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Judgment
This Arbitration Application has been filed under Section 10 and 11 of the Arbitration and Conciliation Act, 1996.
The learned counsel for the applicant submits that after entering into agreement, the work was performed, however, pursuant to the audit objection,
recovery of Rs.4,69,332/- was made. The applicant raised objection against it as the order for recovery was passed without an opportunity of hearing
by the audit party. The applicant preferred an appeal before the Chief Engineer, which was not decided. The applicant thus sent a notice for
appointment of Arbitrator but when no action was taken, the present application was filed. The prayer is to appoint an independent Arbitrator.
Learned counsel for the non-applicant submits that the application is premature because compliance of the Clause 25 of the Agreement has not been
made prior to a request for appointment of the Arbitrator. In absence of compliance, the application would not be maintainable. A reference of the
judgment of this Court in the case of Simpark Infrastructure Pvt. Ltd. Versus Jaipur Municipal Corporation reported in 2013 (1) W.L.N. 111 has been
given. There, in the similar circumstances, application was held to be premature. The prayer is accordingly to dismiss the application holding it to be
premature or not maintainable.
I have heard submissions of learned counsel for the parties and perused the record.
A reference of Clause 25 has been given. For ready reference, it is quoted hereunder:-
Clause 25
“Except where otherwise provided in the contract, all questions and disputes relating to the meaning of the specifications, design, drawings and
instructions here-in before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right,
matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or
these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or
after the cancellation, termination, completion or abandonment thereof shall be dealt with as mentioned hereinafter:
(i) If the contractor considers any work demandedof him to be outside the requirements of the contract, or disputes any drawings, record or decision
given in writing by the Engineer-in-Charge on any matter in connection with or arising out of the contract or carrying out of the work, to be
unacceptable, he shall promptly within 15 days request the Superintending Engineer in writing instruction or decision. Thereupon, the Superintending
Engineer shall give his written instructions or decision within a period of one month from the receipt of the contractor’s letter. If the
Superintending Engineer fails to give his instructions or decision in writing within the aforesaid period or if the contractor is dissatisfied with the
instructions or decision of the Superintending Engineer, the contractor may, within 15 days of the receipt of Superintending Engineer’s decision,
appeal to the Chief Engineer who shall afford an opportunity to the contractor to be heard, if the latter so desires, and to offer evidence in support of
his appeal. The Chief Engineer shall give his decision within 30 days of receipt of contractor’s appeal. If the contractor is dissatisfied with the
decision, the contractor shall within a period of 30 days from receipt of the decision, give notice to the Chief Engineer for appointment of arbitrator on
prescribed proforma as per Appendix XV, failing which the said decision shall be final binding and conclusive and not referable to adjudication by the
arbitrator.
(ii) Except where the decision has become final,binding and conclusive in terms of Sub Para (i) above, disputes or difference shall be referred for
adjudication through arbitration by a sole arbitrator appointed by the Chief Engineer, CPWD, in charge of the work or if there be no Chief Engineer,
the Additional Director General of the concerned region of CPWD or if there be no Additional Direction General, the Direction General of Works,
CPWD. If the arbitrator so appointed is unable or unwilling to act or resigns his appointment or vacates his office due to any reason whatsoever,
another sole arbitrator shall be appointed in the manner aforesaid. Such person shall be entitled to proceed with the reference from the stage at which
it was left by his predecessor.
It is a term of this contract that the party invoking arbitration shall give a list of disputes with amounts claimed in respect of each such dispute
alongwith the notice for appointment of arbitrator and giving reference to the rejection by the Chief Engineer of the appeal.Â
It is also a term of this contract that no person, other than a person appointed by such Chief Engineer CPWD or Additional Director General or
Director General of works, CPWD, as aforesaid, should act as arbitrator and if for any reason that is not possible, the matter shall not be referred to
arbitration at all.
It is also a term of this contract that if the contractor does not make nay demand for appointment or arbitrator in respect of any claims in writing as
aforesaid within 120 days of receiving the intimation from the Engineer-in-charge that the final bill is ready for payment, the claim of the contractor
shall be deemed to have been waived and absolutely barred and the Government shall be discharged and released of all liabilities under the contract in
respect of these claims.
The arbitration shall be conducted in accordance with the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) or any statutory
modifications or re-enactment thereof and the rules made thereunder and for the time being in force shall be apply to the arbitration proceeding under
this clause.
It is also a term of this contract that the arbitrator shall adjudicate on only such disputes as are referred to him by the appointed authority and give
separate award against each dispute and claim referred to him and all cases where the total amount of the claims by any party exceeds Rs.1,00,000/-,
the arbitrator shall give reasons for the award.
It is also a term of the contract that if any fees are payable to the arbitrator, these shall be paid equally by both the parties.
It is also a term of the contract that the arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties
calling them to submit their statement of claims and counter statement claims. The venue of the arbitration shall be such place as may be fixed by the
arbitrator in his sole discretion. The fees, if any, of the arbitrator shall, if required to be paid before the award is made and published, be paid half and
half by each of the parties. The cost of the reference and the award (including the fees, if any, of the arbitrator) shall be in the discretion of the
arbitrator who may direct to any by whom and in what manner, such costs or any part thereof shall be paid and fix or settle the amount of costs to be
so paid.â€
The Clause 25, quoted above, provides how the matter should proceed before a request for appointment of Arbitrator. The learned counsel for the
applicant submits that complete procedure was undertaken before a request for appointment of an independent Arbitrator. I find no document on
record to show compliance of Clause 25.
Learned counsel for the applicant has made reference of the pleading to demonstrate compliance of Clause 25 but I find no pleading for the steps
required to be taken before a request for appointment of Arbitrator. As per the procedure given under Clause 25, whenever, a dispute exists, then
party would sent it within fifteen days to Superintending Engineer for its decision. The Superintending Engineer to decide it within thirty days of receipt
of dispute by the parties to the contract. If Superintending Engineer fails to give instructions on decision in writing within the period of thirty days or if
contractor is dissatisfied then within thirty days, an appeal can be preferred to the Chief Engineer. If contractor remain dissatisfied with the decision, a
demand for appointment of Arbitrator can be made. The pleading to the application does not show any representation in writing to the Superintending
Engineer against recovery of the amount.
The pleading is only for filing of an appeal to the Chief Engineer but no documents to this effect have been filed. The applicant has filed a copy of the
legal notice by which a request for appointment of an Arbitrator was made but, therein also, facts pertaining to compliance of Clause 25 of the
agreement has not been referred. Accordingly, I find present application to be premature. My view is supported by the judgment of this Court in the
case of Simpark Infrastructure Pvt. Ltd. (supra).
Accordingly, the application is dismissed. The applicant would, however, be at liberty to take steps, as envisaged under the agreement, before seeking
appointment of Arbitrator, if so permissible.