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2016 Supreme(Del) 1824
IN THE HIGH COURT OF DELHI AT NEW DELHI
V.KAMESWAR RAO, J.
WINNER CONSTRUCTIONS PRIVATE LIMITED - Petitioner
Versus
UNION OF INDIA - Respondent
ARB.P. 78/2016
Decided on : 28-04-2016
For the Appellant : Ms. Renuka Arora, Adv.
For the Respondent: Mr. Jaswinder Singh, Adv.
The main legal point established in the judgment is that the determination of whether the contractor had delayed the project is arbitrable, and the issue of non-arbitrability is only on the question of any compensation which the Government might claim in terms of clause 2 of the Contract.
Headnote:
Arbitration - Construction Contract - Arbitration and Conciliation Act, 1996 - Section 11 - Clause 2 and 25 of the Contract
Fact of the Case:
The petitioner sought to refer additional claims to the arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. The dispute arose from a construction contract for the construction of residential quarters for staff and officers of Lok Sabha Secretariat. The respondent withheld a substantial amount from the petitioner, leading to the arbitration request.
Finding of the Court:
The court found that the claim was arbitrable and should have been referred to the competent authority. The limited prayer of referring the additional claim No.(I) to arbitration was allowed, and the petition was disposed of with no costs.
Issues: The main issue was whether the additional claim should be referred to arbitration under Section 11 of the Arbitration and Conciliation Act, 1996.
Ratio Decidendi: The court held that the issue of non-arbitrability was only on the question of any compensation which the Government might claim in terms of clause 2 of the Contract. The court also emphasized that the determination of whether the contractor had delayed the project would still be arbitrable.
Final Decision: The court allowed the limited prayer of referring the additional claim No.(I) to arbitration and disposed of the petition with no costs.
V.KAMESWAR RAO, J.
1. This petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 to refer additional Claim No. 1, additional claim No. 1A, Claim No.1, Claim No.2, Claim No. 10 and Claim No. 15 to learned Arbitrator Mr. V.K. Malik appointed by the respondent.
2. It is suffice to state during the course of the submissions, the learned counsel for the petitioner has stated that the relief is only confined to additional claim no. 1, which is reproduced as under:
“Whether the respondent is in breach of contract? If yes, whether the action of the respondent in levying the L.D/ compensation is illegal and arbitrary. Contractor claims declaratory award declaring the action taken under clause 2 of the agreement as illegal and uncontractual.”
3. Some of the facts relevant for deciding the present petition are that pursuant to NIT for "Construction of Residential Quarters for staff and officers of Lok Sabha Secretariat etc. at R.K. Puram, New Delhi including internal and external water supply and sanitary installation, development work and internal electrical installations, the Petitioner submitted its bid and was awarded the contract on 15.06.2011.
4. The petitioner submitted the earnest money amounting to Rs.53,92,792/- and Performance Bank Guarantee for an amount of Rs. 2,40,25,063/-.
5. It is the case of the petitioner that the work was completed on 10.12.2014, but the respondent gave the completion certificate only on 24.04.2015 w.e.f the said date.
6. It is averred by the petitioner that the respondent has withheld the amount of Rs.2,34,02,878/- towards Civil Work & Rs.4,66,940/- towards Electrical Works (totalling to Rs.2,38,69,818/-) on account of alleged milestones not having been adhered to by the Petitioner.
7. Vide letter dated 03.07.2015, respondent levied the compensation under clause 2 of the agreement for an amount of Rs.4,80,50,126/-. The plea of the petitioner for personal hearing was rejected. On 30.07.2015, respondent directed the petitioner to deposit the aforesaid amount of Rs. 4,80,50,126/- towards levy of compensation under Clause 2 of the agreement imposed by the Superintending Engineer within 15 days. The petitioner filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, being OMP. No. 352/2015, which was disposed of by this Court vide order dated 17.07.2015 observing that in case the respondent admits that certain amounts are admittedly payable/retained to of the petitioner under the subject contract and such amounts are in excess of the claim of the respondent, then, in such a case only the respondent will not withhold the amounts from any other contracts in which the petitioner has to receive the payments.
8. The petitioner filed another petition under Section 9 of the Arbitration and Conciliation Act, 1996 being OMP No. 452/2015, wherein this Court stayed the encashment of the bank guarantees.
9. On 14.09.2015, the petitioner invoked the arbitration clause and requested for appointment of an Arbitrator. On 23.12.2015, after some correspondence, the Chief Engineer (NDZ)-VII, CPWD, appointed Mr. V.K. Malik as a sole Arbitrator to adjudicate the disputes between the parties.
10. It appears that while invoking the arbitration, the petitioner had raised 20 claims, whereas while referring the disputes to the arbitration vide letter dated 23.12.2015, the Chief Engineer, Chief Engineer (NDZ)-VII, CPWD had referred only 18 claims of the petitioner. He did not refer amongst other claims, additional claim no.1, which has already been reproduced above.
11. The petitioner vide its letter dated 31.12.2015 brought to the notice of the respondent that the Chief Engineer was only an appointing authority to refer the disputes to arbitration and therefore all the disputes were to be referred to arbitration and in that regard, petitioner relied upon a circular dated 22.01.2007. That apart, it is also the submission of the petitioner that the amounts of certain claims have b
