Engineering Development ... vs Municipal Corporation Of Delhi & ...
2009 Latest Caselaw 5083 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELH
+                          A.A. No.424/2008
                                                            8th December, 2009

Engineering Development Corporation                                ...Petitioner

                                 Through:        Ms. Anusuya Salwan, Advocate

                           VERSUS

Municipal Corporation of Delhi & Anr.
                                                              ....Respondents
                                 Through:        Mr. Nalin Tripathi, Additional
                                                 Standing Counsel for the MCD.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

     1. Whether the Reporters of local papers may be allowed to see
        the judgment?

     2. To be referred to the Reporter or not?

     3. Whether the judgment should be reported in the Digest?
    %                            JUDGMENT (ORAL)

VALMIKI J. MEHTA, J.

*

1. This is a petition under Section 11 of the Arbitration and

Conciliation Act, 1996 for the appointment of an Arbitrator.

2. A contract was entered into between the parties vide Work Order

No.EE (Pr) SZ/2002-2003/63 dated 1.10.2002. The contract was for

construction of 12 class rooms and two toilets blocks. The petitioner A.A.424/2008 Page 1 claims that time was extended provisionally up to 31.7.2004 and

thereafter the work was completed to the entire satisfaction of the

respondent on 11.9.2005. On 28.2.2005 the respondent prepared their

5th R.A bill. This R.A. bill shows that the date of completion is shown as

'work in progress'.

3. In a petition under Section 11, the court has to basically see four

aspects. The first is whether there is an arbitration agreement

between the parties. The second is whether the disputes fall within the

scope of the agreement. The third aspect to be seen is whether the

petition has been filed within the limitation period and finally whether

the claims are live claims.

4. In the present case the first two of the above stated aspects are

not in dispute. What has been canvassed by the counsel for the

respondent is that the petition is barred by time and that the claims

are not live claims.

5. As regards the limitation issue, the right to file a petition for the

appointment of an Arbitrator arises when a claim which is raised by

one party is opposed and denied by the other party, I put a specific

query to the counsel for the respondent as to when the claim of the

petitioner for the work done was denied by the respondent, however,

the respondent failed to point out any letter by which the claim of the

A.A.424/2008 Page 2 petitioner for work done under the subject contract was denied. If that

be so, I fail to understand how the petition is barred by time. It has

been held by the Supreme Court in the judgment reported as Union of

India Vs. L.K.Ahuja 1988(1) Arb.LR 375 (SC) that unless and until

disputes arise, limitation cannot be said to begin for the purposes of

Article 137 of the Limitation Act. The counsel for the petitioner has

rightly relied upon two judgments of this court reported as Pandit

Munshi Ram Associates Pvt. Ltd. Vs. DDA 2002 (Suppl.) Arb. LR

659 (DB) and also an unreported decision dated 20.9.2007 titled

D.Pal Company Vs. MCD (DB). Both these judgments are relied

upon for the proposition that unless and until disputes arise, the

limitation does not commence for filing of a petition for the

appointment of an Arbitrator. The counsel for the petitioner has

further relied upon the judgment of the Supreme Court in the case of

Utkal Commercial Corporation Vs. Central Coal Fields Ltd.

(1999) 2 SCC 571 for the same proposition and has drawn my

attention to para 10 wherein the Supreme Court has referred to its

earlier judgment in the case of Major (Retd.) Inder Singh Rekhi vs.

DDA 1 (1988) 2 SCC 338 to hold that a dispute arises only where

there is a claim by one party denial/repudiation of such a claim by the

other party.

A.A.424/2008 Page 3 In view of the aforesaid judgments and the fact that in the

present case, the counsel for the respondent has failed to show me

any letter whereby the respondent has disputed and denied the claim

of the petitioner for the work done under the contract and I do not find

that the petition is barred by limitation.

6. The second issue which has been urged by the counsel for the

respondent is that by virtue of clause 9 of the contract, the claims are

no longer live claims. As per clause 9, no further claim shall be made

by the contractor after submission of the final bill and such claims as

not stated in the final bill shall be deemed to have been waived and

extinguished.

In the present case, I have not seen any final bill which has been

annexed by the respondent. The only bill which is the last bill prepared

is 5th running bill which in fact states that the work is in progress. The

bill itself factually does not state that it is a final bill. Therefore, there

is no question of application of clause 9. In any case, I am of the view

that any clause in the contract which artificially curtails the period of

limitation is of no effect by virtue of Section 28 of the Contract Act,

1872. This has been so held in two recent judgments of this court

reported as Biba Sethi and Nitin Sethi Vs. Dyna Securities

Limited MANU/DE/1325/2009 and Pandit Construction Co. Vs.

A.A.424/2008 Page 4 DDA 2007(143)DLT270. Accordingly, I do not agree that the claims

are not live claims.

7. So far as the present contract is concerned clause 25 requires

appointment of the Arbitrator by the Commissioner, MCD. The

Supreme Court in its recent judgment reported as Indian Oil

Corporation Vs. Raja Transport 2009 (8) SCC 520 has held that

even if the respondent fails to appoint an Arbitrator after service of the

notice and the petition under Section 11 is filed in the court, the court

would only direct that the Arbitrator be appointed in terms of the

agreed clause between the parties. In accordance with the aforesaid

judgment it is the Commissioner MCD who is to appoint the Arbitrator.

8. Accordingly, this petition is allowed with costs of Rs. 25,000/-

and in terms of clause 25, the Commissioner MCD is directed to

appoint an Arbitrator to decide all the

disputes/differences/claims/counterclaims/issues as arriving between

the parties under the subject work order within a period of four weeks

from today.

DECEMBER 08, 2009                                VALMIKI J. MEHTA, J.
ib




A.A.424/2008                                                        Page 5