Delhi High Court
M/S K.B.G. Engineers vs Delhi Tourism And Transportation ... on 5 July, 2022
$~6
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision 05.07.2022
+ ARB.P. 576/2022
M/S K.B.G. ENGINEERS ..... Petitioner
Through: Mr. Avinash Trivedi, Advocate.
versus
DELHI TOURISM AND TRANSPORTATION DEVELOPMENT
CORPORATION LTD. ..... Respondent
Through: Mr. Abhimanyu Garg, Advocate
CORAM:
HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA
NEENA BANSAL KRISHNA, J. (ORAL)
1. The present petition under Section 11 (6) of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as 'The Act') has been filed on
behalf of the petitioner for appointment of an Arbitrator.
2. Facts in brief are that the petitioner is a registered partnership firm and is
doing the work of construction in Government and private department since
long time. The petitioner was declared successful participant in the Tender
published for the execution of the work of "upgradation/Construction of Sub-
Signature Not Verified
By:NIRMLA TIWARI
Signing Date:08.07.2022
16:55:12
Registrar Office at DC(South East) Office Complex Gargi College, Lajpat
Nagar, New Delhi, SH: Civil work i/c Furniture, Electric and HVAC Work".
After completion of all the formalities, Acceptance Letter bearing no.
DTTDC/Engg./I(196)/EE(PB-III)/2405 dated 30.07.2014 was awarded to the
petitioner.
3. The performance guarantee in terms of the Letter of Acceptance was
submitted after which the Agreement bearing No. 7/EE(PB-
III)/DTTDC/Engg/2014-15 for execution of work for a total contractual amount
of Rs. 2,13,59,777/- was entered into between the parties. The date of the
commencement of the work was 14.08.2014 and the date of completion was
11.12.2014. The petitioner immediately started the execution of work on
issuance of Acceptance Letter but it faced many hindrances during the course
of execution of the work at site which were ultimately completed on
28.09.2015. Thereafter, petitioner submitted his Final Bill and Statements of
10CA and 10C vide its letter dated 14.05.2018 and 18.10.2018 against which
some payments were made by the respondent in the month of August, 2020.
4. The officers of the respondent failed to make payments of the entire
amount despite repeated requests; the petitioner thus sent a letter dated
20.05.2020 to the Executive Engineer to release the entire amount. He also
submitted letter dated 21.05.2020 in the office of Chief Project Manager of
respondent reiterating its claims and invoking Arbitration clause 25 of GCC of
the Agreement. The Superintendent Engineer of the respondent department sent
a reply on the pretext that some Undertaking has already been given by the
petitioner at the time of release of the Final Bill. The petitioner again submitted
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By:NIRMLA TIWARI
Signing Date:08.07.2022
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a letter dated 20.06.2020 to the Managing Director of respondent. The Chief
Engineer of the respondent sent a reply dated 15.07.2020 requesting him to
approach Superintending Engineer of respondent in terms of Clause 25 of
GCC. A letter dated 10.08.2020 was accordingly submitted to the
Superintending Engineer for settlement of disputes and for referring the matter
for appointment of Arbitrator for adjudicating of disputes to which a reply
dated 04.09.2020 was sent from Chief Engineer of the respondent reiterating
the averments made in the letter dated 15.07.2020. The petitioner then
submitted a letter dated 21.12.2020 to Chief Engineer of respondent in terms of
Clause 25 of the GCC Agreement for settlement of disputes but since no reply
came forth, he submitted another letter dated 27.08.2021 to the Managing
Director of the respondent despite which the respondent has failed to constitute
the Dispute Resolution Committee or to pay the claimed amount along with the
interest. It also failed to take any steps for the appointment of the Arbitrator;
hence the present petition has been made for appointment of the Arbitrator.
5. The valuation of the subject matter has been done at approximately
Rs.10,23,082/- alongwith interest @ 18% per annum from the due date till the
date of payment to the petitioner.
6. Learned counsel for the respondent has taken objection that the petitioner
had already accepted the Full and Final payment and had even furnished an
Undertaking to this effect of final payment and, therefore, there exists no
dispute referable to the arbitration. The second ground on which the petition
has been challenged is that there is a procedure prescribed for settlement of
dispute which has not been followed by the petitioner.
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By:NIRMLA TIWARI
Signing Date:08.07.2022
16:55:12
7. Submissions heard.
8. My observations are as under:
9. The existence of the Arbitration Agreement is not in dispute. The
objection taken by the respondent is that the petitioner had given an
Undertaking having received the final amount from the respondent. In this
regard it may be observed that the jurisdiction of this Court under section
11(6A) of the Arbitration and Conciliation Act, 1996 is limited. The law on this
aspect is established after the Amendment of Section 11 subsequent to insertion
of sub clause 6A the jurisdiction of this court is limited only to the examination
of existence and validity of an Arbitration Clause. It is only when the court
finds that on prima facie basis the claims are ex facie not arbitrable that the
petition for referring the dispute to arbitration may be rejected. In Vidya Drolia
and Ors vs. Durga Trading Corporation, (2019) SSC online SC 358 it was
observed that when there is a doubt about the authenticity of the claim, the
thumb rule is that "when in doubt, do refer". The issue raised by the respondent
is arguable for it requires determination whether the final payment has been
received by the petitioner and the said disputed question of fact cannot be
considered under section 11(6) of the Act which has a very limited scope. The
circumstances in which the Undertaking was executed and whether it was in
complete discharge of the contractual obligations of the petitioner absolving the
respondent of all its liability, is a disputed fact which cannot be determined in
the present petition under Section 11 of the Act.
10. The other objection taken is that Section 25 of GCC of the Agreement
provides for a detailed procedure to be followed for referring the matter for
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By:NIRMLA TIWARI
Signing Date:08.07.2022
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settlement/referring the matter to Arbitration. The petitioner has explained that
when his request for payment of the balance amount was not responded to by
the respondent he submitted a letter dated 20.5.2020 to the Executive Engineer.
He also submitted letter dated 21.5.2020 to the Chief Project Manager
reiterating his claim and for invoking the Arbitration Clause. Thereafter, he
wrote a letter to the Superintending Engineer and another letter dated 20.6.2020
to the Managing Director of the respondent in terms of 25 GCC of the
Agreement. Though their responses were received but neither the Dispute
Resolution Committee was appointed nor were any steps taken for appointment
of the Arbitrator by the respondent. In the circumstances, it cannot be said that
the petitioner has not followed the due procedure for resolution of dispute and
untimely invoking arbitration.
11. In the face of inaction of the respondent to either supply the claim or to
constitute a Dispute Resolution Committee or to appoint an Arbitrator, the
intent of Clause 25 has been completely defeated by the conduct of the
respondent and the petitioner cannot be relegated back to the mechanism as
provided under Clause 25 of GCC when the same has been followed and
complied with by the petitioner in true intent and spirit.
12. The petitioner is, therefore, allowed and Shri Satyam Thareja, Advocate,
(Enrolment No. D/1050/2012, Mobile No.9711097019) is hereby appointed as
an Arbitrator.
13. The parties are directed to appear before the Sole Arbitrator as and when
notified. This is subject to the Arbitrator making necessary disclosure(s) under
Section 12(1) of the Act and not being ineligible under Section 12(5) of the
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By:NIRMLA TIWARI
Signing Date:08.07.2022
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Act.
14. The Arbitrator will be entitled to charge his/her fee in terms of the
provisions of the Fourth Schedule appended to the Act.
15. In view of the above, the present petition is allowed. All pending
applications, if any, also stand disposed of accordingly.
NEENA BANSAL KRISHNA, J
JULY 5, 2022/PA
Signature Not Verified
By:NIRMLA TIWARI
Signing Date:08.07.2022
16:55:12
