Claims not properly notified under contract terms are non-arbitrable, thus invalidating related arbitral awards.

JUDGMENT

Date : 25-06-2019

1. Heard Mr. K.N. Choudhury, learned senior counsel appearing for the appellant. I have also heard Mr. D. Das, learned senior counsel representing the respondent.

2. This appeal has been filed under section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act of 1996), assailing the judgement and order dated 29/05/2006 passed by the learned District Judge, Bongaigaon, in Misc. Arb. Case No.01/2004, refusing to set aside the arbitral award dated 10/12/2003.

3. The facts necessary for disposal of this appeal may be noticed as follows :-

(a) The appellant had floated a Tender inviting bids for execution of the work “Fire Water Piping Works including Integration”. Upon processing the tender, the work was awarded in favour of the respondent vide Work Order No. RX-113 dated 31/01/1995. Accordingly, a contract agreement was signed by and between the parties. Time was the essence of the contract. As per the terms of the contract, the date of commencement of the work was 28/11/1994 and the scheduled date of completion was 27/03/1995. However, the respondent could complete the work only on 01/10/1996, i.e. after a delay of 553 days. The respondent had, therefore, applied for extension of time (EoT). M/s Engineers India Limited i.e. the Engineer-in-charge for the contract had recommended that extension of time be granted to the respondent. As such, the appellant (owner) had granted EoT subject, however, to the condition that Liquidated Damage (LD) @ 10% of the total contract value would be imposed on the final bill of the respondent/contractor. The respondent did not raise any protest against the said decision of the owner and accordingly, the final bill of the respondent was settled by paying the balance amount of Rs. 15,837.48 vide Demand Draft No. 620336 dated 21/01/1990, after deducting a sum of Rs. 8,44,043.40 as LD being 10% of the total contract value.

(b) It appears from the record that the respondent had accepted the demand draft dated 21/01/1990 for an amount of Rs. 15,837.48p as full and final settlement of its claim under the contract but after the defect liability period was over and the security deposit in the form of Bank Guarantee (BG) was released by the appellant, the respondent had requested for waiver of the LD on the ground that the delay was for reasons not attributable to the Contractor. When the appellant did not accede to the request for waiver of LD, the respondent had approached the Hon’ble Chief Justice of the Gauhati High Court by filing an application under Section 11(6) of the Act of 1996, which was numbered and registered as OJ-19/2000, with a request to appoint an arbitrator. By the order dated 20/03/2002 passed in OJ-19/2000, Shri N.C. Baruah, a retired District and Sessions Judge, was appointed as the sole Arbitrator so as to enter into a reference and adjudicate the dispute. The learned sole arbitrator had passed the arbitral award dated 10/12/2003 allowing the claim of the respondent for waiver of the LD amounting to Rs. 8,44,034.40.

(c) Being aggrieved by the arbitral award dated 10/12/2003, the appellant had filed an application under Section 34 of the Act of 1996, registered as Misc. Arbitration Case No. 1/2004 in the Court of District Judge, Bongaigaon, praying for setting aside the arbitral award dated 10/12/2003 inter-alia on the ground that under the contract agreement, the subject matter of dispute was not capable of being settled by means of arbitration. By the impugned judgement and order dated 29/05/2006, the learned District Judge had rejected the said application filed by the appellant. Hence, this appeal.

4. Mr. K.N. Choudhury, lear