Urmila And Company Pvt. Ltd. vs Indian Farmers Fertilizers ...
1998 Latest Caselaw 1021 Del

ORDER

Dalveer Bhandari, J.

1. The plaintiffs have filed an application under Sec. 20 of the Arbitration Act for referring the disputes between the parties to the arbitration. In pursuance to the notice, a detailed reply has been filed on behalf of the defendants. In the plaint, it is alleged that the plaintiffs and the defendants entered into a agreement on 10th June, 1986 for transportation of cargo by road and river route from the Indian Port of Landing to the plant site at Anole upon the terms and conditions agreed therein and for a total price of Rs. 15,57 crores to be paid by the defendants to the plain-tiffs.

2. It is further mentioned that the plaintiffs in or about 1987 completed the transportation work and the plant was commissioned by the defendants in or about 1988 within the stipulated period. The plaintiffs sent their final bill on or about 21st MArch, 1989 showing the balance amount of Rs. 1.57 crores payable by the defendants to the plaintiffs. It is further alleged that the plaintiffs had sent a number of letters and on a number of occasions to the defendants for the release of the outstanding amount but the defendants failed to release the balance amount of Rs. 1.57 crores. Ultimately, the plaintiffs decided to refer the matter for arbitration as per the arbitration clauses 21.4 in the said contract agreement dated 10.6.1986. The relevant clause 21.4 reads as under:-

21.4 Arbitration

"21.4.1 - All disputes relating to contract which cannot be settled by mutual negotiations the matter shall be referred for arbitration in accordance with Indian Arbitration Act 1940 or statutory modification or enactment thereof for the time being in force."

21.4.2 - Execution of contract shall be continued by contractor during the Arbitration proceeding unless otherwise directed in writing by owner/consultant in accordance.

21.4.3 - The venue for arbitration shall be Delhi."

3. The defendants in reply have taken various preliminary objections. It is mentioned that this application is not maintainable because the plaintiff has stated that the defendants had admitted their liability and therefore, on the plaintiff's own standing, there is no dispute in existence and proper remedy for the plaintiffs is to file a civil suit, and not the arbitration.

4. The defendants have also taken another preliminary objection that without admitting that here is a dispute, the application and purported claim and plea of the plaintiffs are barred by limitation and, therefore, no reference to the arbitration can be made. It is incorporated that the contract in question dated 10.6.1986 was entered into between the parties and the contract was complete on 17.11.1987. The final bill was submitted on 20.3.1989 and the application under Section 20 of the Arbitration Act was filed on 8.5.1996 and the claims are clearly barred by limitation being beyond three years from the date when the cause of action for the application arose. It is stated that a mere exchange of correspondence does not extend the limitation unless there has been an express unequivocal unconditional admission of its liability by the defendants.

5. In the reply, this objection has also been taken that merely by giving of notice for appointment of Arbitrator would not in the facts of the case constitute the creation or existence of any purported dispute.

6. Mr. Arun Jaitley, learned Senior Advocate for the plaintiffs submitted that the plaintiffs' application is clearly within limitation on the basis of the various documents on record. He, however, submitted that even the dispute pertaining to the limitation, itself can be referred to the arbitration. He further submitted that even after completion of the entire work within the stipulated time, Rs. 1.57 crores has yet not been paid to the plaintiffs and according to the agreement between the parties, there is an arbitration cause. Therefore, in the facts and circumstances of this case, this matter has to be referred for arbitration in terms of the agreement between the parties.

7. Mr. Jaitley has referred to various correspondence between the parties. It may not be necessary to refer all the letters which the plaintiffs have placed on record. The latter dated 9.6. 1989 is the letter sent by the defendants to the plaintiffs in which the defendant have asked the plaintiffs to produce some of the documents which are necessary for the scrutiny of the final bill. The letter dated 25.6.1990 sent by the defendants to the plaintiffs is also to the same effect. He referred to the letter dated 19.11.90 in which it is mentioned that "liquidated damages as per the contract would be deducted from your outstanding payments. The balance payment may please be collected from our Senior Manager (F&A), Anole unit."

8. Mr. Jaitley also referred to the recorded note of discussions held between the plaintiffs and the defendants on 12th October, 1992 in which a number of points were discussed. the defendants had asked the plaintiffs to provide the claim certificate and other documents on this date. A number of points have been recorded in this discussion. Ultimately on 19.8.1994 a legal notice was sent by the plaintiffs to the defendants. On 28.12.1994, the defendants had sent a letter to the plaintiffs in which a reference has been made of the earlier correspondence. The defendants had claimed liquidated damages from the plaintiffs and denied that there has been a delay on the part of the defendants to settle the bills. He also referred to a letter sent by the defendants to the plaintiffs lawyer dated 24.2.1995 in which the defendants have mentioned that "We do not accept your purported reference to arbitration and Mr. R. Karanjawala has no jurisdiction to proceed with the arbitration". Similarly, the defendants had sent a letter on 21.6.1995 in which they did not even accept the arbitration by Justice Avadh Behari Rohtagi, a retired Judge of this Court.

9. Mr. A. Haksar, the learned Senior counsel for the defendants submitted that even on the plaintiffs' own showing the defendants had admitted its liability and if this is so, then there is nothing for the Arbitrator to arbitrate in this matter and this application deserves to be dismissed only on this short ground.

10. Mr. Haksar also submitted that the application of the plaintiffs is barred by limitation. The contract was completed on 17.11.87 and the final bill was raised on 20.3.89 and this application has been filed on 8.5.1996.

11. I have heard the learned counsels for the parties at length and perused a large number of documents placed on record. Though the final bill was submitted by the plaintiffs on 20.3.1989, but the dispute regarding the same has not been resolved. I do not consider it necessary to decide the issue of limitation because I am referring this issue also for the jurisdiction of the arbitration.

12. In my considered opinion, the disputes are liable to be referred to the Arbitrator in consonance with Clause 21.4 of the Agreement. The question of limitation shall also be referred to the Arbitrator. The learned Arbitrator is directed to decide the issue of limitation also.

13. The petition is accordingly allowed and disposed of.