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IN THE HIGH COURT OF DELHI
Neena Bansal Krishna, J.
K.B.G. Engineers - Appellant
Versus
Delhi Tourism and Transportation Development Corporation Ltd. - Respondent
Arb.P. 576 of 2022
Decided On : 05-07-2022




The court ruled that jurisdiction under Section 11(6A) is limited to assessing the existence and validity of arbitration agreements, with unresolved factual disputes requiring arbitration.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11(6) and Section 11(6A) - Petition for appointment of an Arbitrator - Existence of arbitration agreement acknowledged - Dispute regarding final payment and undertaking requires arbitration to resolve - Respondent's inaction on appointment of Dispute Resolution Committee constituted a failure of procedural due process. (Paras 4, 9-12)

(B) Jurisdiction of the Court under Section 11(6A) - Limited to examine existence and validity of arbitration clauses - Claims must be arbitrable to dismiss petition. (Paras 6, 9)

Facts of the case:
The petitioner, a partnership firm, successfully bid for construction work but faced payment issues after completion. Despite initiating correspondence for arbitration under the agreement's clause, no Dispute Resolution Committee was formed by the respondent.

Findings of Court:
The petitioner followed applicable procedures under the agreement; therefore, the claim for arbitration is justified.

Issues: The key issues involved whether the final payment had been fully received and compliance with arbitration procedures.

Ratio Decidendi: The court concluded an undervaluation of the significance of the arbitration agreement due to procedural failures by the respondent and the disputed nature of the final payment necessitated arbitration.

Result: Petition allowed, and an Arbitrator is appointed.

Table of Content
1. factual background of the case. (Para 2 , 3 , 4 , 5)
2. respondent's procedural objections to arbitration. (Para 6 , 10)
3. court's reasoning on validity of arbitration claims. (Para 8 , 9 , 11)
4. appointment of arbitrator and conclusion. (Para 12 , 13 , 14 , 15)

JUDGMENT

Neena Bansal Krishna, J. (Oral)--The present petition under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as `The Act') has been filed on behalf of the petitioner for appointment of an Arbitrator.

2. Facts in brief are that the petitioner is a registered partnership firm and is doing the work of construction in Government and private department since long time. The petitioner was declared successful participant in the Tender published for the execution of the work of "upgradation/Construction of Sub-Registrar Office at DC(South East) Office Complex Gargi College, Lajpat Nagar, New Delhi, SH: Civil work i/c Furniture, Electric and HVAC Work". After completion of all the formalities, Acceptance Letter bearing no. DTTDC/Engg./I(196)/EE(PB-III)/2405 dated 30.07.2014 was awarded to the petitioner.

3. The performance guarantee in terms of the Letter of Acceptance was submitted after which the Agreement bearing No. 7/EE(PB-III)/DTTDC/Engg/2014-15 for execution of work for a total contractual amount of Rs.2,13,59,777/- was entered into between the parties. The date of the commencement of the work was 14.08.2014 and the date of completion was 11.12.2014. The petitioner immediately started the execution of work on issuance of Acceptance Letter but it faced many hindrances during the course of execution of the work at site which were ultimately completed on 28.09.2015. Thereafter, petitioner submitted his Final Bill and Statements of 10CA and 10C vide its letter dated 14.05.2018 and 18.10.2018 against which some payments were made by the respondent in the month of August, 2020.

4. The officers of the respondent failed to make payments of the entire amount despite repeated requests; the petitioner thus sent a letter dated 20.05.2020 to the Executive Engineer to release the entire amount. He also submitted letter dated 21.05.2020 in the office of Chief Project Manager of respondent reiterating its claims and invoking Arbitration clause 25 of GCC of the Agreement. The Superintendent Engineer of the respondent department sent a reply on the pretext that some Undertaking has already been given by the petitioner at the time of release of the Final Bill. The petitioner again submitted a letter dated 20.06.2020 to the Managing Director of respondent. The Chief Engineer of the respondent sent a reply dated 15.07.2020 requesting him to approach Superintending Engineer of respondent in terms of Clause 25 of GCC. A letter dated 10.08.2020 was accordingly submitted to the Superintending Engineer for settlement of disputes and for referring the matter for appointment of Arbitrator for adjudicating of disputes to which a reply dated 04.09.2020 was sent from Chief Engineer of the respondent reiterating the averments made in the letter dated 15.07.2020. The petitioner then submitted a letter dated 21.12.2020 to Chief Engineer of respondent in terms of Clause 25 of the GCC Agreement for settlement of disputes but since no reply came forth, he submitted another letter dated 27.08.2021 to the Managing Director of the respondent despite which the respondent has failed to constitute the Dispute Resolution Committee or to pay the claimed amount along with the interest. It also failed to take any steps for the appointment of the Arbitrator; hence the present petition has been made for appointment of the Arbitrator.

5. The valuation of the subject matter has been done at approximately Rs.10,23,082/- alongwith interest @ 18% per annum from the due date till the date of payment to the petitioner.

6. Learned counsel for the respondent has taken objection that the petitioner had already accepted the Full and Final payment and had eve

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