Uttar Pradesh Rajkiya Nirman Nigam Limited vs National Hydro Electric Power Corporation

B.C. Kandpal, J.—This appeal u/s 39 of the Arbitration Act, 1940, has been preferred against the judgment and order dated 26-4-1997, passed by A.C.J.M./Civil Judge (Senior Division), Nainital in O.S. No. 210 of 1991, U.P. Rajkiya Nirman Nigam Limited v. National Hydro Electric Power Corporation Ltd.

The facts of the case, in a nutshell, are that Agreement No. NH/TP/Agreement/14 dated 23.4.85 was executed between the parties for construction of residences Lot (I) at Banbasa, Tehsil Khatima, District Nainital (now within District U.S. Nagar). There arose dispute between the parties and the U.P. Rajkiya Nirman Nigam Limited, who has entered into agreement for execution of the work, served notice upon the defendant/appellant about the cause of action arose due to the dispute in the construction work and filed the suit u/s 20 of the Arbitration Act, 1940 for appointment of Arbitrator through the intervention of Court. The suit was entered as Arbitration Case No. 210 of 1991.

The allegations of the plaintiff/appellant were that it has been submitting running bills from time to time to the defendant/respondent, but payments thereof were not made by the defendant as per the plaintiff�s such bills on one pretext or the other. The plaintiff completed the work on 7-5-86 and accordingly submitted final bill to the defendant and there remained a sum over Rs. 16,37,834/- payable by the defendant.

Notice was issued to the respondent/defendant, who filed objection before the learned Civil Judge (S.D.) and denied the averments made in the petition. According to it, the plaintiff did not complete the work on 7.5.86 and has not submitted the final bill. In terms of contract the work was to commence on 1.4.85 and was to be completed within 9 months but the plaintiff failed to complete the work within the stipulated period, hence the plaintiff was liable to pay compensation for the delay in terms of contraction to the defendant as per Schedule ''C'' of the contract read within Clause 40 of General Conditions of the contract. As a matter of fact, a sum of Rs. 2,66,563-27 was found payable to the plaintiff after preparation of final bill by the defendant and the plaintiff was duly intimated about the final bill vide letter dated 6.1.88 for accepting the payment but he failed to accept the payment. It was also alleged that difference stands settled under the terms of the contract by the decisions of Engineer-in-Charge and such decisions under Clause 53 of he General Conditions of the contract are final and binding between the parties and the plaintiff can not go beyond the terms of the contract. It was further alleged that the plaintiff was required to serve notice of existence of any dispute/differences/list of disputed items within 30 days from the date of disallowance of any claim with supporting documents, failing which all rights and claims were deemed to have been fully waived and absolutely extinguished. The plaintiff failed to comply with the above terms of the contract, hence the suit is barred on this account also.

The trial court on the pleadings of parties framed the following issues in the petition:

Whether the dispute is liable to refer to the Arbitrator for decision?.

Whether there was any contract agreement between the parties relating to the disputed matter, as alleged in the written statement? If so, its effect?.

Whether the suit is time barred?.

Whether the Court has got no jurisdiction to hear and decide the matter?.

To what relief, the plaintiff is entitled to get?.

Parties exchanged affidavits and counter affidavits and also filed documentary evidence in support of their case. The trial court after hearing learned Counsel for the parties and considering the documents on record, held that the dispute is not liable to be referred to the Arbitrator for decision and accordingly dismissed the case.

Feeling aggrieved, the U.P. Rajkiya Nirman Nigam Limited (contractor) has preferred this appeal.

Heard learned Counsel for the parties and perused the record.

Learned Counsel for the appellant has submitted that final bills of the appellant were not prepared by the respondent, parties were ready to settle the dispute through arbitrator but the trial court without considering the evidence on record has wrongly held that in view of Clause 53 there is no dispute between the parties. He also submitted that the claim of the appellant was not time barred and the trial court has wrongly held the same as barred by time. Learned Counsel therefore submitted that the matter was liable to be referred to the Arbitrator.

The learned Counsel for the respondent/defendant on the other hand has submitted that the work was completed with delay of about three months. The delay was caused due to own fault of the contractor and after completion of work final bill was prepared and its information was sent to the plaintiff thorough letter dated 6-1-1988, but the plaintiff did not accept the payment. Therefore, the learned lower court has rightly dismissed the suit as there was no dispute between the parties and also on the ground of the suit being barred by time.

Admittedly there is no dispute between the parties pertaining to execution of work agreement and execution of work by the contractor. The dispute as per the allegations made in the petition by the plaintiff are that there were differences in the time of completion of work, sanction of extra items at the lesser rates, deductions on the basis of inferior quality of work, penal rates recovery in cement and steel, house rent deductions, interest on mobilization advance, improperly invoking the bank guarantees. The trial court has recorded a categorical finding that these differences are covered under Clause 53 of the contract agreement and the same were to be settled by the Engineer-in-Charge and the decision was binding upon the contractor. It is relevant to go through the Clause 53 of the agreement, which reads as under:

Clause 53, finality clause:

It shall be accepted as an inseparable part of the contract that in matters regarding materials, workmanship, removal of improper work, interpretation of the contract drawings and contract specifications, mode of procedure and the carrying out of the work as stipulated in the Clause Nos. 7, 8, 10, 13, 17, 18, 21, 23, 24, 29, 32, 34, 37, 38, 40, 41 & 44 the decision of the Engineer-in-Charge, which shall be given in writing, shall be final and binding on the contractor.

In view of above specific provision in the work agreement, the trial court has rightly come to the conclusion that the dispute was not liable to be referred to the Arbitrator. In the instant case the difference stands settled under the terms of the above Clause 53 and the decisions of Engineer-in-Charge are final and binding between the parties, therefore the plaintiff can not go beyond the terms of the contract.

The trial court also held that the suit of the plaintiff is barred by time. According to the respondent/defendant the final bill of the works was sent to the plaintiff on 16.12.87 and the same was received by the plaintiff. The plaintiff submitted his objections against the final bill through his letter dated 23-7-88. The period to file suit according to Article 137 of Limitation Act, is three years from the date of the cause of action. As the cause of action in the instant case has arisen on 23.7.88 therefore, the present suit should have been filed within three years, i.e. 22.7.1991, but it has been filed on 2.11.1991, which is clearly time barred. The Hon''ble Apex Court in the case of Major (Retd.) Inder Singh Rekhi Vs. Delhi Development Authority, , has also held that the cause of action in terms of Article 137 of the Limitation Act arises when a party presents a bill and the other party disproves the same.

In the above facts and circumstances of the case, I do not find any illegality and infirmity in the finding recorded by the learned Civil Judge and the same is liable to be confirmed.

Accordingly, the appeal is dismissed. The impugned judgment and order dated 26-4-97 is hereby confirmed.