1 S.B. Arbitration Application No.61/2006 CEO, Sanwaliyaji Mandir Mandal vs MSK Projects (India) Ltd. DATE OF ORDER : 7.7.2009 HON'BLE MR. PRAKASH TATIA. Mr.T. Gupta, for the applicant. Mr.RK Charan, for the respondent. <><><> Heard learned counsel for the parties. The applicant Chief Executive Officer, who was appointed for implementing and completion of Hospital Project Shree Sanwaliyaji Mandir Mandal of District Chittorgarh has moved this application under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act of 1996) for appointment of arbitrator. Brief facts of the case are that a notice inviting tender was issued on 14.2.1997 for construction of 250 bedded “Shri Sanwaliyaji General Hospital” at Chittorgarh at the estimated cost of Rs.3 crores. The 50% of the said cost was to be borne by Mandir Mandal and 50% of the total amount by the State Government. The respondent submitted its offer in response to the NIT dated 14.2.1997 and after negotiation, contract was awarded to the 2 respondent at 11.97% above the “G” Schedule of rates on 23.5.1997. It is stated by the applicant that no formal agreement was executed, however, date of commencement of work was agreed to be 15th June, 1997 and work should have been completed by 14th June, 1999. It appears that dispute arose after some time and by that time, the applicant also paid a sum of Rs.2,30,29,807/- upto 6th July, 1998 to the respondent-contractor. According to the applicant for this amount no fund was contributed by the State Government. After some dispute it appears that respondent did not get the performance Bank Guarantee renewed beyond 20.6.2000 and later on abandoned the contract work and ultimately terminated the contract on 4.8.1999. The respondent, thereafter, raised a claim of Rs.1,26,35,996/- against Mandir Mandal and he then submitted an application to the Indian Council of Arbitration, New Delhi for adjudication of dispute through arbitration. The applicant was advised to file a civil suit for recovery of its claim and from the copy of the suit which has been shown by learned counsel for the applicant it appears that the suit for recovery of Rs.68,31,146/- was filed in the court at Chittorgarh by the applicant. In this 3 application filed under Section 11 of the Act of 1996, the applicant stated that the said suit become infrcutous because of the objection of the respondent raised under Section 8 of the Act of 1996, but from the order dated 29th August, 2003 shown by learned counsel for the applicant, the suit had not become infrcutous but the objection of the respondent under Section 8 of the Act of 1996 was allowed and the civil court held that the mater is pending before the Indian Council of Arbitration and, therefore, the applicant- petitioner's suit is liable to be dismissed and the civil court dismissed the suit of the applicant-petitoner. However, while dismissing the suit, the civil court in its judgment dated 19th Nov., 2003 observed that both the parties shall have right to get the matter adjudicated in the pending arbitral proceedings,which appears to be pending at that time before the Indian Council of Arbitration, New Delhi. The applicant being aggrieved against the order dated 19th Nov., 2003 preferred CMA No.03261/2004 before this Court and said CMA being barred by time was dismissed by this Court vide order dated 16.2.2005 after rejecting the petitioner's-applicant's application filed under Section 5 of the Limitation Act. The applicant has placed on record the cop of the communication dated 15th March, 2005 sent by Indian 4 Council of Arbitration to the applicant conveying that though the arbitral proceedings initiated by the respondents, but inspite of giving several opportunities, the applicant-respondent did not deposit the requisite amount of fees and, therefore, the matter has been closed by the Indian Council of Arbitration. However, it appears that subsequent to that the Indian Council of Arbitration revived the arbitral proceedings and gave a notice to the applicant dated 6th Sept., 2005 (Annex.2). Both the counsel are not aware what happened to that arbitral proceedings and inspite of grant of time by this Court they failed to give any fact about any proceedings taken by the Indian Council of Arbitration excepting submitting that as per their information, the arbitral proceedings is pending. This bald statement is also only after saying that they do not have specific knowledge of the fact if pending then at what stage it is. Learned counsel for the respondent even stated that he had no knowledge whether arbitral proceedings is pending before the Indian Council of Arbitration as his client has not contacted him inspite of efforts of learned counsel for the respondent. Be it as it may be, it will be worthwhile to quote the clause of arbitration which is clause 24.1 and 24.2 and the same are as under: - 5 “24.1 If the contractor believes that a decision taken by the Engineer was either outside the authority given to the Engineer by the contract or that the decision was wrongly taken, the decision shall be referred to the Adjudicator within 14 days of the notification of the Engineer's decision 24.2(1) Settlement SETTLEMENT OF CLAIM SHALL BE DONE BY THE CHIEF EXECUTIVE OFFICER, SHREE SANWALIYAJI MANDIR MANDAL MANDPHIYA. The arbitrator shall be conducted in accordance with the provision of Indian Arbitrator Act of 1940 or any statutory modifications of settlement of claims above 50,000/-. The Arbitrator shall state his reasons in passing the awards. (2) Settlement of claims above Rs.50,000/- and all claims of above Rs.50,000/- are to be settled by a civil court of competent jurisdiction by work of civil suit.” A bare perusal of sub-clause (2) of clause 24.2 reveals that any dispute beyond pecuniary limit of Rs.50,000/- has been kept outside the purview of arbitration clause and it has been specifically provided that any claims above Rs.50,000/- shall be settled by civil court of competent jurisdiction by way of civil suit only. Admittedly, the claim of both the parties are beyond that limit of Rs.50,000/- and, therefore, I do not find any ground for appointing arbitrator 6 under Section 11 of the Act of 1996 when the parties agreed to exclude the dispute from the purview of the arbitral proceedings by making a pecuniary limit by themselves by entering into a specific contract that the dispute with regard to any claim above Rs.50,000/- shall be outside the scope, purview and jurisdiction of the arbitrator. Hence, this arbitration application is hereby dismissed. (PRAKASH TATIA),J. cpgoyal/- 7