Case: M/S Kss Kssipl Consortium Thro. Its Constituted Attorney Mr. Devendra Kumar Vs. M/S Gail (India) Ltd

a sole arbitrator in respect of the disputes arising from each of the two agreements. The said demand was repeated in several communications which were not responded to. The petitioner, therefore, has lodged the present applications under Section 11(6) of the Arbitration Act for the reliefs earlier noticed.7. The claims made by the petitioner have been resisted by the respondent by filing separate counter affidavits in both the cases. A reading of the affidavits filed by the respondent indicate that insofar as the claim for extended stay compensation is concerned, the respondent contend that the said claim does not give rise to any arbitrable issue inasmuch as under clause 42.1.1 the bidder is required to mention the rate for extended stay compensation per month in the “Priced Part”. Under Clause 42.1.2 in case the bidder did not indicate such rate it is to be presumed that no extended stay compensation is required to be paid. Under clause 42.1.4 it was expressly mentioned that “Bidder to note that in case they dont indicate the rate for extended stay compensation as per proforma, provisions of clause No.42.0 will not be applicable to them”. According to the respondent in the relevant proforma relating to “Compensation for Extended Stay”, the petitioner had mentioned/quoted “NIL”. Thus, according to the clauses 42.1.2 and 42.1.4, no extended stay compensation is required to be paid to the petitioner. The above position was also expressly stated in clause 12 of the detailed letter of acceptance dated 13th December, 2010, which is in the following terms: “12.0COMPENSATION FOR EXTENDED STAYExtended stay compensation is not applicable and shall not be payable to the Contractor as per clause no. 42.0 of Special Conditions of Contract.” 8. According to the respondent, the aforesaid clause was further amplified in Annexure -1 to the said detailed letter of acceptance which was not placed before the Court though the detailed letter of acceptance dated 13th December, 2010 formed a part of the petitions filed by the petitioner. 9. Insofar as the claim of payments for additional works is concerned, according to the respondent, clause 91.0 of the GCC deals with such claims. Clauses 91.1 and 91.2 contemplate that such claims will be verified by the Engineer-in-charge whose decision will be final. The respondent further states that the claims made by the petitioner for additional costs had been rejected by the Engineer-in-charge and in terms of clause 91.2 of the GCC such a decision(s) must be construed to be final and binding between the parties and therefore would stand excluded from arbitration.10. There can be no manner of doubt that before exercising the power under Section 11(6) of the Arbitration Act to make appointment of an arbitrator the Court will have to decide on the existence of an arbitrable dispute/enforceable claim by and between the parties to the contract. The existence of a claim and denial thereof giving rise to a dispute is required to be determined on the basis of what the parties had agreed upon as embodied in the terms of the contract and only for the purpose of a decision on the question of arbitrability and nothing beyond. It is from the aforesaid standpoint that the issues raised in the present proceedings will have to be considered.11. Clause 42.0 deals with “Compensation for extended stay”. Under clause 42.1.1 the contractor is required to mention the rate for extended stay of compensation in the event the contract is to be prolonged/extended beyond the contemplated date of completion. Clauses 42.1.2 and 42.1.4 of the SCC contemplate that in the event the contractor/bidder does not indicate the rate of extended stay, it will be presumed that no extended stay compensation is required to be paid. In the present case, admittedly, the petitioner had quoted “NIL” against compensation for extended stay in its bid. If that is so, it must be understood that the petitioner had agreed to forego its claim to extended stay compensation in the event the period of performance of the contract is to be extended as had happened in the present case. This position was conveyed to the petitioner by the letter of acceptance dated 13th December, 2010. The petitioner did not raise any objection on the aforesaid score. If the petitioner had voluntarily and consciously agreed to the above situation, it will be difficult to accept the contrary position that has sought to be now adopted by seeking to claim extended stay compensation which was earlier agreed to be foregone. It must therefore be held that the claim against the aforesaid Head i.e. extended stay compensation does not give rise to an arbitrable dispute so as to permit/require reference to arbitration under clause 59.12. The second issue i.e. claim for payment of additional works however would stand on a different footing. Clause 91.1 and 91.2 contemplate the making/raising of claims by the contractor for additional works and consideration thereof by the Engineer-in-chief. The decision of the Engineer-in-chief is final and binding. The finality attached to such a decision cannot be an unilateral act beyond the pale of further scrutiny. Such a view would negate the arbitration clause in the agreement. Justifiability of such a decision though stated to be final, must, be subject to a process of enquiry/adjudication which the parties in the present case have agreed would be by way of arbitration. The objections raised by the respondent on the aforesaid score, therefore, does not commend to the Court for acceptance and is hereby rejected.13. Accordingly, the claims made by the petitioner for payment of additional works under both the contracts are referred to arbitration by Shri Justice M.M. Kumar, Chief Justice (Retd.), Jammu & Kashmir High Court, who is hereby appointed as the sole arbitrator. The learned sole arbitrator is requested to enter upon the reference and conclude the same at an early date. The terms of appointment of the sole arbitrator as well as the venue of arbitration will be decided by the parties in consultation with the learned Arbitrator.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]9. Insofar as the claim of payments for additional works is concerned, according to the respondent, clause 91.0 of the GCC deals with such claims. Clauses 91.1 and 91.2 contemplate that such claims will be verified by thewhose decision will be final. The respondent further states that the claims made by the petitioner for additional costs had been rejected by theand in terms of clause 91.2 of the GCC such a decision(s) must be construed to be final and binding between the parties and therefore would stand excluded from arbitration.10. There can be no manner of doubt that before exercising the power under Section 11(6) of the Arbitration Act to make appointment of an arbitrator the Court will have to decide on the existence of an arbitrable dispute/enforceable claim by and between the parties to the contract. The existence of a claim and denial thereof giving rise to a dispute is required to be determined on the basis of what the parties had agreed upon as embodied in the terms of the contract and only for the purpose of a decision on the question of arbitrability and nothing beyond. It is from the aforesaid standpoint that the issues raised in the present proceedings will have to be considered.11. Clause 42.0 deals withUnder clause 42.1.1 the contractor is required to mention the rate for extended stay of compensation in the event the contract is to be prolonged/extended beyond the contemplated date of completion. Clauses 42.1.2 and 42.1.4 of the SCC contemplate that in the event the contractor/bidder does not indicate the rate of extended stay, it will be presumed that no extended stay compensation is required to be paid. In the present case, admittedly, the petitioner had quotedagainst compensation for extended stay in its bid. If that is so, it must be understood that the petitioner had agreed to forego its claim to extended stay compensation in the event the period of performance of the contract is to be extended as had happened in the present case. This position was conveyed to the petitioner by the letter of acceptance dated 13th December, 2010. The petitioner did not raise any objection on the aforesaid score. If the petitioner had voluntarily and consciously agreed to the above situation, it will be difficult to accept the contrary position that has sought to be now adopted by seeking to claim extended stay compensation which was earlier agreed to be foregone. It must therefore be held that the claim against the aforesaid Head i.e. extended stay compensation does not give rise to an arbitrable dispute so as to permit/require reference to arbitration under clause 59.12. The second issue i.e. claim for payment of additional works however would stand on a different footing. Clause 91.1 and 91.2 contemplate the making/raising of claims by the contractor for additional works and consideration thereof by theThe decision of theis final and binding. The finality attached to such a decision cannot be an unilateral act beyond the pale of further scrutiny. Such a view would negate the arbitration clause in the agreement. Justifiability of such a decision though stated to be final, must, be subject to a process of enquiry/adjudication which the parties in the present case have agreed would be by way of arbitration. The objections raised by the respondent on the aforesaid score, therefore, does not commend to the Court for acceptance and is hereby rejected.13. Accordingly, the claims made by the petitioner for payment of additional works under both the contracts are referred to arbitration by Shri Justice M.M. Kumar, Chief Justice (Retd.), Jammu & Kashmir High Court, who is hereby appointed as the sole arbitrator. The learned sole arbitrator is requested to enter upon the reference and conclude the same at an early date. The terms of appointment of the sole arbitrator as well as the venue of arbitration will be decided by the parties in consultation with the learned Arbitrator.