The Court should refuse to appoint an arbitrator when claims are ex facie time-barred ("deadwood"), and COVID-19 limitation extensions do not revive claims that had already expired before the extension period began.

JUDGMENT :

G.S. Sandhawalia, Chief Justice.

The present petition has been filed under Section 11(4) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’) by the petitioner-Board for appointment of an Arbitrator. The dispute arose from the “Letter of Award for Supply of Material for providing and execution of augmentation of Conductor (Existing ACSR 6/1/4.72mm to 37/2.49mm) of 33KV Line from Girinagar to Nahan on Turnkey basis in Operation Circle, HPSEBL.” The said contract was stated to be awarded to the respondents by the Superintending Engineer, Operation Circle, HPSEBL, Nahan, vide Purchase Order No. OCN/DB-27/2009-11286-91 dated 07.01.2011 (Annexure P-2) for a sum of Rs. 1,15,56,704/-. Pursuant to clause 12.1 of the Contract, the stipulated time for completing the work was three months from the date of the award.

2. Similarly, “Letter of Award” for 'Survey, Design, Erection, Testing, and Commissioning for the Augmentation of Conductor (Existing ACSR 6/1/4.72mm to 37/2.49mm) of the 33kV Line from Girinagar to Nahan under Electrical Sub-Division No.-II, Nahan on a Turnkey basis in Operation Circle, HPSEBL, Nahan (Erection Part), amounting to Rs. 19,91,739/-, was also awarded to the respondent by the Superintending Engineer, Operation Circle, HPSEBL, vide Award Letter No. OCN/DB-27/2009-11292-97 dated 07.01.2011 (Annexure P-2). Pursuant to clause 7.1 of the Contract, the stipulated time for completing the work was three months from the date of the award.

3. The petitioner-Board stated that the material was supplied to the respondents, who were asked to complete the work vide a letter dated 17.08.2015. However, the work was not completed even after a lapse of five years. Consequently, a final notice dated 11.02.2016, was served by the Superintending Engineer, Operation Circle, HPSEBL, Nahan. A meeting was

allegedly held with the Contractor/Firm on 02.03.2016, wherein the respondents had ensured to start the work after 15.04.2016, following the wheat harvest season. Eventually, the work was stated to have been rescinded on 06.04.2018. Prior to this, the respondent was informed that the work would be measured, and the results of the measurement would be final and binding and because the respondent did not join the measurement process, the petitioner- Board measured the work by forming a Joint Inspection Committee vide a letter dated 31.03.2018. According to the joint measurement report, the respondent had completed re-conductoring on only 4.664 km out of the 22.5 km across four patches between Do-Sarka and Girinagar. Furthermore, the firm failed to return any unused material or dismantled conductors.

4. Resultantly, a fallback was made on clause 4.1 of the Contract Agreement, titled 'Settlement of Disputes,' which provides an arbitration clause and is appended as Annexure P-3. It was specifically agreed between the parties that all differences or disputes arising out of or touching upon the subject matter of the Agreement shall be decided by the process of settlement and arbitration as specified in clause 29 of the General Conditions of Contract, in accordance with the provisions of the Indian Arbitration and Conciliation Act, 1996.

5. On 09.06.2023 (Annexure P-4), a notice was issued for referring the matter to an independent arbitrator in terms of the said clause. This notice mentioned an amount of Rs.1,15,56,704/- (supply part only) and Rs.19,91,379/- (erection part only), along with the award in question, and claimed Rs.96,66,354/- with a reference to the alleged notice dated 29.01.2023.

6. In pursuance to clause 25.1 of the work order and clause 4.1 of the Contract Agreement dated 07.01.2011 containing the arbitration clause, a second notice was sent on 14.08.2024 (Annexure P-5) for settlement of the dispute. In this notice, a sum of Rs.96,66,354/- was stated to be recoverable from the respondents as per the work award dated 07.01.2011 (Annexure P-2). Furthermore, the Chief Engineer (Project)-cum-Arbi