Kmv Projects Limited, Through Its ... vs Malaviya National Institute Of ...
2022 Latest Caselaw 6424 Raj/2

        HIGH COURT OF JUDICATURE FOR RAJASTHAN
                    BENCH AT JAIPUR

            S.B. Arbitration Application No. 160/2021

KMV Projects Limited, Through Its Director K Ramesh Chandra
Bose,    8-3-948/949,        Level     1,    Solitaire          Plaza,     Ameerpet,
Hyderabad-500073, Telangana, India.
                                                                         ----Applicant
                                     Versus
Malaviya National Institute of Technology, Through Its Director,
Jawahar Lal Nehru Marg, Jhalana Gram, Malviya Nagar, Jaipur,
Rajasthan, 302017
                                                                   ----Respondent

For Applicant(s) : Mr. M.M. Ranjan, Senior Advocate assisted by Mr. Daulat Sharma For Respondent(s) : Mr. Nathu Singh Chauhan

HON'BLE MR. JUSTICE PANKAJ BHANDARI

Order

RESERVED ON :: 21/09/2022 PRONOUNCED ON :: 29/09/2022

1. The applicant has filed this Arbitration Application under

Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking

appointment of an Arbitrator.

2. It is pleaded in the Arbitration Application that the non-

applicant/respondent issued a notice inviting tender for

"Construction of Academic Lecture Theaters Complex Building".

The applicant's bid being the lowest was accepted and an

agreement was executed between the applicant and the non-

applicant and a notice to proceed was issued by the non-applicant.

It is contended that the applicant completed the project and

submitted its bills. The non-applicant kept the bills pending for a

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period of more than 3 years and the applicant is thus claiming

interest on account of delayed payment along with other damages

that the applicant has incurred because of non-payment of the

due amount.

3. Learned counsel for the non-applicant has opposed the

Arbitration Application. It is contended that the applicant has

raised the final bills and after submission of the final bills, the

applicant is not entitled to raise any claim as per the terms and

conditions of the Contract. It is also contended by the counsel that

vide letter dated 01.12.2017, the applicant wrote to the

respondent that he agreed to withdraw all the claims, which were

submitted by them along with the final bills and a request was

made to expedite the claim and payment of the amount due to

them.

4. I have considered the contentions and have carefully perused

the record.

5. For the purpose of deciding the present Arbitration

Application, it would be relevant to quote the relevant Clauses 9

and 25 of the Contract, which read as under:

"Clause 9:

Payment of final bill - The final bill shall be submitted by the contractor in the same manner as specified in interim bills within three months of physical completion of the work or within one month of the date of the final certificate of completion furnished by the Engineer-in- Change whichever is earlier. No further claims shall be made by the contractor after submission of the final bill and these shall be deemed to have been waived and extinguished. Payments of those items of the bill in respect of which there is no dispute and of items in dispute, for quantities and rates as approved by Engineer-in-Chief, will as far as possible be made within 90 days from the date of receipt of the bill by the Engineer-in-Chief or his authorized representative."

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"Clause 25: Settlement of Disputes & Arbitration:

Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, 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 referred for adjudication through arbitration by a sole arbitrator appointed by the Director of Institute or if there be no Director of the Institute the administrative head of the said Institute. 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 alongwith the notice for appointment of arbitrator.

It is also a term of this contract that no person other than a person appointed by the Director of the Institute or the administrative head 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 intimation 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 the Institute shall be discharged and released of all the 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

(4 of 6) [ARBAP-160/2021]

under and for the time being in force shall apply to the arbitration proceedings under this clause.

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 of the contract that the arbitrator shall be deemed to have entered on the reference on the date he issues 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 parties. The cost of the reference and of 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 costs or any part thereof shall be paid and fix or settle the amount of costs to be so paid."

6. It is relevant to note that in the letter dated 01.12.2017, the

applicant agreed to withdraw all the claims to expedite the

clearance of his outstanding amount. From the perusal of the

Arbitration Clause, it is evident that all disputes arising out of the

work relating to the Contract were required to be referred to the

Arbitrator. The signing of the letter dated 01.12.2017 cannot

restrain the applicant for seeking arbitration for the very reason

that it was only a letter from the applicant to clear the bills. As per

Clause 9 of the Contract, the claimant cannot claim after

submission of the final bills, however, as per this Clause itself, the

non-applicant is required to clear the dues within 90 days from the

date of receipt of the final bill. Admittedly, the final bill was

(5 of 6) [ARBAP-160/2021]

cleared after a lapse of more than 3 years, hence, Clause 9 of the

Contract cannot be invoked to restrain the applicant from moving

an application for referring the dispute to the Arbitral Tribunal.

7. Judgment cited by the counsel for the respondent M/s. M.N.

Khanusiya Versus Union of India: S.B. Arbitration Application

No.89/2021 decided by this Court on 03.08.2022 was different

on facts. In the present case, even after submission of the final

bill, the bill was not cleared within 90 days and it took a period of

3 years to pay the amount. The Judgment cited by the counsel for

the respondent New India Ass. Co. Ltd. Versus Genus Power INF.

Ltd.: Special Leave to Appeal (C) No(s).24652/2013 decided

by the Apex Court on 04.12.2014 is also distinguishable on facts

because in that case also, there is a discharge and signing of letter

of subrogation, which was signed voluntarily and free from

coercion or undue influence, but in the present case, the applicant

had given the letter wherein itself he has mentioned that because

he wants an early payment, he is leaving other claims. However,

since the payment was made after three years of the signing of

the document, the said judgment cannot be applied on facts.

8. The contention of the counsel for the respondents that the

amount was not paid due to audit objection and the amount was

paid on 03.07.2020 for the above reason cannot be said to be a

ground to retain the amount due to the applicant. The applicant

was thus entitled to at least claim interest on the delayed payment

the other claims and the dispute is thus arbitrable. I, therefore,

deem it proper to allow the Arbitration Application and appoint Mr.

Justice G.S. Sarraf (Retired), E-45, Sidhardh Nagar, Sector-13,

Malviya, Jaipur. as the sole arbitrator.

(6 of 6) [ARBAP-160/2021]

9. The appointment of the sole arbitrator is subject to the

declarations being made under Section 12 of the Arbitration and

Conciliation Act, 1996 with respect to the independence and

impartiality, and the ability to devote sufficient time to complete

the arbitration within prescribed period.

10. Accordingly, arbitration application stands allowed. The

arbitrator shall be entitled to lay down fees as provided under

Manual of Procedure for Alternative Disputes Resolution, 2009 as

amended from time to time.

11. Registry is directed to intimate Mr. Justice G.S. Sarraf

(Retired) and obtain his formal consent.

12. However, it is made clear that the observations made herein-

above are only for the purpose of deciding the present application

and the same will not disentitle the parties to raise all valid

objections before the learned Arbitrator and the Arbitrator will be

free to dispose of the said objection without being influenced by

the observations made by this Court.

(PANKAJ BHANDARI),J

SUNIL SOLANKI /PS

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