Hindustan Construction ... vs Delhi Development Authority
1998 Latest Caselaw 962 Del

ORDER

Mohd. Shamim, J.

1. An award dated January 17,1994 rendered by Shri Dandage, sole arbitrator was filed before the Court.

2. On the filing of the said award notices were issued to both the parties vide order dated August 12, 1996. The petitioner filed objections against the said award (vide I.A. No. 11143/96) under Sections 30 & 33 of the Arbitration Act. The respondent did not prefer any objections against the said award despite service of notice on them. However, they filed a reply to the objections preferred by the petitioner.

3. It has been urged for and on behalf of the objector that there is an error apparent on the face of the award inasmuch as the award has not been rendered on merits. The learned arbitrator fell into a grave error by coming to the conclusion that the claim of the petitioner was barred by time. The claimant failed to invoke the arbitration clause within a period of 90 days of the preparation of the final bill as per the conditions of the contract. The learned arbitrator over-looked and ignored the letter dated May 7, 1984 written by the petitioner Ex. C5 wherein the disputes were raised by the petitioner giving rise to the present claim within 90 days of the payment of the final bill which even according to the award is April 16, 1984. Thus the learned arbitrator has mis-conducted himself and the roceedings and the impugned award referred to above is liable to be set aside.

4. Learned counsel for the respondent while countervailing the said argument has contended that the arbitrator has neither mis-conducted himself nor the proceedings. There is no error apparent on the face of the award. Both the parties are bound by the terms of the contract. According to clause 25 of the agreement the invocation for arbitration has to be within 90 days from the date of intimation that the final bill is ready for payment. The period of 90 days would start running from the date of the intimation of the final bill. It would not run from the date of payment of the final bill. The letter dated May 7, 1984 was therefore, absolutely irrelevant. The objections are false and frivolous and are thus liable to be dismissed.

5. It is manifest from above that the only issue which arises to be adjudicated upon in the present case is as to whether the learned arbitrator was justified in coming to the conclusion that the reference to the arbitration was barred by time. According to the learned arbitrator as per his finding (vide para 6.4 of the award dated January 17, 1994) the claimant demanded the arbitration much after the limit of 90 days not only from the date of payment of final bill but also from the date of release of the amount withheld therein. Hence the claims of the claimant were held to be barred by time.

6. Since we are concerned with the construction of C1.25 of two agreement, the same can be adverted to with profit. It is in the following words:-

"It is also a term of the contract that if the contractor(s) does (do) not make demand of arbitration in respect of any claim (s) in writing within 90 days of the intimation from the Engineer inCharge that the Bill is ready for payment the claim (s) of the contractor (s) will be deemed to have been waived absolutely and the Delhi Development Authority shall be discharged and released of all liabilities under the contract in respect of those (these) claims."

7. Learned counsel for the respondent on the basis of the above clause in the contract has contended that there is nothing wrong with the award inasmuch as the claimant demanded arbitration much after the limit of 90 days.

8. Learned counsel for the petitioner on the other hand has argued that the said clause is hit by an amendment which has been made to Section 28 of the Contract Act (vide Amendment. Act 1 of 1997) whereby clause (b) has been incorporated therein. Section 28 of the Contract Act deals with agreements in restraint of legal proceedings, void. It envisages as under :-

"Every agreement,-

(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights: or

(b) which extinguishes the rights of any party thereto, or discharges any party thereby, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights."

9. Learned counsel for the petitioner inspired by Section 28(b) alluded to above, has then contended that the said provision of law is very much applicable to the facts and circumstances of the present case. By the incorporation of clause 25 in the agreement his right to claim arbitration came to an end after the expiry of period of 90 days from the date of intimation of the final bill being ready for payment and thus he was deprived of a very valuable right to claim the amount which was due to him from the respondent.

10. A perusal of the impugned award reveals that the claims of the petitioner herein were defeated simply on the ground that the invocation of the arbitration clause was barred by time. Consequently the arbitrator did not decide the claims on merit.

11. In the circumstances stated above the petitioner are entitled to succeed. The objections are hereby allowed. The award dated January 7, 1994 is hereby set aside. The arbitrator is hereby directed to decide the claims of the petitioner on merits. In case the arbitrator who rendered the impugned award is not available in that eventuality a new arbitrator would be appointed by the authorities to go into the claims of the petitioner and to render the award within the statutory period.