Purna Nand vs MCD

Shiv Narayan Dhingra, J.—This application has been filed by the petitioner u/s 11 of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator. It is submitted by the counsel for the petitioner that the petitioner was awarded a contract for construction of pavement of fire station at Bawana, Delhi vide Work Order dated 9th March 1999/18.03.99/17.6.99. The work was to be completed within three months i.e. by 26th September 1999. However, the actual date of completion of the work was March 2000. The delay in execution of the work was due to respondent who failed to provide cement at an agreed price. There was unprecedented delay in providing of materials etc. The respondent also failed to release the payment of running bills in time and failed to pay the final bill. The applicant also requested for escalation, in terms of the escalation clause, but it was not agreed, therefore, the applicant served a notice dated 14th July 2003 upon the Commissioner of MCD regarding six claims given as under:

Work done not paid Rs. 9,000/-

Security (approximate) Rs. 40,000/-

Work contract tax (appx.) Rs. 15,152/-

Salaries of staff, watch and ward Rs. 1,10,000/-

Increase in rates of labour and material Rs. 80,000/-

Loss of Profit Rs. 20,000/-

The applicant requested for appointment of an Arbitrator in terms of Clause 25 but the same was not done.

The respondent in response to the application submitted that the petitioner/contractor had not come to the Court with clean hands. The work was awarded on 17th June 1999 but he started work on 9th February 2000 and completed it on 4th April 2000 much beyond the period provided under contract. As per Clauses 5 and 8 of the agreement, he was to apply for extension of time, which he did not. He was also to submit his final bill which he failed to do. Since he did not submit the final bill, no bill could be finalized and the security could not be released. It is also submitted that he had no locus standi to invoke the arbitration clause as he has not followed the procedure as laid down in the arbitration clause. The application was liable to be dismissed.

Clause 25, on the basis of which this application has been filed, is reproduced hereunder:

CLAUSE 25.

Settlement of Disputes and Arbitration Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, design, drawings and instructions hereinabove mentioned ad as to the quality of workmanship or materials as 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 of 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 demanded of 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 of carrying out of the work, to be unacceptable, he shall promptly within 15 days request the Superintending Engineer in writing for written 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 contractors appeal. If the contractor is dissatisfied with this decision, the contractor shall within a period of 30 days form receipt of the decision, given notice to the Commissioner MCD for appointment of arbitrator 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 a sole arbitrator appointed by the Commissioner MCD. 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 along with the notice for appointment of arbitrator and giving reference to the rejection by the Chief Engineer of the appeal.

It is also a term of this contract that no person other than a person appointed by such Commissioner MCD 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 I also a term of this contract that if the contractor does not make any demand for appointment of 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 waived and absolutely barred and the MCD 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 there under and for the time being in force shall 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 appointing authority and give separate award against each dispute and claim referred to him and I all cases where the total amount of the claims by and 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 there 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 of 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 of 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.

A perusal of the above clause would show that the contractor was supposed to make a written representation to the Engineer-in-Charge in connection with any dispute /claim under the contract and it is the Engineer-in- charge who was to give decision. If he was not satisfied with the order of the Engineer-in-charge, he, within 15 days had to approach Suptd. Engineer for a decision. Suptd. Engineer had to decide within 30 days. On his failure to decide within 30 days or on being dissatisfied with his decision, the petitioner had to appeal before the Chief Engineer within 30 days. If he was not satisfied with the decision of the Chief Engineer, then only he could give a notice to Commissioner MCD for appointment of an arbitrator and the decision of the Arbitrator had to be binding.

It is settled proposition of law that if there is a specific mode of settlement of disputes given in the contract, the petitioner has to follow that mode. Before invoking the arbitration clause, the petitioner had not given any notice to the Engineer in charge or to the Superintendent Engineer about the various claims made by him. He directly served a notice to the Commissioner MCD.

I consider that the instant petition made by the petitioner u/s 11 of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator is not maintainable and is hereby dismissed as such.