Budhiraj Electricals vs M/S. Rites
1997 Latest Caselaw 1019 Del

ORDER

C.M. Nayar. J.

1. The present petition seeks relief of issuance of directions to the respondent to file original agreement dated June 20,1990 and for reference of disputes to the Arbitrator as provided in that agreement. The respondent has filed the reply wherein the main objection which is taken is that as per clause 25 of the agreement, if the Contractor does not make any demand for arbitration in respect of any claim(s) in writing within 90 days of receiving the intimation from the Government that the bill is ready for payment,the claim of the contractor will be deemed to have been waived and absolutely barred and the Government shall be discharged and released of all liabilities under the contract in respect of these claims.

2. The petitioners, it is contended, did not raise disputes within the stipulated period and, therefore, the reference of disputes to arbitration is not maintainable. Learned counsel for petitioner has cited the judgment of this Court reported in Jai Chand Bhasin Vs. Union of India and another, which lays down that the court is not concerned with the question whether the claim of the party to the arbitration agreement is barred by time. The question falls within the province of the Arbitrator to whom the dispute is referred, Paragraph 9 of the judgment may be reproduced as under:-

"As a result we would uphold the view taken by Kapur, J. and Luthra, J., in Shri Swaran Singh (AIR 1982 Delhi 103) (supra) and Bhim Sain (AIR 1982 Rajdhani LR 20-Note) (Supra) respectively. The contrary view taken by Avadh Behari, J and Ansari, J. does not lay down correct law and must be held to have been wrongly decided. We would, therefore, answer the question by holding that it is for the arbitrator to decide whether in fact the applicant had not made a demand for arbitration within 90 days of receiving the intimation from the Government that the bill is ready for payment, and in the circumstances whether the claim should be deemded to have been waived and the Government is discharged and released from its liability. These are not matters which are within the purview of the Court when dealing with the application like the present under Section 20 of the Act. There is no dispute that there is arbitration clause. We would, therefore, in the circumstances order that the agreement be filed in the Court and the matter be referred to the arbitration in terms of the arbitration agreement."

The order plea is also with regard to the maintainability of the reference in view of the fact that the petitioner had given No Claim Certificate while accepting final payment. The judgment of the Supreme Court as reported in Union of India & another Vs. M/s. L.K.Ahuja and Co., keeps it open for the Arbitrator to adjudicate upon this contention as well. Paragraph 8 of this judgment may be reproduced as under:-

"In view of the wellsettled principles we are of the view that it will be entirely wrong o mixup the two aspects, namely whether there was any valid claim for reference under Section 20 of the Act, and, secondly, whether the claim to be adjudicated by the arbitrator, was barred by lapse of time. The second is a matter which the arbitrator would decide unless, however, if on admitted facts a claim is found at the time of making an Order under Section 20 of the Arbitration Act, to be barred by limitation. In order to be entitled to ask for a reference under Section 20 of the Act, there must be an entitlement of money and a difference or dispute in respect of the same. It is true that on completion of the work, right to get payment would normally arise and it is also true that on settlement of the final bill, the right to get further payment gets weakened but the claim subsists and whether it does subsist, is a matter which is arbitrable. In this case, the claim for reference was made within three years commencing from April 16,1976 and the application was filed on December 18,1976. We are, therefore, of the view that the High Court was right in this case. See in this connection the observations of this Court in Major (Retd.) Inder Singh Rekhi Vs. D.D.A. ."

In view of settled propositions as enunciated in the above judgments, the points which have been taken by the respondent can be adjudicated upon by the Arbitrator and it will be open for the Arbitrator to hear both the parties and decide in accordance with law. The petition as a consequence is allowed. The claims as referred to in paragraph 9 of the petition shall be referred to the Arbitrator and he shall enter upon the reference within four weeks from the date of communication of this Order and the Arbitrator shall render his award in accordance with law. There will be no order as to costs. Copy of the Order be given dasti to the counsel for the parties.