Chief Engineer vs M/s. Harish Chandra (I) Ltd. and Another

L.N. Mittal, J.—Dispute arose between petitioner (Chief Engineer of Power Generation Corporation) and respondent no. 1-Contractor. Respondent no. 1-Contractor filed application u/s 11 of the Arbitration and Conciliation Act, 1996 for referring the dispute to Arbitrator. Hon''ble the then Chief Justice of this Court vide order dated 11.11.2005 Annexure P/2 dismissed the said application because respondent-Contractor had not complied with pre-condition of depositing 3% of the claimed amount for reference of the dispute to the Arbitrator. The contractor preferred appeal against said order. Before Hon''ble Supreme Court, counsel for the contractor agreed to deposit 3% of the claimed amount. Accordingly, Hon''ble the Supreme Court vide order dated 19.3.2007 Annexure P/3 directed the contractor to deposit the said amount within one week and directed that thereupon the Arbitrator shall be appointed by the Corporation within one week. Accordingly, the dispute stands referred to Arbitrator-respondent no. 2. During arbitration proceedings, the contractor submitted revised claim for enhanced amount. The petitioner raised objection that claim of enhanced amount cannot be entertained without deposit of 3% amount thereof. The said objection was over-ruled by the Arbitrator vide order dated 9.7.2008 Annexure P/1, besides over-ruling other objections raised by the petitioner. The petitioner filed appeal/petition in District Court for setting aside order Annexure P/1. However, said appeal has been dismissed by learned Additional District Judge vide judgment dated 16.2.2012 Annexure P/5 holding the appeal to be not maintainable. Feeling aggrieved, petitioner has filed this revision petition under Article 227 of the Constitution of India assailing order Annexure P/1 passed by the Arbitrator and judgment Annexure P/5 passed by the Additional District Judge.

I have heard counsel for the parties and perused the case file.

Counsel for the petitioner contended that the contractor is bound to pay 3% of the enhanced amount of claim before his claim could be entertained by the Arbitrator for adjudication. Counsel for respondent no. 1-contractor having sought telephonic instructions from respondent no. 1 has stated that respondent no. 1 is ready to deposit 3% of the enhanced amount claimed with the petitioner-Corporation. In view of the aforesaid, the instant revision petition is allowed. Impugned orders Annexures P/1 and P/5 are set aside. Respondent no. 1-contractor is directed to deposit 3% of the enhanced claimed amount with the petitioner-Corporation within two months from today and thereupon the Arbitrator shall proceed further to adjudicate the claim in accordance with law. If the contractor-respondent no. 1 fails to deposit the requisite amount within the stipulated period, its claim for enhanced amount shall be deemed to have been abandoned and arbitration proceedings shall continue for the original claimed amount for which 3% amount has been deposited.