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Mehta and Co. Vs. Union of India (Uoi) - Court Judgment

LegalCrystal Citation
SubjectArbitration;Contract
CourtDelhi High Court
Decided On
Case NumberSuit No. 1265-A of 1981
Judge
Reported in1983(5)DRJ171; 1983RLR467
ActsArbitration Act - Sections 20
AppellantMehta and Co.
RespondentUnion of India (Uoi)
Appellant Advocate D.P. Sharma, Adv
Respondent Advocate B.D. Sharma, Adv.
Cases ReferredUnion of India v. Shri Narain Dass
Excerpt:
arbitration act - section 20--signing of a no claim certificate does not prevent a claimant from claiming a reference of disputes to arbitration the controversy whether the claimant had signed the no claim certificate under protest or not is also a dispute which is to be gone into by the arbitrator.in an application under section 20 there is no legal requirement for the petitioner to give evidence in support of his claims. what is required is that the claim should be specified. - - 2. it is the case of the petitioner that for the fulfillment of the contract the department was to supply material and the designs which it had failed to do so in time. further, the case of the petitioner is that the respondent failed to finalise its final bill for almost a year and a half after the..........the amount which was found by it to be due to the petitioner unless the petitioner signed a 'no claim certificate'. the contention of the petitioner is that 'no claim certificate' was signed under protest. as numerous genuine claims were with held by the respondent it is the case of the petitioner, it had to invoke the arbitration clause for settlement of the disputes.3. respondent vide letter dated 11th august, 1981, it is alleged, informed the petitioner that in view of the 'no claim certificate', the claims sought to be referred to arbitration did not survive and as such could not be referred to arbitration. hence, this petition under section 20 of the arbitration act seeking directions to the respondent to file the original arbitration agreement between the parties in court and.....
Judgment:

Charanjit Talwar, J.

1. The petitioner, M/s. Metha & Company is a registered partnership firm carrying on business as contractors and builders at Jullundur City. It entered into a contract with the Union of India for construction of office blocks in connection with the provision of a diesel shed at Ludhiana, on 3rd December, 1977, after its tender dated 4th August 1977 for the said work was accepted by the respondent. The construction work was to start on 22nd August, 1977, and was to be completed on 21st February 1979, but for certain reasons it could not be completed in time Ultimately it was completed on 31st March, 1980. The respondent had agreed to the extension of time for completion of the work. For the due performance of the contract the petitioner initially deposited a sum of Rs. 20,000/-. Thereafter, it is alleged that a further amount of Rs. 1,20,020 odd was deducted from the running bills of the petitioner towards the security. The agreement entered into between the parties on 3rd December, 1977, provided for the settlement of disputes arising out of the contract between them by arbitration.

2. It is the case of the petitioner that for the fulfillment of the contract the department was to supply material and the designs which it had failed to do so in time. Further, the case of the petitioner is that the respondent failed to finalise its final bill for almost a year and a half after the completion of the contract and while finalising the bill a number of genuine claims were excluded from the same. It is averred that after making illegal deductions from the bill, the respondent did not pay the amount which was found by it to be due to the petitioner unless the petitioner signed a 'no claim certificate'. The contention of the petitioner is that 'no claim certificate' was signed under protest. As numerous genuine claims were with held by the respondent it is the case of the petitioner, it had to invoke the arbitration clause for settlement of the disputes.

3. Respondent vide letter dated 11th August, 1981, it is alleged, informed the petitioner that in view of the 'no claim certificate', the claims sought to be referred to arbitration did not survive and as such could not be referred to arbitration. Hence, this petition under Section 20 of the Arbitration Act seeking directions to the respondent to file the original arbitration agreement between the parties in Court and for making an order of reference of the 13 disputes detailed in paragraph 10 of the petition to arbitration in terms of clause 64 of the General Conditions of the contract.

4. The respondent in their written statement have taken up the plea that Shri N.K. Metha who has signed and verified the petition on behalf of the petitioner, is not competent to institute the suit. It is denied that the petitioner-firm is a duly registered firm. Another objection is that the petition under Section 20 of the Arbitration Act is not maintainable as the petitioner has not given details of the claims sought to be referred to arbitration. The main defense taken by the respondent is that the claims fall within the purview of 'excepted matters' as stipulated under clause 63 of the General Conditions of the Contract and those are not liable to be referred to arbitration.

5. On the pleadings of the parties, the following issues were framed :

'1. Whether Shri N.K. Mehta is competent to institute the suit ?

2. Whether the petition is not maintainable ?

3. Whether the disputes sought to be referred have not been mentioned in the plaint ?

4. Whether the said disputes are not referable ?

5. Relief'.

6. The parties did not lead any oral evidence. They agreed that the case be tried and decided on affidavits.

7. The petitioner has filed a detailed affidavit of Shri N.K. Mehta in support of the petition to be read by way of evidence. The respondent has filed an affidavit of Shri J.R. Gupta, Senior Civil Engineer/Construction, Northern Railway, Ludhiana.

8. I have heard the learned counsel for the parties. With their assistance I have gone through the record. My findings on each issue are as under :--

Issue No. 1 :

9. The petitioner has filed a certified copy of Form 'A' from the Register of Firms, issued by the Registrar of Firms and Societies, Punjab, Chandigarh, which shows Shri Narinder Kumar Mehta as one of the partners of M/s. Mehta & Co. Jullundur City, since 25th May, 1979. It has also filed a certified copy of form 'C' showing M/s. Mehta & Co. Jullundur City to be a partnership firm. The respondent have not led any evidence to the contrary.

10. Issue No. 1 is, thereforee, decided in favor of the petitioner and against the respondent.

Issue No, 2 :

11. As noticed earlier, a preliminary objection to the maintainability of the petition has been taken by the respondent on the ground that details of the claims sought to be referred to arbitration have not been given in the petition. At this stage I may notice the claims which have been referred to in paragraph 10 of the petition. They are-

'Claim No. 1--Rs. 11,89,632.00

Non-payment/less payment for certain items executed by the claimant but not measured and paid for. Claim No. 2--Rs. 18982.00

Illegally recovered from the running and final bills. Claim No. 3--Rs. 89,422.20

On account of non-payment of last running bill by the Department for 13 1/2 months. Claim No. 4--Rs. 8,59,709.00

Infructuous expenditures incurred by the Claimant due to non handing over of work sites; late supply of Government materials, late decision change in design; occupation of work sites by keeping heavy girdars, Darrick; erection of trusses, purloins and sheeting etc; increase in amount of work; late payment of running bills, less payments & also increased cost of execution. Claim No. 5--Rs. 22,0001-

Advance paid but not recouped for department's fault. Claim No. 6--Rs. 42,390.00

Rectification of defects. Claim No. 7--Rs. 49,500.00

For providing facilities to the Department such as digging of pits and making holes of dismantling C.C., R.C.C. flooring, brick work of all structures and making good and redoing the same. Claim No. 8--Rs. 2,77,800.00

Representing the dues for the excess work ordered to be done by the claimant. Claim No. 9--Rs. 77,474.00

Representing the losses suffered by the Claimant due to variation in the quantities in the agreement. Claim No. 10--Rs. 18,205.09

Representing the loss suffered because of certain profitable items not having been got executed from the plaintiff. Claim No. 11--Rs. 2,017.00

Representing the refund of security money deposited for electric connection. Claim No. 12--Interest.

Interest from 1-4-80 @ 18 per cent per annum till the date of realisation of the dues. Claim No. 13--Rs. 10,000.00 Cost of Arbitration.'

12. A perusal of the above shows that the claims are clearly specified although evidence in support of them or the details, as the respondent have chosen to call the same, are not specified. In my view, it is not at all necessary to give evidence in a petition under Section 20 of the Arbitration Act in support of the claims sought to be referred to arbitration. In the present case, along with the affidavit in support of its contentions complete details of the claim have been given. In the petition itself, after mentioning the claims in paragraph 10, the petitioner stated :

'As stated above, the details in support of these claims were sent to the Department and will be filed separately by the plaintiff as a document in this Hon'ble Court'.

13. In my view there is no legal requirement for the petitioner to give evidence in support of the claims or the break-up of each claim whether called details or material. What is required is that the claim should be specified.

14. It is the case of the petitioner that the details had been duly provided to the General Manager. In my view there was enough indication to the General Manager of the claims together with the specific grounds on which the same are based. In case he was not satisfied he could have asked for better particulars. He chose not to do so. In any case, before me the claims have been fully specified.

15. Reliance by the learned counsel for the respondent on Rai Bahadur Basakha Singh & Sons v. Indian Drugs & Pharmaceutical Ltd., : AIR1979Delhi220 , is misplaced inasmuch as in the said case no particulars at all of the disputes to be referred, were made in the petition. The plea by the petitioner in that case that the copies of notice and other documents accompanying the petition contained the particulars of disputes was rejected on the ground that without the disputes being pleaded specifically the petitioner was not entitled to urged as to what were the disputes. That is not the case before me. The disputes have been specifically mentioned. The claims are thirteen, the amounts are mentioned, on which account an alleged claim is being sought, is also mentioned. The details and the break-up have been given along with the affidavit.

16. Accordingly, I reject the preliminary objection of the respondent and hold that the petition is maintainable. Issue No. 2 is accordingly decided against the respondent.

Issue No. 3 :

17. In view of my finding on issue No. 2, issue No. 3 is also decided against the respondent and in favor of the petitioner.

Issue No. 4 :

18. Counsel for the respondent mainly addressed arguments on this issue. It was strenuously contended that the disputes are not referable, as those are excepted matters as per Clause 63 of the General Conditions of Contract. That clause reads as under :

'Clause No. 63--Matters finally determined by the Railway.

63. All disputes and differences of any kind whatsoever arising out of or in connection with the contract whether during the progress of the works or after their completion and whether before or after the determination of the contract, shall be referred by the contractor to the Railway and the Railway shall within a reasonable time after their presentation make and notify decisions thereon in writing, except the decisions for which provision has been made in Clauses 18, 22(5), 39, 45 (a), 55, 55-A(5), 61(2) and 62 XIII(B) (e) (b) of the General Conditions of Contract or in the Special Conditions of the Contract, which are to be deemed to be ''excepted matters', shall be final and binding on the Contractor. These mattersare specifically excluded from the purview of arbitration provided for in clause 64 and shall not be referred to arbitration'.

19. From the pleadings before me the case of the respondent appears to be that the claims of the petitioner fall within 'excepted matters' as they relate to the measurement of the work and/or relating to the decision or direction of the authorised officer of the railways which are final and binding on the contractor.

20. Further, the effort of the respondent is that as admittedly the petitioner had signed 'no claim certificate' thus the disputes come within the ambit of the 'excepted matters' which are not, thereforee, referable.

21. The evidence in support of the claims and details thereof have been mentioned in the replication and in the affidavit of the petitioner. During arguments it transpired that only two items of claim No. 1, i e., items 76 and 95 of Annexure 'B' of the affidavit relate to the measurement of work. Those items read as follows :

76The thickness of walls and bed blocks of InspectionPitts have been less measured. Hence difference of thing ness is claimed.50 CumRs. P.58.60Per Cum 216%Rs. P.

9258.0095Rolling Shutters in N.S. item less measured.8 sqm.210.00sqm. ---1680.00'

22. The total of these items under claim No. 1 comes to Rs. 10,938/-. As these arise out of the measurement, the decision of the appropriate authority is final and binding on the petitioner. Mr. D.P. Sharma, learned counsel for the petitioner, fairly conceded that these two items are not referable.

23. Counsel for the respondent was unable to point out from the evidence and the details to any other item under any other claim, relating to 'excepted matters'. He, however, contended that the petitioner was estopped from seeking reference of the claims as he had given a 'no claim certificate' He submitted that although this objection was not specifically pleaded but by virtue of Sub-clause (2) of Clause 43 of the General Conditions of the Contract, the claimant, petitioner herein, was not entitled to raise any claim what-soever or to seek reference of those claims after having signed 'no claim certificate'.

24. This contention is also entirely misconceived. As noticed above, the case of the petitioner is that he had signed 'no claim certificate' under protest. The reason given is that the amount of about rupees three lakhs, which even according to the respondent was due to it after verification of the final bill, was not being paid to the petitioner till such time the petitioner signed a 'no claim certificate'. It is well-settled by this Court that signing of a no claim certificate does not prevent a claimant from claiming a reference of disputes to arbitration. The controversy whether the claimant had signed a no claim certificate under protest or not is also a dispute which is to be gone into by the Arbitrator.

24. In Union of India v. Shri Jia Lal Mehra, F.A.O. (O.S.) No. 21 of 1972, decided by a Division Bench of this Court on 8th August, 1972, it was held -

'It is for the arbitrator to decide whether there is any waiver or abandonment of his rights by the respondent. In other words, the Union of India urges that the no-claim certificate is a complete waiver or abandonment of the rights by the respondent to get adjudication under the arbitration agreement. The respondent denies this position. In any event this is a dispute which must go to the arbitrator for his decision'.

25. The Division Bench approved the earlier decision of V.D. Misra J. in Union of India v. Shri Narain Dass, F.A.O. 219-D of 1965, decided on 26th April, 1971 wherein the scope of Clauses 64 and 43(2) of the General Conditions of Contract was discussed. V.D. Misra, J. (as his Lordship then was) held :

'The scope of the above-mentioned arbitration clause is very wide indeed. One of the matters which have to be decided by the arbitrator relates to 'true construction, meaning and intent of any part, or conditions of the same........ or as to the true intent,meaning, interpretation construction or effect of the clause of the contract............ .............'

What is the ambit of Clause 43(2) has to be decided by the arbitrator. He is not only to see whether there is no-claim certificate, he is further to find out whether such a certificate was signed voluntarily, and if so, what is the ambit and effect of this clause. Clause 43(2) does not ipso facto repeal or take away the effect of arbitration clause simply because no claim certificate is alleged to have been duly signed by the respondents. The respondents have put up their claims under their contracts against the appellants which have been denied by the latter. The disputes have thus arisen between the parties which have to be decided .

26. In view of the principle enunciated in the above-cited authorities the objections raised by the counsel for the respondent are liable to berejected.

27. Another objection raised during arguments by the counsel for the respondent was that the petitioner had not sought reference of the disputes to arbitration from the appropriate authority. According to him the petitioner had written to the General Manager seeking a reference to arbitration who while dealing with this matter was not the appointing authority. This plea has not been specifically raised in the written statement. However on the respondent's own showing this has to be rejected. On behalf of the General Manager the petitioner was informed that the disputes could not be referred as it had signed a no claim certificate. The objection was not what is sought to be raised before me. The General Manager dealt with the case as an authority having jurisdiction to appoint the arbitrator. That he is the Authority to do so. was admitted by the counsel for the respondent.

28. In view of my discussion above, I hold that except for items 76 and 95 of claim No. 1 amounting to Rs. 10,938/- all the other claims are referable to arbitration.

29. In view of my findings above, the dispute-whether the 'no-claim certificate' was signed under protest by the petitioner together with all the claims, quoted above, except items 76 and 95 of claim No. 1, are referable. The parties agree that there is an arbitration agreement between them. There is thus no need for the respondent to file the original of the same in Court. I, however, direct the respondent to appoint the Arbitrator within six weeks from today and refer the disputes to him for arbitration.

30. The petition is thus allowed with costs.


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