Oriental Construction Co. vs Engineer-in-Chief, PWD (B and R) and Another

Hemant Gupta, J.—The Petitioner-company was awarded contract for up gradation, widening and strengthening of the existing road from Village Taloda (on Jind-Safidon State Highway) to Dhatrath, Khanda upto Alewa (on Jind- Assandh State Highway) and Kandela (on Jind-Assandh State Highway) to Jind-Safidon road via Khokhari - Bohatwala - Dalamwala in Jind District. An agreement dated 11.07.2002 was executed between the parties in this respect.

As per the said contract, the total cost of project was Rs. 493 lacs. As per the Petitioner, it completed the contract and handed over the site to the Respondents on 28.02.2005 and also raised final bill on 09.05.2006. The gross amount of the bill was Rs. 4,87,05,949.90. The Respondents made payment of Rs. 21,82,512/- to the Petitioner on 22.05.2006. It is asserted by the Petitioner that a sum of Rs. 2,66,71,943/- is still payable by the Respondents in respect of which, the Petitioner raised a claim on 10.10.2006. The details of such claim are as under:

Sr. Particulars No. Amount

(i) Less incurred due to non-issuance of letter to IOCL for Release of Bitumen and loss on account of rent paid for idle machinery, labour, administrative and office expenses. Rs. 17,78,000/-

(ii) Loss incurred due to mixing of Stone and Bajri in GSB including extra items used and cost of extra labour used for mixing material. Rs. 19,20,2000/-

(iii) Loss due to filling of Potholes and Undulations. Rs. 5175000/-

(iv) Loss due to non-payment of E/W under GSB area. Rs. 10,29,000/-

(v) Loss due to earthwork done and removed in villages. Rs. 4,53,600/-

(vi) Escalation in the cost of raw-material on account of the delay caused by the Department. Rs. 1,00,00,000/-

(vii) Interest @ 18% on the aforesaid amount from the date it became due, outstanding and payable till realization alongwith pendente lite and future interest. Rs. 63,16,343/-

Total Rs. 2,66,71,943/-

The said claim of the Petitioner was declined by the Executive Engineer on 28.11.2006 (Annexure P-3). It was, thereafter, on 18.01.2007 (Annexure P-4), the Petitioner requested for appointment of an Arbitrator. Since no Arbitrator was appointed, the Petitioner invoked the jurisdiction of this Court u/s 11(6) of the Arbitration and Conciliation Act, 1996 (for short ''the Act'').

In reply, it is pointed out that the Petitioner has received the final payment without any reservation in terms of the final bill raised by the Petitioner and that there is not dispute arising out of the contract and that there is no issue which is arbitral. It is inter-alia pointed out to the following effect:

That the Petitioner raised a final bill for Rs. 4,87,05,949.90 which was value of total work done during the entire period of contract and out of the said sum, the Petitioner had already received Rs. 4,61,00,151.99 upto the previous bills and thus only a balance of Rs. 26,05,797.91 was remaining which has been paid after making the statutory and permitted deduction viz. income tax, education cess, surcharge, sales tax etc. and net payable amount of Rs. 21,82,512/- was paid to the contractor/Petitioner and the same was accepted without any protest. It is, thus, clear that full accord and satisfaction has been reached in the present case and the Petitioner is estopped from raising any claim after final bill. A copy of final bill as approved is annexed hereto and marked as Annexure R-1.

In replication, the stand of the Petitioner-company is that the right of the Petitioner cannot be taken away on acceptance of payment in lieu of the bill and that no estoppel will operate against the Petitioner.

Learned Counsel for the Petitioner has vehemently argued that the Petitioner has raised claim within a period of six months of the payment of final bill vide communication dated 10.10.2006 addressed to the Executive Engineer and, thus, such claim raised by the Petitioner is within the period of limitation prescribed under Clause 25A of the Agreement.

Since, an Arbitrator has not been appointed, such disputes are required to be decided by an Arbitrator.

On the other hand, the stand of the Respondents is that once the payment has been made in terms of final bill raised by the Petitioner, therefore, the Petitioner cannot raise any dispute by raising a claim after acceptance of full and final payment.

From the perusal of pleadings of the parties, it is beyond dispute that final bill raised by the Petitioner was for Rs. 4,87,05,949.90. The running payments amounting to Rs. 4,61,00,151.99 were made. Out of balance of Rs. 26,05,797.91, an amount of Rs. 21,82,812/- was paid to the Petitioner on 22.05.2006. The remaining amount is on account of statutory deductions i.e. income tax, education cess, surcharge, sale tax etc. Therefore, it is apparent that the payments have been made to the Petitioner-company as per final bill raised by it. The Petitioner has not claimed any other amount in the final bill raised nor reserved any right while receiving final payment on 22.05.2006 in respect of any other claim arising out of the contract awarded to the Petitioner. The claim raised by the Petitioner on 10.10.2006 is, thus, an after-thought, which does not arise out of the contract, as with the payments of final bill as raised by the Petitioner, there is no dispute, which remains for adjudication between the parties.

In view of the above, there is no dispute which requires adjudication by an Arbitrator. Consequently, the present petition is dismissed.