Arbitration Case No. 17 of 2009 [1] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Arbitration Case No. 17 of 2009 Date of Decision: 7.10.2009 M/s Harish Chandra (India) Ltd. ......Petitioner Versus Punjab State Electricity Board and others .......Respondents CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? Present: Shri P.S. Rana, Advocate, for the petitioner. Shri H.S. Sidhu, Advocate, for the respondent. HEMANT GUPTA, J. (Oral). The petitioner has sought appointment of an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 [ for short `the Act' ], in respect of the contract awarded to the petitioner on 18.4.2001 for the construction of Channel, Byepass channel and connected works falling in the area of Ash Dyke Stage-III for Micro Hydel Scheme at Guru Gobind Singh Sahib Thermal Plant, Ropar, As per the contract agreement, the work was to be completed within 12 months. The contract agreement contains various Arbitration Case No. 17 of 2009 [2] terms and conditions including an Arbitration Clause. The work could not be completed within the time contemplated. The petitioner has sought extension in time for completion of the contract vide letters appended as Annexure R.2. The first letter is dated 26.2.2004 wherein while seeking extension in completion of work, the petitioner has undertaken that it will not claim anything on any account for overstayal at site for the work executed beyond contractual period. In the subsequent letter dated 21.5.2004, again the petitioner has given a similar undertaking. Later on, vide communication dated 3.2.2006, it was stated by the petitioner to the following effect:- “As discussed the case for more extension pertaining to work on account of various reasons stands submitted to competent authority. We will not claim anything extra beyond the quoted rates for overstay if extension is granted to us.” After considering the aforesaid communications, the Senior Executive Engineer of the respondents vide his letter dated 3.9.2007, intimated to the petitioner to the following effect: “Refer to your letter No. HCI/Hydel/Ropar/ 2007/5407 dated 22.3.07 vide which it was requested to grant the extension in time upto 20.12.05 for the completion of subject cited work. The case has been considered by competent authority and extension in time has been granted upto 20.12.05 without levy of penalty and without any financial liability to Board.” Admittedly, payment in pursuance of the final bill was Arbitration Case No. 17 of 2009 [3] released on 5.11.2007. It was on 15.1.2008, the petitioner raised a dispute claiming escalation charges @ 4% on account of increase in basic prices of material, labour and taxes/duties payable as stipulated in price variation clause. The said claim of the petitioner was rejected vide letter dated 24.7.2008 by the Board on the ground that escalation is not applicable in the extended time period. Thereafter, the petitioner has invoked the jurisdiction of this Court. The only dispute between the parties is whether the petitioner can claim amount of escalation in costs of inputs when the petitioner has sought extension in time for completion of the work vide the letters aforesaid. It is contended by the learned counsel for petitioner that whether the petitioner is justified in seeking extension in time for completion of the work and/or whether it is entitled to escalation charges, is the subject, which falls in the exclusive jurisdiction of the Arbitration. Learned counsel for the respondents has relied upon the Clause 1.8 of the agreement, which, inter-alia, reads as under:- “....Price adjustment shall be applicable only for the work which is carried out within the stipulated completion period including authorised extension thereof for reasons not attributable to the Contractor.” On the other hand, on behalf of the respondents, it is argued that since the petitioner has undertaken that it shall not claim anything on account of overstay at site and the extension granted to it was with the specific condition that such extension would be without any Arbitration Case No. 17 of 2009 [4] financial liability to the Board, therefore, the matter in respect of the claim of escalation charges is not arbitral. I have heard learned counsel for the parties at length and am of the opinion that the dispute between the parties does not require any adjudication by an Arbitrator. The communications appended by the respondents as Annexure R.2 are clear and categorical that the petitioner has undertaken that it shall not claim anything on account of overstay at site for the work executed beyond the contractual period. The argument that the petitioner is not claiming anything for overstay at the work, but for increase in the cost of inputs and, therefore, the said claim does not fall within the undertaking given vide the aforesaid communications, is not tenable. All claims, which arise on account of extension of time in completion of the contract work, can not be raised by the petitioner. It is the petitioner, who has committed default and sought extension in completion of the project as is apparent from the decision communicated. The delay on the part of the petitioner in completion of the work, cannot enure for the benefit of the petitioner so as to claim escalation in the inputs in terms of Clause 1.8 of the agreement. This claim is also not maintainable in view of the undertaking given by the petitioner in the communications referred to above. Learned counsel for the petitioner has sought to raise an argument that extension sought by the petitioner was not on account of default of the petitioner but on account of the acts of the respondents Arbitration Case No. 17 of 2009 [5] and therefore, such dispute is required to be decided by the Arbitrator. However, such argument is not tenable. The petitioner has not disputed the undertaking given by it vide the communication referred to above, that it would not claim anything on account of overstay at site. Having so undertaken, the petitioner cannot be allowed to approbate and reprobate and to raise a claim on account of escalation consequent to extension in time for completion of the contract work granted by the respondents on the ground that there shall not be financial liability on the respondents while granting extension in time. In view of the above, I do not find any merit in the present petition. Consequently, the present petition is dismissed. [ HEMANT GUPTA ] JUDGE 7.10.2009 ds