Neutral Citation No:=

ARB-326-2022 1

ARB-326-2022
Reserved on 19.01.2024
Pronounced on 29.01.2024
ITD Cementation India Ltd.
vs.
Central Public Works Department, Govt. Of India

Present: Mr. Amit George, Advocate,

Mr. P. Harold, Advocate (Through Video Conferencing),
Ms. Isha Goyal, Advocate (Through Video Conferencing) &
Mr. R.P. Saini, Advocate (Through Video Conferencing)
for the applicant.

Mr. Brijeshwar Singh Kanwar, Sr. Panel Counsel,

for the respondent-Union of India.
***

Petitioner-Company has filed the present petition for

appointment of independent and impartial arbitrator under Section 11 (5) of

the Arbitration and Conciliation Act, 1996 (for short ‘the Act 1996’) read

with the Scheme of Appontment of Arbitrators by the Chief Justice of

Punjab and Haryana High Court, 2003, as per agreement dated 10.11.2014

(Annexure P-1).

2. The facts, in brief, are that the petitioner vide its letter dated

20.07.2022 invoked the Arbitration Clause and requsted the respondent to

appoint a Sole Arbitrator to adjudicate the disputes between the parties. The

petitioner submitted its final bill vide letters dated 31.07.2020 (P-3). On

01.01.2021, the Contractor received part payment and vide letter dated

05.03.2021 requested the respondent to provide details of the payment. On

receiving a copy of the final bill from Engineer-in-Charge of the respondent,

the petitioner found that there were certain items that are either uncertified

or incorrectly certified. Thereafter, the Contractor vide letter No.

ITDC/35214EB/IIT Ropar/04/4169 dated 22.04.2021 appealed to the Chief

Project Manager (CPM) of the respondent for its decision in terms of Clause

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25 of the Clauses of Contract. In the said letter, it was informed that as per

clause 25 of the Contract, in case the petitioenr is not satisfied with the

decision of the CPM of the respondent it shall pursue the matter in DRC.

The petitioner was then informed by the CPM of the respondent, vide letter

dated 22.03.2022 that as per calculation of the Executive Engineer of the

respondent there is nothing to be compensated as the amount is (-) Rs.470

lakhs, however, the request of the petitioner for referring the matter to DRC

is being considered. The petitioner, thereafter, received letters from the

Executive Engineer to the effect that there shall not be any compensation

and to the contrary, as per their calculation, the amount is negative.

3. The CPM of the respondent vide letter dated 12.04.2022 informed the

petitioner about constitution of the DRC. Thereafter, a meeting was held on

23.06.2022 for solving the disputes between the parties. However, the DRC

failed to resolve the disputes between the parties. Vide letter dated

20.07.2022, the petitioner invoked Clause 25 of the Clauses of Contract

and requested the respondent to appoint an arbitrator for settling the disputes

between the parties. The respondent vide letter dated 04.08.2022 directed the

petitioner to choose one arbitrator from a list of 05 empanelled arbitrators of

the respondent, in terms of Clause 25 of the Clause of Contract within 15

days from the date of issuance of the letter. In response to the above letter,

the petitioner vide letter dated 19.08.2022 informed the respondent that it is

not in agreement with the names suggested by the respondent through its

previous communication to the petitioner, in the light of the judgment of

Hon’ble the Supreme Court in Perkins Eastman Architects DPC and anr

vs. HSCC (India) Ltd, 2019 (2) SCC Online SC 1517.

On notice of the petition, a reply dated 06.02.2023 has been

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filed on behalf of the respondent and a preliminary objection has been taken

to the effect that the Arbitration Clause which the petitioner is using here to

have an access to legal recourse of filling this petition says that “It is also a

term of this contract that no person other than a person appointed by

such Chief Engineer CPWD or Additional Director General or

Director General of Works, CPWD, as aforesaid, should act as

Arbitrator and if for any reason that is not possible, the matter shall not

be referred to arbitration at all”

In the reply, it has been stated that the petitioner applied vide

letter dated 20.07.2022 (P-21) and mentioned the amount Rs.18,11,73,623/-,

however, the amount that claimed before Dispute Redresal Committee

(DRC) was Rs.17,14,22,215/-. As per Clause 25 (Arbitration clause) of the

agreement the amount of claims claimed before Arbitrator should be same as

claimed before DRC that is why the petitioner was asked to stick to the

amount of claims as claimed before DRC i.e Rs.17,14,22,215/-. The

petitioner was communicated vide letter dated 17.08.2022 (P-31) THAT “As

per contract clause 25, disputes those are referred, with amount and are

rejected by CE only be referred in Arbitration. The dispute amount as

referred by you to CE originally is different, so you are requested to stick to

disputed amount only and withdraw additional amount claim which was

never a dispute with department till date. The respondent sought editing in

the amount claimed vide letter dated 10.08.2022 (P-25) as per agreed terms

and conditions of the contract under Clause 25 which provides as “It is a

term of this contract that the party invoking arbitration shall give a list of

disputes with amounts claimed in respect of each such dispute along with the

notice for appointment of arbitrator and giving reference to the rejection by

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the Chief Engineer of the appeal.”

The petitioner also requested to the Chief Engineer, CPWD vide

letter dated 20.07.2022 (P-21) for appointment of Arbitrator, in view of

Clause 25 of the agreement. The petitioner was provided with list of five

empanelled Arbitrators vide letter dated 04.08.2022 (P-23) to give consent

for one of the Arbitrator out of list of 05 Arbitrators for appointment of fair

and mutually agreed Arbitrator. However, the petitioner demanded to

provide curriculum vitae vide letter dated 10.08.2022 (P-26) instead of

chosing one Arbitrator out of the list provided. This information was

supplied by the respondent vide ltter dated 12.08.2022 (P-28) like DOB,

Address, Email, Mob No and validity. The petitioner, thereafter, asked more

details like (a) Number of on going Arbitrations being conducted by each of

proposed Arbitrator (b) Number of on going Arbitrations wherein “Union of

India” is a party in the dispute (c ) Detailed CV along with Academic

Qualification. (d) Organization they served and last designation held in the

Organization. The respondent again provided the details vide letter dated

17.08.2022 and requested to send the consent before due date as per Clause

25 of the Contract Agreement (Annexure R-1). Vide letter dated 19.08.2022

(P-32), the petitioner refused to select any Arbitrator from the list provided

by the respondent without assigning any valid reasons instead provided a

separate list of 05 Arbitrators of thier choice. The respondent waited for

consent till 22.08.2022 and taken decision to appoint sole Arbitrator from

the list of five arbitrators already conveyed to the petitioenr on 04.08.2022.

The appointment of Sh. S.P. Singh conveyed to the petitioner, vide letter

dated 22.08.2022 (R-2). Without waiting for appointment, the petitioner

filed the petition on 20.08.2022 and the petitioner also informed Sh. S.P.

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Singh, Arbitrator vide letter dated 25.08.2022 for cancellation of preliminary

hearing fixed on 03.09.2022 and accordingly, the schedule was cancelled

vide letter dated 26.08.2022 (R-3).

As per respondents, the total amount claimed before Dispute

Redresal Committee (DRC) was Rs.17,14,22,215/ but while requesting for

appointment of Arbitrator, the amount claimed was mentioned as

Rs.18,11,73,623/- having difference of (+) Rs.97.51 lakhs (Annexure R-5).

Whereas, as per clause 25 of the agreement, the petitioner could have chose

any one Arbitrator from the list of 5 Arbitrators given by the respondents.

The appointment of the sole arbitrator was made on 22.08.2022 as per clause

25 of the agreement within one month after receiving the request from the

petitioner on 25.07.2022. Once the respondent has given the list of 05

Arbtirators, the petitioner ought to have chosen the Arbitrator and there was

no clause in the contract to appoint any other Arbitrator.

The another ground taken by the respondent that the Contract

between the parties was not stamped and on this ground, the matter cannot

be referred for the Arbitration.

Heard.

The issue with regard to stamp duty, has attained finality in a

judgment of Hon’ble the Supreme Court of India in Curative Petition (C

No. 44 of 2023, 2023 SCC Online SC 1666.

With respect to the issue of claim as time barred, reference at

this stage can be made to a judgment of Hon’ble the Supreme Court of India

in a case of Grasim Industries Ltd. vs. State of Kerala, 2018 (14) SCC 265,

wherein in para 12, it has been observed as under:-

12. In view of the legal position expressed hereinabove, the

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limitation with reference to the claim raised by the appellant, would

have to be determined only under Article 137 of the Limitation Act.

Insofar as the instant aspect of the matter is concerned, the High

Court found that the claim raised by the appellant was even beyond

the period postulated under Article 137 of the Limitation Act. In this

behalf, the High Court recorded the following observations: (Grasim

Industries Ltd. SCC OnLine Ker para 12)

“"12.... It is not actually a decision on the claim made under

Annexure X, but it is a decision of the arbitration clause in the

Agreement. Apart from that, the claim put forward by the

applicant in respect of the shortage a of supply of raw materials

from 1988-1989 onwards also is barred by limitation under

Article 137 of the Limitation Act. The Supreme Court in SAIL v.

J.C. Budharaja held that the provisions of Article 137 of the

Limitation Act would apply and any action should be brought

within three years from the date when the cause of action to

recover the amount arose. Thus, the request for appointment of

arbitrator will have only to be rejected."

Reference at this stage can further be made to judgment of

Hon’ble the Supreme Court of India in a case of BSNL and another vs.

Nortel Networks India Pvt. Ltd, 2021 (5) SCC 738 wherein it has been held

that ordinarily the issue of limitation which concerns the “admissibility” of

the claim, must be decided by the Arbitral Tribunal either as a preliminary

issue or at the final stage after evidence is led by the parties. However, while

exercising jurisdiction under Section 11 as the judicial forum, the Court may

exercise the prima facie test to tscreen and knockdown ex facie meritless,

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frivolous and dishonest litigation. At the referral stage, the Court can

interfere only when it is manifest that the claims are ex facie time-barred and

dead or there is no subsisting dispute.

In the present case, the respondent had informed about the

constitution of Dispute Redressal Committee on 12.04.2022 but the DRC

failed to resolve the dispute. Thereafter, the petitioner invoked the

Arbitration Clause on 20.07.2022.

It is the Arbitrator who can examine whether the claim is time

barred or not. The only question for consideration is that whether as per

Section 25 of the Terms of the Contract, once the list of 05 Arbitrators had

been given to the petitioner and the petitioner chose not to finalise out of 05

Arbitrators, whether he can invoke the Arbitration Clause.

This issue has been examined by Hon’ble the Supreme Court of

India in cases of Perkins Eastman Architects DPC and another vs. HSCC

(India) Ltd, 2020 (20) SCC 760, Indian Oil Corporation Ltd and others vs.

Raja Transport Pvt. Ltd, 2009(8) SCC 520 and ICOMM Tele Ltd vs.

Punjab State Water Supply and Sewerage Board and another, 2019 (4)

SCC 401.

In a recent judgment of Hon’ble the Supreme Court of India

in a case of S.K. Engineering and Construction Co India vs. Bharat Heavy

Electricals Ltd, 2023 SCC Online Del 7575, it has been held as under:-

“As such, there is no merit in the contention raised by

learned counsel for the respondent that the present disputes

cannot be referred to arbitration at all. The arbitration clause

insofar as it stipulates that only the respondent can act or appoint

an arbitrator must severed from rest of the arbitration clause in

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view of the judgment of the Supreme Court in TRF Ltd. (supra)

and Perkins (supra). The later part of the arbitration clause, that if

for any reason the person appointed by the respondent cannot act

as Arbitrator, the matter is not to be referred to arbitration at all,

must also be severred, as the same is also a part of the same

stimulation, which is in utter contravention of TRF Ltd (supra)

and Perkis (supra).

Further Hon’ble the Supreme in a case of MTLN vs. Canara

Bank, 2020 (12) SCC 767 has held as under:-

“9.5. A commercial document has to be interpreted in such a

manner so as to give effect to the agreement, rather than to

invalidate it. An "arbitration agreement" is a commercial document

inter partes, and must be interpreted so as to give effect to the

intention of the parties, rather than to invalidate it on

technicalities."

In view of the above mentioned judgments, prayer of the

applicant is accepted and this Court proposes to appoint Justice Sanjay

Kishan Kaul, a former Judge of the Supreme Court, as the sole Arbitrator.

Let necessary declaration under Section 12(5) of the

Arbitration and Conciliation Act,1966, be obtained and placed before this

Court.

List on 16.02.2024.

(RITU BAHRI)
29.01.2024 ACTING CHIEF JUSTICE
G Arora

Neutral Citation No:=

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