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D. B. GUPTA CONTRACTS PRIVATE LIMITED VERSUS PUNJAB NATIONAL BANK


Company & Directors' Information:- D. S. GUPTA CONTRACTS LIMITED [Active] CIN = U45200DL1981PLC012699

Company & Directors' Information:- S K CONTRACTS PRIVATE LIMITED [Active] CIN = U45400DL1986PTC025351

Company & Directors' Information:- S. S. E. CONTRACTS PRIVATE LIMITED [Active] CIN = U74900WB2013PTC192042

Company & Directors' Information:- A B CONTRACTS PRIVATE LIMITED [Strike Off] CIN = U74899DL2000PTC105814

Company & Directors' Information:- S GUPTA CONTRACTS PRIVATE LIMITED [Strike Off] CIN = U70101DL1997PTC086225

Company & Directors' Information:- R S CONTRACTS PRIVATE LIMITED [Strike Off] CIN = U45202WB1997PTC084794

Company & Directors' Information:- S GUPTA CONTRACTS INDIA PRIVATE LIMITED [Active] CIN = U70101DL1999PTC099339

Company & Directors' Information:- J D CONTRACTS PRIVATE LIMITED [Active] CIN = U45400DL2011PTC214287

Company & Directors' Information:- D H CONTRACTS PRIVATE LIMITED [Active] CIN = U45400DL2010PTC198200

Company & Directors' Information:- N J CONTRACTS PRIVATE LIMITED [Strike Off] CIN = U74210HR2011PTC042559

Company & Directors' Information:- J P S CONTRACTS PRIVATE LIMITED [Strike Off] CIN = U45201DL2000PTC107170

    Suit Appeal No. 1141-A of 1988

    Decided On, 19 July 1989

    At, High Court of Delhi

    By, THE HONOURABLE MR. JUSTICE P.N. NAG

    For the Appearing Parties: R.K. Watel, S.K. Pruthi, Advocates.



Judgment Text

P. N. NAG,J.


(1) THE plaintiff has filed this petition under Section 20 of the Arbitration Act of 1940 for directing defendant to file the arbitration agreement in Court and also for reference to arbitration to settle the differences and disputes between the parties. The facts giving rise to the filing of this petition are that the plaintiff was awarded the work of sanitary installation, external water supply and drainage and pumping equipment work by the defendants, for their staff housing and hostel complex at 8underhill Road, Delhi, vide their letter dated 14/11/1985. followed by a formal agreement dated 1/12/1986. The plaintiff vide its letter dated 26. 8 85 submitted its tender to the defendant with certain clarifications. Thereafter the plaintiff has discussed with the defendant and the architect and after discussions the plaintiff agreed to amend certain clauses vide its letter dated 23. 9 85. It did not conclude there and thereafter further discussions were held between the plaintiff and defendant and when only finally the defendant vide its letter dated 14. 11. 85 accepted the tender dated26. 8. 85 of the plaintiff. The aforementioned acceptance letter issued by the defendant clearly superseded all previous correspondence including plaintiff's letter No. DSG/85-86/040 dated 23. 9. 85. The letter of 14/11/1985was followed by formal agreement dated 1/12/1986 and this letter of 14/11/1985 formed a part of the agreement. In the aforementioned letter dated 14/11/1985, there was a stipulation that the date of commencement of work would be 23/11/1985 and time allowed for carrying out the work was four months. Although according to the petitioner the work was to be completed within four months, but even after twenty four months have passed by, since the stipulated period of completion the work entrusted to him is still incomplete, due to acts of prevention, omission and commission on the past of the defendants and the plaintiff has raised claim of Rs. 18,98,569. 90 the details of which have been given in para 10 of the petition. In accordance with the arbitration clause, the plaintiff approached the Architects in the first instance before initiating for invoking the formal arbitration proceedings but there was no response. After architects refusal to settle the claims, the claims are required to be referred to the arbitration in accordance with the arbitration agreement between the parties.


(2) THE stand taken by the defendant is that there is no cause of action in favour of the plaintiff to file the present petition against the defendants. as the alleged claims made by the plaintiff are not borne out of the contract and have been excluded from the ambit of the agreement entered into between the parties, and as such the petition under Section 20 of arbitration Act, as framed, is not maintainable. The case set up by the plaintiff has been denied by the defendant and it is stated in para 7 of the written statement that under the terms and conditions of the contract, vide its letter dated 23. 9. 85 the plaintiff had specifically agreed that it shall not charge any extra labour item elements and if the work continues beyond the stipulated date of completion due to any reason, the plaintiff shall not been titled to any market or statutory increase in the material and labour. It was specifically made clear that the plaintiff shall not be entitled to any such escalations. They have also relied upon clauses 17 and 18 of the Conditions of tender which form a part of the agreement according to which the plaintiff is not entitled to claim any compensation for delayed execution of such work, whatsoever the cause of delay may be, and the rates payable shall be firm, and not be subject of variations, labour condition or any other condition.


(3) THE following only one Issue was framed :-


"whether the disputes raised in para 10 of the petition are covered under the arbitration agreement ?".


(4) ' The learned counsel for the defendant during the course of the arguments vehementally argued that under the terms and conditions of the contract/vide its letter dated 23. 9. 85 the plaintiff has specifically agreed that it shall not charge extra labour as claimed in the original letter dated 26. 885wherein a clause was contemplated to the effect that if the work continues beyond stipulated date of completion due to any reasons, they shall be paid market/statutory increases in materials and labour and which form a subject matter of the contract and it does not lie in the mouth of the plaintiff to say that he is entitled to charge increase in material and labour. This submission is factually incorrect and devoid of any truth. It is no doubt true that by clause 4 of letter dated 23. 9. 85 the plaintiff is not entitled to be paid market/statutory increases in materials and labour but this clause by subsequent letter No. 1nd/87/f dated 14. 11. 85 was superseded, as letter dated 14. 11. 85 clearly supersedes the earlier letter dated 23. 9. 85 where the aforementioned clause contained in letter dated 26. 8. 85 was withdrawn. In fact this letter of 14. 11. 85 is a part of the agreement as would be seen from the terms of the agreement and not letter dated 23. 985. Therefore the plaintiff cannot said to have agreed that he shall not be entitled to additional price of labour and escalation charges.


(5) LEARNED counsel for the defendant further relied upon clause 17and18 of the agreement which stipulates that the contractor shall not be entitled to claim any compensation for any less suffered by him on account of the delay in commencing or executing the work whatsoever the cause of such delay may be including the delay in procurement of any of the building materials including cement and steel and the rates payable shall be firm and not subject of variations labour conditions or any other condition and, therefore, under the arbitration clause such matters cannot be referred to the arbitrator.


(6) IN order to appreciate this contention, it would be necessary to reproduce clause 36 of the Arbitration clauses :-


"settlement of disputes, arbitration :all disputes and differences of any kind whatever arising out of or in connection with the Contract or the carrying out of the works (whether during the progress of the works or after their completion and whether before or after the determination, abandonment or breach of the contract) shall be referred to any settled by the architect who shall ate his decision in writing. Such decision maybe in the form of a Final Certificate or otherwise. The decision of the Architect with respect to any of the excepted matters shall be final and without Appeal as stated in the proceedings clause But if either the Employer or the Contractor be dissatisfied with the decision of the Architect on any matter, question or dispute of any kind (except any of the excepted matters) or as to the withholding by the Architect of any Certificate to which the Contractor may claim to be entitled, then and in any such case either party (the employer or the Contractor) may within 28 days after receiving notice of such decision give a written notice to the other party through the Architect requiring that such matters in dispute be arbitrated upon. Such written notice shall specify the matters which are in dispute and such dispute or difference of which such written notice has been given and no other shall be and is hereby referred to the Arbitration and final decision of a single Arbitrator being a Fellow of the Indian Institute of Architects to be agreed upon and appointed by both the parties or in case of disagreement as to the appointment of a single Arbitrator, to the Arbitration of two arbitrators both being Fellow of the Indian Institute of Architects, one to be appointed by each party, which the Arbitrator shall before taking upon themselves the burden of reference appoint an Umpire. The Arbitrator, the Arbitrators or the Umpire shall have power to open up, review and revise any Certificate, opinion, decision, requisition or notice, save in regard to the excepted matters referred to in the preceding Clause, and to determine all matters in dispute which shall be submitted to him or them and of which notice shall have been given as aforesaid. Upon every or any such reference the cost of and incidental to the reference and award respectively shall be in the direction of the arbitrator or Arbitrators or the Umpire who may determine the amount thereof or direct the same to be taxed as between attorneys and client or as between party and party, and shall direct by whom and to whom and in what manner the same shall be borne and paid. This submission shall be deemed to be a submission to arbitration within the meaning of the Indian Arbitration Act 1899or any statutory modification thereof. The Award of the Arbitratoror Arbitrator: or the Umpire shall be final and binding on the parties. Such reference except as to the withholding by the architect of any Certificates under Clause 33 to which the Contractor claims to be entitled shall not be opened or entered upon until the completion or alleged completion of the works or until after the practical cessation of the works arising from any cause unless with the written consent of the Employer and the Contractor. Provided always that the Employer shall not withhold the payment of an Interim Certificate, nor the Contractor, except with the consent in writing of the Architect, in any way delay the carrying out of the works by reason of any such matter, question or dispute being referred to Arbitration, but shall proceed with the work with all due diligence and shall, until the decision of the Arbitrator, or arbitrators or the Umpire to be given, abide by the decision of the architect and no Award of the Arbitrator or the Arbitrators or the empire shall relieve the Contractor of his obligations to adherestrictly to the Architect's instructions with regard to the actual carrying out of the works. The Employer and the Contractor hereby also agree that Arbitration under this clause shall be a condition precedent to any right of action under the Contract. "

The above contention is wholly untenable in the eyes of law as arbitration clause is all comprehensive and embracing all disputes and differences of any kind whatsoever arising out of or in connection with the contract or carrying out of the works etc. are covered by such clause and is not subject to other provisions as contained in other clauses of the agreement and no exceptions have been provided otherwise.


(7) THE perusal of the arbitration clause would reveal that in such facts and circumstances clauses 17 and 18 of the agreement aforementioned cannot stand in the way of referring the dispute to the Arbitrator.


(8) THE next question arises for consideration whether or not the present dispute as raised by the plaintiff in paragraph 10 is covered under clause 36 of the Arbitration clauses. It goes without saying that the plaintiff has raised a claim of Rs. 18,98. 569. 90 due to delayed execution of the work due to acts of prevention, omission and commission on the part of the defendant and such execution of work is covered under the terms of the contract and there can further possibly be no dispute that this dispute is in connection with the contract or carrying out the works of the contract. It is no doubt true that the defendant has relied upon clause 6 of letter dated14. 11. 85 wherein it is stated that the work. should be com

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pleted in four months or it should be consistent with the completion of the building work, as such the plaintiff is not entitled to escalation charges. This itself raises the dispute and interpretation of agreement which is for the Arbitrator to decide. (9) IT is settled principle of law that in order to deal with a petition under Section 20. it is necessary that there should be arbitration agreement and secondly difference and disputes must have arisen to which this agreement applied. In the light of what I have discussed above there cannot be any doubt that there is a subsisting agreement and secondly there is an assertion of claim by the appellant and silence as well as refusal of the same by the defendant. Therefore, a dispute has arisen regarding the alleged dues of the petitioners. In the circumstances the plaintiff is entitled to reference under Section 20 of the Arbitration Act in accordance with clause 36 of the agreement. (10) IN the result I hereby direct the defendant to file the arbitration agreement in Court and appoint an Arbitrator in accordance with clause 36of the Arbitrator Agreement to settle and adjudicate the differences and disputes between the panics. S. No. 1141a/88 stands disposed of. There will be no order as to costs.
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