I N T H E M A T T E R O F - A P P L I C A N T A P P L I C A T I O N U N D E R C O N C I L I A T I O N S E C T I O N - Ik / A C T 1 ' 1 6 ) O F 1 9 9 6 . A R B I T R A T I O N A N D N 1 N N , 9 % $ W ‘ “ a v i é a w Q ‘ e ° ‘ { \ m . . . . . . u j i B a g a d e , r e s i d e n t o f R a l p u r o p P o s i t e ' M L A C G R e s t H o u s e , T a g o r e N a g a r , m ° f ° g . I ? “ N O N - A P P L I C A N T R A I P U R D E V E L O P M E N T A U T H O R I T Y t h r o u g h ~ 'I ( I ) A u t h o r i t y , T h e C h a i r m a n , R a i p u r D e v e l o p m e n t N e a r B a j r a n g B h o g B h a n d a r , R a i p u r C . G . ( 2 ) T h e C h i e f E n g i n e e r , R a i p u r “ D e v e l o p m e n t A u t h o r i t y , N e a r B a j r a n g B h o g B h a n d a r , R a i p u r C . G A HIGH COURT OF CHHATTISGARH AT BILAspUK M.C.C. No. 214/2008 M/s. Vljeta CSonstruction Co. Vsrsias Raipur Deveiopmenfc Authority M.C.C. Ho. 218/2005 M/s. Vljeta Constructlon Co. Vfisrsiss Raipur Developmeat Authority M.C.C. No. 219/200S M/s. Vljeta Constructlon Co. Versus Raipur Development Authorlty Order post forfij -1-2007 Sd/- DhirendraMishra Judge r HIGH COURT- OF CHHAT-TISGARH AtBILASPUR BI.C.C, »o.214/30Q5 M/s. Vijeta Constructlon Co. Versus Raipur uevelopment Authority M.C.C. Ko. 218/2005 M/s. Vijeta Consteuction Co. yersas Raipur Developmeat Autliority M.C.C. No. 219/200S M/s. Vijeta Constrnction Co. Versas Raipur Development Authority Present: ShriV.R. Rao, Sr. Advocatewith ShriA.K. Mishra, Adv. for the applicant Shri Ashish Shrivastava, Advocate for fhe respondents. O RDB R Per Dhirendra Mishra, J. The above three applications under Section 11(6) of ArbitTation aad Conciliation Act, 1996 are being disposed of together by this common order as the dispute ansing out of the contract agreements is between fhe sauie parties and coininon questions oflaw are iavolved for adjudication ofthese apptications. 2. Contract agreeinents thTee in number were executed by the appUcaut with non-applicant authonly for construction works of flats at Katora Talab, Raipur. Tinie aUowed for completion of work was 24 inonUts iucludiag raiuy season. Time was to be reckoned fr&in the date of issue of work order. Non-appUcaat Raipur Developinent Authority was inerged with Raipur Municipal Corporation, Raipur with effect from 13-2-2001, however it was again restored back as autonomous body with effect froin 26-10- 2004. T'hough ttme aUowed for coiapletion ofwork was 24 inontbs but it prolonged for 7 years for various latches and breaches of contract comiuitted by the non-applicants. The applicant raiscd a claim before the non-applicant in the year 2004. However, the claiui preferred was not considered. The agreeinent contains Arbitration Clause 29 and accordiagfy the Superintendiag Eiigiaeer of fhe non-appUcant was requested to enter upon the reference and settle fhe disputes, howeVer, fhe above request was neglected. The applicaut preferred appeal before the Cominissioner of non-applicaut, however the appeUate authority also did not take aay action on his appeal, ultunately the appUcaat requested vide its letter of Annexure A-7 for constitution of Arbitral Tribunal aad fhe same was refused by the non-applicaut authority vide Annexure A-8. Hence fbis appUcation for appomtment ofa Arbitral Tnbunal for settleinent of the disputes arising out of fhe contract agreeiacnt has been filed. 3. The non-applicants authority in their identical repUes to the above tnree appUcations admitted execution of the agreeinent which provides Arbiteation Clause 29 for fhe purposes of setuement of disputes, however it was denied that fhe work contract prolonged for inore than 7 years on account of latches and breaches of contract coiniiutted by the non-appUcazit, on fhe contrary it has been atleged fhat fhe delay occasioned on account of carelessness aad failure on the part ol the applicaat coinpany as they bave failed to arrange labourers aad fhe raw luaterials for construction work withiu tune. It was subnutted fhat for this reason tbe appUcaat compauy vide fheir coiamuaication dated 25- 10-2004 had undertaken that fhey shalt not claiin aayfhing ia future for delay on their part It has been further contended that the appUcant Conipany vide letter dated 11th March, 2005 of Annexure K-4 which accoiiipatued his own affidavit dated 10th March, 2005 of Annexure R-3 received fuU aud final payment agauist fiual bffl to his fuU satisfaction witfa a farfher declaration fhat henceforth tiie applicant Conipany shaU not be niakiug any clauu against fhe non-applicaat authority in relation to the above work. It has been further stated that as per the procedure prescribed in Clause 29 of fhe agreeinent, the appeUate authority - Chamnan of Raipur Development Authority was reqtured to give his decision wifhin 90 days from fhe date ttie appeal is preferred aad if any party is unsatisfied with fhe decision, he can refer such disputes for arbita^ation by an Arbitration Board to be constituted by the State Goveniment consisting of three meinbers. However ia fhe instan^t case, uo such request was inade by the applicaat Company to the State Goveminent for constitution of the ArbitFation Board and iu view of the above, the instaat application caanot be entertamed as ttie same has been preterred wittiout complyiag with the procedure prescribed iu Clause 29 of fhe Agreeinenl. 4. Leamed coun.sel for fhe applicant subinits that so far as the coinpUance uuder Clause 29 of the Agreeinent is concemed, the applicaat Coiapauy vide document of Aruiexure A-7 addressed to fhe Chairuian of the non-appUcant had calted upon fhe non- applicaat to uubnn fhe name of their noniinee as Arbitrator so that ttie ArbitTator appoiated by the parties could select presidiag ofBcer, however this request was categoricaUy declined vide Aiuiexure A-S aud in fhe aforesaid circuinstauces, the appUcaat coiupaay had no other option except to file tbese appUcations for appointiaent of Arbita-ator. Wifh respect to the second subinission of fhe non-applicaat that the appUcant Coiapaay has received payment agaiast final bffl after accordiug fuU satisfaction aad no claun is conceraed, it is argued fhat the applicant Coiupaay was inade to swear the afHdavit under duress as he was iu dire need of inoney aad the non-appUcants authority insisted that amount payable against securily deposit aad eamest money aud ofher payments could be paid to the Compaay onfy when he accords luU aad final satisfaction and furfher issues no claun certificate. Reliance is placed on decisions in the inatter of Touwi '•fabrlcators -v- Kwcisthan. Urban Infrcistrucbu.re Seveloement Prolect, Jccumr reported in AIR 3006 Rmasthcm. 237 and KamsharaH eina, jS€vmd<aia.l Dmi -v- Bindustem Steel Ltd. reported iu 1980 JLJ 6S9 aad it is contended that Arbitration Clause ia a contract does not coine to aa end inerely because perfoEinaiice of the contract has coine to aa end and fhe same stffl. survives for adjudication ofdisputes arising under fhe agreeinent. Accord aad satisfaction does not put an end to fhe arbitration clause. The question "whether fhere has been a full and fiual settteinent of the claim under fhe contract" is itself a dispute arising froin or in relation to or in coiiaection with the contiact, wtuch cau be decided by the arbitrators. 5. On the ofher hand, leamed coujisel for the non-applicants subinits that the applicant Couipauy has preferred these applicatioas without inakuig a request to ftte State Govemment tbr constitution of the Arbitral Board under Clause 29 of fhe Agreeiuent and as such the applications in the present form are premati.ire. He furtfaer submits fhat while considering appUcatious iinder Section 11(6) offhe Arbiteatioii and Conciuation Act, 1996, the designated judge has to decide regardhig existence or other wise of a live claim between fhe parties and then oiily after appoiutanent of arbitrator such Uve claim may be referred to Tiim for arbitration. 6. I have heard leamed counsel for fhe parties. 7. It is not ia dispute fhat contract agreements entered betn'een the parties consist ofArbitTation Clause 29 which is reproduced as uncter:- Clause 29- Except as ofherwise provided in fhis coatract aU question and dispute relating to the ineaiuug of fhe specincations, desigas, drawings and instructions hereiu before aieiitioned as to fhing wbatsoever in aay way arising out of or relating to fh.e conteact desigas, drsmTngs specifications, estimate, conceming the works, or fhe executiou or laiuug lo cxccutc 'LUC saiuc, whcllier arisiug during fhe progress ot~ the work or after the completion or abandorunent thereofshaU be referred to the Superintending Engmeer in writing for tais decision, withia a period of 30 days of such occurrence. Tliereupon the Chief Engineer shaU give his written instructions and/'or decisions withia a period . "of 60 days of snch reqxiest, Tbis period can be extended by mutual consent of tlie parties. Upon receipt of written instructions or decisious the parties shaU proinpfly without delay to coinpty such instructions or decisions. If the Chief Engiaeer fails to give his instructions or decisions in writing mthin a period of 60 days or luutually agrccd Uiue aTlcr beiug rcqucsled aiiu u ilic parties are aggrieved against the decision of the Chief Engmeer fhe parties inay wifhia 30 days prefer aa appeal to —-^.^c the Chau'm.an who shaU afford aa opportunily to the parties ofbeiag heard aad to offerevidence in support ofhis appeal. The CIuarinaa wiil give his decision vrithin 90 days. If any party is not satisfied with the decision of the Chainaa", he cau refer such disputes for arbitration by an Arbitrauon Boaj-d to be constituted t>y the State Goveniment, which slaaU consist ofthrec uiembers ofwhom oue shail be chosen from among the of&cers belongiug to the department not t}elow the lank of S.E. one retired Chief Engineer of aay technical department, and on serviag oincer not below the rank ofS.E. belonging to aaother techiiical departinent." 8. Froin penisal of this cjause, it is evideut that all disputes whether arisiag during progress ofthe work or after coiupletion or abandoninent thereof are required to be referred to the Chief Engiaeer in writing for his decision wifhin. a period of 30 days of such occurrence. The Chief Engineer is to give his written instructions/decision wifhin. a period of 60 days of such request. T'his inay be extended.by niutual consent ofthe parties, Iffhe Chief Engiueer faUs to give his decisioa within a period of 60 days or withia such inutuauy agreed tmie after being requested, the parties may withia 30 days prefer appeal to the Citainnau who shaU decide the appeal after affording opportuiuty to the parties. The Chau-maa is to give Iiis decision wittun 90 days. Unsatisfied party with the decision of the Chainaan can refer such dispute for arbita-ation by aa Arbita-ation Board to be constituted by the State Goverrunent which shail consist of 3 nieinbers. In atl these fhree cases, fhe applicaat Conipaay has preferred aa appeal under Ciause 29 of the Agreeinent before fhe Conunissioner vide their letter dated 20-3-2005. A request has been ruade to the Chauinan of the non-applicaat for appouitinent of their nomiaee to the Arbitration Board so that fhe nouunees of bofh. fhe parties laay select presidiug ofiticer aad arbitral proceeduigs may conunence. 'Admittedly no request to the State Goverrunent as per fhe procedure prescribed in Clause 29 of fhe agreeiuent for constitution^ of Arbitratioii Board has been inade aud fhe iustant applications have been ffled solely on fhe ground that their request for appointnient of Arbitrator has been decltaed by the non- appUcaats vide letter dated 12-7-2005 of Annexure A-8. F'rom perusal of Annexure A-8, it is evident that fhe request has been a-fl decUned by the non-applicaat authority on the grouad that fhe above request was contraiy to Clause 29 of the agreeinent dated 31-12-1996. 9. So far as accordmg satisfaction vide Aunexures R-3 and R-4 is concenied, froin perusal of Aimexurcs R-3 aud R-4, it is found fhat the applicant has received payment agamst final bffl after according fuU aad fmal satisfaction. T'he appUcant has also given categorical undertaking that no claun subsists agauist the non- appiicants aufhority with respect to the conteacted work. Though leamed coimsel for the applicaat has vehementty argued that the appUcant was made to swear fhe afBdavit under duress as he was in dire need of fhe inoney which was outstanding for a long time wifh fhe non-applicants aufhority, therefore, according satisfaction shatl not put aa end to the arbitration clause aud this question whether fhere has been fuU and final settleinent ofthe claiin under contract, cau be decided by the Arbitrator. 10. ln me matters of Scunshdran tuid Reinwkwcil Oau Co. (supra), the Division Bench of Hiffi Cotirt of Madhya Pradesh bas held that fhe Arbitration Clause ia fhe origiual conteact between the parties was not put to aa end by fhe plea of payment ui mU and final setuement raised by the Conipauy which was disputed by the coutractors. The plea that contoractors' accepted the payment in satisfaction of atl clauns in connection wifh the contract except as to security deposit ineans that fhe contract was discharged except as to securily amoimt by performaace in the shape of payment inade to fhe contractor's satisfaction. The plea does not raise aay case of substitution of fhe or^iaal contract by anot&er contract, The plea in its true character is uot a plea of novation but only ofaccord aad satisfaction. The question whether this plea was tenable or, in other words, whether there was iu fact payment ia fuU aad fiual setdement binding on the contractors was a uiatter wluch under ttie aufhoritv of tiie decision in K.K. Kar's case had to be decided by fhe arbitrators, being a question arisuig froin or iu relation to or ia connection with fhe contTact. -p 11. In the matter of Tolfinl ycuaricnrors (supra), Rajastliaa High Court has also expressed suiiiiar view fhat application fbr reference to Arbitrator is niaintauiable even after full and final settleinent of me claim and it has been held fhat it is for the Arbitrator to resolve as to whether any ajmount is due to be paid and how far claiin is tenable. 12. However, ia thcse inatters fhe appucaat Coinpany has received payment against fuial bfll iacludiiig payment against securily deposit aad eamest money after accordiag full and final satisiaction. T'he applicaat has nowhere inentioued in its application that above nioney was received by the applicaat under duress. The fact of receiviag paynient agamst final bill has not been even inentioned ia fhe applications for appoiatment of Arbitrator under Section 11(6) ofthe Act. Thc non-applicants have inentioned this fact ia their reply. The applicaat even aflter reply was filed by fhe non-applicants Iias not filed any rejoiader briD^iag on record the aUeged circiunstances under which the applicant Company was forced to receive the payment against final bill after according fuU and final satisfaction. 13. A seveu Judges' bench of Supreme Court in fhe matter of •SBP & CompcuiB -v- Fdtel Etwineerimi Ltd. reported m 1200S) 8 SCC 61S iu para 39 of the judgnient has observed as iinder; - "39. It is necessary to define what exactly fhe Chiefdustice, approached with an appUcation under Section 11 of the Act, is to decide at that stage. Obviously, ue has to decide his own jurisdiction ia the sensc whether the party inakiag the luoliou lias appiuacucd tlic i-ight High Coiu'L Hc uas to ^ decide whefher fhere is aa arbiteation agreement, as defined in the Act and whether the person who has inade fhe i^quest before him, is a party to such aa agreement It is necessary to indicate tbat he can. ajso decide fhe quesdoa wbether the claun was a dead one; or a long-barrcd claiin that was sought to be resurrected and whether the parties have concluded the trsuisaction by reconding satisfaction of their mutual rights aad obl^ations or by receiviag fhe final payment without objection. It vaay not be possible at that stage, to decide whetfaer a live claim made, is one wlucli coiaes within the pundew of fhe arbitEation clause. It wQl be ^ appropriate to leave that question to be decided by fhe Arbitral Tribiuaal on taking evidence, along zvith the inerits of the claims iavolved iu the arbitration. The Chief Justice has to decide whether the applicant has satisfied fhe conditious for appoiutiug an arbitrator under Section 11(6) of the Act. For the purpose of takiag a decision on fhese aspects, the Chief Justice caa either proceed on the basis of afifidayits and thc documents produced or take sucb evidencc or get such evidence recorded, as inay be ne<-essajy. We thinlc that adoption of fhis proc-eduie iu thc c-ontext of fuc Act would best serve fhe purpose soi^ht to be achieved by the Act of expeditmg fhe process of arbitiation, without to" inany approaches to fhe court at various stages of the proceedings before fhe Arbitral Tribuiial." Relevant portion of paragraph 47 of fhe above judginent, iu which conclusions have been sumined up is iiader;- "47. We therefore, sum up our conclusions as fouows:- ra (ii) ... (UJJ ... (iv) The Chief Justice or the desigaated Judge wffl have the right to decide the prelmunary aspects as iadicated in the eaj-Uer part of this jiidgnient. The.se wffl be his own jurlsdlction to entcrtaiu the request, thc existeiice of a valid arbitTation agreement, fhe existence or otherwise of a live clatm, the existence of fhe coadition for the exercise of his power aad on fhe qualifications of thc arbitrator or arbitrators. The CIiief-Justice or fhe designated Judge would be ennued to seek the opinion ofaa iastitution ia the xnatter of noiniaating an arbitrator quaU&ed in tenns of Section 11(8) of tlic Aut if the uccd aiises bul tuc oiucr appoiuuug fhe arbitrator could only be fhat of the Chief Justice or the des^nated Judge." Thus froin perusal of the above decision, it is ia the jurisdiction of fhe des^nated Judge to decide preliminaiy aspects such as existence of a valid arbitration agreenient, the existence or omerwise of a live claim., fhe existence of ftie condition for the exercise of his power and on fhe qualtfications of fhe arbitrator or arbitrators. 14. In the light of fhe above judgnient, the designated Judge considering an application zuider Section 11 of the Act has to clecicle- (i) his owu jurisdiction; 4 v (ii) whether fhere is aa arbitration agreeinent defined in the Act; (iu) whether fhe applicaat is a party to such agreeineut; (iv) whefher the claim was a dead one or a long-barred that was sought to be resurrected; and (v) whether the parties have concluded fhe trausaction by recordiug satisfaction of fheir lautual r^hts and obiigations or by receiving the final paynient wifhout objection, The above decisions can be inade either on tfae basis of amdavits and fhe docuinents produced or take such evidence or get such evidence recorded, as raay be necessary. 15. ln the instant cases, au afBdavit dated 10th March, 2005 of Annexure R-3 has been has beea filed by fhe non-applicao.t aufhority stating fhereia that tiie appUcant Coinpaay have received Unal bffl for the above work uicluding security deposit and eamest inoney with fuu satisfaction and no further clami subsists agaiust the above work. The non-appUcaut aufhorily has also submitted the application of the appUcaat dated 11th March 2005 of Annexure R-4. These applications uuder Section 11 ofthe Act have been filed on 30th Septeniber, 2005, however, the above fact has not been nientioned. 16. Thus froni the niaterial avaUable on record, ifwe appfy fhe above law enunciated by the Apex Court iu ffae present set of facts, we find that the appUcant Compaay has preferred this appUcation wiuiout approaching appropriate aufhority with a request to coastitute ArbitTation Board as per Clause 29 of the agreeinent. It is also foiuid that flie appUcaat had received payiaent agaiast fiiial biU after.according fuU aad final satisfaction aad as such no live clatm arising out of the contract agreement exists between the parfy which may be referred to fhe arbitrator. 17. In the result, thc iiistant appUcations i.e. M.C.C. No. 214/2005 (M/s. Vijeta Construction Co. -v- Raipur Development ^ 10 Authority), M.C.C. No. 218/2005 (M/s. Vijeta Construction Co. -v- Raipur Development Authorily) aad M.C.C. No. 210/2005 (M/'s. Vqeta Construction Co. -v- Raipur Developaient Aufhorily) are rejected. However fheie shatl be no order as to costs. 18. A copy of fhis order be placed in fhe records of au the fhree cascs. Sd/- Dhirendra Mishra Judge