Claims for interest on delayed payments are non-arbitrable if precluded by the terms of the Agreement, particularly following the execution of release and discharge certificates.

JUDGMENT :

1. The present petition has been filed under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) for appointment of an Arbitrator for adjudication of the disputes arising out of and in connection with Agreements dated 07.01.2017.

2. Briefly stated, the material facts are that the petitioner was allotted a contract for construction of a hundred bedded girls hostel and a hundred bedded boys hostel at Mulakaluru Village in Narasaropet. Two Agreements bearing numbers 211of 2017 and 210 of 2017 came to be executed between the petitioner and the official respondents on 07.01.2017.

3. The case of the petitioner is that the projects allotted as per the Agreements were completed, the possession was delivered and the buildings occupied by the requisitioning authority. The respondents prepared the final bills for an amount of Rs.94,14,888/- and Rs.86,04,654/- respectively and that there was delay even in the preparation of the said bills. The grievance of the petitioner was that even when the bills were finally prepared, the amounts as per the bills were not paid. A representation in that regard was made to the Executive Engineer on 09.12.2019, with a request for release of the final amount. Similar representations were submitted to the District Collector on 27.07.2019 as also the Secretary, Finance Department, Government of Andhra Pradesh on 12.08.2019 and 26.08.2020 and finally on 16.12.2020, requesting for the release of the amounts payable to the petitioner.

4. Having failed to get any favourable response, the petitioner claims that a writ petition was filed bearing W.P.No.5180 of 2021, before this Court seeking release of the amount due to the petitioner. During the pendency of the writ petition, the amount was finally paid but without any interest on the delayed payments. The petitioner claims that there was delay in handing over the site to the petitioner for about a year, after the parties entered into the agreement, during which material costs, including labour costs had increased and therefore, the respondents were required to pay escalation charges as per SSR rates in terms of G.O.Ms.No.35, dated 30.01.2009, as also the adjustment of the price in terms of G.O.Ms.No.94.

5. The petitioner states that a request was made for revision in the final bills as per revised SSR rates by giving price adjustment, due to increase in material, oil, essential commodities, transport and labour rates, etc. It is further stated that the Earnest Money Deposit amount was also not released after completion of the works and the same was released finally, in the year, 2022, and thereby the respondents enriched themselves unduly.

6. It is stated that since disputes had arisen between the parties, a notice dated 15.02.2022, was issued requesting the release of the amounts failing which the claim raised by the petitioner was required to be treated as dispute and as request for arbitration under Clause 22 of the Agreement. In the said notice, the petitioner suggested the name of a retired District Judge as his arbitrator to resolve the dispute through the mechanism of arbitration.

7. It is stated that having failed to elicit the desired response, the disputes are required to be referred for adjudication through a Court appointed Arbitrator.

8. Response has been filed by the official respondents in which the stand taken is that the petitioner, having executed a release and discharge certificates dated 10.07.2019 and 14.10.2019, was not entitled to claim any amount beyond the final bills, according to which payment was required to be made, the same having been accepted by the petitioner as payable to him. In view of the release and discharge certificates, it was further stated that the petitioner would not be entitled to maintain the present petition and to seek reference of the disputes in terms of the arbitration Clause 22, the existence of which is not denied by the counsel for the respondents.

9. Apart