Delhi High Court Ram Nath Mehra & Sons vs Union Of India on 9 November, 1981 Equivalent citations: 21(1982)DLT38B, 1982RLR12, AIR 1982 (NOC) 164 (DEL), (1981) DRJ 308, (1981) 2 RENCR 516, (1982) 1 RENCJ 381, (1982) 21 DLT 16, (1982) 1 RENTLR 39, 1982 RAJLR 12 JUDGMENT Avadh Behari, J. (1) Petitioner is a contractor. He entered into a contract with the Union of India for work of contruction of M.S.O. Building. A formal agreement was executed between the parties. The value of the contract was Rs. 7,82,206.00. The work was completed on 28.6.76. Final bill of Rs. 8,06,163.00 was prepared on 30.3.77. Govt. effected certain recoveries from contractor's bill. On 21 4.77, Govt. wrote to the contractor that : "The final bill of the above work in your favor is ready in this office for payment." (2) On 11.5.77, Govt. wrote another letter to the contractor in which it was said that the Govt. had a right to recover liquidated damages in accordance with clause 2 of the agreement as the work was not completed in time. It was said : 'Under clause 2 of the agreement, you have rendered yourself liable to pay Rs. 12,040.00 as compensation. The amount of compensation is hereby levied on you". It is admited case of the parties that the Govt. had withheld in the final bill a sum of Rs. 16,141.00 on account of their claim for damages for delay in the completion of the work. On 11.5.77, Govt. assessed damages at Rs. 12,040.00 on account of delay & refunded Rs. 4,101.00 to the contractor on 28.5.77. (3) The Govt. had withheld certain other amounts also. Three amounts are admitted by Govt. to have been so withheld. These were Rs. 3,000.00, Rs. 5,000.00 & Rs. 1,000.00. Total Rs. 9,000.00. Out of the amounts withheld a sum of Rs. 8001.47 was refunded to the contractor on 17.8.77, 21. 10.78 and 7.6.79. The balance of Rs, 998.53 was adjusted for substandard work executed by the contractor. (4) After 7.6.79 the contractor thought of demanding arbitration for settlement of his claims. Because he was aggrieved by the action of the government in withholding various amounts in the final bill and effecting recoveries from him. There was an arbitration clause in the contract. This was clause 25. It provided for arbitration in the event of disputes arising between the parties. On 23.6. 79 the contractor addressed a letter to the Chief Engineer requiring him to appoint an arbitrator in terms of clause 25 of the contract. A list of disputes was annexed to this letter. (5) On 6.7.79 the Chief Engineer wrote to the contractor that the letter was receiving his attention. On 1.5.80 he turned down the request on the ground that "your claims are barred by time. As such your request for appointment of arbitrator cannot be agreed to". The contractor in his letter dt. 22.5.80 protested. He said that claims were not barred by time and that he was entitled to demand arbitration. On 6.6.1980 the Chief Engineer wrote to the contractor that the decision already communicated to him in letter dated 1.5.80 could not be changed. On 7.7.80 the contractor made the present application u/s 20 of the Arbitration Act. (the Act) (6) The sole defense of the government is that the contractor's demand for arbitration is time barred. They rely on the following terms of the contract : "It is also a term of the contract that if the contractor (s) do/does not make any demand for arbitration in respect of any claim (s) in writing within 90 days of receiving the intimation from the Govt. that the bill is ready for payment, the claim of the contractor (s) will be deemed to have been waived and absolutely barred and the Govt. shall be discharged and released of all liabilities under the contract in respect of those claims." (7) Counsel for the Govt. says that the period of 90 days should be computed from the date of intimation of the final bill to the contractor. This was done on 21.4.77, as have said. The period of 90 days expired on 21.7.77. The demand for arbitration was mads, as we have seen, on 23.6.79. The question for decision is whether the demand for arbitration was made out of time. In my opinion it was made within time. A clause such as the one we have here which restricts the lights of a person to demand arbitration to a limited time, say 90 days as here, must be strictly constructed against the employer. Such time limit clauses sometimes operate most unjustly The contractor is absolutely barred for ever from making claims. The question is whether the arbitrator should be appointed in this case or the contractor is barred absolutely from demanding arbitration. Will the period of 90 days commence from the intimation given by the government on 21.4.77 that the final bill was ready for payment, or it would commence from the last payment which the government made, namely, 7.6 79. In my opinion it ought to commence from the last payment which admittedly the government made on 7.6.79. (8) What is the object o