THE HIGH COURT OF UTTARANCHAL AT NAINITAL A.O. No. 789 of 2001 (Old FAFO No. 507 of 1984) State of U.P. through the Superintending Engineer, Maneri Bhali Bandh Nirman Mandal Maneri District Uttarkashi. (Defendant). ... Appellant. Vs. 1. M/s Hindustan Construction Company Ltd. Construction House, Walchand Hira Chand Marg Ballard Estate Bombay- 400038. (Plainitff). ...Respondent. Sri Bhupender Singh, learned Standing Counsel, for the appellant. Sri Rakesh Thapliyal, Adv., learned counsel for the respondents. Coram: Hon’ble P.C.Verma, J. Hon’ble B.S. Verma, J. Date August 29, 2006 This appeal under Section 39 of the Arbitration Act has been preferred against the judgment and order dated 28-2-1984 passed by the then Civil Judge, I, Dehradun in Suit No. 452 of 1982 Hindustan Construction Co. Ltd. Vs. State of U.P. By the impugned order, the learned Civil Judge allowed the petition under Section 20 of the Arbitration Act and passed the order to the effect “let a reference be made to two Arbitrator, one to be nominated by the plaintiff and the other by the defendant, who shall select an Umpire in accordance with Clause 6.01(c) of the agreement. The Arbitrators or the Umpire shall give their award within four months from the date of entering in to the reference.” Brief facts of the case are that the defendant-appellant accepted the tender offered by the plaintiff for construction of diversion dam across the river Bhagirathi at Maneri, in take and Sedimentation Tank, Head Race Tunnel, Surge Tank, power house at Uttarkashi with its appurtenant works including collection gallery and expansion chamber etc. and a formal agreement was executed on 22.12.1972 between the plaintiff and the defendant. The plaintiff was to provide cold bent structural member support for underground works for which the plaintiff set up a rib bending workshop with sophisticated equipment. Due to unprecendent flood in August 1978 in Bhagirathi river the entire establishment of the plaintiff including the said workshop was washed away. When the work started again, it was assessed that the plaintiff was required to fabricate or to prepare about 600 Mt. tons of structural steel rib supports only and the setting up of a new bending workshop with new equipment which was likely to increase the costs of execution of work. The plaintiff suggested to the department in the alternative for fabrication of steel supports by cutting and welding which involved comparatively lesser extra costs. The defendant by letter dated 24.1.1979 approved the new method and the plaintiff fabricated 715 MT structural steel ribs. The plaintiff by letter 6.1.1979 requested the defendant to make payment for the said work at the rate of Rs. 300/-per MT. It was further alleged that similar rate existed in the schedule of quantities for structural steel work in power-house and control room building. The defendant vide its letter dated 29-11-1979 rejected the said claim for Rs. 8,78,607-50 to the plaintiff. It was alleged that there was an arbitration clause in the agreement executed between the parties, therefore, the plaintiff vide letter dated 26.12.1979 requested the defendant to refer the disputes to arbitration but the defendant kept mum. According to the plaintiff certain disputes as mentioned in the petition have arisen for arbitration. The plaintiff therefore prayed that the disputes be referred to arbitrators in terms of the arbitration clause in the agreement and in case the parties do not agree to appoint their nominee as arbitrators, reference may be made to arbitrators to be appointed by the Court. The defendant contested the suit by filing its written statement mainly on the ground that there are no disputes between the parties covered by the arbitration agreement; that the alleged disputes cannot be allowed to be referred to the arbitration for want of mandatory provisions of clause 7.01(1) and (b); that the petition is barred by limitation; that the plaintiff showed their inability by means of letter dated 6.1.1979 to manufacture circular ribs although it was a contractual obligation as per Clause 19.21 (b) of the agreement; that plaintiff by letter dated 6-1-1979 submitted a proposal to manufacture segmental ribs in place of circular ribs. It was further alleged that manufacture of segmental ribs was not the alternative to circular ribs but it was a different proposal obtained by the plaintiff to substitute the contractual need of the circular ribs because the plaintiff had to reestablish the workshop, which proved uneconomical and would have cost Rs. 7,50,000/- extra. It was contractual obligations of the plaintiff to manufacture the circular ribs. It was asserted that on the verbal request of the plaintiff, the Executive Engineer asked the plaintiffs to manufacture the said ribs without according any sanction for its payment vide his letter dated 24.1.1979 and later by letter dated 15.2.1979 approved the proposal but informed the plaintiff that in no case the payment shall be made under item no. 162. Thereafter the plaintiff started manufacturing segmental ribs. The petition was contested on a number of grounds taken in their written statement by the defendant-appellant. It was alleged that the plaintiff was guilty of latches and undue delay in filing the petition. The plaintiff also filed a petition under Section 37(4) of the Arbitration Act for extension of time, which was registered as Misc. Case No. 31 of 1982 because in the written statement the defendant had taken a stand that the petition of the plaintiff was barred by limitation. It was prayed that in case the point is decided in favour of the defendant undue hardship would be caused to the plaintiff, therefore, in the interest of justice extension of time may be made in favour of the plaintiff. The defendant-appellant contested that application and asserted that plaintiff had not complied with the provision of Section 6.01(a) and (b) of the agreement and as such the decision of the Engineer-in-Charge became final and the matter in dispute cannot be referred to arbitration. Plea was also raised that the plaintiff-respondent will not suffer any undue hardship, rather there is no question of hardship and the plaintiff is not entitled to any extension of time. On the pleadings of the parties, the learned Civil Judge framed following issues:- 1. Whether the alleged disputes between the parties are referable to arbitration? 2. Whether the alleged disputes cannot be referred for want of compliance of Clause 6.01(a) and 6.01(b)? 3. Whether the petition is barred by limitation? 4. Relief? The plaintiff filed affidavit of its Senior Manager Sri K.S.Gharpure and also filed Annexure No.1 to his plaint, which relates to protest and claims arising out of the agreement. The defendant-appellant filed affidavit of Sri J.K.Verma, Assistant Engineer of the Department as well as a number of documents. The learned court below heard both the parties and after perusing the evidence on record, held that it is established from a perusal of the arbitration agreement that the question of rate is referable matter and all the disputes raised by the plaintiff are to be decided by arbitration. Issue No.1 was decided in favour of the plaintiff- respondent. The contention of the defendant-appellant that the disputes alleged by the plaintiff cannot be referred to arbitration for want of compliance of sub clause (a) and (b) of Clause 6.01 was dealt with in Issue No.2. The learned trial court has reduced in writing the complete arbitration clause in the impugned judgment while taking up Issue No.1. According to the defendant-appellant the matter stood finally decided by the Superintending Engineer vide letter No. 334/MBBNM/C-F-28 dated 8-4-1979, which is Annexure No.4 to the written statement. The case of the defendant is that if the plaintiff was not satisfied by the decision, the plaintiff firm should have given notice to the Engineer-in-Charge requiring that the matter be referred to arbitrator and he should have furnished all necessary particulars of the disputes and further such a notice was required to be given within contractual period of twenty days. According to the defendant the decision of the Engineer-in- Charge as contained in the aforesaid letter dated 8-4-1979 became final and the same was communicated to the plaintiff vide letter dated 28/29-11-1979 (Annexure No. 3 to the written statement). It was after this communication received by the plaintiff that notice dated 26.12.1979 was sent to the Engineer-in-Charge for referring the matter to arbitration. The trial court after dealing with the issue elaborately ultimately held that Clause 6.01 (a) and 6.01(b) of the agreement were complied with and the disputes between the parties were liable to be referred to arbitration as provided under the agreement. The learned Civil Judge also held that the suit was not barred by limitation. Ultimately the petition under Section 20 of the said Act was allowed, as mentioned earlier. In this appeal, the impugned judgment has been assailed mainly on the ground that the matter between the parties became final vide letter dated 8-4-1979 and not after communication of letter dated 28/29-11-1979 of the Engineer-in- Charge; that the finding of the trial court that the decision of the Engineer-in-Charge was not communicated to the plaintiff by letter dated 8-4-1979 is erroneous. It has been vehemently argued that compliance of Clause 6.01 (b) of the agreement was not complied with. We have heard submissions of learned counsel for both the parties and perused the entire material on record. At the outset, it may be noted that the plaintiff has alleged in his petition the disputes relating to payment of Rs. 8,78,607.50 for the period January 1979 to January 1982 towards work of manufacturing, providing and placing segmental steel supports as well as for the interest pendente lite and future and costs of the proceedings. The main argument advanced on behalf of the appellant-defendant is that the matter between the plaintiff and the defendant was finally decided by the Superintending Engineer vide letter No. 334/MBBNM/C-F-28 dated 8-4-1979. The defendant has annexed the same as Annexure 4 to the written statement. The contention of the respondent-plaintiff is that the final decision of the Engineer in-Charge was communicated to the plaintiff vide letter No. 1837/MBBNM dated 28/29-11-1979, which is Annexure 3 to the written statement. Plaintiff’s case is that after receiving the letter dated 29-11-1979, the plaintiff by notice dated 26.12.1979 sent to the Engineer in-Charge that the matter be referred to arbitration. The plaintiff has filed the said notice/letter as Annexure G to the replication. Admittedly the notice, dated 26.12.1979, was sent by the plaintiff within the period of 20 days as per Clause 6.01 (b) thereby clearly the requirement of the Clause 6.01(b) stands fulfilled. In that noticed the particulars of the disputes have been given. After having considered the documents furnished by the appellant as well as the plaintiff, there is nothing to doubt that the final decision of the Engineer-in-Charge is dated 29-11-1979. However, according to the defendant, the letter dated 29-11-1979 is not the final decision rather the letter dated 8.4.1979 is the final decision of the Engineer-in-Charge, therefore, the petition for arbitration was not made within the stipulated time. The record shows that receipt of letter dated 8-4-1979 was not admitted by the plaintiff. We have perused the Clause 6.01. It would appear from this clause that first of all the contractor has to ask in writing any written instruction or decision in case it was considered that any record of the Engineer-in-charge or his representative in respect of the contract was unfair or in case any work demanded or asked for by the Engineer-in-Charge to be outside the requirement of the contract. Then on receipt of the said written instruction or decision, the contractor has to continue with the work and also within a period of 20 days after receipt of the said decision or instruction, the contractor may file written protest with the Engineer-in-Charge giving details about the basis of objections and the Engineer-in- Charge was required to give decision thereon. Then against this decision the contractor has to give a notice in accordance with the procedure laid down in Clause 6.01(a) in case the contractor was dissatisfied with the decision of the engineer-in-charge. Annexure B to the replication is a letter issued by the plaintiff to the Engineer- in-Charge dated 16.1.1979 requesting for according approval for construction of segmental ribs and about its payment under item No. 162 of Schedule of quantities. The Executive Engineer in response of this letter issued letter Annexure VI to the written statement. From a perusal of Annexure VI it is evident that there was urgency of getting the work done by the plaintiff and, therefore, approval for fabricating ten ribs was accorded for the reason that the supporting of tunnel excavation may not be delayed on this ground. There was specific recital in that letter that general approval for the proposal may be accorded later-on. Annexure II to the written statement is the latter dated 15.2.1979 wherein the approval for segmental ribs has been accorded. Thus Annexure II is in response of the above letter. In Annexure II it has been alleged that payment for the said work shall be made under item No. 10 and not under item No. 162. It is pertinent to note that this letter was issued by the Executive Engineer of the defendant, Sri P.S.Rajvanshi, who was not the Engineer-in-Charge, therefore, this letter cannot be termed as final decision under Clause 6.01(a). It has not been shown at any point of time that Executive Engineer P.S.Rajvanshi was the Engineer-in-Charge or he was working as such under the delegated powers of the Engineer-in-Charge. In such circumstances, letter dated 15-2-1979 issued by Sri P.S. Rajvanshi cannot be taken as decision as provided under Clause 6.01. Even the date of issue of the letter 15-2-1979 was proved. It is not disputed that the plaintiff could file written protest within 20 days from the date of receipt of the said letter. The defendant- appellant cannot escape from its burden to prove the date of receipt of letter-dated 15.2.1979. The appellant-defendant cannot take any benefit from the letter dated 15.2.1979 (Annexure No. II) and it is not open to the appellant to argue that the plaintiff-respondent failed to file the written petition within the stipulated period of 20 days as provided under Clause 6.01. The learned trial Judge after having discussed the entire evidence on record has rightly discarded the contention of the appellant-defendant that there was no compliance of Clause 6.01(a) and 6.01(b). The learned trial court has rightly observed that the plaintiff made new offer to accept Rs. 3000/- per M.T. to avoid delay in receiving payment, therefore, no decision was taken by the defendant in respect of the revised offer till 29.12.1979 (Annexure III), which is undoubtedly the final decision of the Engineer-in-Charge. We are of the view that the appellant has miserably failed to establish that there has been non- compliance of agreement Clause 6.01(a) and 6.01(b) on the part of the plaintiff-respondent. Having gone through the entire evidence led by both the parties, we are in full agreement with the observation of the learned trial court that the stand taken by the defendant that provisions of aforesaid agreement clause were not complied with is incorrect. The learned court below has rightly held that the final decision of the Engineer-in-Charge was the letter dated 29-11-1979 (Annexure No. 3 to the written statement). We are of the view that by the letter dated 29-11-1979, issued by the Engineer-in-Charge, the final decision of the defendant was communicated to the plaintiff and thereafter, the plaintiff sent notice dated 26.12.79 to the authority concerned that the matter be referred to arbitration. The notice dated 26.12.1979 was sent within a period of 20 days as provided in the Agreement Clause 6.01 (b) Having considered the entire text of agreement Clause 6.01 Protests executed between the parties vis-à-vis the evidence produced by both the parties before the trial court and having given our anxious thoughts to the rival contentions of both the parties, we hold that the question of rate is referable to arbitration and the disputes between the parties were referable to the arbitration. The issue no.1 is answered in favour of the plaintiff-respondent. We further hold that there has been sufficient compliance of Clause 6.01(a) and 6.01(b) of the agreement. Issue No.2 is answered accordingly. We also hold that the petition filed by the plaintiff- respondent is not barred by limitation. Issue no.3 is answered in negative and against the defendant-appellant. We do not find any illegality or infirmity in the findings recorded by the trial court on Issue Nos. 1 to 4. The petition filed by the plaintiff-respondent under Section 20 of the Arbitration Act has been rightly allowed by the trial court. The impugned judgment and decree dated 28-2- 1984 are liable to be affirmed. The appeal lacks merit and must fail. The appeal is hereby dismissed. Costs easy. The judgment and decree under appeal are hereby upheld. The interim order dated 22-2-1985 thereby staying the proceedings in consequence of the impugned order dated 28-2-1984 is vacated. (B.S. Verma,J.) ( P.C. Verma,J.) RCP