Sanyukta Nirmata vs Delhi Development Authority
1997 Latest Caselaw 27 Del

JUDGMENT

J.B. Goel, J.

(1) This is a petition under section 20 of the Arbitration Act, 1940, filed by the petitioner seeking directions to the respondents to file the arbitration agreement in the Court and for making to reference of the remaining claims in disputes as detailed in the petition to the arbitration of S.E.(Arb.)-II, Dda, who has already been appointed as an Arbitrator to resolve some other disputes arising out of the same contract.

(2) Briefly the facts alleged are that the petitioner is a registered partnership firm and were awarded the work of construction of 536 Houses for CAT-II (Two Bedroom) under S.F.S. houses on Block-C, Sector-19, Rohini, Category-II, SH: Construction of 192 Houses for CAT-II, (Two Bedroom) under Sfs Group-II and an agreement bearing No.26/EE/RPD-6/90-91 was executed between the parties which contained the terms and conditions of the contract and also provided for settlement of disputes by arbitration.

(3) It is alleged that the work was commenced on 7.2.1991 and was to be completed within the stipulated period of 15 months. For executing the work the petitioner had made all arrangements. However, the work could not be completed within the stipulated period as respondents failed to fulfill their contractual obligations as a result of which the work could be completed on 31.1.1994 against the originally agreed period ending on 6.5.1992. It is also alleged that vide letter dated 5.5.1992 the petitioner had informed the respondents that they will continue the work beyond the stipulated date of completion on the condition that they would be entitled to reasonable compensation on account of prolongation of the contractual period and the escalation in cost of materials and labours as provided under clause 10-CC of the agreement was not adequate and the petitioner had demanded 20% escalation over and above the agreed tendered rates under clause 10CC of the agreement. It appears that the petitioner had also submitted the bills accordingly and his bills were not paid in full and also were not paid in time and some unwarranted recoveries were also made from the bills. Even security deposit has not been released/paid though the defect liability period had ended on 31.7.1994. Thus as there were disputes between the parties the petitioner vide his letter dated 1.8.1995 had invoked the arbitration clause. Details of the disputes were grouped in four categories. (1) Claim No.1-items not paid or paid at lower than the due rates. This comprised 19 items. (2) Claim No.2-Amounts unduly withheld, unjustified recoveries, reduction items etc. It contained 10 items. (3) Claim No.3-Interest compensation and damages comprised of 16 items. Claim No.4-Interest, pre suit, pendente lite and future interest on all amounts at the rate of 20% per annum from the due date till date of payment.

(4) Respondent No.2 in pursuance of the power vested in him under the terms of the agreement referred the disputes raised by the petitioner in claim No.1; some in respect of claims No.2 & 3. Disputes in respect of items 6(a), 6(b) and 7 of claim No.2, items No.8, 9, 10, 12, 13, 15 & 16 of claim No.3, and claim against claim No.4 were however not referred for arbitration. The petitioner has claimed that these claims which were left also arise out of the contract and ought to have been referred to the Arbitrator and accordingly he has filed the present petition.

(5) Reply has been filed on behalf of the respondent. It is not disputed that the petitioner was awarded the aforesaid work and he had completed the work beyond the agreed period. It has also not been alleged that there was any breach or default on the part of the petitioner. However, it is alleged that the claim of the petitioner for escalation is covered by escalation clause 10 Cc which was allowed and the disputes which have not been referred to arbitration do not arise out of the agreement and so were not referred to and are not referable to arbitration. Replication has been filed on behalf of the petitioner disputing this.

(6) I have heard the learned counsel for the parties.

(7) Learned counsel for the respondents could not satisfy me as to how the remaining disputes raised by the petitioner have been taken care of in the contract and that the Arbitration Clause is not attracted for resolving their disputes.

(8) Clause 25 of the Agreement inter alia provides that all questions and disputes relating as to any questions, claims, right, matter or thing whatsoever in any way arising out or relating to the contract or concerning the work or the execution or failure to execute the same whether arising during the progress of the work or after the completion thereof shall be referred to the sole arbitration of the person to be appointed by the Chief Engineer. The Arbitration clause is wide enough and contemplates that all the disputes and claims whatsoever pertaining to the execution of the work in question are to be resolved through arbitration. The question that arises is that the work could not be executed within the prescribed period and when no fault or default is imputable to the petitioner to what amount of compensation or remuneration he would be entitled for the same from the respondents and also if his just and reasonable dues are not paid in time whether or not he would be entitled to interest from the date when such amounts became due till the date of actual payment. The respondents are not competent/authorized to decide as to on what rate the petitioner would be entitled for compensation for the work done due to delay in execution of works caused by the respondent. Whether the claim raised by the petitioner is covered by escalation clause 10 Cc is a disputed question. Besides this claim security has also been retained. It is also to be decided whether this security deposit has been unreasonably withheld and to what relief on this count the petitioner will be entitled to.

(9) These disputes raised by the petitioner relate to and arise out of the contract between the parties and can be settled through arbitration. These are thus referable to the arbitrator.

(10) I accordingly, allow this petition, direct the respondents to file the arbitration agreement containing the arbitration clause in Court. Respondent No.2 is further directed to refer the remaining disputes as mentioned in Para 11 out of the remaining disputes mentioned in para 10 of the petition also for arbitration to S.E.(Arb.) concerned to whom the remaining disputes have earlier been referred to, within 4 weeks of this order.