M/S Simplex Infrastructure Ltd ... vs M/S J.P. Singla Engineers And ...
2022 Latest Caselaw 16325 P&H

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     CR 6634/2019

                        IN THE HIGH COURT OF PUNJAB AND HARYANA AT
                                        CHANDIGARH




                                                                              CR 6634/2019

                                                               Date of decision. 09.12.2022



           M/s Simplex Infrastructure Limited and another



                                                         ..................Petitioners.

                                                  Vs.

           M/s J.P.Singla Engineers and Contractor.



                                                         .....................Respondent



           CORAM               HON'BLE MS. JUSTICE NIDHI GUPTA



           Present:-           Mr. Sanjeev Pabbi,Advocate for the petitioner.

                               Mrs. M.S.Chauhan, Advocate for the respondent.

           Nidhi Gupta,J.

Present revision petition has been filed challenging the order

dated 5.9.2019 (Annexure P-5) passed by Civil Judge (Junior Division)

Chandigarh whereby petitioners' application under Section 8 of the

Arbitration and Conciliation Act,1996 (for short 'the 1996 Act') has been

dismissed.

Brief facts of the case are that the respondent/plaintiff is a

proprietorship firm and deals in the construction of roads and buildings. Vide

Agreement/work order dated 14.4.2014, the petitioners/defendants allocated

road work to the respondent/plaintiff. As per work order the respondent RAJINDER PARSHAD JOSHI 2022.12.09 13:49 I attest to the accuracy and integrity of this document

CR 6634/2019

started road work and completed the same as per specifications of the

petitioners/defendants. It is case of the respondent that after completion of

the road work, it communicated its bill dated 22.8.2016 for the period from

1.8.2013 to 22.8.2016 to the petitioners. Thereafter, after completion of minor

patch work the final bill dated 13.5.2017 was also submitted to the petitioners.

However, since payment was not disbursed to the respondent despite

numerous reminders, the respondent was left with no alternative but to file the

present Civil Suit bearing C/S No.2207 of 2018, for recovery of

Rs.27,16,659/- as principal amount and Rs.3,79,748/- as interest @ 15% per

annum w.e.f. 13.5.2017.

During the pendency of the above said suit the

petitioner/defendant filed application under Section 8 of the 1996 Act before

the Civil Judge (Jr.Div.) praying therein that the above said civil suit filed by

the respondent/plaintiff was not maintainable in view of Clause 12 of the

Agreement/work order wherein it was clearly stipulated that in case of any

dispute between the parties the matter is to be referred to arbitration. It is

against dismissal of this application by the learned Civil Judge (Jr.Div.) vide

order dated 5.9.2019 that the petitioners have approached this Court by way

of present revision petition.

It is submitted by the learned counsel for the petitioners that

as per Clause 12 of the Arbitration Agreement (Annexure P-1) the respondent

was required to refer the dispute regarding non-payment of bills to arbitration.

It is submitted that the total dues were Rs.1,33,00,000/- out of which only

about Rs.27,16,000/- is outstanding. It is stated that as there is an arbitration

clause in the Agreement between the parties, therefore, the civil suit filed by

the respondent is not maintainable. It is submitted that once the execution of RAJINDER PARSHAD JOSHI 2022.12.09 13:49 I attest to the accuracy and integrity of this document

CR 6634/2019

the Agreement between the parties containing arbitration clause is admitted,

then in case of dispute between the parties, the matter was required to be

resolved through arbitration. Learned counsel further submits that respondent

is raising dispute on merit whereas language of Section 8 is pre-emptory.

Per contra, learned counsel for the respondent/plaintiff

submits that it is not in dispute that the respondent had completed the job as

per specifications of the petitioners. At no stage was there any objection

raised by the petitioners regarding nature of work done by the respondent.

Accordingly, after completion of work, the respondent had submitted its bill

dated 22.8.2016; and after completion of minor repair/patch work on the roads

and the final bill was also submitted on 13.5.2017. It is further submitted that

as per Clause 11 of the Agreement/work order dated 14.4.2014, the defect

liability period therein was specified to be one year from the date of

completion of work which in the present case expired on 22.9.2017. It is

further submitted that the final bill was raised on 13.5.2017 which as per the

agreement was due for payment to the extent of 60% within 15 days and the

balance to be released within next ten days. Thus, the final payment was due

on 28.5.2017 (60%) and 7.6.2017 (final payment). It is further submitted that

as the petitioners did not make the payment within the stipulated period, the

respondent sent several reminders/emails and communications to the

petitioners for release of payment for the work done. However, till the end the

Project Manager of the petitioner-company continued to assure the respondent

that payment will be released. But despite numerous reminders/emails the

petitioners neither replied to the emails of the respondent nor paid the bill

amount. It is stated that now they do not even answer the phone calls made

by the respondent and as such the respondent was left with no alternative but

to file the aforesaid civil suit.

RAJINDER PARSHAD JOSHI 2022.12.09 13:49 I attest to the accuracy and integrity of this document

CR 6634/2019

I have heard learned counsel for the parties and perused the

record.

There is no doubt that the liability is not disputed by the

petitioners. A perusal of the arbitration Clause 12 in the Agreement/ work

order dated 14.4.2014 shows that the same is related to 'dispute arising out of

or in connection with this work order/contract/purchase order which shall be

first amicably settled by mutual dialogue. If the parties fail to settle the

difference or dispute arising out of or in connection with this work

order/contract/purchase order (including interpretation of the terms thereof),

the same shall be referred to arbitration.' In the present case, in my view the

dispute does not arise out of or in connection with the work

order/contract/purchase order. It is plain and simply a case of non-payment of

dues. As such, it cannot be said to be a dispute arising out of the work contract.

Even otherwise, the operation of the agreement ceases once the respondent

has completed the work project. Accordingly, this is a simple case of non-

payment of final amount due and therefore, the arbitration clause cannot be

held to be applicable to this case.

In this regard reliance may be placed upon judgment of the

Hon'ble Supreme Court in The UOI vs. The Birla Cotton Spinning &

Weaving Mills Lawfinder Doc. Id # 61151 and judgment of Hon'ble Delhi

High Court passed in Monporte Impex Pvt. Ltd. V Harveen Bali and

others, Law Finder Doc id # 214537. Head note A of which reads as under:-

"A. Arbitration and Conciliation Act,1996, Section 8-Stay of proceeding- Reference of dispute to arbitrator of non-payment of price of goods-Failure of applicant to spell out the detail of claims arisen between the parties- In such a case non-payment of price cannot be said to be a dispute under or arising out of a contract. UOI v Birla

RAJINDER PARSHAD JOSHI 2022.12.09 13:49 I attest to the accuracy and integrity of this document

CR 6634/2019

Cotton Spinning and Weaving Ltd. [Reported in (1996 AIR (SC) 688)] Followed."

Further, as regards argument of ld. Counsel for the petitioner

regarding said Section 8 of the 1996 Act, same is reproduced hereinbelow.

"8. Power to refer parties to arbitration where there is an arbitration agreement. - [(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.]

(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.

[Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.]

(3) Notwithstanding that an application has been made under sub- section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made".

A perusal thereof shows that arbitration clause comes into

operation 'in a matter which is the subject of an Arbitration Agreement'.

However, in the present case the dispute is not a subject of the Arbitration

Agreement as it does not relate to execution of the work or its completion, or

even of the contract or projects related thereto. As noticed above the present

dispute relates to/ is a case of non-payment of dues simpliciter. The present RAJINDER PARSHAD JOSHI 2022.12.09 13:49 I attest to the accuracy and integrity of this document

CR 6634/2019

dispute between the parties cannot be said to be a dispute 'under', 'in

connection with', or even 'with regard to' the contract. Therefore, it cannot

be held to be a case for reference to arbitration, and in the face of admitted

liability respondent has legally filed the present suit for recovery. Perusal of

record also reveals that respondent has sent numerous reminders and emails

to the petitioners for payment but no reply was received by the respondent on

the part of the petitioners. Accordingly, even the condition for amicable

settlement was not adhered to by the petitioner. As such, in view of the

aforesaid facts and discussion, I find no error in the order dated 5.9.2019

impugned herein, and the revision petition is dismissed.

           09.12.2022                                                   (Nidhi Gupta)
           Joshi                                                            Judge

                               Whether speaking/reasoned                 Yes
                               Whether reportable                        Yes/No




RAJINDER PARSHAD JOSHI
2022.12.09 13:49
I attest to the accuracy and
integrity of this document