Delhi High Court
Ved Prakash Mithal & Sons vs Delhi Development Authority & Anr on 10 July, 2018
$~1
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 10th July, 2018
+ ARB.P. 212/2018
VED PRAKASH MITHAL & SONS ..... Petitioner
Through Mr.Peeyoosh Kalra, Ms.Sona Babbar
and Mr.Vishal Aggarwal, Advs.
versus
DELHI DEVELOPMENT AUTHORITY & ANR. ..... Respondents
Through Ms.Kanika Singh, Adv.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
NAVIN CHAWLA, J. (Oral)
1. This petition under Section 11 (6) of the Arbitration and Conciliation
Act, 1996 (hereinafter referred to as the 'Act') has been filed by the
petitioner seeking appointment of a Sole Arbitrator for adjudicating the
disputes that have arisen between the parties in relation to the Contract dated
02.05.2014 executed between the parties for carrying out the work of
construction of 268 EWS Houses by the petitioner for the respondents. The
Arbitration Agreement between the parties is contained in Clause 25, the
relevant portion of which is reproduced herein below:
ARB.P.212/2018 Page 1
"CLAUSE 25
Settlement of Disputes & Arbitration.
(A) Except where otherwise provided in the contract, all
questions and disputes relating to the meaning of the
specifications, design, drawings and instructions herein
before mentioned and as to the quality of workmanship or
materials used on the work or as to any other questions,
claim, right, matter or thing whatsoever in any way arising
out of or relating to the contract, designs, drawings,
specifications, estimates, instructions, orders or these
conditions or otherwise concerning the works or the
execution or failure to execute the same whether arising
during the progress of the work or after the cancellation,
termination, completion or abandonment thereof shall be
dealt with as mentioned hereinafter.
i) If the contractor considers any work demanded of him
to be outside the requirements of the contract, or disputes
any drawings, record or decision given in writing by the
Engineer-in-Charge on any matter in connection with or
arising out of the contract or carrying out of the work, to be
unacceptable, he shall promptly within 15 days request the
Superintending Engineer in writing for written instruction
or decision. Thereupon the Superintending engineer shall
give his written instructions or decision within a period of
one month from the receipt of the contractor's letter. If the
Superintending Engineer fails to give his instructions or
decision in writing within the aforesaid period or if the
contractor is dissatisfied with the instructions or decision
of the Superintending Engineer, the contractor may, within
15 days of the receipt of Superintending Engineer's decision
appeal to the Chief Engineer who shall afford an
opportunity to the contractor to be heard, if the latter so
desires, and to offer evidence in support of his appeal. The
chief Engineer shall give his decision within 30 days from
receipt of the contractor's Appeal. If the contractor is
dissatisfied with the decision, the contractor shall within a
period of 30 days from receipt of the decision, give notice to
ARB.P.212/2018 Page 2
the Engineer Member for appointment of Arbitrator, failing
which, the said decision shall be final, binding and
conclusive and not referable to adjudication by the
Arbitrator."
2. The primary contention raised by the respondents is that the present
petition is not maintainable inasmuch as the petitioner has not followed the
procedure prescribed in the Arbitration Agreement before filing of the
present petition. To appreciate this submission reference would have to be
made to the following facts/documents:
The disputes having arisen between the parties, the petitioner
addressed a letter dated 03/10.04.2017 to the Chief Engineer,
Superintending Engineer and the Executive Engineer of the
respondents raising certain claims.
By another letter dated 29.05.2017 addressed to the Executive
Engineer of the respondents, the petitioner while referring to the
earlier letter dated 03.04.2017, called upon the Executive Engineer
to communicate his decision on the issue raised by the petitioner.
Relevant extract from the letter is reproduced herein below:
"You are requested to do the needful and communicate
your decision to us, besides paying our claims and dues,
as raised by us vide our earlier letters."
The Executive Engineer of the respondent vide its letter dated
31.05.2017 responded to the above letter and in fact raised a
claim against the petitioner.
The petitioner, instead of following the procedure as prescribed
ARB.P.212/2018 Page 3
in Clause 25 and filing an appeal against this communication to
the Superintending Engineer, vide letter dated 21.07.2017
called upon the Engineer Member of the DDA to appoint an
Arbitrator. Having received no response to this request, the
present petition has been filed.
3. A reading of the above sequence of events would show that the
procedure as prescribed in Clause 25 of the Agreement has not been
followed by the petitioner before invoking the Arbitration Agreement in
form of its letter dated 21.07.2017 and filing of the present petition.
4. Section 11(6) of the Act would come into operation only where the
other party fails to act as required under that procedure. The petitioner itself
having not followed the procedure as prescribed in the Arbitration
Agreement, cannot make a complaint against the respondents' alleged
failure to act in accordance with the same.
5. This Court in its judgment dated 17.03.2009 passed in A.A.389/2006,
Sushil Kumar Bhardwaj v. Union of India and other connected petitions,
while examining the identical Clause in the contract of Municipal
Corporation of Delhi and Government of NCT of Delhi, has held that the
procedure of inviting the decision in writing on any claim/dispute, of
approaching the Superintending Engineer and thereafter the Chief Engineer
for decision on the dispute is to be exhausted before the Chief Engineer can
be approached for appointment of an Arbitrator. It was further held that the
procedure prescribed in Clause 25 is mandatory and not directory.
6. Learned counsel for the petitioner submits that with the Amendment
to the Act by the insertion of Section 11(6A) in the Act by way of
Arbitration and Conciliation (Amendment) Act 2015, the above judgment
ARB.P.212/2018 Page 4
would no longer be applicable. I am unable to agree with the said
submission. Section 11(6A) of the Act is reproduced herein below:
"11(6A) The Supreme Court or, as the case may be, the High Court,
while considering any application under sub-section (4) or sub-
section (5) or sub-section (6), shall, notwithstanding any judgment,
decree or order of any Court, confine to the examination of the
existence of an arbitration agreement."
7. The above provision does not deal with the question of
maintainability of the petition under Section 11(6) of the Act. A petition
under Section 11(6) of the Act would be maintainable only where the
respondent has failed to act in accordance with the procedure prescribed in
the Arbitration Agreement. In the present case as the petitioner itself has not
followed the procedure prescribed in the Arbitration Agreement, the petition
is clearly pre-mature and would not be maintainable and therefore, the
question of applicability of Section 11(6A) of the Act would not arise.
8. Learned counsel for the petitioner has further placed reliance on the
judgments of this Court in M/s Sikand Construction Co. v. State Bank of
India, ILR (1979) 1 Delhi 364 and Saraswati Construction Company v.
East Delhi Co-operative Group House Society Ltd., 57 (1995) DLT 343, to
contend that where an Arbitration Agreement required the contractor to refer
its disputes to the Architect and on being dissatisfied with the decision of the
Architect invoke the Arbitration Agreement, this Court had held the said
procedure to be directory and not mandatory.
9. It is noticed that both these decisions are based on Section 20 of the
Arbitration Act, 1940 and were interpreting the specific Arbitration
Agreement in question in those petitions. In view of the decision of this
ARB.P.212/2018 Page 5
Court in Sushil Kumar Bhardwaj (supra), specifically interpreting a pari
materia Arbitration Agreement and the provision of Section 11(6) of the
Act, these judgments would not be applicable and come to the aid of the
petitioner.
10. Learned counsel for the petitioner has further placed reliance on the
judgment of this Court in Ravindra Kumar Verma v. BPTP Ltd. & Anr.
2015(147) DRJ 175; judgment dated 30.01.2018 passed by this Court in
Arb. P.243/2017 Siemens Limited v. Jindal India Thermal Power Limited
and; Indian Potash Limited v. Bohra Industries Ltd., 2011 (121) DRJ 601
in support of its submission that the procedure as prescribed in Clause 25 of
the Agreement should be read as directory and not mandatory in nature.
11. In my view these judgments have no application to the facts of the
present case inasmuch as they deal with the Arbitration Agreement, which
required the party to first explore the possibility of an amicable settlement
before seeking appointment of an Arbitrator. This is very different from the
procedure as has been prescribed in Clause 25 of the Agreement in question,
which not only provides for a hierarchical manner of adjudication of the
claims raised by the Contractor, but also gives specific timeline for the
decision of each authority.
12. In view of the above, the present petition is not maintainable and is
dismissed, with no order as to cost.
NAVIN CHAWLA, J
JULY 10, 2018/Arya
ARB.P.212/2018 Page 6
