1 S.B. CIVIL MISC. ARBITRATION APPLICATION NO.13/2007 M/s. G.R. Agarwal Builders & Developers Ltd. Vs. The Sate of Rajasthan & Ors. DATE OF ORDER : 28.3.2008 HON`BLE MR. MANAK MOHTA, J. Ms. Rekha Borana, for the applicant. Mr. Deepak Choudhary, Addl. GA for respondent No.1 Mr. R.L. Jangid, for respondents No.2 and 3 Heard learned counsel for the parties in respect of application filed under Section 11 read with Section 10 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act of 1996') for the appointment of Arbitrator. It was submitted by the learned counsel for the applicant that the applicant is a Company registered under the Companies Act, 1956 and is “AA” class contractor registered with Public Works Department. The applicant-Company was awarded work-contract vide order No.6086-6104 dtd. 10.1.2003 (Annex.1) by the government of Rajasthan amounting to Rs.8,69,23,867/- for “Widening and strengthening of various roads in Jodhpur city” (Package No.JOD/ST/05) falling under the jurisdiction of the Superintending Engineer, R.U.I.D.P., PIU, Jodhpur (non-applicant 2 No.2) and an agreement No.18 dtd. 10.1.2003 in this respect was executed between the parties having Arbitration Clause 21.4 in it which provides that in case any sort of dispute arises in respect of said contract or execution of works related to the said agreement, the matter will be resolved through arbitral proceedings and certain procedure was provided in the agreement itself. A copy of the work-order awarded to the applicant has been annexed as Annex.1. It was further stated that the work was to commence from 10.1.2003 and was to be completed by 09.1.2004, however, the applicant completed the work finally by 31.10.2004 after a delay of 296 days, which was accepted by the Department without any demur. It was further submitted that after satisfactory completion of work, the applicant-contractor demanded his dues amounting to Rs.3,58,63,298.54 plus interest @ 18% per annum but the concerned Department did not make payment, thus, a dispute arose between the parties. There is a procedure of raising dispute in the agreement and the applicant moved accordingly. The provision of moving dispute is provided in Clause 21.1 onwards in the agreement, as mentioned under :- “Clause 21 : Disputes Delete Clause 21 in its entirety and replace it with the following : 3 21.1 Engineer's decision : If any dispute of any kind whatsoever arises between the “Employer” and the Contractor in connection with, or arising out of, the contract or the execution of the works, whether during the execution of works or after their completion, and before or any repudiation or other termination of the contract, including any dispute as to : a)the meaning of the specifications, designs, drawings and instructions herein before mentioned, b)the quality of the workmanship or materials, c) any opinion, instruction, determination, certificate or valuation of the 'Engineer', or d)any other question, claim, right matter or anything whatsoever in any way arising out of or relating to the contract, design, drawings, specifications, estimates, instructions, conditions, orders or the failure to execute the same. The dispute shall, in the first place, be referred in writing to the Engineer who has jurisdiction over the Works specified in the Contract, with a copy to the other party. Such reference shall state that it is made pursuant to this Clause 4 not later than 28 (twenty eight) day after the day on which he received such reference the Engineer shall give written notice of his decision to the Employer and the Contractor. Such decision shall state that it is made pursuant to the Clause. Subject to the other forms of settlement hereinafter provided, the Engineer's decision in respect of every dispute or difference so referred shall be final and binding upon the Contractor and the Employer. Unless the Contract has already been repudiated or terminated, the Contractor shall, in every case, continue to proceed with the Works with all due diligence and the Contractor and the Employer shall give effect forthwith to every such decision of the Engineer until or unless the same shall be revised in an amicable settlement or as hereinafter provided.” 21.4 Arbitration : Any dispute in respect of which : a)the decision, if any, of the Engineer has not become final and binding pursuant to sub- clause 21.1, and b)amicable settlement has not been reached within the period stated in sub-clause 21.3, shall be finally resolved by arbitration. The arbitration will take place in accordance with 5 the Indian Arbitration and Conciliation Act, 1996 and the arbitration will take place at Jaipur. Arbitration may be commenced prior to or after completion of the Works, provided that the obligations of the Employer, the Engineer and the Contractor shall not be altered by reason of the arbitration being conducted during the progress of the Works.” It was further submitted that on completion of work, the applicant wrote letter dated 13.4.2005 (Annex.3) and reminder dated 2.5.2005 (Annex.4) to the Superintending Engineer, RUIDP, PIU, Jodhpur (non-applicant No.2) stating that they have claims against the Department of Rs.3,58,63,298.54 with interest @ 18% per annum from 13.4.2005 till payment and requested for giving “decision” under sub-clause 21.1 of Section IV-”CONTRACT DATA”. It is stated that decision was conveyed to the applicant on 12.5.2005. The concluding para of the decision communicated vide office letter No.RUIDP/JOD/PIU-II/585-88 dated 12.5.2005 (Annex.5) reads thus : “Hence, as per the above contentions, out of all the claims submitted by you, only the final bill would be considered as per the time extension and variations to be approved from 6 the competent authority and all other claims are not acceptable.” It was further submitted that thereafter the applicant again moved to the concerned authority as provided in above- mentioned Clause but to no avail. Attention was drawn towards Annex.7, 8, 9 and 10, thereafter ultimately he gave notice on 20.2.2006 (Annex.10) to the authority to proceed as per agreed terms provided in the agreement and made a request to appoint arbitrator to resolve the dispute but no heed was given, therefore, this application was moved in the court to appoint independent arbitrator. A reply to the application was submitted on behalf of respondents No.2 and 3 and it was submitted that the claim made by the applicant was neither justified nor tenable in the eye of law. The action of the applicant under Clause 21 of the contract agreement by all means was stated to be pre-mature and not entertainable. It was further submitted that the alleged claims like loss of profit etc., do not come within the ambit of the dispute mentioned in the agreement. It was further contended that the decision of the engineer is not final. Disputes have been raised but they are pending for taking decision, therefore, the application 7 is pre-mature and is not maintainable, thus, a prayer was made to dismiss the application. During the course of arguments, the learned counsel for the parties reiterated their submissions made in the pleadings. I have heard both the learned counsel for the parties and considered the rival contentions advanced before me. I have gone through the material available on record. After considering the contentions and from the bare perusal of the record it is the admitted position between the parties that a work-contract for the aforesaid work was given to the applicant and an agreement was executed in this respect between the parties. Further, from the perusal of the material placed by the parties and the submissions made thereon, the applicant has raised his claims and those have not been satisfied. Thus, dispute exists between the parties and for resolving those dispute provision of arbitration Clause is there in the agreement itself, which is prima facie established and that has not been disputed. It is also borne out from the record that the applicant had moved step to step for redressal of his disputes through 8 arbitral proceedings as provided in Clause 21.4 of the said agreement but despite lapse of reasonable time after giving notice to appoint arbitrator, the matter has not been referred to Arbitrator, which was required to be referred to. The contentions placed by the Government Advocate are having no force in presence of the documents submitted by the parties. The Engineer's decision is final and that has been conveyed to the applicant, therefore, the main contention of opposite party that the applicant is pre-mature, is not sustainable, thus, an independent Arbitrator is required to be appointed to resolve the disputes between the parties. In the net result, the application is allowed. Shri Hon`ble Justice Shri M.C. Jain, Former Chief Justice of Delhi High Court and Former Sr. Judge of this Court is hereby appointed as the Sole Arbitrator to resolve the dispute between the parties. The parties are free to raise their dispute, claim, counter-claim etc., before the Arbitrator. It is further directed that the initial expenses of Rs.10,000/- shall be deposited by the applicant with the Arbitrator so that arbitral proceedings may start. The deposit of initial amount will be subject to final determination of fees. The fee of arbitrator and the cost of arbitration shall be determined by the 9 Arbitrator himself and that shall be borne equally by both the parties. The Arbitrator may be informed accordingly. The application stands disposed of. (MANAK MOHTA) J. Sanjay/-