P. Jeevanandam C.P. Ponnurangam vs Union of India and others

This an application filed u/s 8 read with Section 11(6) of the Arbitration and Conciliation Act, 1996, (for short, the ''Act'') for resolving the disputes between the parties to the petition.

The applicant entered into an agreement on 31-7-1994. His tender was accepted on 25-5-1994 for the work of transportation of 45,000 BG PSC Sleepers from sleepers manufacturing factory at Madgaon and unload the same between Belgaum-Ghatprabha stations on Miraj-Londa Section of South Central Railway and stack them in order. These sleepers were to be manufactured and supplied by M/s. Rayalaseema Concrete Sleepers Private Limited. The value of the agreement was Rs.95,98,500-00. The due date of completion of work is one month from the date of acceptance i.e., 25-5-1994 and in nay case not later than 5-7-1994, and time is the essence of the contract. The manufacturer failed to load the sleepers in the vehicles of the applicant, the same could not be transported, though the applicant procured cranes, motor lorries and sufficient number of labour workers for loading and unloading by paying heavy advances. The petitioner brought it to the notice of the respondents by letters dated 9-7-1994 and 14-7-1994. Inspite of receipt of notice, the respondents have not taken any steps to augment the supply. Due to non-availability of sleepers for transportation, the entire organisation of the applicant mobilised by him was kept idle. However, the time was extended by the respondents on various dates upto 31-11-1994 without any penalty. As against the total quantity of 45,000 sleepers, the applicant was provided with 980 sleepers within the contract period and 2387 sleepers were made available during the extended period till 31-11-1994. The applicant by letter dated 30-11-1994 requested the respondents to extend the time upto 31-3-1995 as the manufacturers of contract sleepers are willing to supply 20,000 sleepers, but the contract was rescinded on 6-1-1995. As the respondents did not make any payment for the work executed, the applicant submitted his claim on 14-4-1996. The respondents by letter dated 17-10-1997 asked the applicant to withdraw the claims stating that they are not reasonable, justifiable and beyond the scope of the agreement. In view of the same, the applicant requested the respondents for appointment of an arbitrator, as specified under clause 64 of the General Conditions of Contract within thirty days for deciding the disputes and the claims submitted by him through his letter dated 14-4-1996. The same was rejected by the respondents through their letter dated 16-7-1998 stating that the claims are beyond the scope of the agreement and hence the same cannot be referred to the arbitrator.

In response to the notice, respondents filed counter accepting the agreement and supply of 3367 sleepers only out of 10,000 made available. The contractor miserably failed to execute the work. The applicant was paid an amount of Rs.6,25,501-00 (net) vide CC1 bill dated 7-1-1995. Hence the failure is on the contractor''s incapacity to transport the sleepers and not on the administrative side, the agreement of the applicant was rescinded. The contractor willfully did not make any attempt to seek extension of currency in order to avoid termination of the contract with risk and cost. The payment to the contractor to the extent of work was already paid and the bill was signed by the contractor. For preparation of ''Nil'' bill and passing security deposit, the currency of the agreement is required and the contractor is very well aware of the same. Instead of seeking currency of the agreement, the contractor is blaming the administration for his lapses; and the various claims numbering 12 submitted by the contractor falls under excepted matters are not arbitrable as per clauses 63 and 64 of the General Conditions of the Contract and prayed for dismissal of the application.

Under clause 63 of the General Conditions of Contract, in the event of dispute or difference, the contractor should refer the dispute to the railways and; if the railway fails to make a decision within a reasonable time, the matter may be referred to the arbitrator for resolving the disputes. It is not stated, which claim falls under the excepted matter and whether any decision with regard to the same was taken by the Competent Authority. It is stated in the counter that the applicant has raised several claims and they are only hypothetical, false, arbitrary and without logic. It is also admitted that the contractor has not submitted ''no claim certificate'' for processing the release of security deposit etc. Whether the claims of the contractor are exaggerated or not or maintainable or not in view of the agreement, is a question to be decided by the arbitrary Tribunal appointed to resolve the disputes.

From what is discussed above, it does appear that the disputes have arisen between the applicant on one hand and the respondents on the other. The respondents have not referred the dispute to the arbitrator for adjudicating the dispute, though the applicant requested for referring the claims to the arbitrator by his letter dated 15-5-1998. As the respondents failed to honour the agreement for referring the disputes to the arbitrator, the application deserves to be allowed and it is accordingly allowed. Mr. Justice A. Gangadhar Rao, former Judge of this Court, is appointed as an arbitrator in the above matter to resolve the disputes between the parties. His remuneration is initially fixed at Rs.30,000-00 (Rupees Thirty thousand only). No costs.