Dsa Engineers (Bombay) vs National Building Construction ...
2005 Latest Caselaw 517 Del

JUDGMENT

Pradeep Nandrajog, J.

1. Present proceedings reflect a sorry state of affair in the administration of justice. With a little care and appropriate proceedings at the relevant time could have saved the parties trauma of unnecessary and useless litigation. Counsel for the petitioner has to share major part of the burden for rendering inappropriate legal advice to the client. A dispute between the parties which surfaced in the year 1993 continues to be embroiled in controversial preliminary issues. Contract between the parties contained an arbitration clause. Parties had hoped that their dispute, if any, would be settled with promptness. Unfortunately, their hopes lie belied and shattered in the files of this Court.

2. It all started in the year 1992 when respondent NBCC obtained a contract from HUDCO for construction of HUDCO Bazaar at plot No.25, Bikhaji Cama Place, New Delhi. Petitioner was the sub-contractor under NBCC. Vide contract agreement dated 9.7.1992, petitioner was to execute certain sanitary, plumbing and fire equipment works at HUDCO Bazaar. Clause 12 of the agreement signed between the petitioner and the respondent on 9.7.1992 incorporated an arbitration clause requiring the Chairman-cum-Managing Director (in short CMD) of NBCC to appoint an arbitrator to settle any dispute, difference or question arising out of or in connection with the contract.

3. Petitioner had certain claims. It served a notice upon the CMD of NBCC to appoint an arbitrator. Since an arbitrator was not appointed, petitioner filed a petition under Section 20 of the Arbitration Act, 1940 in this Court. Petition was registered as Suit No.1316-A/94. In the said petition, petitioner listed the disputes which petitioner wanted to be referred to an arbitrator.

4. During the pendency of the aforesaid petition, on 30.1.1995, Shri A.K. Sarkar, CMD of NBCC appointed Shri A.K. Pruthi, Project Manager as the sole arbitrator and referred to him the claims/disputes raised by the petitioner in Suit No.1316-A/94 as also counter claims of NBCC.

5. Suit No.1316-A/94 was listed before Court on 25.7.1995. Since, disputes were referred to arbitration vide letter dated 30.1.1995, Suit No.1316-A/94 was disposed of as infructuous. Order dated 25.7.1995 reads as under :

"25.7.95

Present: Mr. Girish Aggarwal for the plaintiff.

Mr. S.C. Gupta for the defendants.

S.No.1316/94

This is a petition under Section 20 of the Arbitration Act for a direction to the defendant to file the original agreement dated 9th July,1992 in Court and appointment of an arbitrator in terms of the said agreement.

Written statement has been filed and it is stated in paragraph 17 of the written statement that disputes between the parties have already been referred for adjudication of Shri A.K. Pruthi, Project Manager, NBCC House, Lodhi Road, New Delhi who has been appointed as arbitrator by the Chairman of the defendant Corporation in terms of Clause 12 of the contract agreement, vide letter dated 30.1.1995. The letter dated 30th January,1995 has also been placed on record.

In view of the fact that the arbitrator has already been appointed in terms of the agreement, the petition has become infructuous.

Dismissed as infructuous."

6. Unfortunately for the petitioner, it had not raised complete claims in the petition filed by it under Section 20 of the Arbitration Act. It did not realize that CMD of NBCC had referred to the arbitrator, claims of the petitioner as set out in the petition filed under Section 20 of the Arbitration Act. Petitioner did not realize that in view of the fact that an arbitrator was appointed, this Court dismissed suit No.1316-0A/94 as infructuous.

7. Petitioner filed its claim before the arbitrator. NBCC filed counter claim. In the claim filed before the arbitrator, petitioner raised certain claims which were not referred to in the petition filed by it under Section 20 of the Arbitration Act, 1940. On 23.6.1997, learned arbitrator directed the petitioner to submit a statement of claims strictly as per the scope of reference.

8. Probably, realizing that its entire claims were not referred to arbitration, therefore, some action needs to be taken, petitioner filed an application in Suit No.1316-A/94. Petitioner sought clarification of order dated 25.7.1995. Application was disposed of vide order dated 4.2.1997. The order reads as under :

"IA. No. 9114/94 in S.No.1316/94

This is an application moved by DSA Engineers (Bombay) in Suit No.1316/94 for clarification/ supplementation of claims already referred to arbitrator Shri A.K. Pruthi.

Petitioner filed a petition under Section 20 of the Arbitration Act being Suit no.1316/94 for reference of disputes to arbitrator. Notices were issued to the parties in I.A. No.637/94 being an application under Order 26 Rule 9 of the Code of Civil Procedure. Some local commissioner was appointed for certain purpose. Thereafter on appearance of the opposite parties, the matter was heard but ultimately on 25.7.1995, the suit was dismissed having become infructuous. The reason being, as stated in the order that disputes between the parties had already been referred for adjudication of Shri A.K. Pruthi, Project Manager, NBCC House, Lodhi Road, New Delhi vide letter dated 30th January,1995. Incidently that letter was also placed on record Petitioner, therefore, had knowledge o the letter by which reference had been made. Now, it appears that petitioner is facing some difficulty in respect to the contents of that letter and is perhaps fearing that certain claims of his are not being considered to have been referred to the arbitrator. For that petitioner should have approached learned arbitrator and this Court has nothing to do as the suit of petitioner (under Section 20 of the Arbitration Act) was dismissed as having become infructuous by order dated 25-7-1995. There is no question of any clarification/ supplementation of the claims already referred to the arbitrator by this Court as this Court had not referred the disputes to the arbitrator.

The application is accordingly dismissed.

IA stands disposed of. dusty as well.

Sd/-

A.K. SRIVASTAVA, J."

9. I feel sorry for the petitioner. Its counsel should have realized that the CMD of NBCC had referred claims of the petitioner as laid in Suit No.1316-A/94 and petitioner had suffered the order dated 25.7.1995 and the action needed was to either seek a review of the order dated 25.7.1995 or seek a supplementary reference. Rather than seeking the correct relief, petitioner's counsel went about seeking a clarification of order dated 25.7.1995. This court rightly held that none could be granted under the circumstances.

10. Petitioner's counsel persisted with obstinate attitude. Petitioner's counsel did not seek the correct remedy as per law. Present petition was filed under Section 20 of the Arbitration Act, 1940. Prayer made was to refer the disputes set out in the present petition to arbitration.

11. Petition was opposed by NBCC by bringing to the notice of this Court that disputes had been referred to arbitration. Counsel for the petitioner, even in the present proceedings, did not point out to this Court when matter was argued on 1.4.1998 as to what was the real grievance of the petitioner. Present petition came to be disposed of vide order dated 1.4.1998. The same reads as under :

"01-4-98

Present : Ms. Sonia Bhatia for the petitioner.

Mr. S.C. Gupta for the respondent.

S. No. 1086-A/97 and IA.No.1847/98

The present petition has been filed under the provisions of Section 20 of the Arbitration Act, 1940 for issuance of direction to the respondent to file arbitration agreement between the parties dated 9th July,1992 and for reference of disputes to the arbitrator in terms of that agreement. Reply has been filed to the petition wherein it has been stated that another petition was earlier filed under Section 20 of the Arbitration Act of 1940 (Suit No.1316/94) was filed earlier in this Court in which in order was made on July 25, 1995 which reads as follows :

"25.7.95

Present: Mr. Girish Aggarwal for plaintiff.

Mr. S.C. Gupta for the defendants.

S.No.1316/94

This is a petition under Section 20 of the Arbitration Act for a direction to the defendant to file the original agreement dated 9th July,1992 in Court and appointment of an arbitrator in terms of the said agreement.

Written statement has been filed and it is stated in paragraph 17 of the written statement that disputes between the parties have already been referred for adjudication of Shri A.K. Pruthi, Project Manager, NBCC House, Lodhi Road, New Delhi who has been appointed as arbitrator by the Chairman of the defendant Corporation in terms of Clause 12 of the contract agreement, vide letter dated 30.1.1995. The letter dated 30th January, 1995 has also been placed on record.

In view of the fat that the arbitrator has already been appointed in terms of the agreement, the petition has become infructuous.

Dismissed as infructuous."

Subsequently an application was made (OMP.No.197) under Section 28 of the Arbitration Act for extension of time for making the award. The same was allowed and the following order was passed on 8th January,1997 :

"8.1.97

Present : Ms. Sonia Bhatia, for the petitioner.

Mr. S.C. Gupta, for the respondent.

OMP-1/97

After hearing learned counsel for the parties, time to make and publish the award by the arbitrator is extended by a further period of four months from today. Application is disposed of. dusty."

From the above , it is obvious that the arbitrator has already been appointed. The main contention of learned counsel for the petitioner is that though the petitioner has submitted its claims, the arbitrator has not yet adjudicated on the same. The learned arbitrator shall now consider the claims of the petitioner and even decide as to whether such claims or part of such claims are referable. Similarly, he will also adjudicate on the counter claims, if any, submitted by the respondent corporation. In view of the period which has elapsed since the reference was made it will be appropriate if the arbitrator examines the claims and counter claims , if any, of both the parties expeditiously and dispose of the matter without any further delay. This petition is disposed of in the above terms. There will be no order as to costs.

Let copy of the order be given dusty to counsel for the parties.

The learned counsel for the parties shall appear before the arbitrator on 20th April,1998 for further proceedings.

Sd/-

April 01,1998 C.M. Nayar, J."

12. I am surprised at the attitude of counsel for the petitioner. She filed a petition by making allegations that the first reference omitted certain claims of the petitioner. She did not urge the points which should have been urged. She allowed the order dated 1.4.1998 to attain finality.

13. Petitioner remained at square one. Claims of the petitioner, which could be adjudicated by the arbitrator, remained the claims which were set out in Suit No.1316-A/94.

14. Petitioner raised the issue of its claims before the arbitrator once again. Petitioner once again urged that the arbitrator had to decide the claims as filed. Notwithstanding the fact that the letter dated 30.1.1995 referred the counter claim of NBCC to arbitrator, learned arbitrator passed an order on 16.5.1998. In para 5 of the order, learned arbitrator recorded that since counter claims are not forwarded as a reference by the CMD of NBCC, same will not be proceeded with. Qua the claims of the petitioner, learned arbitrator took a stand that he would only adjudicate the claims which were referred to him for arbitration being the claims set out in Suit No.1316-A/94.

15. Petitioner filed an application under Section 5, 11 and 12 of the Arbitration Act, 1940 praying for removal of arbitrator. Said application was registered as IA.No.5717/98. Grievance made in the application was that the learned arbitrator was not adjudicating the claims of the petitioner as filed.

16. Counsel for the petitioner was just not understanding that the petitioner having suffered reference of only such claims as were set out in Suit No.1316-A/94, could not seek adjudication of any other claim before the arbitrator without having a proper reference either from CMD of NBCC or by way of review/modification of order dated 25,7.1995 passed in Suit No.1316-A/94. Counsel for the petitioner did not realize that problems of the petitioner got compounded when order dated 1.4.1998 as passed disposing of the present suit.

17. Respondent moved an application before the CMD of NBCC on 31.8.1998 requiring a clarification on the issue of counter claims of the respondent. Chairman of NBCC issued a clarificatory letter dated 21.9.1998 referring the claims of NBCC against petitioner to the arbitrator for adjudication.

18. This court may clarify that there was no such need for the reason that the original reference made by the CMD of NBCC while referring the claims of the petitioner to the arbitrator, referred counter claims of NBCC as well.

19. During the pendency of IA.No.57187/98, petitioner filed two more applications being IA.No.2318/99 and 2319/99. Former invoked Section 5, 9, 11, 30 and 33 of the Arbitration Act, 1940. The later prayed for a stay of proceedings before the arbitrator.

Grievance in IA.No.2318/99 was to the reference made by CMD of NBCC pertaining to counter claims of NBCC. Prayer was made to remove the arbitrator.

20. Petitioner, I would say, its counsel was filing applications without realizing the situation and the content. Where was the occasion to remove the arbitrator on the CMD of NBCC issuing a letter on 21.9.1998 referring referring the claims of NBCC. It has also to be noted that claims of NBCC were already referred to arbitration when original reference was made.

21. IA.No.5717/98, 2318/99 and 2319/99 were disposed of vide order dated 1.2.2001. The order reads as under :

"1.2.2001

Present : Mr. Chetan Sharma with Ms. Sonia Bhatia for the petitioer.

Mr. Rajiv Nayar, Sr. Advocate with Mr. S.C. Gupta, for the respondent.

IAs.5717/98, 2318/99, 2319/99 in S.No.1086-A/97

Learned counsel for the parties are agreed that the learned arbitrator will look into the claims of the petitioner in terms of the order dated 1st April,1998 passed by this Court.

The petitioner may file an additional statement of claim in in terms of the order dated 1st April,1998.

The learned arbitrator should endeavor to dispose of the reference expeditiously.

No further orders are required to be passed.

IAs stand disposed of."

22. Fortunately for the petitioner by default, petitioner got something which it would otherwise not have got under the application moved. This Court directed the arbitrator to look into all the claims of the petitioner.

23. Going back before the arbitrator, petitioner sought to circumvent the counter claims of NBCC by taking a stand that counter claim of NBCC could not be looked into by the arbitrator. Petitioner filed IA.No.5119/01 invoking Section 9 and 11 of the Arbitration Act, praying for removal of Shri A.K. Pruthi, arbitrator. Grievance of the petitioner is to the fact that Shri A.K. Pruthi is considering the counter claims of NBCC.

24. Petitioner thereafter filed IA.No.2731/2003 invoking Section 11 and 14 of the Arbitration and Conciliation Act, 1996 praying that an independent arbitrator be appointed.

25. On 19.8.2002, this Court took cognizance of the fact that Shri A.K. Pruthi, against whom petitioner had some reservation had retired and in his place, another arbitrator stood appointed. For record, the other arbitrator is Shri A.K. Gupta.

26. Unfortunately, nothing could be done by the new arbitrator for the reason, on 23.5.2001, petitioner had obtained a stay against further arbitration proceedings.

27. This is the chequered history of the litigation and I am left with IA.No.5119/01 and IA.No.2731/03 to be decided.

28. I just do not understand as to how counter claim of NBCC cannot be adjudicated by the arbitrator. The first reference which was made to arbitrator when claims of petitioner were referred was by and under letter dated 30.1.1995 written by CMD of NBCC. In the said order of reference, Shri A.K. Sarkar, CMD of NBCC directed as under :

"Therefore, I A.K. Sarkar, Chairman-cum-Managing Director, National Building Construction Corporation limited, New Delhi in pursuance of the same, do hereby appoint Shri A.K. Pruthi, Project Manager of NBCC Ltd. as sole arbitrator to decide and make has reasoned award regarding the claims/disputes as raised by the claimants vide their petition dated 13.6.1994 filed in the High Court of Delhi (copy enclosed) and also counter claim of the respondent."

29. Counter claim of NBCC were clearly referred to arbitrator for adjudication. It appears that counsel for the petitioner hassled the learned arbitrator who got mislead into passing an order requiring the NBCC to get their counter claim referred and CMD of NBCC vide letter dated 21.9.1998 referred the claim of NBCC for arbitration. The second letter is surplus for the reason on 30.1.1995, counter claim of NBCC were referred to arbitration.

30. Be that as it may, petitioner, vide IA.No.2398/95 raised a grievance on this issue. It did not press the IA evidenced by the fact that on 1.2.2001, this Court disposed of 3 applications including IA.No. 2318/99. No order was passed prohibiting the arbitrator from considering the counter claim.

31. The position which exists today is that when Shri A.K. Gupta was appointed as arbitrator to fill the vacancy occasioned by the retirement of Shri A.K. Pruthi, the CMD of NBCC issued two letters dated 28.8.2002. By the first letter of even date, claims of petitioner as per suit No.1316-A/94 were referred to arbitration and by the second letter, claims of NBCC, referred vide letter dated 21.9.1998, were referred to arbitration.

32. A new arbitrator has been appointed. He has to adjudicate the claims and counter claims. Only clarification required to be given by this Court is that in terms of order dated 1.2.2001, learned arbitrator would look into all the claims of the petitioner i.e. claims which have been filed by the petitioner when Shri A.K. Pruthi was the arbitrator. Claim of the petitioner would not be restricted to the claim as set out in Suit No.1316-A/94.

33. IA. No.5119/01 and IA.No. 2731/03 are accordingly disposed of by rejecting the prayer of the petitioner but by clarifying as per para 32 above.

34. No costs.