IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision : 17.11.2011 Arb. Case No.150 of 2010 M/s D.L.Lamba and sons ...Petitioner Versus Union of India and another ...Respondents CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA Present : Mr. Anupam Singla, Advocate, for the petitioner. M/s Sandeep Vermani & Vikas Awasthi, Advocates, for the respondents. HEMANT GUPTA, J. (ORAL) The petitioner has invoked the jurisdiction of this Court for appointment of an Arbitrator in respect of the disputes between the parties arising out an Agreement dated 20.02.2008. Vide the aforesaid Agreement, the petitioner was awarded work of construction of Road Over Bridge (ROB) in lieu of level crossing No.86- B at KM 181/9-1 on Saharanpur-Ambala section in Saharanpur yard. The arbitration clause between the parties reads as under: “64(1)(i) Demand for Arbitration:- In the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to the withholding by the Railway of any certificate to which the contractor may claim to be entitled to, or if the Railway fails to make a decision within 120 days then and in any such, case, but except in any of the ‘excepted matters’ referred to inclause – 63 of these conditions, the contractor, after 120 days but within 180 days of his presenting his final claim on disputed matters, shall demand in writing that the disputes or difference be referred to arbitration.” Arb. Case No.150 of 2010 Certain disputes arose between the parties, which led to serving of a notice dated 05.12.2008 (Annexure A-19) raising following claims by the petitioner: Claim No.1 Compensation for loss of profit and extra overhead expenses due to shortfall in turnover, reasons attributable to the Railways. Claim No.2 Payment due on account of conducting ‘Integrity Test’ & ‘Soil Investigation’. Claim No.3 Declaration of Termination of Contract illegal and compensation thereof alongwith other damages. Claim No.4 Refund of security amount. Claim No.5 Refund of performance guarantee. Claim No.6 Claim on account of loss of interest on capital, Bank charges etc. Claim No.7 Refund of expenses on Court cases. Claim No.8 Arbitration cost. Claim No.9 Interest. In pursuance of such notice, the respondents have constituted an arbitral tribunal in respect of claim Nos.2, 4 & 5 only, whereas in respect of remaining claims, it was stated that the same fall within the “Excepted Matter” and not referable to arbitration. It is, thereafter, the petitioner has invoked the jurisdiction of this Court for appointment of an Arbitrator in respect of such claims. This Court in Arbitration Case No.109 of 2009 titled “M/s Rakesh Kumar & Co. Vs. Northern Railway through General Manager etc.” decided on 29.09.2011 has examined the similar Clause 64 and returned the following finding: “In Anil Kumar’s case (supra), the Hon’ble Supreme Court found that there are disputes between the parties on the issues/claim raised by the petitioner and countered by the respondent including whether the claim still subsists or stands extinguished as alleged by the respondents. Such 2 Arb. Case No.150 of 2010 claims cannot be resolved without evidence and in view of such finding, referred the disputes to an Arbitrator. In J.G.Engineers Pvt. Ltd. case (supra), considering the Clauses (2) & (3) of the Agreement, which gave finality to the decision of Superintending Engineer, the Hon’ble Supreme Court found that the finality is in respect of quantification and not that, who has committed breach. It was held to the following effect: “14. Thus what is made final and conclusive by clauses (2) and (3) of the agreement, is not the decision of any authority on the issue whether the contractor was responsible for the delay or the department was responsible for the delay or on the question whether termination/rescission is valid or illegal. What is made final, is the decisions on consequential issues relating to quantification, if there is no dispute as to who committed breach. That is, if the contractor admits that he is in breach, or if the Arbitrator finds that the contractor is in breach by being responsible for the delay, the decision of the Superintending Engineer will be final in regard to two issues. The first is the percentage (whether it should be 1% or less) of the value of the work that is to be levied as liquidated damages per day. The second is the determination of the actual excess cost in getting the work completed through an alternative agency. The decision as to who is responsible for the delay in execution and who committed breach is not made subject to any decision of the respondents or its officers, nor excepted from arbitration under any provision of the contract.” It was further held that the question that which of the party has considered breach cannot be decided by a party to an agreement. The question whether the other party committed breach cannot be decided by the party alleging breach. The contract cannot provide that one party will be the arbiter to decide whether he committed breach or the other party committed breach. That question can only be decided by only an adjudicatory forum. But in the present case, the claims of the petitioner i.e. claim Nos.1, 2 4(i), 4(ii), 5, 6 & 10 pertains to price escalation or the fact that there is loss of profit. Such claims are specifically prohibited in the agreement executed between the parties as per the clauses 5.1, 9.2, 11.3, 16(3), 21.5, 49.1 & 63. The reasons communicated that such dispute falls within excepted matters, as contained in Annexure P-9 are as under: xxx xxx xxx There is specific bar in the agreement that the petitioner shall not be entitled to increased wages or price variations and the rates, the petitioner cannot raise any dispute in terms of the agreement. All the claim of the petitioner except claim No.6, fall within the prohibited terms of the agreement i.e. petitioner cannot claim any increase as claimed except in the matter of release of security falling within claim No.6, which is dependent upon the successful completion of the project. 3 Arb. Case No.150 of 2010 Present is the case, where there it is not asserted by one party or denied by the other party or that there is dispute in respect of the breach of conditions of the agreement. The petitioner was granted extension of period of completion of contract without any penalty meaning thereby that for delayed completion, the petitioner was not penalized. The non-imposition of penalty signifies that the period of completion of work was extended without any consequence falling on the parties. Therefore, the petitioner cannot claim wages or escalation in cost for the reason that the work could not be completed within the period originally specified. As per the petitioner, the time period of bridge No.232 was extended and corrigendum issued. Such corrigendum has taken into consideration the increase in cost as well. Therefore, in terms of Clauses 5.1, 9.2, 11.3, 16 (3), 21.5, 49.1 & 63, as reproduced above, of the agreement, the petitioner cannot be permitted to raise disputes, as such disputes are prohibited to be raised by the contractor.” In terms of the aforesaid judgment, claim Nos.1 and 3 are not arbitral, whereas the disputes in respect of claim Nos.6 to 9 are required to be decided by an Arbitrator. Consequently, the present petition is partly allowed. The arbitral tribunal appointed by the respondents vide communication dated 05.03.2009 shall also consider claim Nos.6 to 9. 17.11.2011 (HEMANT GUPTA) Vimal JUDGE 4