Delhi High Court
Shanti Prakash Goenka vs Mahanagar Telephone Nigam Ltd. on 20 September, 2016
$~22
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 76/2016
SHANTI PRAKASH GOENKA ..... Petitioner
Through : Mr R Rajappan & Ms Rajni, Advs
versus
MAHANAGAR TELEPHONE NIGAM LTD. ..... Respondent
Through : Ms Suruchi Suri, Adv
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
ORDER
% 20.09.2016
VIBHU BAKHRU, J
1. The petitioner has filed the present petition under Section 11
(5) of the Arbitration and Conciliation Act, 1996 (hereafter the „Act‟)
inter alia, praying that an arbitrator be appointed for adjudication of
the disputes that have arisen between the parties.
2. It is not in dispute that the petitioner and the respondent had
entered into an agreement dated 25.10.2010 for construction of
MTNL staff quarters at GH-17, Paschim Vihar, New Delhi. It is also
not in dispute that the said contract includes an arbitration clause
which reads as under:-
"53. ARBITRATION SETTLEMENT OF DISPUTES
53.1 For contract other than with public sector
undertakings
Except where otherwise expressly provided in the
contract all questions differences & disputes relating to
the meaning of the specification, designs, drawing and
instructions herein before mentioned and as the quality
of workmanship or material used on the work or as to
any other questions, claim, right, matter or things
whatsoever in any way arising out of or relating to the
contract, designs, drawings, specifications, estimates
instructions, orders or these conditions or others
concerning the works or the executions or failure to
execute the same whether arising during the progress
of the work or after the completion, cancellation,
termination or abandonment thereof shell be referred to
the sole arbitration of the person to be appointed by the
CE(BW), MTNL, Delhi (in charge of work) at the time
of dispute or if there is no chief engineer, the
administrative head of the said MTNL, Delhi at the
time of such appointment. There will be no objection
to any such appointment that the arbitrator so appoint
is a government / MTNL servant, that he had to deal
with the matter to which the contract relates ant that in
the course of his duties as dispute or difference. The
arbitrator to the whom the matter is originally referred
being transferred or vacating his office or being unable
to the act for any reasons, CE(BW) of MTNL as
aforesaid at the time of such transfer, vacation of office
or inability to act, shall appoint another person to act as
arbitrator In accordance with the term of the contract.
Such person shall be entitled to proceed with the
reference from the stage at which it was left by his
predecessor. It is also a term of this contract that no
person other than a person appointed CE (BW) of the
MTNL as aforesaid should act as arbitrator and if for
any reason that's not possible, the matter is not to be
referred to arbitration at all. In all cases where the
amount of claim is Rs. 75000/- (Rupees Seventy five
thousand only) and above, the arbitration shall give
reason for the award.
Subject as foresaid the provisions of the arbitration &
conciliation act, 1996 or any statutory modification or
re-enactment there of the rules made here under and for
the time being in force shall apply to the arbitration
proceeding under his clause.
It is a term of the contract that the party invoking
arbitration shall specify the dispute or disputes to be
referred to arbitrator under this clause together with the
amount or amounts claimed in respect of each dispute.
If the any contractor(s) does/ do not make any demand
for arbitration in respect of any claim (s) in writing
within 90 days of receiving the intimation from the
MTNL, that the bill is ready for payment, the claim of
the contractor (s) will be demand to have been waived
and absolutely barred and the MTNL shall be
discharged and released of all liabilities under the
contract in respect of these claims.
The decision of superintending engineer regarding the
quantum of reduction as well as justification thereof· in
respects of rates for sub-standard work which he may
decide to be accepted will be final and would not be
open to arbitration."
3. The only objection raised by the respondent is that the
invocation of the arbitration clause is beyond the period of limitation
of 90 days. The learned counsel for the respondent has pointed out
that the final bill was prepared on 15.03.2013 and the petitioner
invoked the arbitration clause on 04.04.2015. She also drew the
attention of the Court to the arbitration clause, which specifically
provides that if the demand for arbitration in respect of any claim is
not made within 90 days of receiving the intimation from the MTNL
that the bill is ready for payment, the demand would be deemed [sic
demand] to have been waived and barred.
4. She also submits that in view of express condition in the
arbitration clause, the petitioner is deemed to have waived his right
for invoking the arbitration.
5. The learned counsel for the petitioner has countered the
aforesaid submissions and submits that the issue whether the period of
limitation for invoking the arbitration clause can be restricted is no
longer res-integra as same is covered by several decisions of this
Court including Hindustan Construction Company v. DDA : 1999
(1) Arb. LR 272; Pandit Construction Company v. Delhi
Development Authority and Anr : 2007 (3) Arb LR 205 ( Delhi); and
M/s Chander Kant & Co. v. The Vice Chairman, DDA & Ors : Arb.
Pet. No.246 of 2005, decided on 26.05.2009.
6. I have heard the learned counsel for parties.
7. In Chander Kant & Co (supra), a Division Bench of this Court
was concerned with a petition under Section 11 (5) of the Act for
appointment of an arbitrator. In that case, the work was completed on
11.10.1990 and the final bill was released on 07.11.2002. The
petitioner therein invoked the arbitration clause by a notice dated
17.06.2004. As in the present case, the respondent therein had urged
that failure to make demand for appointment of the arbitrator beyond
the specified period of 90 days had resulted in forfeiture or waiver of
the right to invoke the arbitration clause. The Division Bench noted
the earlier decisions and concluded that the clause which restricts the
period of limitation or provides for waiver of the right, if no action is
commenced within the specified period, is violative of Section 28 of
the Indian Contract Act, 1872 as amended.
8. In my view, the decision in Chander Kant & Co (supra),
squarely covers the objection raised by the respondent in the present
petition. Accordingly, the penultimate sub paragraph of the
Arbitration clause which provides that "if the any contractor(s) does/
do not make any demand for arbitration in respect of any claim (s) in
writing within 90 days of receiving the intimation from the MTNL,
that the bill is ready for payment, the claim of the contractor (s) will
be demand to have been waived and absolutely barred and the MTNL
shall be discharged and released of all liabilities under the contract
in respect of these claims" is void.
9. In view of the above, the petition is allowed. It is directed that a
sole arbitrator be appointed under the Rules of the Delhi International
Arbitration Centre (DIAC). The representatives of the parties shall
appear before the co-ordinator, DIAC on 04.10.2016 at 11:00 AM.
The arbitration shall be conducted under the aegis of DIAC and in
accordance with its Rules.
10. In above terms, the petition stands disposed of.
11. The Registry of this Court is directed to send a copy of this
order to the co-ordinator, DIAC.
VIBHU BAKHRU, J
SEPTEMBER 20, 2016
M
