P. Manohar Reddy vs Maharashtra Krishna Valley Dev. Corp.

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2008 Supreme(SC) 1898

SUPREME COURT OF INDIA
THE HONOURABLE MR. JUSTICE S.B. SINHA & THE HONOURABLE MR. JUSTICE CYRIAC JOSEPH
M/s. P. Manohar Reddy & Bros. - Appellant
Versus
Maharashtra Krishna Valley Dev. Corp. & Others - Respondent
CIVIL APPEAL NOS.7408-7409 OF 2008 (Arising out of SLP (C) Nos. 49684969 of 2005)
Date of Judgment : 18-12-2008

Advocates appeared:
For the Appellant :----- For the Respondents: ----

Headnote:A) Arbitration Act, 1940, section 8 and 20, Limitation Act, 1963., Article 187, Contract Act, 1872, Section 28:- Where the contractual clause provides limitation period for raising a period of limitation within which the bill has to be raised, the trial court was held to have erred in allowing the claim for arbitration with respect to the bill raised for additional works done during the period of extension after the original bill had been paid. (Para 18 to 31)
       B) Arbitration Act, 1940, Section 2(a), 8 and 20:- Commercial arbitration must be interpreted having regard to the language in which it is used.
       C) Arbitration Act, 1940, Section 8 and 20:-Where the differences and disputes arises with reference to an arbitration agreement, then territorial jurisdiction of the courts under these provisions has to be invoked. (Para 21)
       D) Arbitration and Conciliation Act, 1996, Section 16(1) (b), Arbitration Act, 1940, Section 8 and 20, Section 1(a), Uncitrel Model Law. Clause 16(1):- The concept of separability of arbitration clause in so far as the arbitration clause not perishing along with expiry of contract in all cases is now an accepted judicial doctrine which come to stay. (Para 20)

JUDGMENT :-

S.B. Sinha, J.

1. Leave granted.

2. Respondent herein invited tenders for the work of excavation in canal K.M. No. 126, Kukadi Left Bank Canal, Shrigonda in the District of Ahmednagar at an estimated costs of Rs.23,26,424/- pursuant whereto appellant herein submitted its offer for a sum of Rs.21,10,233/-. The said offer being the lowest was accepted.

3. The parties hereto thereafter entered into a contact on 9.2.1988; clauses 37, 54 and 55 whereof read as under:

"37. After completion of work and prior to that payment, the contractor shall furnish to the Executive Engineer, a release of claims against the Government arising out of the contract, other than claims specifically identified, evaluated and expected from the operation of the release by the contractor."

54. Settlement of Dispute (For works costing less than Rs. 50 lakhs). If the contractor considers any work demanded of him to be outside the requirements of the contract, or considers any drawings, record or ruling of the Executive Engineer, KIP Dn. No. VII, Shrigonda on any matter in connection with or arising out of the contract or the carrying out of work to be outside the terms of contract and hence unacceptable he shall promptly ask the Executive Engineer, in writing, for written instructions or decision. Thereupon the Executive Engineer, shall give his written instructions or decision within a period of 30 days of such request. Upon receipt of the written instructions or decision the contractor shall promptly proceed without delay to comply with such instructions or decision.

If the Executive Engineer fails to give his decision in writing within a period of 30 days after being requested, or if the contractor is dissatisfied with the instructions or decision of the Executive Engineer, the contractor may within 30 days after receiving the instructions or decision appeal to upward authority who shall afford an opportunity to the contractor to be heard and to offer evidence in support of his appeal.

If the contractor is dissatisfied with this decision, the contractor within a period of thirty days fromreceipt of the decision shall indicate his intention to refer the dispute to Arbitration as per clause 55failing which the said decision shall be final and conclusive.

55. Arbitration (For works costing less than Rs.50 lakhs)

All the disputes or differences in respect of which the decision has not been final and conclusive as per clause 54 above shall be referred for arbitration to a sole arbitrator appointed as follows.

Within 30 days of receipt of notice from the contractor or his intention to refer the dispute to arbitration the Chief Engineer (SP Irrigation Department), Pune shall send to the contractor a list of three officers of the rank of Superintending Engineers or higher, who have not been connected with the work under this contract. The contractor shall within 15 days of receipt of this list select and communicate to the Chief Engineer, the name of one officer from the list who shall then be appointed as the Sole Arbitrator. In case contractor fails to communicate this selection of name within the stipulated period, the Chief Engineer shall without delay select one officer from the list and appoint him as the sole arbitrator. If the Chief Engineer fails to send such a list within 30 days as stipulated the contract shall send a similar list to the Chief Engineer within 15 days. The Chief Engineer shall then select one officer from the list and appoint him as the Sole Arbitrator within 15 days. If the Chief Engineers fails to do so, the contractor shall communicate to the Chief Engineer the name of one officer from the list who shall then be the sole Arbitrator.

The Arbitrator shall be conducted in accordance with the provision of the Indian Arbitration Act, 1940 or any statutory modification thereof. The Arbitration shall determine the amount of costs to be awarded to either parties.

Performance under the contract shall continue during the arbitratio

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2008 Supreme(SC) 1898

Cases Referred (8)