the arbitrator. Such an approach gives true meaning to the legislative intention underlying Section 11(6-A) of the Act, and also to the view taken in In Re: Interplay (supra) (emphasis supplied) 16. The provision of Section 11(6A) of the A&C Act, 1996, is alive and operative as settled by the Constitutional Bench of Hon'ble Supreme Court In Re: Interplay Between Arbitration Agreements Under The Arbitration and Conciliation Act 1996 And the Indian Stamp Act, 1989 [ AIR 2024 SC 1 ] and further, Hon'ble Supreme Court in case of Krish Spinning (Supra), has made it clear that the scope of enquiry at the stage of appointment of arbitrator is limited to a prima facie scrutiny of the existence of arbitration agreement and nothing-else. 17. Thus, leaving the issue of limitation in respect of claim and counter claim of both parties open to be considered and decided by the Arbitral Tribunal, this Court is of the considered opinion that in view of the fact that a dispute has arisen between the parties and an arbitration agreement exists between the parties to settle such dispute through arbitration but the Arbitral Tribunal has not been appointed by the parties, therefore, this Court is required to constitute an Arbitral Tribunal. Since the panel of three arbitrators as per the arbitration agreement could not be constituted by the mutual consent of both parties, therefore, this Court in view of Section 10(2) of the A&C Act and in order to maintain the arbitration proceedings less expensive as also with the consent of counsel for both parties, constitute an Arbitral Tribunal of sole Arbitrator. 18. As a final result, the instant arbitration application succeeds and is hereby allowed and this Court appoints Hon’ble Mr.
18. As a final result, the instant arbitration application succeeds and is hereby allowed and this Court appoints Hon’ble Mr. Justice Manoj Kumar Vyas, former judge of the Rajasthan High Court, Address:- B-145, Tara Marg, Hanuman Nagar, Jaipur; Mobile No.9414408677; E-mail:- vyas_manoj@yahoo.com, as a sole Arbitrator, to adjudicate the dispute between parties in accordance with provisions of the Arbitration and Conciliation Act, 1996. 19. The appointment of the Sole Arbitrator is subject to the declarations being made under Section 12 of the Arbitration & Conciliation Act, 1996 with respect to independence and impartiality, and the ability to devote sufficient time to complete the arbitration within the prescribed period. 20. The arbitration fee of the Sole Arbitrator shall be payable in accordance with the provisions contained in the Manual of Procedure for Alternative Dispute Resolution, 2009 as amended by the Manual of Procedure for Alternative Dispute Resolution (Amendment), 2017 vide notification dated 23.03.2017 read with 4 th Schedule appended to the Act of 1996 or as determined by the Arbitrator with consensus of parties. 21. The Registry is directed to intimate Arbitrator Hon’ble Mr. Justice Manoj Kumar Vyas (Former Judge), for his approval and consent to act as Arbitrator. 22. All other issues may be raised by the parties before the Arbitrator, which shall be considered in accordance with law. 23. Since as per Section 29A of the Arbitration and Conciliation Act, 1996, the arbitration proceedings are required to be concluded within scheduled time as stipulated therein, it is expected from the parties to appear before the Arbitrator on 30.01.2025 or any other date as informed by the Arbitrator to parties or agreed between parties with the consent of Arbitrator, and further parties shall provide their respective E-mail/ Contact Number/ Mobile Number as also of their authorized representatives/lawyers, appearing on their behalf before the Arbitration Tribunal, in order to facilitate the Arbitrator to send information to the parties, whenever required. The information sent by the Arbitrator, on such address/ E-mail/ cellphone of the parties/ their authorized representatives/lawyers, shall be treated as sufficient unless same is not changed. 24. The Arbitration Application stands disposed of accordingly.