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SUPREME COURT OF INDIA
ABHAY MANOHAR SAPRE, ASHOK BHUSHAN, JJ.
M/s. EMM ENN Associates – Appellant
Versus
Commander Works Engineer & Ors. – Respondents
Civil Appeal Nos. 7184 & 7185 of 2008
Decided On : 29-06-2016
(2005) 8 SCC 618 – Relied upon
(b) Arbitration and Conciliation Act, 1996 – Section 11 – Live claim – A claim may be held a dead claim only when it is evidently and patently long time barred – There is no need for any detailed consideration of evidence – Instantly contract containing defect liability period of two years – Final payment of undisputed claims made – Disputed claims not adjudicated – Cannot be termed dead claim. (Para 20, 21)
(c) Section 11 – Certificate in the final bill by contractor making it clear that it was in respect of undisputed claims – This presupposes that there were other claims also which required adjudication – Clause 67 of contract also uses the term “undisputed claims” – The disputed claims cannot be said to be dead claims – This question ought to be left to arbitrator to decide – Matter remitted back to High Court for appointing an arbitrator. (Para 27, 28, 29)
Facts of the case:
The appellant a partnership firm was allotted a contract on 10.11.1998 for providing additional security fencing at Mullanpur. The work was completed on 10.7.2000. Work completion certificate was issued. Final bill was prepared on 20.2.2001 and the payment of final bill was made to the petitioner on 10.04.2001. Payment of the undisputed part of the final bill was made by cheque dated 10.04.2001.
Even after expiry of two years period from payment of final bill, no demand for any recovery was issued by the Government. Contractor then served a notice stating that final bill amount as paid during April, 2001 did not include the payments due to contractor against several items which were claimed.
The Garrison Engineer informed the appellant that he had signed the final bill without any protest and had given ‘No Further Claim’ certificate. Hence no arbitrable dispute exists. The claim now intimated after the lapse of a period of approx four years was denied being baseless.
The appellant filed an application under Section 11 of the Arbitration Act before District Judge, Ropar. The application was ultimately taken by Chief Justice of the High Court and was rejected taking the view that appellant’s claim is not a live claim.
Finding of the Court:
Disputed claims cannot be termed dead claims.
Result: Appeal allowed. Matter remitted back to High Court.
JUDGMENT :
Ashok Bhushan, J.
These two appeals raising identical questions of law have been heard together and are being decided by this common judgment. For deciding both the appeals, it shall be sufficient to refer to facts and pleadings in Civil Appeal No. 7184 of 2008. Appeal No. 7184 of 2008 has been filed against judgment of Chief Justice of Punjab & Haryana High Court in Arbitration Case No. 184 of 2006 by which judgment learned Chief Justice has dismissed the application, filed by appellant for referring the dispute to an arbitrator in exercise of power under Section 11 of the Arbitration and Conciliation Act 1996 (hereinafter referred to as ‘Act’).
2. Civil Appeal No. 7185 of 2008 has also been filed against the identical judgment of learned Chief Justice in Arbitration Case No. 89 of 2006 by which the application filed by the appellant for appointing an arbitrator has been dismissed.
3. Brief facts giving rise to Appeal No. 7184 of 2008 now need to be noted. The appellant a partnership firm was allotted a contract on 10.11.1998 for providing additional security fencing at Mullanpur. The work was completed on 10.7.2000. Work completion certificate was issued. Final bill was prepared on 20.2.2001 and the payment of final bill was made to the petitioner on 10.04.2001. Payment of the undisputed part of the final bill was made by cheque dated 10.04.2001.
4. Although Clause 67 of general conditions of contract contemplated for recovery from contractor in several contingencies one of which as referred in sub-Clause (f) was that if as a result of any audit and technical examination, any over payment is discovered in respect of work done under this contract, the contractor shall on demand make payment of a sum equal to the amount of over-payment. Sub-Clause (g) further provided that the Government shall not be entitled to recover any over-payment beyond a period of two years from the date of payment of the undisputed portion of the final bill.
5. Even though, two years period expired after payment of final bill, no demand for any recovery was issued by the Government. Contractor by letter dated 23.02.2005 served a notice stating that final bill amount as paid during April, 2001 did not include the payments due to contractor against several items which were claimed as per appendix A annexed to the notice.
6. It was further stated that the decision be communicated within thirty days failing which it shall be assumed that the claim is disputed and contractor shall be left with no remedy except to seek adjudication by an arbitrator appointed in terms of the contract.
7. The Garrison Engineer issued a letter dated 22.03.2005 informing that contractor had signed the final bill without any protest and had given ‘No Further Claim’ certificate. Hence no arbitrable dispute exists. The claim now intimated after the lapse of a period of approx four years is baseless and hence denied.
8. A letter dated 24.03.2005 was written by the contractor to the chief engineer in reference to notice dated 23.02.2005 with a prayer that arbitrator under condition 70 of the Contract may kindly be appointed to adjudicate the dispute. The appellant thereafter filed an application under Section 11 of the Arbitration Act before District Judge, Ropar. The application was ultimately taken by Chief Justice of the High Court and by an order dated 12.03.2007, the application was rejected taking the view that appellant’s claim is not a live claim. Aggrieved against the above judgment dated 12.03.2007 in Arbitration Case No. 184 of 2006, Appeal No. 7184 of 2008 has been filed.
9. Arbitration Case No. 89 of 2006 has also been filed by the appellant seeking appointment of an arbitrator under Section 11 of the Act in the said case and also the work was completed on 23.09.2000 and the final bill was paid on 10.04.2001. Notice along with list of claim was sent by the appellant on 23.02.2005 i.e. on the same day when notice in Arbitration Case No. 184 of 2006 has been sent.
10. Hon
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