Rajasthan High Court
M/S Rakesh Enterprises vs Union Of India on 12 February, 2021
Bench: Indrajit Mahanty
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Arbitration Application No. 100/2019
M/s Rakesh Enterprises, B-123, Sethi Colony, Agra Road, Jaipur
302004 Through Its Proprietor Sh. Rakesh Kumar Mushraf
----Petitioner
Versus
Union Of India, Through The Executive Engineer, Jaipur Central
Division-Ii, Cpwd, A.g. Colony, Bajaj Nagar, Jaipur 302015
----Respondent
For Petitioner(s) : Mr. Dinesh Kumar Mishra
For Respondent(s) : Mr. Parag Rastogi
HON'BLE THE CHIEF JUSTICE
Order
12/02/2021
1. Heard learned counsel for the parties.
2. The present application under Section 11(6) of the
Arbitration and Conciliation Act, 1996 has been filed by the
applicant-claimant seeking appointment of sole arbitrator for
resolution of disputes arising under Contract No.27/EE/JCD-
1/2013-14.
3. Learned counsel for the applicant submits that in terms of
settlement, the disputes, if any, are required to be settled through
arbitration as prescribed under Clause 25 of the agreement. Clause
25 of the Contract reads as under :-
"CLAUSE 25 - Settlement of Disputes &
Arbitration
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,
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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 requirement
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 opinion
within 30 days of receipt of contractor's appeal.
If the Contractor is dissatisfied with the decision
of the Chief Engineer, the Contractor may within
30 days from the receipt of the Chief Engineer's
decision, appeal before the Dispute Redressal
Committee (DRC) along with a list of
disputes with amounts claimed in respect of each
such dispute and giving reference to the rejection
of his disputes by the Chief Engineer. The Dispute
Redressal Committee (DRC) shall give his
decision within a period of 90 days from the
receipt of Contractor's appeal. The constitution of
Dispute Redressal Committee (DRC) shall be as
indicated in Schedule 'F'. If the Dispute Redressal
Committee (DRC) fails to give his decision within
the aforesaid period or any party is dissatisfied
with the decision of Dispute Redressal Committee
(DRC), 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 for appointment of
arbitrator on prescribed proforma as per
Appendix XV, failing which the said decision shall
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be final binding and conclusive and not referable
to adjudication by the arbitrator.
ii) Except where the decision has become final,
binding and conclusive in terms of Sub-
Para (i) above, disputes or difference shall be
referred for adjudication through arbitration by a
sole arbitrator appointed by 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
of Works, CPWD. If the arbitrator so appointed is
unable or unwilling to act or resigns his
appointment or vacates his office due to any
reason whatsoever, another sole arbitrator shall
be appointed in the manner aforesaid. Such
person shall be entitled to proceed with
the reference from the stage at which it was left
by his predecessor.
It is a term of this contract that the party
invoking arbitration shall give a list of disputes
with amounts claimed in respect of each such
dispute along with the notice for appointment of
arbitrator and giving reference to the rejection by
the Chief Engineer of the appeal.
It is also a term of this contract that no person
other than a person appointed by such
Chief Engineer, CPWD or the administrative head
of the CPWD, as aforesaid should act as
arbitrator and if for any reason that is not
possible, the matter shall not be referred to
arbitration at all.
It is also a term of this contract that if the
contractor does not make any demand for
appointment of arbitrator in respect of any claims
in writing as aforesaid within 120 days of
receiving the invitation from the Engineer-in-
Charge that the final bill is ready for payment,
the claim of the contractor shall be deemed to
have been waived and absolutely barred and
government shall be discharged and released of
all liabilities under the contract in respect of
these claims.
The arbitration shall be conducted in accordance
with the provisions of the
Arbitration and Conciliation Act, 1996 (26 of
1996) or any statutory modifications or re-
enactment thereof and the rules made there
under and for the time being in force shall apply
to the arbitration proceedings under this clause.
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It is also a term of this contract that the
arbitrator shall adjudicate on only such disputes
as are referred to him by the 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 equally by both the parties.
It is also a term in the contract that the arbitrator
shall be deemed to have entered on the
reference on the date he issued notice to both
the parties calling them to submit their
statement of claims and counter statement of
claims. The venue of the arbitration shall be such
place as may be fixed by the arbitrator in his sole
discretion. The fees, if any, of the arbitrator shall,
if required to be paid before the award is made
and published, be paid half and half by each of
the party. The cost of the reference and the
award (including the fees, if any, of the
arbitrator) shall be in the discretion of the
arbitrator who may direct to any by whom and in
what manner, such cost or any part thereof shall
be paid and fix or settle the amount of cost to be
so paid."
4. Learned counsel for the applicant places reliance on the
judgment of this Court in the case of Suresh Kumar Kothari Vs.
State of Rajasthan, AIR 2019 Raj. 124 as well as in the case
of JIL-Aquafil (JV) Vs. Rajasthan Urban Infrastructure
Development Project and Ors., 2016(4) CDR 1973(Raj).
5. He further places reliance on the judgment of Supreme Court
of India in the case of Uttarakhan Purv Sainik Kalyan Nigam
Limited Vs. Northern Coal Field Limted, AIR 2020 SC 979,
wherein after taking into consideration the objection of limitation
raised by the respondent, the Hon'ble Supreme Court in para 9.12
& para 10 held as under:-
9.12. In the present case, the issue of
limitation was raised by the Respondent-
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Company to oppose the appointment of the
arbitrator under Section 11 before the High
Court.
Limitation is a mixed question of fact and
law. In ITW Signode India Ltd. v. Collector of
Central Excise (2004) 3 SCC 48 a three judge
bench of this Court held that the question of
limitation involves a question of jurisdiction. The
findings on the issue of limitation would be a
jurisdictional issue. Such a jurisdictional issue is
to be determined having regard to the facts and
the law.
Reliance is also placed on the judgment of
this Court in NTPC v. Siemens Atkein Gesell
Schaft (2007) 4 SCC 451, wherein it was held
that the arbitral tribunal would deal with
limitation under Section 16 of the 1996 Act. If
the tribunal finds that the claim is a dead one, or
that the claim was barred by limitation, the
adjudication of these issues would be on the
merits of the claim. Under subsection (5)
of Section 16, the tribunal has the obligation to
decide the plea; and if it rejects the plea, the
arbitral proceedings would continue, and the
tribunal would make the award. Under subsection
(6) a party aggrieved by such an arbitral award
may challenge the award under Section 34.
In M/s. Indian Farmers Fertilizers
Cooperative Ltd. v. Bhadra Products (2018) 2
SCC 534 this Court held that the issue of
limitation being a jurisdictional issue, the same
has to be decided by the tribunal under Section
16, which is based on Article 16 of the UNCITRAL
Model Law which enshrines the Kompetenze
principle.
10. In view of the aforesaid discussion, we set
aside the impugned judgment and order dated
11.01.2018 passed by the High Court, and direct
that the issue of limitation be decided by the
arbitral tribunal'.
6. Learned counsel appearing for the respondent on the other
hand, places reliance on Clause 25 and in particular sub-clause
(ii) which reads as under:-
'It is also a term of this contract that
if the contractor does not make any
demand for appointment of arbitrator in
respect of any claims in writing as
aforesaid within 120 days of receiving the
intimation from the Engineer-in-charge
that the final bill is ready for payment, the
claims of the contractor shall be deemed to
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have been waived and absolutely barred
and the Government shall be discharged
and released of all liabilities under the
contract in respect of these claims'.
7. Placing reliance on the above, it is asserted on behalf of the
respondent that since no claim has been lodged by the claimant
within 120 days of receiving the intimation from the Engineer-in-
charge, the claim is otherwise barred by law of limitation in terms
of contract entered into between the parties. In this respect
reliance is also placed by the learned counsel for the respondent
on the judgment of Hon'ble Supreme Court in the case of Union
of India & Anr. Vs. Mohan Aggarwal Construction Co.
(unreported), Civil Appeal No.1167/2015 decided on
22.01.2015, where their Lordships' allowed the appeal of Union
of India and came to held that in terms of the contract no person
other than a person appointed by the Chief Engineering CPWD or
the Administrative Head of CPWD should be appointed as
arbitrator.
8. The aforesaid judgment, in my humble consideration, has no
application to the circumstances that are arising for consideration
in the present case. The issue raised herein has nothing to do with
the power/authority or either party to nominate an arbitrator.
9. Learned counsel for the respondent essentially is raising a
plea of limitation even these are read with the Clause of the
agreement entered into between the parties in particular part of
Clause 25 which has been quoted hereinabove.
10. The Hon'ble Supreme Court in the case of Uttarakhan Purv
Sainik Kalyan Nigam Limited Vs. Northern Coal Field Limted
(supra) has categorically held that the issue of limitation is a
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mixed question of fact and law and consequently, the issue can be
raised before the Hon'ble Arbitrator in the proceedings.
11. After noting the above, the learned counsel appearing for
CPWD submits a list of approved arbitrators and both the learned
counsel for the parties have agreed for appointment of Shri
Mukund Joshi, (Retd.) SDG, R/o-05A, Shankar Sadan, Adinath
Marg, Opposite SMS Hospital, C Scheme, Jaipur, 302004, Mob:
8800552725 as an Arbitrator, whose name finds place in the list of
approved arbitrators. The respondent would be free to raise all
objections before the Arbitrator.
12. The application is accordingly allowed.
(INDRAJIT MAHANTY),CJ
BRIJ MOHAN GANDHI/Rajat-3
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