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2016 Supreme(Del) 3559
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
SHANTI PRAKASH GOENKA - Petitioner
Versus
MAHANAGAR TELEPHONE NIGAM LTD. - Respondent
ARB.P. 76/2016
Decided On : 20-09-2016
For the Petitioner: Mr. R Rajappan & Ms. Rajni, Advs
For the Respondent: Ms. Suruchi Suri, Adv
The provision in the arbitration clause restricting the period of limitation for invoking arbitration or providing for waiver of the right is void under Section 28 of the Indian Contract Act, 1872 as amended.
Headnote:
Arbitration - Construction Contract - Arbitration and Conciliation Act, 1996, Section 11(5) - 53. ARBITRATION SETTLEMENT OF DISPUTES - The court discussed the arbitration clause in the construction contract and held that the provision restricting the period of limitation for invoking arbitration or providing for waiver of the right is void under Section 28 of the Indian Contract Act, 1872 as amended.
Fact of the Case:
The petitioner filed a petition under Section 11(5) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator for disputes arising from a construction contract.
Finding of the Court:
The court found that the provision in the arbitration clause restricting the period of limitation for invoking arbitration or providing for waiver of the right is void under Section 28 of the Indian Contract Act, 1872 as amended.
Issues: The main issue was whether the petitioner's invocation of the arbitration clause was beyond the period of limitation of 90 days, as per the arbitration clause in the contract.
Ratio Decidendi: The court relied on previous decisions and concluded that the provision restricting the period of limitation for invoking arbitration or providing for waiver of the right is violative of Section 28 of the Indian Contract Act, 1872 as amended.
Final Decision: The petition was allowed, and a sole arbitrator was directed to be appointed under the Rules of the Delhi International Arbitration Centre (DIAC). The arbitration was to be conducted under the aegis of DIAC and in accordance with its Rules.
VIBHU BAKHRU, J.
1. The petitioner has filed the present petition under Section 11 (5) of the Arbitration and Conciliation Act, 1996 (hereafter the ‘Act’) inter alia, praying that an arbitrator be appointed for adjudication of the disputes that have arisen between the parties.
2. It is not in dispute that the petitioner and the respondent had entered into an agreement dated 25.10.2010 for construction of MTNL staff quarters at GH-17, Paschim Vihar, New Delhi. It is also not in dispute that the said contract includes an arbitration clause which reads as under:-
“53. ARBITRATION SETTLEMENT OF DISPUTES
53.1 For contract other than with public sector undertakings
Except where otherwise expressly provided in the contract all questions differences & disputes relating to the meaning of the specification, designs, drawing and instructions herein before mentioned and as the quality of workmanship or material used on the work or as to any other questions, claim, right, matter or things whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates instructions, orders or these conditions or others concerning the works or the executions or failure to execute the same whether arising during the progress of the work or after the completion, cancellation, termination or abandonment thereof shell be referred to the sole arbitration of the person to be appointed by the CE(BW), MTNL, Delhi (in charge of work) at the time of dispute or if there is no chief engineer, the administrative head of the said MTNL, Delhi at the time of such appointment. There will be no objection to any such appointment that the arbitrator so appoint is a government / MTNL servant, that he had to deal with the matter to which the contract relates ant that in the course of his duties as dispute or difference. The arbitrator to the whom the matter is originally referred being transferred or vacating his office or being unable to the act for any reasons, CE(BW) of MTNL as aforesaid at the time of such transfer, vacation of office or inability to act, shall appoint another person to act as arbitrator In accordance with the term of the contract. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other than a person appointed CE (BW) of the MTNL as aforesaid should act as arbitrator and if for any reason that's not possible, the matter is not to be referred to arbitration at all. In all cases where the amount of claim is Rs. 75000/-(Rupees Seventy five thousand only) and above, the arbitration shall give reason for the award.
Subject as foresaid the provisions of the arbitration & conciliation act, 1996 or any statutory modification or re-enactment there of the rules made here under and for the time being in force shall apply to the arbitration proceeding under his clause.
It is a term of the contract that the party invoking arbitration shall specify the dispute or disputes to be referred to arbitrator under this clause together with the amount or amounts claimed in respect of each dispute.
If the any contractors does/ do not make any demand for arbitration in respect of any claims in writing within 90 days of receiving the intimation from the MTNL, that the bill is ready for payment, the claim of the contractors will be demand to have been waived and absolutely barred and the MTNL shall be discharged and released of all liabilities under the contract in respect of these claims.
The decision of superintending engineer regarding the quantum of reduction as well as justification thereof in respects of rates for sub-standard work which he may decide to be accepted will be final and would not be open to arbitration.”
3. The only objection raised by the respondent is that the invocation of the arbitration clause is beyond the period of limitation of 90 days. The learned counsel for the respondent has pointed out that the f
