Nitin Construction Co. vs National Agricultural Marketing ...
1999 Latest Caselaw 720 Del

ORDER

Mukul Mudgal, J.

1. This is a petition under Section 20 of the Arbitration Act, 1940, filed by the petitioner company. The petitioner had submitted a tender to the respondent National Agricultural Co-operative Marketing Federation of India Limited (NAFED) for 'Civil' work for constriction of Effluent Water Treatment Plant at Lawrence Road, New Delhi' and the work in question was awarded to the petitioner on 3rd July, 1990.

2. On 3rd December, 1990 a formal agreement was executed which contained a clause for arbitration which reads as under:-

"4. In the event of any dispute or difference arising out of or relating to this contract of breach thereof, which cannot be settled amicably between the parties, then such a dispute shall be referred for arbitration to Managing Director NAFED or any person nominated as arbitrator by him. The arbitration between the parties will take place and be governed by the rules of Arbitration of Indian Council for Arbitration."

3. Disputes having arisen between the parties, the petitioner invoked the arbitration clause vide its letter dated 23rd December, 1991 seeking the reference of the disputes for arbitration. The following disputes were raised in the petition for seeking arbitration:-

      (i)  Claim  No. 1 : The petitioner claims a sum of  Rs.  52,805/-      being payment of bonus as per terms and conditions of agreement. 
 

      (ii) Claim  No. 2: The petitioner claims a sum of  Rs.  29,045.06  being balance payment of final bill. 
 

      (iii)  Claim No. 3: The petitioner claims a sum of  Rs.  20,000/-  being  infructuous expenditures and damages sustained by him  due to various breaches committed by the NAFED. 
 

      (iv) Claim  No. 4: The petitioner claims interest @ 24%  p.a.  on  delayed payment as well as outstanding payment from the due  date  to the date of its payment. 
 

      (v)  Claim  No.  5:  The petitioner claims interest  @  24%  p.a.  pendente lite and future. 
 

      (vi)  Claim  No. 6: Contractor/petitioner claims Rs.  5,000/-  as  costs of the arbitration proceedings.  
 

4. The claim was resisted on behalf of the respondent by contending that the dispute is not referable to arbitration in view of no claim certificate dated 31st October, 1991 issued by the petitioner. The present dispute, therefore, centres round the plea that whether a dispute can be referred to arbitration once a no claim certificate has been given by the claimant. The learned counsel for the respondent has relied upon an order of the Hon'ble Supreme Court dated 1st October, 1993 pronounced by Hon'ble Mr. Justice K. Ramaswamy to contend that upon giving a no claim certificate there is accord and satisfaction by final settlement of the claims and , therefore, there is a bar to refer the claims to arbitration.

5. On the other hand the learned counsel for the petitioner has relied upon a judgment of the Hon'ble Supreme Court in the case reported as Union of India and another Vs. M/s. L.K. Ahuja and Co. Where Hon'ble Mr. Justice Sabyasachi Mukherji held as under :-

"In view of the well-settled principles we are of the view that it will be entirely wrong to mix-up 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 to 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.

6. This decision was also considered and followed by the learned Single Judge of this court in case Budhiraja Electricals Vs. M/s. RITES reported as 1998 I AD (Delhi) 401. Thus there are two authorities cited before me of the Hon'ble Supreme Court . The authority cited by the learned counsel for the respondent, based on the facts of the case and on a factual finding that there was accord and satisfaction , cannot come to the aid of the respondent in the present case. Even the arbitration clause in the said authority is different from the present clause and it is thus clear that this case is covered by the judgment of the Hon'ble Supreme Court in case Union of India Vs. L.K. Ahuja cited by the learned counsel for the petitioner. The same view was also taken by this court in other judgment such as the case reported as M/s. Nav Bharat Dal Mills Vs. FCI ; and Mr. Ram Singh Vs. NCT of Delhi 1996 (I) ALR 56.

7. Accordingly the petitioner is entitled to succeed in the petition and, therefore, the petition is allowed. The respondent is directed to file the agreement dated 3rd December, 1990 in this court and the disputes mentioned in para 8 are referred to arbitration. The Managing Director of NAFED is directed to refer the dispute for arbitration in accordance with the above clause 4 of the agreement within a period of six weeks from today.