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Ircon International Limited v/s Government of Andhra Pradesh rep by its Chief Engineer


    Arbitration Application No. 74 of 2015

    Decided On, 09 June 2020

    At, High Court of for the State of Telangana

    By, THE HONOURABLE MR. JUSTICE A. RAJASHEKER REDDY

    For the Applicant: S. Rajan, Advocate. For the Respondent: Bathula Rajkiran, Advocate.



Judgment Text


1. This arbitration application is filed under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (for short, “the Act”), seeking for appointment of a nominee arbitrator on behalf of the respondent for adjudication of the disputes between the parties arising under the contract dated 26–03–1998, in respect of work of “widening and strengthening of Kadapa-Tadipatri road (for short, “the APSH-3 project”).

2. The brief facts of the case are:-the applicant is a public sector Company under Ministry of Railways, Government of India, represented by its Addl. General Manager. The Government of Andhra Pradesh Roads and Buildings Department represented by its Engineer-in-Chief, (R&B) CRN & MD, APRDC-respondent (for short, “the Employer”) invited tenders for the work of the APSH-3 project. The applicant submitted its bid which was accepted by the Employer vide letter dated 09-03-1998. Both entered into an agreement dated 26-03-1998 for completion of the work. Time for completion of the work was 24 months reckoned from 01-05-1998 and was to be completed by 30-04- 2000. The contract was divided into two parts comprising of widening and strengthening of Kadapa-Tadipatri road and the construction of Road over Bridge (ROB). The applicant completed the work on 24-12-2000 excluding the works of ROB and its approaches. The de-linked work of ROB and its approaches, which is the claim now being raised by the applicant was completed in the extended time by 30-06-2004 and no adverse financial burden was imposed on the applicant. According to the applicant, the works of ROB and its approaches could not be completed by 24-12-2000 for various reasons attributable to the Employer such as, delay due to land acquisition, non-handing over of the site free from hindrances, delay in approval of ROB drawings, delay in approval of mix design, delay in nomination of Railway authorities for supervision, delay in approval of girder launching programme, non granting of block period at the time of launching of girders, delay due to introduction of extra items at belated stage etc. The Defect Liability Certificate for de-linked works of ROB and its approaches was issued by the Engineer of the Employer on 09-03- 2006. The applicant, upon the issue of the Defect Liability Certificate, submitted Draft Final Statement (DFS) to the Engineer vide letter dated 29-04-2006 in terms of Clause 60.11 of Conditions of Particular Application (for short, “COPA”) annexed to the contract agreement. Since there was no response from the Engineer, the applicant addressed two more letters to the Engineer on 04-02-2008 and 23-04- 2008. The applicant states that on the claims made by it, the Engineer vide letters dated 15-05-2008, 18-05-2008 and 10-06-2008 sent his remarks to the Employer. That as there was no response from the Employer (respondent) to the Engineer’s letters and in the meantime, all the 3 members of Disputes Review Board (DRB) which was constituted earlier in terms of the contract agreement had resigned, subsequent to the issuance of the Defect Liability Certificate, as the contract itself stipulates, services of the DRB would stand terminated on the issuance of the Defect Liability Certificate except, for deciding any disputes which had already been referred to it during the execution of the work. The applicant vide its letter dated 03-08- 2009 appraised the Employer, regarding the non-existence of DRB and gave a notice of arbitration under Clause 67.3 of COPA and required the Employer to refer the claims to an arbitral Tribunal which was adjudicating certain other claims not connected to de-linked works of ROB and its approaches.

3. In reply thereto, the Employer intimated the applicant vide their letter dated 14-10-2009 that it approached the Government of Andhra Pradesh to resolve the issue by way of arbitration by-passing the DRB. The Employer further informed the applicant that as soon as the approval was accorded by the Government, further proceedings shall be done as per the terms of the contract. However, since no decision was forthcoming from the Employer, even after lapse of four months, the applicant vide its letter dated 10-02-2010 issued notice to the Employer of its intention to commence arbitration under the provisions of the Act duly submitting the quantified claims. The applicant also nominated a retired Judge of this Court as their nominee arbitrator in the said letter dated 10-02-2010 and required the Employer to appoint their nominee arbitrator within the stipulated period of 30 days from the date of receipt of the said letter. Despite receipt of notice dated 10-02-2010, the Employer failed to appoint their nominee arbitrator as per the agreed procedure in the contract agreement under Clause 67.3 (i) of COPA. Instead, by communication dated 06-03-2010, the Employer stated that the claims are not admissible as they are time barred and the appointment of a retired Judge of this Court was not legal.

4. The applicant states that Clause 67.3 (i) of COPA provides for three Arbitrators, two to be appointed by respective parties and the presiding Arbitrator by the appointed two Arbitrators. That Clause 67.3 (v) stipulates that if one of the parties fail to appoint its arbitrator within 30 days after receipt of notice of appointment of its arbitrator by the other party, then the Chairman of the Executive Committee of the Indian Road Congress shall appoint the arbitrator. Accordingly, the applicant vide petition dated 12-03-2010 approached the appointing authority designated under the contract agreement i.e. the Chairman of the Indian Road Congress (IRC) for the appointment of arbitrator on behalf of the Employer.

5. The applicant states that the Employer vide its letter dated 31- 03-2010 requested the IRC not to appoint the arbitrator on its behalf. This was replied by the applicant vide letter dated 13-04-2010 addressed to IRC, even before the IRC forwarded the copy of Employer’s letter dated 31-03-2010 to the applicant for its views vide letter dated 17-05-2010. However, IRC letter was also replied by the applicant vide letter dated 25-05-2010. That the Employer again wrote to IRC vide its letter dated 22-05-2010 to reject the application of the applicant. The applicant replied the same vide its letter dated 01-06- 2010. Later, IRC forwarded a copy of the same vide letter dated 03-06- 2010 to the applicant and asked for its views in the matter.

6. The applicant states that the appointing authority (IRC) instead of appointing the nominee arbitrator on behalf of the Employer has indulged in needless exchange of correspondence with the parties and thus abdicated its functions in the matter of appointment of arbitrator. In those circumstances, the applicant left with no option, filed Arbitration Application No.94 of 2010 under Section 11(6) of the Act r/w the scheme for appointment of Arbitrators before this Court for appointment of a nominee co-arbitrator, which the Employer as well as the IRC failed to appoint. The said arbitration application came to be dismissed vide orders dated 29-07-2011. In the said order, while referring to the arbitration agreement, this Court was of the view that though the Dispute Review Board (DRB) was not in existence, the same has to be reconstituted and the disputes have to be referred to it before an arbitration application could be moved under Section 11 of the Act. The operative portion of the order in Arbitration Application no.94 of 2010 reads as under:-

“A plain reading of the above clause indicates that for replacement of any member, the same procedure which has been stipulated for selecting a member is to be followed. No doubt, as on this day, there are no members on the Board. For nominating members of the Board, the parties have to follow the procedure contemplated under Clause 67.1. First, the parties have to nominate the members to be on the Board, then the disputes are required to be referred to it. The applicant has to follow the said procedure before invoking sub Section 6 of Section 11 of the Arbitration and Conciliation Act, 1996. Accordingly, the application is dismissed reserving liberty to the applicant to follow the procedure as contemplated in Clause 8 of Annexure A to Conditions of Particular Application.”

7. That the above order was challenged before the Supreme Court vide SLP (Civil) no.258 of 2011, but the same was dismissed on 16-01- 2012. Thereafter, it is stated that the applicant followed the requirements as stipulated in Clause 67.1 and Clause 67.3 (v) of COPA before the IRC and thereafter issued notice of arbitration dated 18-01- 2014 under Clause 67.3 of COPA. Having failed to get any response from the Employer to the letters addressed by the applicant, he filed the instant arbitration application for appointment of a nominee Arbitrator on behalf of the Employer to act as joint-Arbitrator along the Arbitrator already nominated by the applicant so that both the Arbitrators, in turn appoint the presiding Arbitrator for adjudicating the disputes between the parties arising under the contract.

8. Counter affidavit is filed by the Chief Engineer, (R&B) of the respondent department wherein it is stated that the claims made by the applicant are purportedly associated with the execution of works, which was finally completed on 30-06-2004, the claims are barred by limitation under Article 137 of the Limitation Act, 1963, as on 18-01- 2014 i.e. the date of receipt notice of arbitration under Clause 67.3 of COPA by the Employer. It is stated that the arbitration clause contained in Clause 67 of COPA contemplates 3-tier dispute resolution mechanism, which reads as under:-

(i) Resolution of disputes initially by the parties themselves within 14 days of receipt by either party of a notice of dispute issued by the other party under the provisions of Rule 9 (a) of Annexure-A to COPA. (ii) Under sub-Clause 67.1 of COPA if the parties fail to arrive at an amicable settlement/resolution of dispute within 14 days of notification, the said dispute is referable by either party to the Dispute Review Board (DRB) seeking for its recommendations for resolution under Rule 9 (c) of Annexure-A to COPA. The DRB is required to furnish its recommendations within 56 days of receipt of the reference.

(iii) That if the DRB fails to give their recommendations to the parties within the stipulated 56 days, or either party or both parties is/ are not satisfied with the recommendations, if any, of the DRB, then either party may refer the dispute to arbitration for final settlement, with a pre-requisite of a notice to commence arbitration to the other party within 14 days of receipt of DRB’s recommendations or within 14 days after the expiry of stipulated 56 days of reference of dispute to the DRB.”

9. The applicant raised their claims no.1 to 5 in the Draft Final Statement (final bill) on 29-04-2006 for Rs.4,75,23,644/- with 18% interest. The applicant without resorting to and exhausting the requirements contemplated in Clause 67.1 and without issuing the mandatory notice of dispute under Rule 9 (a) of Annexure-A to COPA, issued notice of arbitration to the Employer on 10-02-2010. That after the issue of Defect Liability Certificate by the Engineer of the Employer on 09-03-2006, the services of Disputes Review Board were not available due to resignation of all of its members with effect from 25- 06-2006. Neither party replaced their respective DRB members by fresh appointment/replacement within 28 days of the said resignations. That notice to commence arbitration is contemplated under Clause 67.1 of COPA and not under Clause 67.3 of COPA which provides for arbitration and appointment of arbitrators. The applicant did not issue any notice of dispute under Rule 9 (a), r/w. Clause 67.1 of COPA and did not notify to commence arbitration within 14 days of expiry of the 56 days, after the reference to the Disputes Review Board (DRB). That there are no provisions in the contract which postulates for scrapping Clause 67.1 of COPA for directly making reference to arbitration. The requisition of the applicant to by-pass DRB was subject to the consent of the State Government and, therefore, not enforceable by the applicant unilaterally on any ground whatsoever. The respondent raised the issue of non-compliance of notice of dispute under Rule 9 (a), r/w. Clause 67.1 of COPA, in earlier round of litigation, but the applicant did not comply Clause 67.1 of COPA and instead once again issued a notice of arbitration under Clause 67.3 of COPA on 18- 01-2014 initiating and repeating the same cycle of making a requisition to the Employer to nominate the arbitrator under Clause 67.3 of COPA, approached the IRC, but in vain. In the circumstances, this arbitration application under Section 11 of the Act seeking for appointment of arbitrator is premature and not maintainable and liable to be dismissed.

10. Heard Sri S. Rajan, the learned counsel for the applicant and Sri Bathula Rajkiran, the learned counsel for the respondent.

11. Learned counsel for the applicant strenuously contended that pursuant to the directions of this Court in Arbitration Application no.94 of 2010, the applicant has followed procedure as prescribed in COPA by raising the dispute before the Engineer of the Employer, as the issue could not be settled with him, and the Disputes Review Board was no longer in existence, the Indian Roads Congress (IRC) could not appoint a nominee arbitrator on behalf of the Employer, the applicant invoked the jurisdiction of this Court for appointment of an arbitrator on behalf of the Employer. It is stated that merits or otherwise of the claim cannot be the subject matter and considered in this arbitration application. Learned counsel further submits that existence of arbitration clause is not disputed by the Employer and, there exists a dispute between the parties in connection with the settlement of final bill, this application is maintainable.

12. Per contra, learned counsel for the Employer submitted that when a particular procedure has been contemplated for resolution of dispute arising from the contract, such a procedure is required to be exhausted before invoking the arbitration clause. Learned counsel also submits that the procedure contemplated in Clause 67.1 of COPA is not exhausted by the applicant, notice of arbitration dated 18–01– 2014 is contrary to Clause 67.1 of COPA and, therefore, the application is premature and not maintainable. Learned counsel further submits that the applicant submitted Draft Final Statement (DFS) to the Engineer on 29–04–2006 for payment for the works done and if not paid by 10-07–2006 i.e. within 42 days as provided under Clause 60.2 r/w. Clause 60.8 of COPA, a dispute was deemed to have been arisen on 10–07-2006 for payment of DFS amounts. It is argued that the cause of action arose to the applicant on 10–07–2006 and, therefore, the notice of arbitration dated 18-01-2014 is barred by limitation as, as on 18–01-2014 under Article 137 of the Limitation Act, the claim made is beyond the period of three years limitation. The decisions in PANCHU GOPAL BOSE vs. BOARD OF TRUSTEES FOR PORT OF CALCUTTA (AIR 1994 SC 1615), J.C. BUDHRAJA vs. ORISSA MINING CORPORATION LIMITED (2008) 2 SCC 444) & NATIONAL INSURANCE COMPANY LIMITED vs. M/S.BOGHARA POLYFAB PVT. LIMITED (2008 (6) Supreme 725) are relied on.

13. The scheme formulated for resolution of disputes under the contract agreement in this case is in 3 tier mechanism. The arbitration agreement between the parties consists of two parts under Clause 67 of COPA. The first part consists of reference of dispute, in the first place, to the Disputes Review Board (DRB) under Clause 67.1 for its recommendations to settle the dispute. For that purpose notice of dispute under Rule 9 (a), r/w Clause 67.1 is to be issued by disputing party to other party prior to reference to the DRB. It is only in case of failure of settlement under Clause 67.1, the parties could settle the dispute finally through arbitration under Clause 67.3 which provides for the procedure of appointment of arbitrators.

14. It has come on record that in earlier round of litigation, Clause 67.1 COPA was held to be not followed by applicant by this Court which order was also affirmed by the Supreme Court in SLP (Civil) no.258 of 2012, thereafter the applicant has taken steps to re-constitute the Disputes Review Board (DRB) on 09–10–2013 after finalising the remuneration and taking their acceptance. It has further come on record that before the Disputes Review Board (DRB), the applicant filed its statement of claims on 25-10-2013. The Employer however did not file their response on merits of the claims and instead they raised the maintainability of the claims, by way of preliminary objections vide their letter dated 10-12-2013. Besides, the Employer also filed a counter claim vide its letter dated 12-12-2013. The applicant submitted their response to the said counter claim of the Employer. It is borne out from the record that the DRB in its meeting held on 20-12- 2013 sought the consent of both the parties for extension of time beyond 56 days and the same was agreed to by both the parties, as recorded in the Minutes of Meeting dated 20-12-2013. However, the Employer vide its letter dated 17-02-2014 filed another counter claim before the very same Disputes Review Board for High Embankment, to which the applicant filed its objection vide its letter dated 24-12-2013, the DRB vide its order dated 18-04-2014 rejected the said counter claim of High Embankment.

15. The rules and procedures of Disputes Review Board (DRB) are stipulated under Annexure-A to COPA. Clause 9 (f) thereof which prescribes the DRB to give its recommendations within 56 from the date of its reference to the Board, reads as under:-

“(f) During the hearing, the Contractor, the Employer, and the Engineer shall each have ample Opportunity to be heard and to offer evidence. The Board‘s Recommendations for resolution of the dispute will be given in writing to the Employer, the Contractor and the Engineer as soon as possible, and in any event not less than 56 days after receipt the Chairman of the Board of the written Request for Recommendation.”

16. From the above it is clear that the DRB has to give its recommendations for resolution of the dispute in writing in any event within 56 days and the term of the functioning of the Board beyond that period requires the consent of both the parties to the dispute. The DRB in its first meeting held on 20-12-2013 in its Minutes of the meeting recorded that it would be not possible to apprehend the disputes in question and give its recommendations within 56 days unless further time extended by the parties. At para 12 of the Minutes of the meeting, recorded as follows:-

“12. It was agreed by the Parties that as the DRB has not been associated with the progress of the work during its execution stage, it would not be possible for the DRB to apprehend the Disputes in question and give its recommendations within 56 days as stipulated in the Contract Agreement. Parties would be required to apprise the DRB of the Disputes in depth. Parties agreed to waive the stipulation of 56 days and give the DRB extension of time to give recommendations as per necessity.”

Since no extension of time could be mutually granted by the parties, the DRB in the Minutes of the second meeting (internal) held on 06- 01-2014, at para 4 recorded as follows:-

“4. In view of the E-mail dated 07-01-2014 received from the Respondent the meeting scheduled to be held on 03-02-2014 is cancelled. The date of next meeting will be decided in consultation with the parties after receiving extension as sought in paragraph 2 (h) above.”

It is to be seen that the time period of the DRB was not extended beyond 56 days by the parties and it is clear from para 4 above that in view of the E-mail dated 07-01-2014 received by it from the Employer (respondent), the further proceedings of the DRB which was to be held on 03-02-2014 stood cancelled and the DRB decided not to proceed further unless it received extension of period of time with the consent of both the parties to give its recommendations.

17. The applicant sent notice to the Employer on 18-01-2014 under Clause 67.3 of COPA conveying its intention to commence arbitration. To which the Employer also sent a notice from its side on 17-02-2014 conveying its intention to commence arbitration in respect of one of their counter claims viz., excise duty exemption by treating that the time limit of 56 days for the Disputes Review Board had expired on 11-02-2014 and they would appoint an arbitrator in due course. However, as no arbitrator has been appointment by the Employer, the applicant, in respect of its claims appointed a retired Judge of this Court vide its letter dated 06-02-2014 and called upon the Employer to appoint their nominee arbitrator. The Employer has not appointed their nominee arbitrator. Therefore, the applicant under Clause 67.3 (v) of COPA approached the Indian Roads Congress (for short, “the IRC”) vide their letter dated 28-07-2014 to appoint the nominee arbitrator on behalf of the Employer. Clause 67.3 (v) of COPA reads as follows:-

“67.3 (v) If one of the parties fail to appoint its arbitrator in pursuance of the sub-clause (i) and (ii) above, within 30 days after receipt of the notice of the appointment of its arbitrator by the other party, then the Chairman of the Executive Committee of the Indian Roads Congress, both in cases of foreign contractors as well as Indian Contractors, shall appoint the arbitrator. A certified copy of the order of the Chairman of the Executive Committee of the Indian Roads Congress making such an appointment shall be furnished to each of the parties.”

18. It has come on record that even before the IRC, the Employer has been addressing letters informing it not to appoint nominee arbitrator on their behalf, which is evident from its letter dated 21-10- 2014 and ultimately the IRC could not appoint nominee arbitrator on behalf of the Employer.

19. But it is noticed that the Employer on one occasion, by letter dated 17–02–2014 addressed to the applicant expressed its intention to commence arbitration in respect of the claim of declaration of entitlement of excise duty exemption. However that expression of intention was also not put into practice by the Employer by nominating arbitrator on its behalf. In the said letter it was categorically noted that the time period of 56 days for furnishing recommendations by the DRB expired on 11–02-2014 and it has not made efforts to extend the 12 period nor review the DRB. The operative portion of the said letter dated 17-02-2014, is as follows:-

“Lr.No.220209/APSH-3/De-link works/DCEI/DEE4/AEE-5/2013/2, Dt.17-02-2014

Sub: (R&B) Dept-MD, APRDC-APSHP-Widening and Strengthening of Kadapa-Tadipatri road-APSH-3 (Pkg)-Declaration of entitlement of excise duty exemption-Dispute referred to DRB-No recommendation received within 56 days-Notice to commence arbitration-Regarding.

Ref:-T.O.Lr.No.168/MD,APRDC/APSH-3/DCE2/DEE4/AEE-5/2009, Dt.12-12-2013

Adverting to the reference cited, where in the subject dispute was referred to the DRB seeking their recommendation it is to be noted that the time period of 56 days for furnishing recommendation is expired on 11.02.2014 and no Recommendation of the DRB in respect of subject dispute is received in this office.

Therefore, under the provision of COPA 67.1 you are notified of the intention of the Employer to commence Arbitration in respect of subject dispute of declaration of entitlement of excise duty exemption. The arbitrator will be appointed in due course.......”

20. A perusal of the various letters addressed by the Employer to the Disputes Review Board (DRB) as also the Indian Roads Congress (IRC) goes to show that the Employer did not cooperate and participate in the proceedings before the said forums which are the creatures of the parties themselves for resolution of disputes under the contract. It is to be seen that the life span of the DRB itself is defined to function for a period of 56 days and, for continuing any further thereafter, it requires the consent of both the parties and precisely for this reason the DRB could not proceed further in the matter. It is also to be seen that the IRC could not pass any orders in the petition filed by the applicant on account of cross letters addressed by the Employer opposing the appointment of nominee arbitrator on their behalf. Therefore, it cannot be said that the applicant has not followed the 3-tier mechanism to ultimately invoke the arbitration clause to resolve the dispute. The Employer in its notice sent on 17-02-2014 conveying its intention to commence arbitration in respect of one of their counter claims did not complain of not following the Rule 9 (a) by the applicant. The Arbitration and Conciliation Act does not specifically exclude any category of disputes as being not arbitrable. (see BOOZ ALLEN & HAMILITON INC vs. SBI HOME FINANCE LTD. (2011 (5) SCC 532). The Apex Court, however, held that certain categories of disputes as not arbitrable, but the present dispute does not fall within the exempted category. The decisions in PANCHU GOPAL BOSE (1 supra) relied on for the proposition that cause of arbitration has been held to accrue when the applicant acquires the right to require arbitration is a principle of law. However, the said decision was rendered under the Arbitration Act (Act 10 of 1940). The decision in J.C.BUDHRAJA (2 supra) also arises under the Arbitration Act (Act 10 of 1940) which is repealed Act. In M/S.SUDARAM FINANCE LIMMITED vs. M/S.NEPC INDIA LIMITED (AIR 1999 Supreme Court 565), the Supreme Court held that the Arbitration and Conciliation Act (Act 26 of 1996) is very different from Arbitration and Conciliation Act, 1940, and the provisions of Act 1996 have to be construed uninfluenced by principles underlined in repealed Act 1940.

21. As regards the plea of the claim being barred by limitation, the case of the Employer is that cause of action arose to the applicant on 10-07-2006 i.e. on expiry of 42 days from the date of raising the Draft Final Statement (DFS) (final bill) by the applicant as provided under Clause 60.2 r/w. Clause 60.8 of COPA, the limitation period being three years from 10-07-2006, the notice of arbitration dated 18-01-2014 is barred by limitation under Article 137 of the Limitation Act. It is to be seen that the notice of arbitration dated 18-01-2014 is the second arbitration notice. In first round of litigation, the notice of arbitration was issued on 10-02-2010 which was the subject of matter of Arbitration Application No.94 of 2010 and this Court held that the applicant has to take steps and follow the procedure under Clause 67.1, nominate the members of the DRB and then refer the disputes to the Board. The earlier Arbitration Application no.94 of 2010 filed by the applicant was not dismissed on the question of the claim being barred by limitation.

22. In NATIONAL INSURANCE COMPANY LIMITED vs. BOGHARA POLYFAB PRIVAITE LIMITED, (3 supra) the Hon’ble Supreme Court while examining similar like issue which arose prior to 2015 Amendment Act has enunciated three categories of issues that may arise where the intervention of the Court is sought for appointment of an arbitral Tribunal in an application under Section 11 of the Act. First category comprises of issues relating to territorial jurisdiction and existence of arbitration agreements and whether the party who has applied under Section 11 of the Act is a party to such an agreement, which the Court hearing the application must decide. Issues falling in the second category are those that the Court may choose to decide or leave for the arbitrator to decide and includes issues relating to bar of limitation or estoppel. Third category comprises of issues that should be left exclusively for determination by the arbitrator and includes issues as to arbitrability of claims and merits of the claims. Para 17 of the said decision reads as follows:-

17. Where the intervention of the Court is sought for appointment of an Arbitral Tribunal under Section 11, the duty of the Chief Justice or his designate is defined in SBP & Co. This Court identified and segregated the preliminary issues that may arise for consideration in an application under Section 11 of the Act into three categories, that is (i) issues which the Chief Justice or his Designate is bound to decide; (ii) issues which he can also decide, that is issues which he may choose to decide; and (iii) issues which should be left to the Arbitral Tribunal to decide.

17.1 The issues (first category) which Chief Justice/his designate will have to decide are:

(a) Whether the party making the application has approached the appropriate High Court.

(b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement.

17.2 The issues (seco

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nd category) which the Chief Justice/his designate may choose to decide (or leave them to the decision of the arbitral tribunal) are: (a) Whether the claim is a dead (long barred) claim or a live claim. (b) Whether the parties have concluded the contract/ transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection. 17.3 The issues (third category) which the Chief Justice/his designate should leave exclusively to the arbitral tribunal are: (i) Whether a claim made falls within the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration). (ii) Merits or any claim involved in the arbitration…” 23. In this case, the Draft Final Statement (DFS) (final bill) was submitted to the Engineer vide letter dated 29–04–2006 by the applicant pursuant to which the Engineer of the Employer addressed letters to the Employer on 15-05–2008, 18–05–2008 and 10–06–2008 by giving his remarks. It is also a matter of record that the Employer has intimated the applicant vide letter dated 14–10–2009 that it approached the Government of Andhra Pradesh for its approval to resolve the issue by way of arbitration by-passing the DRB. It was also assured by the Employer that as soon as approval was accorded by the Government further proceedings shall be done as per the terms of the contract agreement. It is only during the efflux of time, the Employer started raising that the claims are not admissible and are time barred. 24. In ORIENTAL INSURANCE COMPNAY LIMITED vs. DICITEX FURNISHING LIMTED, (2019 (16) SCALE 242) the Apex Court observed that when once the Court is satisfied with the existence of arbitrable dispute, in respect to other contentious pleas, it cannot be too particular about the nature of the plea, which necessarily has to be made and established in the substantive proceeding. It was further held that if the Court were to take a contrary approach and minutely examine the plea and judge the credibility or reasonableness of the pleas, there would be a danger of its denying a forum to the applicant, as rejection of the application would render the finding final, thus, precluding the applicant of its right to approach a civil Court. 25. In the totality of the circumstances, the issue of limitation being a mixed question of law and fact, in view of the long pendency of the matter which necessitated much correspondence between the parties, determination of the issue of limitation requires leading of evidence by the parties and filing of documents, if any, in support of their case, the question of limitation is left open to be decided by the arbitral tribunal. 26. In the circumstances, the arbitration application is allowed. Sri Justice M. Venkateshwar Reddy & Sri Justice G. Bhavani Prasad, former High Court Judges are nominated as Arbitrators who in-turn will nominate Presiding Arbitrator and resolve the dispute between the parties arising under the contract agreement. Miscellaneous applications if any pending in the arbitration application shall stand disposed of. No order as to costs.
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