Ahluwalia Contracts (India) Ltd. ... vs Delhi Development Authority, ...
2005 Latest Caselaw 1071 Del

JUDGMENT

Swatanter Kumar, J.

1. This is a petition under Section 8 and 11 of the Arbitration and Conciliation Act, 1996 praying that the respondents be directed to file the Arbitration Agreement between the parties No. 36/EE/ED-2/DDA/2002-03 and further that the Arbitrator be appointed by the Court and disputes and differences that have arisen between the parties to the present petition should be referred to the said Arbitrator.

2. M/s. Ahluwalia Construction India Ltd., which is a company duly registered under the Companies Act, with its registered office at Ahluwalia House, 4, Community Centre, Saket, New Delhi. Sh. G.A. Hingorani, being the authorised representative of the said company and being duly empowered, has filed this application with the above prayers. The petitioner-company is engaged in the business of engineering, designing and construction. The Delhi Development Authority (DDA) had invited tenders and finally the contract was awarded to the petitioner for construction of LIG houses on turnkey basis at Bakkarwala, Pocket-A Project. It is case of the petitioner that during the course of execution of work, the DDA, through its employees had requested the petitioner to carry out some extra jobs and works as per site requirements, and the petitioner executed the extra jobs and works as per instructions of the Engineer in charge of the DDA which he was obliged to do under the terms of the agreement. The extra word which the petitioner did was never objected to by the DDA. The extra work for pile foundation and testing charges for material though claimed, was still pending for payment with the respondents. The petitioner sent various letters in this regard, but despite service of letter dated 15th June, 2004 the respondent-DDA failed to clear the pending bills and in fact, they even denied their liability to make the payment as communicated by letter dated 28th June, 2004 Resultantly, serious disputes arose between the parties. The claims of the petitioner in regard to extra work and payment of testing etc. and differential payments have been stated in paragraph 7.11 of the petition. According to the petitioner, all the above disputes were referable to Arbitration in terms of the clause of arbitration, contained in the agreement executed between the parties. The petitioner claims to have served the letter dated 1st March, 2005 and the notice dated 31st March, 2005 requiring the respondents to appoint a person as an independent Arbitrator. The respondents having failed to appoint the Arbitrator despite the notice served by the petitioner, the petitioner has been compelled to file the present statement of claim before this court and petition for reference.

The petition is opposed by the respondents primarily on the ground that it is a 'specified item' covered under clause 24 of the agreement between the parties and is only referable to, and can be determined by the Vice-Chairman, DDA whose decision in that regard would be final. Parties having agreed to the said mode of determination cannot be allowed to refer back to the general arbitration, under the provisions of the Act, as claimed by the petitioner.

3. Petitioner has served upon the respondents a notice dated 1st March, 2005, copy of which has been placed on record, duly received by the respondents. However, a copy of the notice dated 30th March, 2005 for reasons best known to the petitioner has not been placed on the record of this case.

4. The short question that requires determination by the court is whether clause 24 of the agreement between the parties, which is commonly relied by the learned counsel for the respective parties, is an arbitration clause, which would entail the consequences in law as postulated under Section 11 of the Arbitration and Conciliation Act, 1996. Clause 24 of the agreement reads as under:-

"24. The contractor shall neither be entitled nor shall he claim the damages, loss of profit or compensation against the authority on any account, whatsoever, except the amounts specifically provided to be paid to him against the stages. In case any dispute thus arises between the parties in respect to the execution of the work, interpretation of the clauses of this agreement as well as the tendered documents and communication existing between the parties, the decision of the Vice Chairman DDA their pon shall be final and binding."

5. Learned counsel for the petitioner while referring to the said clause and relying upon the judgment of the court cited as Nimet Resources Inc. and Anr. v. Essar Steels Ltd. , Hythro Power Corporation Ltd. v. Delhi Transco Ltd. , Niko Resources Ltd. v. Gujarat State Petroleum Corporation (GSPC) , Sunrise Enterprises v. Union of India 2001 V AD (Delhi) 140, Prasar Bharati v. Stracon (India) Ltd. 14 (2004) Delhi Law Times 562 contended that the said clause followed by the correspondence exchanged between the parties constitute an arbitration agreement and the disputes are consequentially referable to the Arbitrator in accordance with the provisions of the Act.

6. Learned counsel for the petitioner contends that once he had served the notice and period of 30 days had lapsed, which in any case, would be a reasonable period for payment of the Arbitrator, the respondents had even lost their right to appoint an Arbitrator in terms of the said clause and the court should appoint an independent Arbitrator.

7. The contention raised by the learned counsel for the petitioner are misconceived. The correspondence subsequent to the execution of a contract unless unambiguous and clear in its language, cannot substitute the original agreement or alter its terms and conditions. Certainly letters have been written by the contractors claiming certain amounts which have been disputed by the DDA and in no letter the DDA has conceded to the arbitration claim of the claimant. From the documents placed on record it cannot be inferred and even reasonably interpreted that parties had created an arbitration agreement to substitute clause 24 of the agreement. Clause 24 clearly postulate case of 'specified items' or 'accepted items'. The claims of the claimant in respect of the execution of the work and interpretation of the clauses of the agreement and the tendered documents, this matter is expected to be tried and determined by reference to the Vice-Chairman, DDA whose decision is stated to be final and binding. This cannot be construed as an arbitration clause which would entitle the petitioner for a reference to an independent Arbitrator. The learned counsel appearing for the DDA referred to the judgment of a Division Bench of this Court in the case of Delhi Development Authority v. Sudhir Brothers 1995 (2) Arbitration Law Reporter Page 306 to argue that the court had even set aside the award wherein the Arbitrator had gone into the merits of the decision of the Superitending Engineer, who under the terms of the contract was to determine such claims. In fact, the court held that such a matter was not within the power of the Arbitrator. In that case relying upon the judgment of the Supreme Court, in Vishwanath Sood v. Union of India and Anr. , the court elucidated the principle that the Arbitrator had gone into the merits of the levy of compensation by the engineer, and the words 'unless otherwise provided' clearly indicated that the concerned engineer should decide this question and is decision is to be final. Clause 24, in fact, is an exception to the provisions of the Arbitration Act, per se. It being a matter squarely falling within the jurisdiction of the Vice-Chairman as per the terms of the agreement cannot be defeated by recourse to an indirect method of doing something which was not otherwise permissible within the terms of the agreement.

8. Clause 24 has already been invoked as it was conceded on behalf of the DDA that the matters (claims of the claimant) have already been referred in terms of clause 24 of the contract to the Vice-Chairman of the DDA. The same is pending decision and the decision would be taken shortly in that regard.

9. In these circumstances, I find no merit in this petition and the same is disposed of, however with a direction to the Vice-Chairman, DDA that he shall deal with the matter and dispose of the same expeditiously.