Arbitration Case No. 17 of 2007 (1) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Arbitration Case No. 17 of 2007 Date of Decision: 23.1.2009 ECE Industries ...Petitioner Versus The Superintending Engineer, PHSC ....Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA. Present: Shri Samarth Sagar, Advocate, for the petitioner. Shri Brijeshwar Singh, Advocate, for the respondent. HEMANT GUPTA, J (Oral). The petitioner has sought appointment of an Arbitrator in terms of Section 11(6) of the Arbitration and Conciliation, 1996 (for short `the Act'), in pursuance of an agreement dated 13.5.1999 for installation of bed cum passenger elevators and one dumb waiter elevator. It is averred by the petitioner that an amount of Rs.10.92 lacs is due to the petitioner as on 9.12.2003 in respect of which claim was lodged with the Engineer-in-Charge on 8.9.2005. A notice dated 28.3.2006 (Annexure P.18) was also served upon the Executive Engineer of the respondent, claiming payment of Rs.10.92 lacs after adjusting the payment of Rs.28,88,000/-. Subsequently, vide Annexure P.19 dated 3.7.2006, the petitioner has sought reference to Arbitrator under Clause 25 of the agreement dated 13.5.1999 by addressing a communication to the Engineer-in-Charge, but no reply thereof was received. A notice was also sent on 7.7.2006. Subsequently, on 18.12.2006, another communication was addressed to the Superintending Engineer-in- Charge of the respondent seeking reference to Arbitration in terms of Arbitration Case No. 17 of 2007 (2) Clause 25 of the agreement, but since the dispute was not referred to an Arbitrator, the petitioner invoked the jurisdiction of this Court by way of the present petition filed on 7.3.2007. Learned counsel for the respondent has raised an argument that the petition is beyond the prescribed period of limitation for initiation and seeking reference of the dispute to the Arbitrator and/or that the petitioner has not invoked the jurisdiction of Engineer-in-Charge or Superintending Engineer, in terms of Clause 25 of the agreement, therefore, the present petition is not maintainable. It is also contended by the learned counsel for the respondent that reference to the Superintending Engineer-in-Charge, was made after the expiry of 60 days available to the petitioner in terms of sub-clause (iv) of Clause 25 of the Agreement and, therefore, the dispute in respect of non payment of the amount, cannot be now referred to an Arbitrator. Before proceeding further, it would be relevant to reproduce Clause 25 of the agreement, which reads as under:- “Clause 25 : DISPUTES AND ARBITRATION i) If any dispute or difference of any kind whatsoever shall arise between the Corporation/its authorised representative and the contractor in connection with or arising out of this contract or the execution of work thereunder. ii) Whether before its commencement or during the progress of work or after the termination abandonment or breach of the contractor, it shall, in the first instance, be referred for settlement to the Engineer-in-Charge of the work and he shall within a period of sixty days after Arbitration Case No. 17 of 2007 (3) being requested in writing by the contractor to do so, convey the decision to the contractor. Such decision in respect of every matter so referred shall, subject to arbitration as hereunder provided, be final and binding upon the contractor. In case the work is already in progress the contractor shall proceed with the execution of the work on receipt of the decision of the Engineer-in-Charge as aforesaid with all due diligence, whether any of the parties requires arbitration as hereinafter provided or not. iii)If the Engineer-in-charge has conveyed his decision to the contractor and no claim for arbitration has been filed by the contractor within a period of sixty days from the receipt of the letter communicating the decision, the said decision shall be final and binding upon the contractor and will not be a subject matter of arbitration at all. iv)If the Engineer-in-charge fails to convey the decision within a period of sixty days after being requested as aforesaid, the contractor may within further sixty days of the expiry of the final sixty days from the date on which the said request was made by the contractor refer the dispute for arbitration as hereafter provided. v) As disputes or difference in respect of which the decision is not final and conclusive shall, at the request of other party made in a communication Arbitration Case No. 17 of 2007 (4) sent through registered A.D. post be referred to the sole arbitration of the Superintending Engineer-in-charge at the bid of reference or any retired Chief Engineer appointed by Managing Director, PHSC acting as such at the time of reference unless debarred from acting as an Arbitrator by an order of the Punjab Government in which event the Chief Engineer shall appoint any other technical officer not below the rank of Superintending Engineer to act an arbitrator on receipt of a request from either party.” A perusal of the documents on record would show that the petitioner has requested the Engineer-in-Charge on 3.7.2006 for settlement of dispute. The said reference is in terms of sub-clause (ii) of Clause 25 of the agreement. The receipt of such communication is not denied by the respondent in its reply. The Engineer-in-Charge, was to communicate his decision within 60 days, but the Engineer-in-Charge has not taken any cognizance or communicated any decision on the request made by the petitioner. Therefore, within the next 60 days, the petitioner could make a reference for appointment of an Arbitrator in terms of sub-clause (iv) of Clause 25 of the agreement. Such request was required to be made to the Superintending Engineer-in-Charge. The request has been made on 18.12.2006. After having heard learned counsel for the parties at some length, I do not find any substance in the stand taken by the respondents. It is not disputed that the cause of action for non-payment of Rs.10.92 lacs arose on 9.12.2003. Therefore, the petitioner could invoke the jurisdiction of this Court for appointment of an Arbitrator within a period of three years from the said date after excluding the period required to be spent in obtaining decision of the Engineer-in- Arbitration Case No. 17 of 2007 (5) Charge in terms of conditions of contract as provided in Section 15(2) of the Limitation Act, 1963. The agreement contemplates invocation of the jurisdiction of Engineer-in-Charge and that of Superintending Engineer- in-Charge, in terms of sub- clause (ii) and sub-clause (iv) of Clause 25. The agreement grants 60 days' time to the Engineer-in-Charge to communicate his decision and further 60 days are granted to the contractor to seek appointment of an Arbitrator. The period prescribed under the agreement is to ensure that both the parties act with the due diligence. The agreement will not confer any legal right upon the respondents to assert that the reference has been sought by the petitioner after expiry of the period stipulated in the agreement as the respondents themselves have failed to act in accordance with the terms in the agreement. The respondents were bound to act with due despatch. Having failed to act with due diligence, the stand of the respondents that the petitioner has sought reference of disputes to the Arbitrator after the prescribed period of limitation, is not tenable as the reference has been sought within the period of three years & 120 days. Therefore, the present petition is allowed. All the disputes between the parties are ordered to be referred for adjudication to the sole arbitration of Shri B.S. Bedi, Retired District Judge, resident of house No. 2826, Phase VII, Mohali. The Arbitrator shall be free to fix his fee keeping in view the claim amount as also the time that he would require to adjudicate upon the same. Parties are directed to appear before the Arbitrator on 2.3.2009 further proceedings. 23-01-2009 (HEMANT GUPTA) ds JUDGE