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2019 Supreme(MP) 515
IN THE HIGH COURT OF MADHYA PRADESH
Sanjay Yadav, J.
Budhiraja Electricals – Applicant
Versus
Union of India – Respondent
A. C. No. 29 of 2019
Decided On : 08-07-2019
Advocate Appeared:
For the Applicant : K. N. Gupta, Senior Counsel with R. S. Dhakar
For the Respondent: Vivek Khedkar, Assistant Solicitor General
The court emphasized the importance of referring unresolved disputes to the arbitrator for adjudication, disregarding the plea of res judicata.
Headnote:
Arbitration - Dispute Reference - Arbitration and Conciliation Act, 1996, Section 11(6)
Fact of the Case:
Dispute arose between the applicant and respondent regarding payments for construction work. Applicant invoked the agreement's mechanism for dispute resolution. Dispute Resolution Committee (DRC) was constituted and referred four claims to the arbitrator, declining to refer five other claims. Applicant filed an application seeking reference of the remaining disputes to the arbitrator.
Finding of the Court:
The court found that the remaining disputes deserved to be referred to the arbitrator, as the resolution passed by the DRC had not been implemented by the respondent. The plea of res judicata was dismissed, and the court directed the respondent to refer the unresolved disputes to the arbitrator.
Issues: Dispute reference to the arbitrator, implementation of DRC resolution, application of res judicata
Ratio Decidendi: The court held that the remaining disputes should be referred to the arbitrator, as the resolution passed by the DRC had not been implemented by the respondent, and the plea of res judicata was not applicable.
Final Decision: The court directed the respondent to refer the unresolved disputes to the arbitrator for adjudication.
JUDGMENT :
1. Shri K. N. Gupta, learned Senior Counsel with Shri R. S. Dhakar, learned counsel for the applicant.
Shri Vivek Khedkar, learned Assistant Solicitor General for the respondent/Union of India.
Vide this application under section 11(6) of the Arbitration and Conciliation Act, 1996, applicant seeks reference of existing dispute to the arbitrator already in seisin with part of dispute.
2. It is borne out from record that for construction of residential and non-residential buildings for RTC ITBP, Karera, M. P (SH: Providing Fans and Fittings in Residential and Non-residential buildings and pumping sets) an agreement was entered into between the applicant and respondent vide Agreement No. 43/EE(E)/GCED/2014-15 dated 22-12-2014. The work order was issued on 12-1-2015 and was completed on 5-4-2016. Certain disputes arose between them as regard to payments. The applicant invoked Clause 25 of the Agreement which lays down the mechanism for resolution of inter se dispute; on 7-12-2016. As no decision was taken on the application, the applicant filed an appeal; whereon, Dispute Resolution Committee (DRC) was constituted on 3-2-2017. The applicant made following claims :
| Claim No. | Particulars of Claim | Account of Claim |
| Claim No. 1 | Claim on account of 4th and final Bill (Revised) submitted on 24-8-2016 against completed work on 5-4-2016 | 12,96,310.00 |
| Claim No. 2 | Claim on account of interest @ 7.50% under amended Clause 7 of agreement for delay in payment of Running Account Bills. | Rs. 11,193.00 |
| Claim No. 3 | Claim on account of Labour Escalation payment under clause 10-C of Agreement Note : Escalation Bill of Labour Component duly passed pending for want of funds. | Rs. 57,825.00
|
| Claim No. 4 | Claim on account of Losses and Damages sustained due to prolongation of contract | 6,35,850.00
|
| Claim No. 5 | Claim on account of loss of profitability due to prolongation of contract | 16,95,600.00 |
| Claim No. 6 | Claim on account of interest @ 7.50% w.e.f. 25-11-2016 to 31-10-2018 under amended Clause 9 of agreement for delay in payment of 4th and final Bill of Rs. 12,96,310/- within specified period of time. | 1,88,320.00
|
| Claim No. 7 | Claim on account of interest @ 10% due to delay in refund of Earnest money and Security Deposit for the work completed on 5-4-2016. |
|
| (1) | Refund of EMD due on 5-4-2017, But refunded on 26-12-2017 Rs. 1,042.00 |
|
| (2) | Refund of Security Deposit due on 5-4-2017, but refunded on 8-7-2018 Rs. 14,768.00 |
|
|
| Total Rs. 15,810.00 | Rs. 15,810.00 |
| Claim No. 8 | Claim on account of Pendente-lite and future interest @ 10% on the awarded amount
| Shall be worked out after publication of Award |
| Claim No. 9 | Claim on account of Cost of Arbitration |
|
| (a) | In case Sole Arbitrator Min. of Housing and Urban Affairs is appointed | Rs. 2,00,000.00
|
| (b) | In case Independent Sole Arbitrator is appointed or Sole Arbitrator is appointed through Court. | Rs. 4,00,000.00
|
|
| Total | Rs. 39,00,908.00 + Claim No. 8 and 9 |
3. The DRC by order dated 14-11-2018 appointed Shri A. P. Joshi as sole Arbitrator and referred following 4 claims (out of 9) for adjudication. Four Claims referred to the arbitrator were :
| Claim No. | Particulars of Claim | Account of Claim |
| Claim No. 4 | Claim on account of Losses and Damages sustained due to prolongation of contract | 6,35,850.00
|
| Claim No. 5 | Claim on account of loss of profitability due to prolongation of contract | 16,95,600.00 |
| Claim No. 8 | Claim on account of Pendente-lite and future interest @ 10% on the awarded amount
| Shall be worked out after publication of Award |
| Claim No. 9 | Claim on account of Cost of Arbitration |
|
| (a) | In case Sole Arbitrator Min. of Housing and Ur | |
