Delhi High Court Earnest Builders (Pvt.) Ltd. vs Union Of India (Uoi) And Ors. on 2 May, 2007 Equivalent citations: 2007(3)ARBLR183(DELHI) JUDGMENT Vipin Sanghi, J. 1. This petition under Section 11(6) of the Arbitration and Conciliation Act (The Act) has been filed by the petitioner to seek reference of its disputes with the respondent to arbitration in terms of an arbitration agreement contained in the contract agreement number CWE/PM/N.18/9899. 2. It is the admitted position that the parties had entered into the aforesaid agreement which contains an arbitration agreement in clause 70 of the IAFW2249. Under this clause disputes between the parties to the contract shall, other than disputes in respect of which the decision of the CWE or any other person is, by the contract expressed to be final and binding, after written notice by either party to the contract to the other, be referred to the sole arbitration of any serving officer having degree in engineering or equivalent on having passed final/direct final examination of subdivision II of Institute of Surveyor (India) recognized by the Government of India, to be appointed by the authority mentioned in the tender document. 3. In relation to the works done by the petitioner under the aforementioned contract, disputes arose and the petitioner sought reference of its seven claims to Arbitration. The chief engineer who is the appointing authority appointed an arbitrator by his communication dated the 9th September, 2003 in relation to two claims of the petitioner deleting five other claims made by it. The petitioner protested against the nonreference of some of its claims by the chief engineer. 4. The arbitrator entered upon the reference on the 16th September, 2003. However, he resigned from the post of arbitrator vide his communication dated 12th April, 2004. The petitioner thereafter once again requested the chief engineer to refer all his claims to a new arbitrator vide his communication dated 24th April, 2004 and reminder dated 25th April, 2005 but to no avail. 5. The petitioner thereafter filed the present application on the 1st September, 2005 in the Court of the District Judge, Delhi which has been transferred to this Court after the decision of the Hon'ble Supreme Court in the case of SBP v. Patel Engineering. 6. The respondent in its reply has stated that it has already appointed a substitute arbitrator on the 21st September 2005. It is further stated that the petitioner had submitted its final bill on 5th March, 2001 without any protest. Under the terms of the agreement, as per condition 65 of the IAFW2249, no further claim can be made by the contractor after submission of the final bill and all other claims shall be deemed to be waived and extinguished. Therefore the claim of the petitioner for damages could not be referred to arbitration. It is further stated that the other claims, of which reference was sought by the petitioner, and which were not referred to Arbitration, the decision of the CWE is final and binding and therefore not referable to arbitration under condition 70 of the IAFW2249. It is claimed that the earlier appointed Arbitrator had already ruled that the other claims raised by the petitioner were excepted matter. Counsel for the respondent also contended in the alternative, that if the court was inclined to appoint an independent arbitrator in exercise of its power under Section 11 of the Act, the appointee should have the requisite qualification as is prescribed under the arbitration clause. 7. Petitioner had sought reference of seven claims to arbitration. They read as follows: Sl. Brief of description of Claims Approx. Amount No. 1. Reimbursement of Sale Tax on works contract made applicable by Delhi Govt. w.e.f. 01121999. Not known to the contracting parties (Recovered from our final bill vr. No. E/22/526/EM dated 05032001) 42421.00 2. Damage due to Breach of Contract by M.E.S. By nonhandling over of sites, delay in RAR payments, delay in decisions, delay in decision of commission of HT Panels and HT Cables, Illegal cancellation of contract for certain period beyond the provision of contract conditions. 4,50,000.00 3. Interest on blocked amount for sl. Item No. 1 & 2 @24%P.A. 4. Refund of unauthorized recoveries made by MES for others CA's from RAR's and final bill. CWE/D2/9394 Rs. 1143/ CWE/D18/9596 Rs. 510/ CWE/PM/N18/9899 Rs. 1000/ Rs. 2653/ 2653.00 5. Damages due to delay in payment of RAR's and Restriction of amount. @24%P.A. 6. Interest past, pendantelite and future @24%P