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M/s. URC Construction (P) Ltd., Represented by its Authorized Signatory V. Ganesan v/s The Government of India, Department of Atomic Energy Bhabha Atomic Research Centre, Represented by its Project Director, Kalpakkam

    Arb.O.P (Comm.Div.) No. 220 of 2021

    Decided On, 11 January 2022

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE SENTHILKUMAR RAMAMOORTHY

    For the Petitioner: P.J. Rishikesh, Advocate. For the Respondent: P.G. Santhosh Kumar, Advocate.



Judgment Text

(Prayer: This Original Petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 praying to appoint an independent and impartial Sole Arbitrator to adjudicate the disputes between the petitioner and the respondent in terms of the arbitration agreement dated 19.07.2016.)

This petition is filed seeking appointment of an arbitrator to adjudicate the disputes between the petitioner and the respondent. The petitioner states that it was the successful bidder for a contract for the execution of civil work at the Nuclear Recycle Board, Bhabha Atomic Research Centre. An item rate contract was awarded for a sum of Rs.35,04,99,126.54/-. The petitioner cites Clause 25 of the general conditions of contract, which contains the arbitration clause. Clause 25 is set out below:

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, 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 requirements 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 of the receipt of Superintending Engineer's decision, appeal 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 decision within 30 days or receipt of contractor's appeal. If the contractor is dissatisfied with this decision, the contractor shall within a period of 30 days from receipt of the decision, give notice to the Chief Engineer for appointment of arbitrator on receipt of the decision, give notice to the Chief Engineer for appointment of arbitrator on prescribed proforma as per Appendix XV, as given below: failing which the said decision shall be final binding and conclusive and not referable to adjudication by the arbitrator.

Notice for appointment of Arbitrator

[Refer Clause 25]

To

The Chief engineer,

Architecture & Civil Engineering Division,

BARC, Trombay,

Mumbai 400 085.

Dear Sir,

In terms of clause 25 of the agreement, particulars of which are given below. I/We hereby give notice to you to appoint an arbitrator for settlement of disputes mentioned below:

Name of applicants

Whether applicant is individual/Prop.Firm/Partnership firm/Ltd.Co

Full address of the applicants

Name of the work and contract number in which arbitrator sought

Name of Division which entered into contractor

Contract amount in the work

Date of contract

Date of initiation of work

Stipulated date of completion of work

Actual date of completion of work ( if completed)

Total number of claims made

Total amount claimed

Date of initiation of final bill ( if work is completed)

Date of payment of final bill ( if work is completed)

Amount of final bill ( if work is completed)

Date of request made to SE for decision

Date of receipt of SE's decision

Date of appeal to you

Date of receipt of your decision

Specimen signatures of the applicant

(only the person/authority who signed

The contract should sign)

I/We certify that the information given above is true to the best of knowledge. I/We enclose following documents.

1. Statement of claims with amount of claims

2.

3.

Yours faithfully,

(Signatures)

Copy in duplicate to:

The Project Engineer

Arch. & Civil Engg.Divn..BARC

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 Director, BARC, in respect of the contract entered in to by any subordinate authority under him. However, if the contract is entered into by Director BARC, the arbitrator shall be appointed by the Department of Atomic Energy. 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 the 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 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 terms of the 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 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 of re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding 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 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 costs 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.”

2. According to the petitioner, upon completion of work, it submitted a final bill on 04.10.2019 claiming a sum of about Rs.6.58 Crores. In addition, claims were made towards additional work and for refund of amounts levied by the respondent towards liquidated damages. After invoking the arbitration clause by issuing notice dated 30.06.2021, the present petition is filed.

3. The respondent has filed a counter affidavit. The main contentions of the respondent are that all the running account bills of the petitioner were paid. The petitioner has not fulfilled the contractual requirements for the consideration of its final bill. Since the work was completed belatedly, the respondent exercised its contractual right to levy liquidated damages. The disputes raised by the petitioner cannot be resolved through arbitration since considerable time has lapsed after the execution of work and, therefore, measurements cannot be taken at this juncture.

4. The scope of proceedings under Section 11 of the Arbitration and Conciliation Act, 1996 is narrow especially after the amendment thereto by Act 3 of 2016. A request for reference to arbitration may be refused if there is no arbitration agreement between the parties or the dispute is manifestly non-arbitrable or the disp

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ute is patently outside the scope of the arbitration agreement. In the case at hand, the dispute appears to arise out of the contract between the parties. The arbitration clause is worded widely and all questions and disputes arising out of the contract would clearly fall within the scope of the arbitration agreement. The claims relate to the non-payment of the final bill, additional work claims and claims pertaining to the levy of liquidated damages. Such claims cannot be said to be manifestly non-arbitrable or outside the scope of the arbitration agreement. Consequently, the petitioner is entitled to succeed. 5. Accordingly, Arb.O.P.No.220 of 2021 is allowed by appointing Mr.Justice K.Ravichandrabaabu, retired judge of this Court, Flat 1D, Crescent Castle Apartment, 13, Second Crescent Park Road, Gandhi Nagar, Adyar, Chennai – 600 020 (Mobile No : 94980 33336) as the Sole Arbitrator. The Sole Arbitrator is directed to enter upon reference and adjudicate the dispute between the parties in accordance with law. The Sole Arbitrator may fix his fees and expenses in connection with such arbitral proceedings.
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