Deepak Kumar Bansal vs Union Of India & Anr

3. The respondent-Union of India invited tenders for construction of 6 unit Type-II and 24 unit Type-I new quarters at Phulera Sub Division Office under Railway Inspector, Kishangarh. An agreement was executed between the parties on 24th of April, 1996 under which in response to the said tender, the appellant submitted his offer, which was accepted and after completion of all kinds of formalities, the work order was issued to the appellant on 22nd of September, 1996. The initial estimated cost of the work was Rs.32,74,904.37. In the said agreement, there is a Clause 64 in which the arbitration clause has been inserted. Clause 64 of the arbitration clause runs as under:-

4. The appellant, upon sanction of the work, requested the respondents for issuing him a work order so that he could commence the work. On his request, work order dated 22nd of February, 1996 for a sum of Rs.32, 17, 641.29 indicating the date of completion of work as 21st of February, 1997 was issued to the appellant, which was received by him on 7th of May, 1996. Since the quantity of the work was much more than the work order was issued, supplementary work order was subsequently issued by the 3 respondents on 30th of December, 1997 for a sum of Rs.4,99,471.36 and further another supplementary work order issued on the same date i.e. 30th of December, 1997 for a sum of Rs.3,25,865.02. Thereafter, another work order to the tune of Rs. 2,17,748.63 was issued on 22nd of June, 1998. Hence, the total work orders for a cost of Rs. 42,60,726.30 were issued to the appellant. When some disputes arose between the parties on the question of payment of money, which was withheld by the respondents, the appellant requested the respondent from time to time to take deposition of the material remained and prepare his final bill, but his request was not acceded to. Accordingly, finding no other alternative, the appellant raised a dispute by issuing a notice dated 27th of December, 2004 and requested for appointment of an Arbitrator in terms of Clause 64 of the General Conditions of Contract appended with the agreement. When the respondent had failed to appoint an arbitrator in terms of Clause 64 of the General Conditions of Contract, the appellant filed an application under Section 11(6) of the Act before the High Court of 4 Rajasthan at Jaipur Bench for appointment of an Arbitrator.

9. In our view, the High Court has mis-directed itself in holding that the claim was in excess of 20% of the total cost of the work. Admittedly, the work was for a sum of Rs.32,17,641.29 (original) and three additions viz. Rs.4,99,471.36, Rs.3,25,865.02 and Rs.2,17,748.63 totalling Rs. 42,60,726.30/-, which cannot be in excess of 20% of the total cost of the work.

11. Accordingly, question of applicability of the said Circular intimating intention of the respondent to insert Clause 18 could not arise at all. That being the position, we are unable to sustain the impugned order of the High Court and accordingly, the appeal is allowed and the 8 application under Section 11(6) of the Act stands allowed. In view of our discussions made hereinabove, the decision cited by the High Court in the case of State of AP & Anr. Vs. Obulu Reddy (supra) may not be dealt with. The application is now directed to be posted to the concerned Judge of the High Court and to appoint an Arbitrator in compliance with Clause 64 of the General Conditions of Contract entered into by the parties.

12. The impugned order is set aside. The appeal is thus allowed to the extent indicated above. There will be no order as to costs.