Hotel Corpn. of India Ltd. vs Continental Furnishers, New

Mukul Mudgal, J.—This appeal is directed against the orders dated 3.10.2001 and 31.10.2001 passed by the learned Single Judge setting aside the awards dated 31.5.1995 made and published by the Arbitrator and appointing a new Arbitrator. The learned Arbitrator rejected the claims of the respondent as being barred by time on the ground that the notice asking for reference of disputes to arbitration had not been given by the respondent within 28 days of the issuance of the Architects Certificate as provided in Clause 48 of the agreement. The learned Single Judge, by relying upon the decision in Hindustan Construction Corporation Vs. Delhi Development Authority, set aside the award on the ground that the reference cannot be rejected merely because the arbitration was not invoked within the time stipulated by such a clause.

The appeal is preferred on the ground of violation of Clause 48 of the agreement between the parties. Clause 48 of the agreement reads as under:

Settlement of Disputes:

All disputes and differences of any kind whatever arising out of or in connection with the contract or carrying out of the works (whether during the progress of the works or after their completion, and whether before or after the determination, abandonment or breach of the contract) shall be referred to and settled by the Architects, who shall state his decision, in written. Such decisions may be in the form of a final certificate or otherwise. The decisions of the Architects with respect to any or all of the following matters shall be final and without appeal:

(a) The variation or modification of the design;

(b) The quality or quantity of works or the additions/alterations, omissions, or substitutions of any work;

(c) Any discrepancy in the drawings or between the drawings and/or specifications, and schedule of quantities;

(d) The removal and/or re-execution of any works executed by the contractor;

(e) The dismissal from the works of any person employed thereupon;

(f) The opening up for inspection of any work covered up;

(g) The amending and making good of any defects under defects liability period;

(h) Acceptability of materials, equipment and workmanship;

(i) Materials, labour, tools, equipment, and appurtenances necessary for the proper execution of work;

(j) Assignment of sub-letting;

(k) Delay and extension of work;

(l) Termination of contract by the Employer.

But if either the Employer or the contractor be dissatisfied with the decision of the Architects or any matter, question or dispute of any kind except the matters listed above, then and in any such case, either party (the Employer or the contractor) may within twenty eight (28) days, after receiving notice to such decision, give a written notice to other party through the Architects requiring that such matters which are in dispute or difference of which such written notice has been given and no other shall be and is hereby referred to the Arbitration and final decision of a single Arbitrator being a person who is a Professional Engineer/Chartered Architect/Chartered Surveyor (Building and Quantities/Land Surveying), to be agreed upon and appointed by both the parties or in the case of disagreement as to the appointment of a single Arbitrator to the arbitration of two Arbitrators both being persons who are professional Engineers/Chartered Architects/Chartered Surveyors (Building and Quantities/Land Surveying), one to be appointed by each party, which Arbitrators shall, before taking upon themselves the burden or reference appoint an Umpire, who must also be Professional Engineer/Chartered Architect/Chartered surveyor, as described earlier.

The Arbitrator, the Arbitrators or the Umpire shall have power to open up, review and revise any certificate, opinion, decision, requisition or notice pertaining to the matters referred to them, and to determine the same by his/their award. Upon every or any such references the cost of and incidental to the reference and award respectively shall be at the discretion of the Arbitrator or Arbitrators or Umpire, who may determine the amount thereof, or direct the same to be taxed as between Attorney and Client or as between party and party, and shall direct by whom and to whom and in what manner the same shall be borne and paid. This submission shall be deemed to be submission to Arbitrator within the meaning of the Indian Arbitration Act, 1940 or any statutory modifications thereof. The award of the Arbitrator or Arbitrators or the Umpire shall be final and binding on the parties. The Employer and the Contractor hereby also agree that the Arbitration under this Clause shall be a condition precedent to any right of action under the contract.

It is contended that the certificate of the architect was questioned only on 12.05.1992, whereas the architect�s certificate was issued on 22.09.1986. For this purpose reliance has been placed on the judgment of the Hon''ble Supreme Court titled as P. Manohar Reddy and Bros. Vs. Maharashtra Krishna Valley Dev. Corp. and Others, in which reliance has been placed on Clause 54 in the Contract before the Hon''ble Supreme Court which was in terms para materia with present Clause 48. The above decision holds that for purposes of invocation of arbitration, the contractual term binds the parties.

Mr. Sharma, who appears on behalf of the respondent, submits that in the facts of the present case the decision of the Hon''ble Supreme Court has no application, as aforesaid, the architects certificate dated 22.09.1986 was indeed questioned and arbitration invoked on 18.10.1986 i.e. within 28 days.

A perusal of the record of the Arbitrator demonstrates that it was the appellant who had admitted before the Arbitrator the fact that the notice dated 18.10.1986 was issued by the respondent. Now from a perusal of the letter dated 18.10.1986 it is evident that the arbitration was indeed invoked by the respondent and the arbitration commenced upon issuance of the said notice by virtue of Section 37 of the Arbitration Act, 1940. The judgment relied upon by the appellant is not applicable in the facts and circumstances of the present case and the appeal accordingly stands dismissed.