IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN MONDAY, THE 26TH JULY 2010 / 4TH SRAVANA 1932 AS.No. 265 of 1998(A) -------------------------------- OS.451/1996 of SUB COURT, NEDUMANGAD .................... APPELLANT(S): PLAINTIFF -------------------------------------- M/S. GRAND CONSTRUCTION COMPANY (FIRM), HEAD OFFICE, SITARA, ASRAMAM RESIDENCY ROAD, KOLLAM 2. BY ADVS. SRI.B.KRISHNA MANI SRI.V.PREMCHAND SRI.K.SUBASH CHANDRA BOSE RESPONDENT(S): DEFENDANTS ------------------------------------------------ 1. UNION OF INDIA, REP.BY THE CHAIRMAN & SECRETARY, DEPARTMENT OF SPACE, I.S.R.O., ANDAREEKSHA BHAVAN, NEW BEL , BANGALORE 54. 2. THE ENGINEER-IN – CHARGE, DEPARTMENT OF SPACE ,CIVIL ENGINEERING DIVISION, P.S.L.V. PROJECT, VALIYAMALA, NEDUMANGAD, THIRUVANANTHAPURAM. 3. THE CHIEF ENGINEER, DEPARTMNET OF SPACE, I.S.R.O. ANDAREEKSHA BHAVAN, NEW BEL ROAD, BANGALORE 54. ADV. SRI.MOHAN IDICULLA ABRAHAM SRI.K.RAMAKUMAR, SENIOR ADVOCATE FOR SRI.T.P.M.IBRAHIM KHAN,ASST.S.G OF INDI FOR R THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 26/07/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: tss M.N. KRISHNAN, J. = = = = = = = = = = = = = = = A.S. NO. 265 OF 1998 = = = = = = = = = = = = = = = Dated this the 26th day of July, 2010. J U D G M E N T This appeal is preferred against the judgment and decree passed by the Subordinate Judge, Nedumangad in O.S.451/96. The said suit was filed with a prayer to file agreement and to direct the 3rd defendant to appoint an arbitrator within a specified time and in case of failure to do so, request the Court to appoint arbitrators consisting of two members one by either side. The trial Court by referring to clause 25 held that request for arbitration is made beyond the period of 90 days and therefore after the issuance of the final bill and therefore under the clause arbitration cannot be done. It is challenging that decision the present appeal is filed. A.S. 265 OF 1998 -2- 2. Heard the learned counsel appearing for both the sides. Clause 25 of the agreement is extracted as follows. “Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions herein before mentioned and as to the quality of workmanship, or materials used on the work, or as to any other question, claim, right, matter or thing what- so-ever, in any way arising out of or relating to the contract design drawings specifications estimates instructions orders or these conditions or otherwise concerning the works or the execution or failure to execute the same, whether arising during progress of the work or after the completion or abandonment thereof shall be referred to the sole A.S. 265 OF 1998 -3- arbitration of the person appointed by the Chief Engineer, Department of Space, Bangalore............ It is also the terms of the contract that if the contractor do not make any demand for arbitration in respect of any claim in writing within 90 days of receiving the intimation from the Department that the bill is ready for payment, the claim of the contractor will be deemed to have been waived and absolutely barred and the Government shall be discharged and released of all liabilities under the contract in respect of those claims.” 3. Now the contention raised by the defendants in this case is that a final bill has been prepared and sent and since the arbitration request has not come within 90 days from 2.2.87 (the date of final bill according to the defendants) by virtue of clause 25 it cannot be A.S. 265 OF 1998 -4- referred to arbitration and the right of the contractor should be deemed to have been waived by the contractor and therefore he is not entitled to any relief. The learned counsel for the appellant would submit on the contrary that Ext.B2 is not a final bill. He does not admit it as a final bill and in support of the same he would submit that there are many communications between the plaintiff and the defendants regarding the correctness of the amount etc. and regarding the transaction. So here is a case where the plaintiff does not admit about the fact that Ext.B2 is a final bill. As per the provisions of the agreement unless it has become a final bill the question of 90 days limitation for preferring a request for arbitration may not arise at all. It is in this background we have to analyze the case. The matter has come up A.S. 265 OF 1998 -5- before a Division Bench of the Delhi High Court in the decision reported in Jai Chand Bhasin v. Union of India and another(AIR 1983 Delhi 508). The Court held that when there is a dispute that the bill has not become final and that itself is a dispute it is for the arbitrator to decide that question and therefore that point also is a question that arises for determination by the arbitrator. The Delhi High Court in the decision reported in Ram Nath Mehra & sons v. Union of India(AIR 1982 Delhi 164) had taken a decision that the question whether the time has elapsed or not is a question to be decided by the Court and not by the arbitrator. But the Division Bench of the Delhi high Court in the decision reported in AIR 1983 Delhi 508 held that the said view expressed in AIR 1982 Delhi 164 is not correct and has overruled the same. A.S. 265 OF 1998 -6- The Division Bench held that, “We would, therefore, answer the question by holding that it is for the arbitrator to decide whether in fact the applicant had or had not made a demand for arbitration within 90 days of receiving the intimation from the government that the bill is ready for payment, and in the circumstances whether the claim should be deemed to have been waived and the government is discharged and released from its liability. These are not matters which are within the purview of the Court when dealing with the application like the present under section 20 of the Act.” Therefore the Court set aside the order directing the agreement to file in Court and the matter was directed to be referred to the A.S. 265 OF 1998 -7- arbitration in terms of the arbitration agreement. Now one of the decisions that may be cited will be Wild Life Institute of India, Dehradun v. Vijay Kumar Garg (1997 (10) Supreme Court Cases 528. It was a case where the contractor accepted it as a final bill and received the payment regarding the complete satisfaction. Under those circumstances the Hon'ble Supreme Court held that the term as per the clause had come into force and there should be a waiver by the contractor and therefore not entitled to any relief. 4. So far as this case is concerned there is no such admission and it is the specific contention that the bill is not final and it is attempted to be established by producing the subsequent communications between the defendant and the contractor. Therefore the said decision A.S. 265 OF 1998 -8- will not come to the rescue. So according to me now whether there is any waiver as contended by the department is also a matter which has to be considered by the arbitrator for the reason that it is also arbitrable. If the answer to that question is against the contractor it will go against the contractor. Therefore the judgment and decree of the lower Court are set aside and the appeal is allowed and a direction is given to file the agreement before the Court, if not already filed and the matter be referred to the arbitration in terms of the arbitration agreement. The trial court is directed to act accordingly in accordance with law. I make it very clear the appointment shall be as per the terms of the agreement and only on failure to do so the Court shall appoint persons after collecting the panel from both the parties. It A.S. 265 OF 1998 -9- has also to be made further clear when the matter goes to the arbitrator the parties can raise the contentions which they are entitled to raise under the terms of the agreement. As per the memo filed by the respondent, at present the authority authorised to appoint the arbitrator is Director, Vikram Sarabhai Space Centre (V.S.S.C), Trivandrum-695022. So the Court below has to direct him to appoint the arbitrator. Parties are directed to appear before the trial court for further directions on 7.9.10. Sd/- M.N. KRISHNAN, JUDGE. ul/- [true copy] P.A. To Judge. A.S. 265 OF 1998 -10- M.N. KRISHNAN, J. = = = = = = = = = = A.S. No. 265 OF 1998 = = = = = = = = = = = J U D G M E N T 26th July, 2010.