Orissa High Court
United Construction vs The Chief General Manager on 1 October, 2021
IN THE HIGH COURT OF ORISSA AT CUTTACK
ARBP No.69 of 2018
United Construction .... Petitioner
Mr. S.S. Rao, Sr. Advocate
-versus-
The Chief General Manager,
Office of the Principal Chief
Engineer, Rail Sadan, .... Opp. Parties
Bhubaneswar and others
Mr. A.K. Mishra, Advocate
CORAM:
THE CHIEF JUSTICE
ORDER
Order No.
01.10.2021
Dr. S. Muralidhar, ACJ
21. 1. This petition under Section 11(6) of the Arbitration and
Conciliation Act, 1996 ('Act') seeks appointment of an
Arbitrator to adjudicate the disputes between the Petitioner and
the Opposite Parties East Coast Railways (ECR) arising from
the award of work in favour of the Petitioner on 19th April,
2010 for replacement of the existing steel channel sleepers with
new galvanized fastenings.
2. The case of the Petitioner is that under Clause-64 of the
General Conditions of Contract (GCC), governing the award of
the above work, as amended on 11th November, 2016, the
disputes involving claims of total value not exceeding One
Crore were to be referred to the sole Arbitrator who shall be a
Gazetted Officer of the Railway not below the rank of J.A.
cadre nominated by the General Manager, who shall be
appointed within 60 days from the date of demand. In other
cases, the disputes were to be referred to a panel of three
Gazetted Railway Officers not below the J.A. cadre or two
Railway Gazetted Officers not below the J.A. cadre and a
retired Railway Officer not below the rank of an SAG Officer.
3. The Petitioner states that in view of the amendment made to
the Act in 2015, an option was given to the parties to waive of
the applicability of Section 12 (5) of the Act. According to the
Petitioner he prayed for extension of time for completion of the
work but this request was not accepted. Therefore, by a letter
dated 12th November 2012 he requested the ECR to close the
work and release the funds.
4. The Petitioner by letter dated 25th June, 2018 is stated to
have raised a demand and sought the appointment of an
Arbitrator. In paragraph 6 of the petition it is stated by the
Petitioner that by a letter dated 6th July, 2018 he was advised by
the General Manager, Arbitration, of the ECR to sign a letter
exempting the applicability of the Section 12 (5) of the Act.
The Petitioner declined and wrote back on 21st July, 2018
asking the General Manager to suggest a panel of Arbitrators. It
is stated that on 4th September, 2018 the Chief General
Manager (CGM) wrote to the Petitioner disputing the
correctness of the demand and declined the request.
5. On 14th September, 2018 the Petitioner's request for the
appointment of Arbitrator was rejected. The ECR stated in the
said letter that the claim of the Petitioner was baseless and
would not be required to be referred to arbitration. It is in the
above circumstances, the present petition was filed on 21st
December, 2018.
6. The ECR has filed a reply to the petition on 24th July, 2019.
It is stated therein that the work was completed within the
extended date, i.e., 31st March, 2013. The final bills (one each
for Asst. Divisional Engineer/Bhubaneswar and Dhenkanal)
had been passed and the contractor submitted 'No Claim
Certificate' (NCC) on both the final bills. Thereafter, the final
bills were passed and the security deposit was released on the
Petitioner submitting the NCC.
7. In its reply the ECR has pointed out how five years after the
release of the money, the Petitioner applied by a letter dated
25th June, 2018 for the appointment of an Arbitrator. The claim
was time-barred and was accordingly rejected.
8. At the hearing of the present petition on 5th July, 2021 the
Court noticed that the NCC had been signed by the Petitioner
on 16th November, 2013 whereas the fresh notice by the
Petitioner to the ECR making a claim was sent on 25th June,
2018. The Petitioner was asked to explain the gap of over four
years between these dates. Mr. Rao, learned Senior counsel
appearing for the Petitioner then sought time for instructions
regarding the delay.
9. The Court heard the submissions of Mr.S.S. Rao, learned
Senior counsel appearing for the Petitioner and Mr. A.K.
Mishra, learned counsel appearing for the ECR.
10. Mr. Rao referred to the decision dated 10th March, 2021 of
the Supreme Court of India in Civil Appeal Nos.843-844 of
2021 (Bharat Sanchar Nigam Ltd. v. M/s. Nortel Networks
India Pvt. Ltd.) and submitted that the issue whether the
claims for time barred should be best left to the Arbitrator. He
however frankly stated that he had no material to explain the
delay between the date of Petitioner signing the NCC and the
date of making the claim. However, he submitted that this also
should also be left to be decided by the Arbitrator.
11. The Court has examined the above decision. The law has
been summarized by the Supreme Court in paragraph 40 of the
judgment as under:
"40. Conclusion Accordingly, we hold that:
(i) The period of limitation for filing an
application under Section 11 would be governed
by Article 137 of the First Schedule of the
Limitation Act, 1963. The period of limitation
will begin to run from the date when there is
failure to appoint the arbitrator;
It has been suggested that the Parliament may
consider amending Section 11 of the 1996 Act to
provide a period of limitation for filing an
application under this provision, which is in
consonance with the object of expeditious
disposal of arbitration proceedings;
(ii) In rare and exceptional cases, where the
claims are ex facie time-barred, and it is manifest
that there is no subsisting dispute, the Court may
refuse to make the reference."
12. The question is here about the delay between the date, the
NCC was signed and the date on which the Petitioner made a
fresh claim. Since this gap is well over four years, it was
incumbent by the Petitioner to satisfactorily explain to the
Court, even prima-facie, that the claim is not barred by
limitation. There is no such material available with the
Petitioner. Therefore, even if the dispute were to be referred to
arbitration, the result would be no different.
13. In the considered view of the Court the claims of the
Petitioner appear ex facie time barred and therefore cannot be
referred to arbitration. In that view of the matter, the Court
declines to accept the prayer of the Petitioner for the reference
of the dispute to arbitration. The arbitration petition is
accordingly dismissed but in the circumstances no order as to
costs.
(Dr. S. Muralidhar)
Chief Justice
KC Bisoi
