Delhi High Court
M/S Rkmt Buildcon Private Limited vs Government Of National Capital ... on 4 November, 2024
Author: Sachin Datta
Bench: Sachin Datta
$~4
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 04.11.2024
+ ARB.P. 1329/2024
M/S RKMT BUILDCON PRIVATE LIMITED .....Petitioner
Through: Mr. Sumit Rana, Mr. Arun Dalal,
Advs.
versus
GOVERNMENT OF NATIONAL
CAPITAL TERRITORY OF DELHI ....Respondent
Through: Mr. Avishkar Singhvi, Adv (ASC),
Mr. Naved Ahmed, Mr. Vivek Kumar
Singh, Mr. Shubham Kumar, Advs.
CORAM:
HON'BLE MR. JUSTICE SACHIN DATTA
SACHIN DATTA, J. (Oral)
1. The present petition has been filed by the petitioner under Section
11(6) of the Arbitration and Conciliation Act (hereinafter 'the A&C Act')
seeking reference of certain claims to arbitration.
2. The disputes between the parties have arisen in the context of a tender
issued by the respondent for (Civil and Electrical work) vide NIT No.
01/CE/HMZ/PWD/2018-19 for the work of "Remodelling of 94 nos. Delhi
Govt. Dispensaries to Policlinics. SH: Remodelling of 20 Nos. DGD at
various places in constituencies of District North of Delhi including Water
supply, sanitary installations, Electrical installations, AC, Firefighting
system etc. (Package- I)".
3. The petitioner emerged as the lowest bidder pursuant to the tender
process and the letter of award dated 01.12.2018 was issued in favour of the
petitioner.
4. The relevant conditions of contract contained an arbitration clause as
under:-
"CLAUSE 25
Except where otherwise provided in the contract, all questions and
disputes relating to the meaning of the specifications, design,
drawings and instructions here-in before mentioned and as to the
quality of workmanship or materials used on the work or as to any
other question, 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 consider 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 or if the Engineer in Charge considers any act or
decision of the contractor on any matter in connection with or
arising out of the contract or carrying out of the work, to be
unacceptable and is disputed, such party shall promptly within
15 days of the arising of the disputes request the Chief Engineer
or where there is no Chief Engineer, the Additional Director
General (CE/ ADG) who shall refer the disputes to Dispute
Redressal Committee (DRC) within 15 days along with a list of
disputes with amounts claimed if any in respect of each such
dispute. The Dispute Redressal Committee (DRC) shall give the
opposing party two weeks for a written response, and, give its
decision within a period of 60 days extendable by 30 days by
consent of both the parties from the receipt of reference from
CE/ADG. The constitution of Dispute Redressal Committee
(DRC) shall be as indicated in Schedule 'F'. Provided that no
party shall be represented before the Dispute Redressal
Committee by an advocate/legal counsel etc. If the Dispute
Redressal Committee (DRC) fails to give its decision within the
aforesaid period or any party is dissatisfied with the decision of
Dispute Redressal Committee (DRC) or expiry of time limit
given above, then either party may within a period of 30 days
from the receipt of the decision of Dispute Redressal Committee
(DRC), give notice to the Chief Engineer, CPWD, in charge of
the work or if there be no Chief Engineer, the Additional
Director General of the concerned region of CPWD or if there
be no Additional Director General, the Director General,
CPWD (CE/ ADG/DG) for appointment of arbitrator on
prescribed proforma as per Appendix XV under intimation to
the other party. It is a term of contract that each party invoking
arbitration must exhaust the aforesaid mechanism of settlement
of claims/disputes prior to invoking arbitration.
The CE/ADG/DG shall in such case appoint the sole arbitrator
or one of the three arbitrators as the case may be within 30 days
of receipt of such a request and refer such disputes to
arbitration. Wherever the Arbitral Tribunal consists of three
Arbitrators, the contractor shall appoint one arbitrator within
30 days of making request for arbitration or of receipt of
request by Engineer-in-charge to CE/ ADG/DG for appointment
of arbitrator, as the case may be, and two appointed arbitrators
shall appoint the third arbitrator who shall act as the Presiding
Arbitrator. In the event of
a. A party fails to appoint the second Arbitrator, or
b. The two appointed Arbitrators fail to appoint the
Presiding Arbitrator, then The Director General, CPWD
shall appoint the second or Presiding Arbitrator as the
case may be.
(ii) Disputes or differences shall be referred for
adjudication through arbitration by a Tribunal having sole
arbitrator where Tendered amount is Rs.100 Crore or less.
Where Tendered Value is more than Rs. 100 Crore, Tribunal
shall consist of three Arbitrators as above. The requirements of
the Arbitration and Conciliation Act, 1996 (26 of 1996) and any
further statutory modifications or re-enactment thereof and the
rules made there under and for the time being in force shall be
applicable.
It is a term of this contract that the party invoking arbitration shall
give a list of disputes with amounts claimed, if any, in respect of each
such dispute along with the notice for appointment of arbitrator and
giving reference to the decision of the DRC. It is also a term of this
contract that any member of the Arbitration Tribunal shall be a
Graduate Engineer with experience in handling public works
engineering contracts at a level not lower than Chief Engineer (Joint
Secretary level of Government of India). This shall be treated as a
mandatory qualification to be appointed as arbitrator.
Parties, before or at the time of appointment of Arbitral Tribunal may
agree in writing for fast track arbitration as per the Arbitration and
Conciliation Act, 1996 {26 of 1996} as amended in 2015. Subject to
provision in the Arbitration and Conciliation Act, 1996 (26 of 1996)
as amended in 2015 whereby the counter claims if any can be directly
filed before the arbitrator without any requirement of reference by the
appointing authority, the arbitrator shall adjudicate on only such
disputes as are referred to him by t he appointing authority and give
separate award against each dispute and claim referred to him and in
all cases where the total amount of the claims by any party exceeds
Rs. 1,00,000/-, the arbitrator shall give reasons for the award. It is
also a term of the contract that if any fees are payable to the
arbitrator, these shall be paid as per the Act.
The Place of arbitration shall be as mentioned in Schedule F. In case
there is no mention of place of arbitration, the arbitral tribunal shall
determine the place of arbitration. The venue of the arbitration shall
be such place as may be fixed by the Arbitral Tribunal in consultation
with both the parties. Failing any such agreement, then the Arbitral
Tribunal shall decide the venue."
5. It has been brought out in the petition that in terms of the aforesaid
arbitration agreement, the Chief Engineer of the respondent has appointed
Mr. Bharat Bhushan Makkar, a retired SDG of CPWD as Sole Arbitrator to
adjudicate certain claims. The said Arbitral Tribunal is seized the following
claims:-
Nature of Claim Description in Brief Amount (INR)
Claim No.1 Work done, final bill submitted on 4,16,60,512.00
23.01.2023 for civil work and on
22.02.2023 for electrical work but not paid
Claim No.2 Claim on account of escalation not paid 2,26,04,522.00
under clause 10C, 10CC of the contract
Claim No.3 Damages and losses on account of 7,02,55,328.00
prolongation of contract for the reasons
attributed to the department
Claim No.4 Claim on account of unlawful withheld 38,00,620.00
amount under clause 5 of the contract
Claim No.5 Claim on account of unlawful recovery 24,81,616.00
from 6th R/A bill as interest on advance
payment
Claim No.6 Claim on account of compound interest on Not pressed
claims 1 to 6 @ 10% per annum from the
due date of realisation of payments.
Claim No.7 Pre-suit, pendent-lite and future compound
interest @ 10% per annum
Claim No.8 Cost of Arbitration fee to be paid to the Amount shall be intimated
Arbitral Tribunal, Consultants, Advocates, after concluding of arbitration
Venue charges and other expenses to be proceedings.
spent
6. The petitioner has sought to refer certain additional claims to the
same Arbitral Tribunal. However, the concerned Chief Engineer has failed
to refer the said additional claims to the existing Arbitral Tribunal. The said
additional claims are as under :-
Nature of Claim Description in Brief Amount (INR)
Additional Claim Claim on account of Security Deposit Civil Work-
No.1 deducted from the R/A bill & Final bill. 47,50,774.00
Electrical Work-
25,88,025.00
Total- 73,88,799.00
Additional Claim Claim on account of delay of R/A bill as per 49,16,156.00
No.2 specified period under Clause 7 of the
contract
Additional Claim Claim on account of GST from 12% to 18% 8,28,405.00
No.3 from 22/07/2022 on the gross amount of
payments made after 22/07/2022 to the
Petitioner on the actual basis to be
calculated on reallocation of payment
Additional Claim Claim on account of GST to be paid by the
No.4 Petitioner @18% on the award amount to be
calculated on realization on actual basis
7. It is noticed that the learned Sole Arbitrator Mr. Bharat Bhushan
Makkar was unilaterally appointed by the respondent in terms of the
aforementioned arbitration agreement between the parties. Notwithstanding,
that such unilateral appointment has been frowned upon in a catena of
judgments 1, learned counsel for the petitioner submits that the prayer in the
present petition is confined to seeking that the aforesaid additional claims of
the petitioner be referred to the aforesaid Arbitrator appointed by the Chief
Engineer of the respondent vide letter dated 25.04.2024. It is submitted that
for this purpose, the petitioner is desirous of waiving the provisions of
Section 12(5) of the A&C Act and enter into an express agreement with the
respondent in this regard, to enable the aforesaid Arbitrator to exercise
jurisdiction and to adjudicate the claims.
8. In the circumstances, this Court accedes to the aforesaid prayer made
on behalf of the petitioner. Accordingly, the additional claims are referred to
arbitration by the Sole Arbitrator appointed by the respondent, subject to the
parties entering into an express agreement waiving Section 12(5) of the
A&C Act. In case, there is impediment in this regard, the parties are at
liberty to avail appropriate remedies under law.
Naveen Kandhari v. Jai Mahal Hotels Pvt. Ltd., 2018 SCC OnLine Del 9180; Sunil Sethi v. Hero
Fincorp Ltd., 2024 SCC OnLine Del 1476; Perkins Eastman Architects DPC v. HSCC (INDIA) Limited,
(2020) 20 SCC 760; TRF Limited v. Energo Engineering Projects Limited, (2017) 8 SCC 377; Bharat
Broadband Network Limited v. United Telecoms Limited, (2019) 5 SCC 755; Kotak Mahindra Bank Ltd.
v. Narendra Kumar Prajapat, 2023 SSC OnLine Del 3148; and Radhika Engineering Co. v.
Telecommunication Consultants India Ltd., 2024 SCC OnLine Del 4262
9. The present petition stands disposed of in above terms.
SACHIN DATTA, J
NOVEMBER 4, 2024/uk
