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2021 Supreme(Mad) 3306

IN THE HIGH COURT OF JUDICATURE AT MADRAS
Sanjib Banerjee, Senthilkumar Ramamoorthy, JJ.
The Chief Engineer Highway Metro/Employer and ors. – Appellants
Versus
M/s.Roman Tarmat Ltd. rep. By its General manager and ors. – Respondents
O.S.A.Nos.147 and 153 of 2021
Decided On : 12-07-2021

Advocates:
Advocate Appeared:
For the Appellant :Mr. R. Shunmugasundaram, Advocate-General, Assisted by Mr. V.T. Aravind Gosh, A.G.P. (CS)
For the Respondent: Mr. M.S.Krishnan, Senior Counsel, for Mr.B.Harikrishnan

Headnote:

Arbitration and Conciliation Act, 1996 - Section 21 and 34 - Arbitral award - Counter-claim - Challenged - Appellants awarded similar contracts in favour of respondent contractor for constructing two stretches of a road for first ten kilometer and from tenth kilometer to 17th kilometer - Both contracts required work to be completed within a certain period of time and work to be taken up on a continuous basis - Relevant provision implies that engineer had due authority to take decisions as to nature of work and any other conditions attendant thereto. However, engineer’s decision was subject to scrutiny by an adjudicator, who was named in relevant contracts, and adjudicator could receive any grievance that the contractor would deem necessary to carry from any decision of engineer - It cannot be missed that clause expressly provides that objection to engineer’s decision should be taken to adjudicator, “within 14 days of notification of engineer’s decision - Whether point would be accepted or rejected, it would be better to allow adjudicating authority of first instance to give an opinion thereon since an original adjudication at revisional or appellate level on such aspect would deprive party which loses point a court of appeal or a forum of revision – Held, clock of limitation stops immediately upon receipt of request by other party - Subject-matter of claim cannot be said to be barred by limitation if commencement of arbitral reference within meaning of Section 21 of Act has happened ten years prior to statement of claim being lodged before arbitrator - It would not do for a party to a contract to receive a request for an arbitral reference, not take any action in respect thereof and not even pursue its own claim; and then to wait for statement of claim of other party to be lodged before starting to count period of limitation - Period of limitation would still be running from time cause of action accrued to make counter-claim irrespective of whatever steps may have been taken by other party to contract - Reasoning in judgment and order impugned in such regard, as to counter-claim of appellants herein being hopelessly barred by limitation at time it was lodged, cannot be flawed and calls for no interference whatsoever - O.S.A.Nos. stand dismissed.

JUDGMENT :

Sanjib Banerjee, J.

The appeals arise out of a common judgment and order of November 24, 2020 passed on petitions challenging an arbitral award of December 28, 2019. The appellants' challenge to the arbitral award on the ground of the claim being barred by limitation has been repelled. On the first respondent contractor's challenge to the counter-claim filed in the arbitral reference by the appellants herein, the counter-claim has been rejected.

2. The short question raised in seeking to dislodge the contractor's claim is that the termination of the two contracts was not questioned within the time referred to in a clause in the contract; and, as a consequence whereof, the contractor is deemed to have accepted the termination of the two contracts. The appellants submit that though such ground was squarely taken in course of the proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 and even urged in course of the hearing before the arbitration court, it is apparent from the order impugned that the arbitration court misconstrued the submission and did not deal with such aspect of the matter in the judgment and order impugned dated November 24, 2020.

3. The issues involved in the two appeals are identical. The appellants awarded similar contracts in favour of the respondent contractor for constructing two stretches of a road for the first ten kilometer and from the tenth kilometer to the 17th kilometer. Both contracts required the work to be completed within a certain period of time and the work to be taken up on a continuous basis.

4. For reasons that are not necessary to be looked into at present, the contracts were terminated by the employer on April 21, 2011. It is necessary, at this juncture, to notice clause 24 of the contract in either case that provides as follows:

    “If the Contractor believes that a decision given by the Engineer was either outside the authority given to the Engineer by the contract or that the decision was wrongly taken, the decision shall be referred to Adjudicator within 14 days of the notification of the Engineer’s decision”.

5. The relevant provision implies that the engineer had due authority to take decisions as to the nature of the work and any other conditions attendant thereto. However, the engineer’s decision was subject to scrutiny by an adjudicator, who was named in the relevant contracts, and the adjudicator could receive any grievance that the contractor would deem necessary to carry from any decision of the engineer. It cannot be missed that the clause expressly provides that the objection to the engineer’s decision should be taken to the adjudicator, “within 14 days of the notification of the engineer’s decision”.

6. There is also no dispute that the decision to terminate the contract made on April 21, 2011 by the engineer concerned was not challenged before the adjudicator within 14 days of the notification thereof or of notice in such regard being received by the contractor. Instead, the contractor instituted W.P.No.12392 of 2011 and W.P.No.12393 of 2011 which were disposed of without any cheer for the contractor except that the contractor was permitted to approach the adjudicator, if the law so provided.

7. The contractor approached the adjudicator on November 28, 2011, more than seven months after the termination in either case was notified. The appellants claim that since the relevant clause in either contract required a decision of the engineer to be carried to the adjudicator within 14 days of the notification thereof, it implied that upon the expiry of 14 days and no objection being carried to the adjudicator, the contractor had accepted the decision. Despite the clause not providing negative words like ‘not later than’ or ‘not thereafter’, the appellants insist that the parties by contract fixed a particular time for an objection to the engineer’s decision to be taken to the adjudicator and, in the contractor’s failure to adhere to the time as was consensua

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