Delhi High Court
Bhartiya Const. Co. vs Delhi Development Authority on 31 March, 2009
Author: Shiv Narayan Dhingra
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Reserve: 26.03.2009
Date of Order: 31.03.2009
CS(OS) 965A/1995
% 31.03.2009
BHARTIYA CONST. CO. ... Petitioner
Through: Mr. Vivekanand, Adv.
Versus
DELHI DEVELOPMENT AUTHORITY ... Respondent
JUSTICE SHIV NARAYAN DHINGRA
1. Whether reporters of local papers may be allowed to see
the judgment? Yes.
2. To be referred to the reporter or not? Yes.
3. Whether judgment should be reported in Digest? Yes.
Order
1. The matter is taken up after remand back by the
Division Bench for addressing the maintainability of the petition
inter alia under Order 2 Rule 2 CPC, on limitation and cause of
action. None has appeared for the respondent despite service of
the Court notice.
2. The present petition was filed under Section 20 of
Arbitration Act for directions to DDA to appoint an Arbitrator. A
contract for construction of 504 SFS category flats in Sukhdev Vihar
was awarded by DDA to the petitioner in 1982. During the
continuation of the contract a dispute arose between the parties and
CS(OS) 965A/1995 BHARTIYA CONST. CO. v. DELHI DEVELOPMENT AUTHORITY Page 1 of 6
this dispute in terms of the arbitration agreement was referred for
adjudication to the Arbitrator in 1983. The work under the contract
continued irrespective of the dispute being adjudicated by the
Arbitrator. The work got completed on 24th June, 1988. The award
on the dispute arisen at the initial stage of the contract was
rendered by the Arbitrator on 31.10.1988. This award was affirmed
by the Court and was made a Rule of the Court on 8.8.97. The
present petition has been filed by the petitioner seeking
appointment of an Arbitrator after completion of the work because
the final bill of the petitioner has not been prepared and paid,
neither the security deposit made by the petitioner has been
returned. The petitioner has also raised other disputes seeking
escalation in price etc.
3. I consider that the earlier award passed by the
Arbitration would not either amount to res- judicata or would bar the
invocation of the arbitration clause in respect of the disputes arisen
between the parties after completion of the work. Principles of
Order 2 Rule 2 CPC would have been attracted if the petitioner had
failed to raise the present dispute at the time when earlier dispute
was raised by the petitioner. The present dispute was not even in
existence at the time when earlier dispute was raised in 1983. The
present dispute arose only after completion of work, because of
non-payment of the final bill, non-return of the security deposit and
other connected matters after completion of the work. These
CS(OS) 965A/1995 BHARTIYA CONST. CO. v. DELHI DEVELOPMENT AUTHORITY Page 2 of 6
disputes had not arisen in 1983 and could not have been referred to
the Arbitration in 1983. Thus, this petition would not be barred
under Order 2 Rule 2 CPC.
4. It is settled law that only a living dispute can be referred
for adjudication to the Arbitrator. There is no doubt that in the
present case, the work was completed on 24.6.1988. After
completion of work, the final bill of the petitioner was to be finalized
by the respondent. It is not the case of the respondent that
respondent had finalized the final bill. As late as on 24th October,
1994, the respondent had written to the petitioner that its challenge
to the earlier award was pending before the High Court therefore
respondent would not comment or discuss the merits of the claim
raised by the petitioner. Respondent restricted its reply to the
extent of renewal of bank guarantee and renewal of FDR (security
provided by the petitioner to the respondent) for completion of
work. In this letter, it is stated by the respondent that completion
was recorded on 24.6.1988 and the counter claim of the department
against the petitioner was rejected by the Arbitrator in award
published on 31.10.1988. Since the respondent has challenged this
rejection of counter claim by way of suit no.2816/88, the respondent
only wanted that petitioner should get the bank guarantee renewed
without further delay and in case the bank guarantee was not
renewed, the respondent would be forced to invoke it. The
CS(OS) 965A/1995 BHARTIYA CONST. CO. v. DELHI DEVELOPMENT AUTHORITY Page 3 of 6
respondent made it clear to the petitioner that bank guarantee was
required to be kept in force till the decision of the High Court.
5. The High Court ultimately dismissed the petition filed by
the respondent against rejection of its claim by Arbitrator.
Thereafter, instead of finalizing the bill of the petitioner, the
respondent encahsed the bank guarantee which forced the
petitioner to file the present petition. Until and unless final bill of
the petitioner was prepared/approved by the DDA and DDA had
given intimation to the respondent that it was forfeiting the bank
guarantee, no cause of action had accrued in favour of the plaintiff.
Cause of action accrued in favour of the plaintiff only when DDA
showed its inclination to invoke the bank guarantee and did not
finalize the bill. This happened only after rejection of the petition of
the respondent. This Court vide order dated 3rd January, 1997 had
observed that the question of appointment of Arbitrator would be
considered only after decision in the suit filed by the respondent.
The present petition which was filed in 1995 cannot be said to be
beyond period of limitation since the limitation is of 3 years and
cause of action had not even arisen in 1994 when respondent
informed the petitioner that it would not consider the finalization of
the bill until and unless its objection pending before the High Court
against rejection of its counter claim was not decided. I therefore
consider that the present petition was very much maintainable.
CS(OS) 965A/1995 BHARTIYA CONST. CO. v. DELHI DEVELOPMENT AUTHORITY Page 4 of 6
6. In Hari Shankar Singhania & Ors vs. Gaur Hari
Singhania & Ors. (2006) 4 SCC 658 Supreme Court had observed
that the cause of action for filing petition under Section 20 would
arise only on the date of last correspondence between the parties
showing that the claim was still unsettled. The period of limitation
commences from the date of last communication between the
parties regarding the dispute being under consideration. The
present petition was therefore well within the period of limitation.
7. It cannot be said that the present petition was filed
without cause of action. Petitioner gave its final bill to the
respondent for payment on completion of work but the respondent
did not make the payment under this final bill and asked him to
continue the bank guarantee and security deposited with the
respondent. The petitioner continued renewing bank guarantee
from time to time on the assurance of the respondent that they
would release the amount due to the petitioner under final bill after
waiting for the result of the challenge to earlier award made by the
respondent. I therefore consider that there was sufficient cause of
action for the petitioner to file the present petition.
8. There is no dispute that there is an arbitration clause
between the parties. It is also settled law that non-invocation of the
arbitration clause by a separate notice is no ground to deny a
petition under Section 20. In Anand Kumar Jain vs. UOI, 1984
RLR 438 this Court had observed that filing of an application under
CS(OS) 965A/1995 BHARTIYA CONST. CO. v. DELHI DEVELOPMENT AUTHORITY Page 5 of 6
section 20 itself amounts to invocation of the Arbitration Clause and
if the amount as claimed in the petition under Section 20 is not paid,
the Court can ask the respondent to refer the matter to the
arbitration in accordance with the contract. I therefore allow this
petition. DDA is directed to appoint an Arbitrator within a period of
60 days from today in terms of the Arbitration Clause and make
reference of the dispute to the Arbitrator.
March 31, 2009 SHIV NARAYAN DHINGRA, J.
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