M/S. Emm Enn Associates vs Commander Works Engineer & Ors

3. Brief facts giving rise to Appeal No. 7184 of 2008 now need to be noted.

The appellant a partnership firm was allotted a contract on 10.11.1998 for providing additional security fencing at Mullanpur. The work was completed on 10.7.2000. Work completion certificate was issued. Final bill was prepared on 20.2.2001 and the payment of final bill was made to the petitioner on 10.04.2001. Payment of the undisputed part of the final bill was made by cheque dated 10.04.2001.

5. Even though, two years period expired after payment of final bill, no demand for any recovery was issued by the Government. Contractor by letter dated 23.02.2005 served a notice stating that final bill amount as paid during April, 2001 did not include the payments due to contractor against several items which were claimed as per appendix A annexed to the notice.

6. It was further stated that the decision be communicated within thirty days failing which it shall be assumed that the claim is disputed and contractor shall be left with no remedy except to seek adjudication by an arbitrator appointed in terms of the contract.

7. The Garrison Engineer issued a letter dated 22.03.2005 informing that contractor had signed the final bill without any protest and had given ‘No Further Claim’ certificate. Hence no arbitrable dispute exists. The claim now intimated after the lapse of a period of approx four years is baseless and hence denied.

9. Arbitration Case No. 89 of 2006 has also been filed by the appellant seeking appointment of an arbitrator under Section 11 of the Act in the said case and also the work was completed on 23.09.2000 and the final bill was paid on 10.04.2001. Notice along with list of claim was sent by the appellant on 23.02.2005 i.e. on the same day when notice in Arbitration Case No. 184 of 2006 has been sent.

14. The respondents never adjudicated the disputed part of the final bill and after serving notice the appellant had rightly sought for adjudication by an arbitrator which application has been rejected by Hon’ble Chief Justice not on valid considerations.

payment is discovered in respect of the work done under this Contract, the contractor shall on demand make payment of a sum equal to the amount of over-payment or agree for effecting necessary adjustment from any amounts due to him by Government. If however, he refuses or neglects to make the payment on demand or does not agree for effecting adjustment from any amounts due to him, Government shall be entitled to take action as in sub- para (a) hereinbefore. If as a result of such audit and technical examination any under payment is discovered, the amount of under payment shall be duly paid to the Contractor by Government.

28. The claim raised by petitioner in the facts of the case could not have been said to be a dead claim. Especially in view of the additional documents which have been placed before us by IA No. 03 of 2012. We are thus of the view that the order dated 12.03.2007 passed in Arbitration Case No. 184 of 2006 and 89 of 2006 deserves to be set-aside.

29. As a consequence thereof, the application made by the appellant under Section 11 of the Act is allowed. We, however, consider it apposite to remit the case to the High Court (designated Judge) to pass consequential orders for appointment of the arbitrator for deciding the disputes which have arisen between the parties. The appointment of the arbitrator may be made in the first instance with the consent of the parties and if, for any reason, it is not possible to do so then the Court will appoint the arbitrator in its discretion. It be done within one month from the date of the parties appearance.

30. Parties to appear before the designated Judge in the High Court on 25.07.2016 to enable the Court to pass appropriate consequential order as directed above. Both the appeals are accordingly allowed.