Delhi High Court
Sharma Enterprises vs National Building Construction ... on 4 December, 2002
Equivalent citations: I (2003) BC 398, 2003 (66) DRJ 334
Author: J Kapoor
Bench: J Kapoor
JUDGMENT
J.D. Kapoor, J.
1. The petitioner entered into a contract for the
construction of Railway Station Building-cum-Commercial
Complex at Vashi at New Bombay with respondent-NBCC.
However, certain disputes arose during the execution of
the work. Bank guarantees were also furnished against
mobilisation advances. The disputes were referred to the
Arbitrator on 2.12.1997. However, the petitioner could
not succeed in obtaining the relief o stay against the
invocation of Bank guarantees.
2. This court vide order dated 2.12.1997 made the
observations that the petitioner has failed to make out a
prima facie case in its favor for grant of ad interim
injunction restraining the respondent from encashing the
Bank guarantees and that balance of convenience also does
not lie in its favor nor would it cause irretrievable
injustice to the petitioner as disputes have already been
referred to an independent arbitrator for adjudication.
It was observed that in these circumstances it cannot be
said that there is no possibility of recovery of the
amounts which may be realised by the respondent under the
Bank guarantee in question.
3. This order was confirmed by the Division Bench
of this court. Pursuant thereto respondent encashed Bank
guarantees on 17.12.1997 in the midst of arbitration
proceedings. The petitioner immediately approached the
Arbitrator and preferred an additional claim emanating
from the encashment of the Bank guarantees. However, the
Arbitrator did not entertain the claim on the premise that
the order of his appointment and reference of disputes has
been made by the court and the petitioner should also
approach the court for adjudication of dispute raised by
them in respect of Bank guarantees.
4. Petition is being resisted mainly on two
grounds. Firstly it is barred by Order 2 Rule 2 CPC
inasmuch as the claim in question arose out of termination
of contract and therefore was referable to the Arbitrator
at the initial stage itself and has placed reliance upon
K.V. George v. The Secretary to Govt. Water and Power
Dept. Trivandrum and Anr. . I am afraid
this contention does not cut ice as the provisions of
Order 2 Rule 2 CPC are not invokeable in the given facts
and circumstances as at the time of reference of disputes
cause of action was not available to the petitioner nor
was the claim being now preferred was in existence. This
claim was available to the petitioner only after
encashment of Bank guarantees and therefore reliance on
aforesaid judgment is misplaced.
5. The second objection is that claim is barred by
limitation. This contention has also no substance and
appears to be a feeble attempt to scuttle the reference of
dispute to the Arbitrator as the question of limitation
does not arise mainly for the reason that the petitioner
had immediately approached the Arbitrator after refusal of
stay against the encashment of Bank guarantees. Merely
because the Arbitrator did not entertain the claim of the
petitioner does not mean that limitation should be deemed
to have started running from the date of first reference.
Contention is fallacious and difficult to accept.
6. The object of deciding disputes by way of
arbitration is not to complicate the matter by way of
splitting and multiplying the reference to different
Arbitrators but to decide all the disputes arising in the
midst of proceedings through the same Arbitrator.
Otherwise it would defeat the very object of expeditious
and inexpensive mode of adjudicating disputes through
Arbitration would be frustrated.
7. In view of the foregoing reasons, petition is
allowed to the extent that Arbitrator shall entertain only
those disputes which arose out of encashment of Bank
guarantees. The Arbitrator will be at liberty to
determine which of the disputes mentioned in Annexure P-1
pertain to Bank guarantees and are arbitrable.
