M.K. Abraham & Co vs State Of Kerala & Anr

2. A section of the work relating to NH-49 was awarded to the appellant under letter of acceptance dated 1.12.1999 issued by the second respondent [Project Director (SE), National Highway (ADB), Circle Edappally, Cochin]. A formal contract agreement was executed by them on the same day. By letter dated 9.10.2001, the appellant-contractor called upon the Executive Engineer, National Highways (Roads) Division to pay certain amounts as compensation for the losses caused on various accounts. The Executive Engineer denied the claim by a reply sent in December, 2001 contending that there was a full and final settlement of the claims by paying the amounts due under the final bill. Being dissatisfied with the said rejection, the appellant by notice dated 1.4.2002 called upon the Executive Engineer to refer the disputes in regard to its claims aggregating to Rs.42,26,432/58 to arbitration. As there was no response, the appellant by letter dated 26.8.2002 nominated his arbitrator and called upon the second respondent to nominate the department's arbitrator in terms of the contract so that the Director-General (Road Development), Ministry of Surface & Transport, could nominate the Chairman - Arbitrator. The second respondent failed to comply. Therefore, the appellant by letter dated 28.10.2002 requested the Director-General to appoint the arbitrator on behalf of the 3 employer as also the Chairman of the Arbitration Committee. As the Director-General also failed to comply, the appellant filed an application dated 9.4.2003 under section 11 of the Arbitration & Conciliation Act, 1996 (for short `the Act'). The designate of the Chief Justice dismissed the application by order dated 19.12.2003.

3. A section of the work relating to NH-49 was awarded to the appellant under letter of acceptance dated 7.9.2000 issued by the second respondent. A formal contract agreement was executed on 26.9.2000 between them. The work was completed on 30.4.2001. According to Appellant, the Executive Engineer informed him that unless it gave a no claim certificate, even the admitted dues would not be released. Under such coercion, it gave such a certificate on 23.1.2002, so that it can receive at least the admitted amounts. Immediately on receiving the admitted dues, the appellant claims to have informed the respondents by letter dated 2.2.2002 that it signed the no claim undertaking under coercion and therefore, it had no legal effect. It also called upon the respondent to redress its grievances and claims. As there was no response, the appellant by notice dated 19.8.2002 called upon the Executive Engineer, who was the "Engineer" under the contract to give his decision on its claims, in terms of the contract. As the "Engineer" failed to 4 do so within 60 days, the appellant wrote to the Director-General (Road Development), Ministry of Surface & Transport on 26.10.2002, to appoint a sole Arbitrator to adjudicate upon the disputes. The appellant filed a petition under section 11 of the Arbitration & Conciliation Act, 1996 (for short `the Act') contending that the contract between the parties provides for settlement of disputes by arbitration and that in spite of appellant taking necessary pre-arbitration steps in terms of the arbitration clause, there was no compliance. The designate of the Chief Justice dismissed the application by order dated 19.12.2003.

5. The respondents contend that there was no provision for arbitration as it was specifically excluded, relying upon clauses 24 and 24(a) of the "Notice Inviting Tenders for Works" and clause (3) in the printed standard form of Agreement executed between the parties extracted below:

The appellants challenged the orders of the designate of the Chief Justice holding that there was no arbitration agreement, in writ petitions which were dismissed by a common order dated 14.12.2005 as not maintainable. Thereafter, the appellants have challenged the orders of the designate of the Chief Justice in these appeals by special leave contending that the High Court ignored the relevant attachment to the contract which incorporated the arbitration clause by special reference.

GENERAL OBSREVATIONS

16. We therefore allow these appeals and set aside the order of the High Court, holding that there is an arbitration agreement between the parties in both appeals. We remand the matter to the High Court to consider and decide the other objections raised by the respondents in accordance with law.