IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision : 23.02.2011 Arb. Case No.6 of 2006 Ess Vee Conractors Pvt. Ltd. ...Petitioner Versus Sir Chhotu Ram Coop. Group Housing Society Ltd. ...Respondents and another CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA Present : Mr. D.K.Singhal, Advocate, for the petitioner. Mr. B.R.Mahajan, Advocate, for the respondents. HEMANT GUPTA, J. (ORAL) The petitioner has sought appointment of an Arbitrator in respect of disputes between the parties arising out of an Agreement dated 16.06.1999, whereby the petitioner was given contract for construction of flats on Plot No.GH-8A situated in Sector-20, Panchkula. The petitioner relies upon completion certificate Annexure A-5 on behalf of the Architect, under whose supervision, the petitioner has completed the construction of the flats. After the said completion certificate, the Bank guarantee furnished by the petitioner has been released on 25.04.2001. The petitioner has submitted final bill claiming a sum of Rs.16,85,303/- on 17.01.2001. Thereafter, on 07.07.2001, the petitioner sought the total amount of Rs.54.44 lacs alongwith interest at the rate of 24% per annum. It was on 19.09.2001, the petitioner sought the Arb. Case No.6 of 2006 appointment of an Arbitrator to resolute the issue between the parties arising out of the agreement dated 16.06.1999, wherein the petitioner claimed a sum of Rs.54,43,861.05. By subsequent communication dated 11.02.2002, the petitioner communicated the names of two Arbitrators for consent of the respondent, but since no consent came from the respondent, the petitioner invoked the jurisdiction of the Civil Court for appointment of an Arbitrator. The Civil Court returned the petition for presentation before the Court of competent jurisdiction on 21.09.2005. It is, thereafter, the present petition has been entertained by this Court. In reply, it has been asserted that the petitioner has not got certificate from the Architect, certifying the amount payable to the petitioner as per Clause 40 of the Agreement. It is further contended that in terms of Clause 40, all disputes and differences of any kind can be raised within 28 days of the issuance of the final certificate and since the petitioner has not complied with the terms of the Agreement, there is no dispute between the parties, which can be referred for decision by an Arbitrator. The relevant Clauses i.e. 25, 40 & 49 of the Agreement read as under: “25. CERTIFICATE OF VIRTUAL COMPLETION: The works shall not be considered as completed until the architect has certified in writing that they have been virtually completed and all the defects removed. Defects Liability Period shall commence from the date of such certificates. Such certificate of virtual completion shall not be issued until the contractor shall have cleared the site of all malba, removed dirt and dust from the wood work and floors and cleaned all doors and windows, ventilators, paint etc. as specified in clause 45. 40. CERTIFICATE AND PAYMENTS: …. And when the works have been virtually completed and the architect shall have certified in writing that they have been completed, the contractor shall be paid by the employer in accordance with the certificate to be issued by the architect the sum of money named in the appendix as first instalment after virtual completion being a part of the said total 2 Arb. Case No.6 of 2006 retention money. After expiry of six months from the date of virtual completion the contractor shall be paid on a certificate to be issued by the architect the second instalment after virtual completion also being a part of the total retention money and the contractor shall be entitled to the payment of the final balance in accordance with the final certificate to be issued in writing to the contractor on account of the works executed by architect at the expiration of the period referred to as the Defects Liability Period in the appendix hereto from the date of virtual completion or as soon after the expiration of such period as the works shall have been finally completed and all defects made good according to the true intent and meaning hereof whichever shall last happen, provided always that the issue by the architect of any certificate during the progress of the works or after their completion shall not relieve the contractor from his liability under clause 2 and 24 nor relieve the contractor from his liability in case of fraud, dishonesty or fraudulent concealment relating to the works or materials or to any material dealt with the certificate and in case of all defects and insufficiencies in the works or materials which a reasonable examination would not have disclosed. No certificate of the architect shall be itself be conclusive evidence that any works or materials to which it relates are in accordance with the contract. 49. SETTLEMENT OF DISPUTE BY ARBITRATION: All disputes, differences, of any kind whatever arising out of or in connection with the contract or the carrying out of the works (whether during the progress of the works or after their completion and whether before or after the determination, abandonment or breach of the contract but not later than twenty eight days after the architect has issued the final certificate as provided in clause 40 of this agreement) shall be referred to and settled by the Arbitrator appointed with the mutual consent of the parties under dispute (i.e. client and contractor) who shall state his decision in writing. Such decision may be in the form of a final certificate or otherwise. The decision of the architect with respect to any of the accepted matters shall be final and without appeal as stated in the proceeding clause. But if either the employer or the contractor be dis- satisfied with the decision of the architect on any matter, question or dispute of any kind (except of the ACCEPTED MATTER) of as to the withholding by the architect of any certificate to which the contractor may claim to be entitled, then and in any such case either party (the employer, or the contractor) may within twenty eight days after receiving notice of such decision give a written notice to the other party through the architect requiring that such matter in dispute be arbitrated upon. Such written notice shall specify the matters which are in dispute and such dispute or 3 Arb. Case No.6 of 2006 differences of which such written notice has been given shall be and is hereby referred to the arbitration and final decision of a single arbitrator.” The petitioner has relied upon completion certified issued by the Architect dated 18.04.2001. The completion certificate reads as under: “COMPLETION CERTIFICATE I do hereby certify that the construction of SIR CHHOTU RAM COOP. GROUP HOUSING SOCIETY LIMITED has been supervised by me and has been completed to my satisfaction in accordance with the sanctioned plans (with minor changes pertaining to the width of the balconies, omission of one stair adjoining the ramp and the slight change in the position of the lift), that the workmanship and whole of the materials used are good, that no provision of Haryana Urban Development Authority (Erection of Building) Regulations, 1979 and no requisition made, conditions prescribed or order issued thereunder has been transgressed in the course of the work, that there is no change in the design of the flats duly sanctioned by HUDA. City : Panchkula Sector : 20 Plot No. : GH-8A Particulars of : Stilt Floor, typical six Works floors, ramp and lift block. for KANT & ASSOCIATES Dated; 18.04.2001 Sd/- 18042001 (SURYA KANT ARCHITECT) Place: Chandigarh (CA-77-4032)” The said completion certificate is a certificate in terms of Clause 25 of the Agreement i.e. of virtually completing the construction. Therefore, in terms of Clause 40 of the Agreement, the Contractor is required to be paid by the Employer in accordance with the certificate issued by the Architect. Appendix ‘A’ of the Contract Agreement contemplates the payments to be made in two instalments after virtual completion i.e. first at the time of issue of occupation certificate and; second at the time of expiry of Defects Liability period. Since the petitioner has been granted completion certificate, therefore, in terms of Appendix ‘A’, the petitioner became entitled to release of first instalment of payment. 4 Arb. Case No.6 of 2006 Clause 49 of the Agreement contemplates that all disputes, differences of any kind whatever arising out of or in connection with the contract or carrying out of the works or after their completion and whether before or after the determination, abandonment or breach of the contract, but not later than 28 days after the architect has issued the final certificate as provided in Clause 40 of the Agreement, shall be referred to and settled by the Arbitrator appointed with the mutual consent of the parties. After the completion certificate was issued on 18.04.2001 and on failure of the respondent to make payment of the first instalment, the petitioner has sought appointment of an Arbitrator, which has not been appointed. Therefore, all the disputes between the parties are required to be resolved by an Arbitrator including in respect of the interpretation of the Agreement dated 16.06.1999. Consequently, Shri N.K.Jain, District Judge (Retd.) resident of H.No.879, Sector-12, Panchkula is appointed as an Arbitrator to adjudicate upon all the disputes arising between the parties. The Arbitrator shall be free to fix his fee in consultation with the parties on the first date of hearing. 23.02.2011 (HEMANT GUPTA) Vimal JUDGE 5