M/s. Gulab Chand Jain vs South Eastern Coalfields Ltd. and Others

N.K. Agarwal, J.—The applicant has preferred instant application u/s 11(6) of the Arbitration and Conciliation Act, 1996 (henceforth ''the Act'') for appointment of sole Arbitrator. Facts in brief are as under:

(i) Applicant and the respondents, vide agreement No. CE(C)/BSP/AGT(2)/164 dated 6-2-1991 entered into a contract for the execution of the work for construction of 400 Nos. of "B" type quarters at Kurasia colony (Chirimiri area) of SECL.

(ii) The work was finally completed in all respects within the extended completion period, i.e., before 20-11-1992 and the possession of the quarters were also handed over on that date. The contractual maintenance/defects liability period also expired on 20-5-1993.

(iii) After completion of work, the applicant requested for grant of final extension of time without the imposition of penalty and also to prepare the final bill after recording the final measurements. The same was not done by the respondents and instead the respondents, in the year 1999, granted extension of time, as prayed by the applicant and paid the amount of 22nd running bill only in the month of November. 2000 but the final bill was never prepared so far by the respondents. Therefore, the applicant raised the claim vide Annexure A/2, dated 20-11-2007. The same was denied/refused by the respondents vide Annexure A/4 dated 26-3-2008. Thereafter, vide notice Annexure A/3 dated 31-1-2008, the applicant prayed for appointment of sole arbitrator, in terms of clause 9 of the General Terms and Conditions of the Contract to resolve the dispute between them but the respondents did not act on the request of the applicant. Hence, the instant application.

According to Dr. N.K. Shukla, learned Senior Advocate appearing for the non-applicants, the work under agreement was completed in the year 1993, and therefore, the application for appointment of arbitrator filed in the year 2008 is time barred and thus is not maintainable.

I have heard counsel for the parties and perused the material available on record.

Agreement No. CE(C)/BSP/AGT(2)/164 dated 6-2-1991 entered into between the parties contains arbitration clause-9 which reads thus:

Clause - 9: All disputes or difference whatsoever arising between the parties out of or relating to the constitution, meaning and operation or effected of this contract or breach thereof shall be settled by a sole arbitrator appointed by CMD of South Eastern Coalfields Ltd. and the award or arbitrator shall be final and binding on the parties concerned. The arbitrator may from time to time with the consent of the parties enlarge the time for making and publishing the award. The arbitration proceedings shall be in accordance with the Arbitration Act, 1940.

The only question falls for consideration of this Court is whether or not the application preferred by the applicant for appointment of arbitrator u/s 11(6) of the Act is time barred in the facts and circumstances of the case.

It is the date on which the right to apply accrues for appointment of arbitrator, that determines the starting point of limitation. Starting point does not coincide with the date of which the cause of action for filing a suit arises. Whether the claims of a party are barred by limitation or not is for the arbitrator to see, but it is the duty of the Court to see whether the application filed in the Court is within limitation or not.

The Supreme Court, in the case of Major (Retd.) Inder Singh Rekhi Vs. Delhi Development Authority, while dealing with reference u/s 20 of the Indian Arbitration Act, 1940, has held in para 4 of its judgment:

...as appears from the record and when the assertion of the claim was made on 28th Feb., 1983 and there was non-payment, the cause of action arose from that date, that is to say, 28th of Feb., 1983. It is also true that a party cannot postpone the accrual of cause of action by writing reminders or sending reminders but where the bill had not been finally prepared, the claim made by a claimant is the accrual of the cause of action. A dispute arises where there is a claim and a denial and repudiation of the claim. The existence of dispute is essential for appointment of arbitrator under S. 8 or a reference under S. 20 of the Act.......There should be dispute and there can only be a dispute when a claim is asserted by one party and denied by the other on whatever grounds. Mere failure or inaction to pay does not lead to the inference of the existence of dispute. Dispute entails a positive element and assertion of denying, not merely inaction to accede to a claim or a request. When in a particular case a dispute has arisen or not has to be found out from the facts and circumstances of the case.

Coming to the facts of the present case, admittedly, the work was completed in the year 1993 and the amount of 22nd running bill has been paid in the month of November. 2000 by the respondents, i.e., after lapse of 7 years and that too after completion of contract. It is also not in dispute that till now the final bill has not been prepared by the respondents and payment of final bill was only refused by the respondents in their letter dated 26-3-2008 (Annexure A/4). In these circumstances, by applying the ratio of law laid down by the Supreme Court in the case of Major (Retd.) Inder Singh Rekhi Vs. Delhi Development Authority, in my considered opinion, the cause of action for appointment of arbitrator accrued on 20-12-2007 when the demand was raised by the applicant and on 26-3-2008 when the non-applicants denied the applicants claim. Therefore, the application filed on 18-6-2008 for appointment of arbitrator is well within limitation and the plea raised by Dr. N.K. Shukla is devoid of merit.

Considering that the parties to the proceedings had entered into contract which contains arbitration clause and further considering that the non-applicants have failed to act on the request of the applicant for appointment of arbitrator and also considering that the dispute had arisen out of contract agreement, this Court is of the opinion that a case for appointment of arbitrator is made out.

Learned Counsel for both the parties unanimously submit, they have no objection if Hon''ble Shri Justice V.K. Shrivastava, former Judge of High Court of Chhattisgarh, Bilaspur is appointed as sole Arbitrator in the present case.

Therefore, I hereby, with the consent of the parties, appoint Hon''ble Shri Justice V.K. Shrivastava, former Judge of High Court of Chhattisgarh at Bilaspur, as sole arbitrator, subject to his consent.

The Hon''ble Arbitrator may settle his terms and conditions and remuneration.

Registry of this Court to intimate Hon''ble Shri Justice V.K. Shrivastava about his appointment as Arbitrator in the instant matter to resolve the dispute arose between the parties. Necessary papers be also sent to Shri Justice V.K. Shrivastava along with addresses of the parties.

Parties to the application are also directed to approach Shri Justice V.K. Shrivastava, Mridu Villa, Warehouse Road, Opp. State Legal Services, Bilaspur and to submit relevant papers and also to take part in arbitration proceedings. In view of the above, this application for appointment of Arbitrator stands disposed of.