Ambica Construction vs Union Of India (Uoi)

3. Pursuant to a Tender Notice, issued by the respondent for certain new works, additions, alterations, repair and maintenance works in the Mancheswar Complex, the appellant submitted its tender on 2nd September, 1992. The appellant's tender was duly accepted by a letter dated 14th September, 1992 with the stipulation that the work was to be completed in all respects by 30th June, 1993. It was also indicated that the work orders were to be issued within 7 days from the date of receipt of the acceptance letter. A formal contract was executed between the parties on 4th March, 1993 and the said agreement provided that the General Conditions of Contract and Standard Specifications of the South Eastern Railways shall be applicable to the contract. Clause 63 of the General Conditions of Contract provides for settlement of disputes by Arbitration.

5. By a letter dated 17th January, 1996, the appellant called upon the respondent to make payment of a sum of Rs. 8,73,168/- and Rs. 1,31,642/- which, according to the appellant, was due from the respondent to the appellant under the contract, failing which the respondent was requested to appoint an Arbitrator for adjudication of the disputes which had arisen between the parties. In view of the failure of the respondent either to pay the dues, as demanded, or to appoint an Arbitrator, the appellant filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter called "the 1996 Act") before the Calcutta High Court for reference of its claims in terms of its letter dated 17th January, 1996 to arbitration and for appointment of an Arbitrator. No reply was filed by the respondent to the said application but during the pendency thereof, the respondent refunded to the appellant, the security deposit of Rs. 79,000/-. The same was received by the appellant under protest.

6. As no objection was taken by the respondent to the appellant's application under Section 11 of the 1996 Act or with regard to the submission of the No Claim Certificate by the appellant at the time of receiving the security deposit, the learned Single Judge of the Calcutta High Court, by his order dated 20th February, 1998, directed the matter to be placed before Hon'ble the Chief Justice for naming an Arbitrator for adjudication of the disputes. On 12th March, 1998, the Chief Justice appointed one Shri Subrata Bagchi as Sole Arbitrator to go into the disputes between the parties. The Arbitrator came to a finding that the No Claim Certificate had been signed by the appellant under duress and coercion but disallowed the various claims of the appellant amounting to Rs. 10 lakhs. However, the Arbitrator awarded a sum of Rs. 1,03,000/- as costs to the appellant. Both parties were aggrieved by the aforesaid Award and filed separate applications for setting aside the same. Ultimately, by consent of parties, the learned Single Judge of the Calcutta High Court by his order dated 31st January, 2000 set aside the Award made by Shri Subrata Bagchi and by consent appointed Shri G.C Law, Counsel appearing for the Union of India in the case, as Sole Arbitrator.

9. The Union of India filed a Review Petition, being GA No. 1265 of 2005, for review of the aforesaid judgment dated 16th March, 2004 but the same was also dismissed on 23rd September, 2004. SLP (C) No. 2753 of 2005 is directed against the order passed on the Review Petition.

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14. Since we are called upon to consider the efficacy of Clause 43(2) of the General Conditions of Contract with reference to the subject matter of the present appeals, the same is set out herein below:

16. We are convinced from the materials on record that in the instant case the appellant also has a genuine claim which was considered in great detail by the Arbitrator who was none other than the counsel of the respondent-Railways. In such circumstances we are inclined to hold that notwithstanding Clause 43(2) of the General Conditions of Contract and the submission of a No Claim Certificate by the appellant, the appellant was entitled to claim a reference under the contract and the Division Bench of the Calcutta High Court was wrong in holding otherwise. The appeals are accordingly allowed. The impugned judgments in the two appeals are both set aside. There will, however, be no order as to costs.