M/s Bharat Construction v. The General Manager, Northern Railway & Anr.

Mr. G.S.Bal, Advocate, for the respondents. HEMANT GUPTA, J. (ORAL) The present is a petition for appointment of an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) in respect of the disputes between the parties arising out of an Agreement dated 29.06.2007. Vide the aforesaid Agreement, the petitioner was awarded work for provision of Rest House for Sub-ordinates and Group ‘D’ staff at Jalandhar City. The said contract is subject to General Conditions of Contract, which contains arbitration clause, which reads as under: “Demand for Arbitration: In the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to the withholding by the Railway of any certificate to which the contractor may claim to be entitled to, or if the Railway fail to make a decision Arb. Case No.33 of 2010 2 within 120 days, then and in any such case, but except in any of the ‘excepted matter’ referred to in clause 63 of these conditions, the contractor, after 120 days but within 180 days of his presenting his final claim on disputed matter, shall demand in writing that the dispute or difference be referred to arbitration.” It is pleaded by the petitioner that the acceptance letter was issued by the respondents on 10.02.2006 with stipulate date of completion of the construction as 09.10.2006. The Agreement after the acceptance of the petitioner was executed after 14 months on 29.06.2007. The petitioner raised disputes vide communication dated 19.06.2009 and claimed amount under eight different heads, which are as follow: “Claim No.1: Regarding mean profit of the total estimate cost of the work at the rate of 15%. Claim No.2: Regarding interest on the 15% mean profit. Claim No.3: Regarding Idling of Labour and machinery. Claim No.4: Regarding material such like bricks titles, sand, crusher etc. i.e. the wastage of material, loading as well as unloading, carries of these materials from working place to the other place. Claim No.5: Regarding dismantling of the wall plaster. Claim No.6: Regarding setting aside the impugned order dated

28.04.2008. Claim No.7: Regarding interest on all said claims for past, pendent lite and future period @ 18%. Claim No.8: Regarding cost.” It is pointed out by the petitioner that vide communication dated 13.11.2009 (Annexure P-8), the respondents have appointed an Arbitrator in respect of three claims i.e. 4, 5 & 6. However, the disputes in respect of other claims were not referred to the Arbitrator. Relevant extract Arb. Case No.33 of 2010 3 from the communication (Annexure P-8) issued by the respondents reads as under: “The General Manager, Northern Railway has appointed you as sole Arbitrator to settle the dispute arising out the above noted contract. You are, therefore, requested to enter into reference with the parties at the earliest. The amount of the contractor’s claims in this case is Rs.70575/- + claim No.6 (amount not mentioned) as given below: Sr. Contractor’s Claim No. Amount

1. Towards material such like Bricks, Tiles Rs.69000/- Sand, Crusher etc. i.e. for the wastage of material loading as well as unloading carries of these materials from working place to other place.

3. Towards dismantling of the wall plaster Rs.1575/- Towards setting aside the impugned order dated 28.04.08 Amt.not Total: Rs.70575/- + Claim No.6 (amt. not mentioned) The Railway claim is as under: Sr. Railway Claims No. Amount

1. Towards 10% penalty/liquidated damages Rs.69495/- (on total cost of work)

2. Towards recovery of 100 Nos. cement Rs.1575/- bags not returned by the contractor i. ii. Contractor’s Claim = Rs.70575/- + Claim No.6 (amt. not mentioned) Railway’s Claims = Rs.122383/- G. Total = Rs.192958 Arb. Case No.33 of 2010 4 Since all the disputes in respect of the claims were not referred to an Arbitrator, the petitioner has invoked the jurisdiction of this Court on

03.03.2010. In reply, the stand of the respondents is that it is the petitioner, who has failed to complete its contractual obligations and, thus, the petitioner is entitled to seek adjudication regarding determination of loss, if any, to the contractor towards material such as Bricks, Tiles, Sand, Crusher etc. as well as dismantling of the wall plaster. Thus, such disputes alone have been referred to an Arbitrator. Having heard learned counsel for the parties at some length, I find that the stand of the respondents that some of the claims alone are required to be adjudicated upon is wholly untenable. Whether the claim is tenable or not, is subject to adjudication. Such dispute is required to be decided by an Arbitrator in terms of arbitration clause between the parties. The respondents cannot be Judge in their own cause. The decision to refer some of the claims for adjudication and declining the others is amounting to declining the claims of the petitioner against the aforesaid heads. The maintainability of such claims is required to be decided by an Arbitrator and not by the respondents. I find that the action of Mr. Anil Kumar Singh Sharwal, Deputy Chief Engineer, or any other person who has decided to refer only limited claim for adjudication by an Arbitrator in respect of some of the claims, is wholly illegal and in fact, causes harassment to the petitioner and increases the work of this Court for appointment of an Arbitrator. Such action of the respondents in not appointing an Arbitrator in respect of all the claims, is wholly unwarranted and, thus, the present petition is allowed with costs of Arb. Case No.33 of 2010 5 Rs.10,000/-. Costs be deposited by the respondents with the Legal Aid Society of this Court within a period of one month. Consequently, Shri A.K.Sharma, District Judge (Retd.), resident of House No.41, Indsor Park, Near DAV Engineering College, Jalandhar, is appointed as an arbitrator to resolve all the disputes between the parties. The Arbitrator shall be entitled to charge fee not exceeding Rs.11,000/- per hearing and for not more than 10 hearings apart from expenses of Rs.25,000/-. Such expenses shall be shared equally by parties.

20.04.2011 Vimal (HEMANT GUPTA) JUDGE