Suresh Chander vs Delhi Development Authority
2003 Latest Caselaw 107 Del

JUDGMENT

S. Mukerjee, J.

1. This is one of the unfortunate examples of the defendants dragging a petition under Section 20 of the Arbitration Act, 1940 for a period of 20 years.

2. The brief background of the facts, to the extent required for appreciating the contents involved in the present case, are that the petitioner entered into a contract with DDA for execution of the work of "Construction of 470 Janta D.U.'s in Pocket 'L' at Dilshad Garden (Group-II) for which an agreement bearing No.400/EE/HDXIX/81-82 was duly executed between the parties.

3. The case of the petitioner is that due to various acts of omission and commission on the part of the respondents, the work could be completed only on 5.11.1986.

4. The plaintiff has a pending claims and damages on account of the delay/prolongation of the work, which delay according to the plaintiff is entirely attributable to the respondent.

5. The other grievance of the plaintiff is that, in terms of the agreement, the bill for the work was required to be drawn up by the respondent and to be finalized within 6 months of the actual date of completion, i.e, latest by 4.5.1987.

6. It is further submitted that the DDA has failed to prepare the final bill till date, and that no intimation about the preparation of the final bill has been ever communicated by the DDA to the petitioners, as per practice prevailing, and also as required under the agreement. The DDA has been simply making adhoc payment to the petitioner, on allotment of flats to the allottees.

7. However the final payment has not yet been made to the petitioner, even though same was required to be done under the agreement.

8. The plaintiff sought reference of various disputes under arbitration clause No.25 of the contract between the parties, vide plaintiff's letter dated 7.8.93 addressed to the Engineer Member of the DDA calling upon the said persona designata under the contract, to appoint an arbitrator for adjudicating on those disputes.

9. In the petition it is stated that the cause of action firstly arose on the said date of the communication dated 7.8.93, and that the same is a continuing one.

10. Thereafter on account of defendant's failure in appointing an arbitrator, the present petition under section 20 was filed on 3.7.95.

11. On behalf of the defendant (DDA), a stand has been taken to the effect that the claims are time-barred. It is submitted that the work was completed on 5.11.1986, and that the contractor/plaintiff ought to have submitted his final bill within one month thereof, which he has failed to do.

12. According to the plaintiff on the other hand, both as per established practice and the contract provisions, it is the respondent who has to prepare the final bill, and then has to intimate to the plaintiff about the same, which intimation has never been received by the plaintiff. The defendant (DDA) also has not communicated any intention to pay the amount due in that final bill even as per their own calculation.

13. According to the plaintiff, the defendant has not yet even prepared the final bill, and in the absence thereof, has been making only adhoc payments.

14. The plaintiff further submits that vide plaintiff's communication dated 19.5.93, the plaintiff called upon an Executive Engineer concerned to pay certain specified amounts totalling about Rs. 60 lakhs, since the final bill had not been prepared and/or finalized even though several months had passed after the actual date of completion. This was followed up by the subsequent communication dated August, 1993 addressed to the Engineer Member of the DDA, to refer the disputes for adjudication by a sole arbitrator in terms of Clause 25 of the agreement between the parties.

15. In support of the petition under Section 20 of the Arbitration Act, 1940, both the parties filed their affidavits, and the plaintiff also filed an additional affidavit dated 12.3.98 explaining the practice in the DDA viz. to act under Clause 8 of the agreement whereby the DDA was preparing the final bills and categorically taking the stand that Clause 7 of the agreement, was actually not being enforced for the reason that all the measurement books etc. were available only with the DDA.

16. Having considered the pleadings and the evidence which has been filed by the parties, I am satisfied that the relief claimed in this petition, for appointment of a sole arbitrator deserves to be allowed for the following reasons, of course on an appreciation limited to the context of exercise of function under Section 20/Section 11:-

1.There was no intimation from the DDA about the final bill even though Clause 8 of the agreement casts responsibility on the DDA in that behalf, and it cannot be denied by the DDA that the measurement books are in its custody and control;

2.The notice sent by the plaintiff dated 19.5.93 is within the limitation period in terms of Section 37(3) of the Limitation Act;

3.The claim of the plaintiff was rejected by a communication of the DDA dated 6.4.95 (as per Annexure P/4 which has been filed Along with the additional affidavit of the plaintiff), and the petition under Section 20 was filed on 2.7.95 which is within time as prescribed under Article 137 of the Limitation Act.

17. I find that the reliance of the Ld. Counsel for the plaintiff on the authoritative pronouncement of the Hon'ble Supreme Court in Major (Retd.) Inder Singh Rekhi vs. Delhi Development Authority to be well placed. In the said case, the work was completed on 2.4.80, and Section 20 petition as filed in January 1986, was held to be within time.

18. There is another aspect also which has a bearing on the present case. During the pendency of this petition, the Arbitration Act, 1940 was repealed and the Arbitration and Concilliation Act, 1996 came into force. The Division Bench of this Court, after considering the provisions of repeal and other allied matters, have held that all those cases in which the arbitrators have not been actually appointed before the date of coming into force of the new Act, will be governed by the provisions of the new Arbitration Act, i.e, the Arbitration & Concilliation Act, 1996. If that be so, then the moment this court finds that there is an arbitration clause in existence between the parties, the matter has to be referred to the sole Arbitrator, and all disputed question including the plea of time-barred nature of the claim would have to be decided by the arbitrator in accordance with the law.

19. In view of the above, and even on the basis that the present case as instituted is a petition under Section 20 of the Arbitration Act 1940, and on a due consideration of the pleadings and evidence on record, I answer Issue No.(1) in favor of the plaintiff and against the defendants.

20. As regards Issue No.(II), I find that the defendant has not pleaded any thing to establish that the disputes fall outside the scope of arbitration clause.

21. Since both the issues have been decided in favor of the plaintiff and against the defendant, the plaintiff is thus entitled to the relief of a direction to be issued to the defendants requiring the persona designate (viz. Engineering Member DDA) to appoint a Sole Arbitrator within a period of four weeks from the date of this direction, referring to him for his adjudication all the claims of the plaintiffs and valid counter claims, if any, of the DDA.

22. Moreover reliance may be placed upon the authoritative pronouncement of the Division Bench of this Court holding that except where an arbitrator has already entered into upon reference, the old Act of 1940 would not survive in its applicability and would stand repealed, and that what would be applicable would be the new Act of 1996, then in such eventuality also, the disputes would be required to be referred to a sole Arbitrator in terms of contractual provisions, and the arbitrator so appointed, would have jurisdiction to decide all aspects of the matter including those governed by Section 16 of the new Act.

23. While under the new Act, under certain circumstances it would have warranted for this court to hold that DDA's persona designate stands forfeited from the right to appoint a sole Arbitrator, and the appointment then ought to have been made by this Court, but since the matter is continuing for the past about 17 years on the basis of the provisions as contained in the old Arbitration Act of 1940, therefore I exercise my discretion in favor of the DDA, by holding them to have not forfeited the right, but this will be subject to the condition that in case DDA does not make the appointment within a period of four weeks, then the appointment shall be made by this Court. With these observations, the petition stands allowed to the above extent and is disposed off but with no order as to costs.