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1999 Supreme(AP) 179
ANDHRA PRADESH HIGH COURT
Krishna Saran Shrivastav, J.
M.V.V. SATYANARAYANA – APPELLANT
v.
UNION OF INDIA AND OTHERS – RESPONDENTS
Arb. Appl. Nos. 8 and 11 of 1998
Decided on: March 30, 1999.
Sh. Prasad Rao, Vemulapalli, Advocate, for the Appellant.
Sh. R.S. Murthy, Standing Counsel, for the Respondents.
A contractor's claims are not barred by limitation if he has lodged a protest against the proposed deductions prior to the finalisation of the bill.
Headnote:
ARBITRATION - APPOINTMENT OF SOLE ARBITRATOR - RAILWAY CONTRACT - DISPUTES ARISING OUT OF CONTRACT - CLAIMS BY CONTRACTOR - APPLICATION FOR APPOINTMENT OF SOLE ARBITRATOR - APPOINTMENT OF SOLE ARBITRATOR - INTERPRETATION OF CONTRACTUAL PROVISIONS - LIMITATION - APPLICABILITY OF RAILWAY BOARD CIRCULAR - ARBITRABILITY OF DISPUTES.
Fact of the Case:
The petitioner entered into an agreement with the respondents for doubling of track, earth work, construction/extension of bridges, and other miscellaneous works. The work was completed on 3-4-1993, and the final bill was paid on 30-4-1994. The petitioner submitted claims on 25-6-1996 and issued a notice for arbitration. The respondents denied the claims and contended that the claims were barred by limitation and excluded from arbitration under various clauses of the General Conditions of Contract (GCC).
Finding of the Court:
The court held that the petitioner's claims were not barred by limitation as he had lodged a protest against the proposed deductions prior to the finalisation of the bill. The court also held that Clauses 16(2), 17(3), and 62(2)(a) of the GCC were not excepted matters under Clause 63 of the GCC and therefore the dispute was arbitrable. The court further held that Clause 64(5) of the Railway Board Circular dated 6-8-1997 was not applicable to the case as the work was completed and the final bill was paid before the issuance of the circular.
Issues: 1. Whether the petitioner's claims were barred by limitation? 2. Whether the dispute was arbitrable? 3. Whether Clause 64(5) of the Railway Board Circular dated 6-8-1997 was applicable to the case?
Ratio Decidendi: 1. The court held that the petitioner's claims were not barred by limitation as he had lodged a protest against the proposed deductions prior to the finalisation of the bill. The court relied on the decision in V. Ramana Reddy v. Union of India, where it was held that when the petitioner records his objection as regards the proposed deductions prior to the payment of the final bill, the question of there being an unconditional acceptance of the final bill does not and cannot arise. 2. The court held that the dispute was arbitrable as Clauses 16(2), 17(3), and 62(2)(a) of the GCC were not excepted matters under Clause 63 of the GCC. 3. The court held that Clause 64(5) of the Railway Board Circular dated 6-8-1997 was not applicable to the case as the work was completed and the final bill was paid before the issuance of the circular.
Final Decision: The court allowed the applications and appointed Sri. Justice T.N.C. Rangarajan, a former Judge of the High Court, as the Sole Arbitrator to decide the disputes between the parties.
These are the applications for appointment of Sole Arbitrator for adjudicating the disputes that have arisen between the parties to these petitions.
2. It is common ground that the petitioner has entered into an agreement with the respondents on 19-2-1990 for doubling of track between Thangundi-Chegunta Stations, earth work in formation, construction/ extension of major/minor bridges as also other miscellaneous works from Ch. 39000 to Ch. 43200 M in Reach-VIII. The value of the contract was Rs. 46,22,600/- and Rs. 42,48,585/- respectively. The contract was to be completed on 31-10-1990. But it was extended from time to time upto 30-4-1993. The work was completed on 3-4-1993. The petitioner had written a letter on 11-6-1993 wherein he has lodged certain claims. A qualified no claim certificate was given at the time of submission of the final bill. The 'No Claim Certificate' was given under protect. That had been lodged through letter dated 11-6-1993. The payment of final bill was made on 30-4-1994. The security deposit was refunded on 2-12-1994. On 25-6-1996 the petitioner had submitted his claims and notice for arbitration was issued on 25-6-1996. These applications have been filed on 20-2-1998.
3. It is alleged in the applications for appointment of Arbitrator that due to the default of the respondents the work could not be completed in time, and therefore the petitioner has been put to heavy losses as shown in the tabular form in Clause G of the written claim filed by the petitioner. The respondents did not appoint the Arbitrator in terms of the agreement and therefore, an Arbitrator should be appointed to adjudicate the disputes.
4. The respondents through the counter denied the claim of the petitioner. It is alleged that at the request of the petitioner extension was granted from time to time, liberally without levying penalty. The work was delayed due to the default of the petitioner. Separate subsidiary agreements were executed and the rates were finalised. The claim is barred by limitation because after the finalisation of the bill on 23-3-1994 he had not submitted his claims within (90) days from the date of measurement in terms of the 64(i)(iii) of G.C.C. The claims are also excluded from arbitration under Clauses 16(2), 17(3) and 62(2)(a) of the General Conditions of Contract, and under Clause 64(5) of the Railway Board's Circular dated 6-8-1997, the petitioner had submitted his claim after about two years from the date of payment of the final bill and on this count only the claims are barred by limitation and, as he has accepted the final payment without protest, he cannot reagitate the something again, because he had received the payment in full and final satisfaction of all his claims.
5. As noted above, the petitioner has specifically mentioned in 'No Claim Certificate' that it is submitted under protest lodged through letter dated 11-6-1993. In the case of V. Ramana Reddy v. Union of India (= 1999(1) Arb. LR 179), the Contractor has lodged a protest much prior to the finalisation of the bill. Rejecting the contention of the Standing Counsel for the Railways, it has been held that when the petitioner records his objection as regards the proposed deductions prior to the payment of the final bill, the question of there being an unconditional acceptance of the final bill does not and cannot arise as there was existing on that date a claim lodged by the petitioner. Therefore, the acceptance of the final bill cannot be said to be a payment received against full and final satisfaction of the claim of the petitioner for the simple reason that he had already lodged a protest vide letter dated 11-6-1993, that is to say, much before the finalisation of the bill. The question whether the claim is barred by limitation, because the contract was completed on 30-4-1993 and whereas the petition has been filed on 20-2-1998 is a question to be decided by the Arbitrator after recording the evidence during investigation.
