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Nehru Bhavan Trust Vs. C.L. Misra - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberF.A.O. (O.S.) No. 73 of 1980
Judge
Reported in23(1983)DLT387
ActsArbitration Act - Sections 20
AppellantNehru Bhavan Trust
RespondentC.L. Misra
Appellant Advocate P.G. Gokhalel, Adv
Respondent Advocate Daljit Singh and ; Ashok Kashyap, Advs.
DispositionAppeal dismissed
Excerpt:
arbitration - arbitration clause - section 20 of arbitration act, 1940 - agreement comprised of reciprocal promises to be performed by both parties - dispute arose with regard to such promises - one party alleged that other party not performing his part - matter may be referred to arbitrator. - - the later part of clause 35 clearly shows, on the other hand, that the refusal by the architects to give any decision would be a matter which can be referred to arbitration. the respondent had complained that the architects had not issued certificate for payment of the 7th running bill. the decision of the learned single judge in this behalf is, thereforee, clearly unassailable. the disputes which were sought to be raised between the parties clearly fell within the ambit and scope of the..........to the final certificate issued by the architects on may 25, 1977 the matters in controversy were excepted matters and the decision of architects was final. 7. the respondent filed his rejoinder and denied that any of the matters in dispute was an excepted matter. 8. on the pleadings of the parties, the fallowing two issues were framed :-- (1) whether the disputes are not referable to arbitration as pleaded in paras 4 and 11 of the written statement (2) relief. 9. the learned single judge vide judgment dated march 12, 1980,came to the conclusion that the respondent had done everything in his powerfor initiation of arbitration and while doing so, he had acted strictly in accordance with the provisions of clause 37 of the agreement between theparties. it was also held that the claim.....
Judgment:

B.N. Kirpal, J.

1. In this appeal the correctness of the order of the learned single Judge, who allowed the respondent application under Section 20 of the Indian Arbitration Act, 1940, is sought to be challenged.

2. The respondent had entered into an agreement dated January 20, 1976 with the appellant for the construction of a building by the name of Nehru Bhawan at Bharatpur. According to the respondent the said agreement comprised of reciprocal promises to be performed by both the parties.

3. According to the respondent the architects of the appellant were required to supply the drawings, etc. which they did not do. According to the respondent some disputes arose between the parties. The respondent wrote a letter dated April 11, 1977 to the said architects of the appellant. The disputes, which were enumerated in the said letter, which were stated to have arisen between the parties were as follows:

'1. Withholding of payment of the 7th running bill amounting to Rs. 51,440.65 P.

2. Part rate payment and illegal deductions in measurement and amounts of the bills from 3rd to 6th running bills.

3. Settlement of rate prior to execution of extra items which was asked to you to settle the same but you refused to settle before its taking in hand, wrong interpretation of R.G.G. Vault roof by wrongly interpreting and conversing the same as Arches.

4. Delay in supplying drawings, details and materials:-Due to your non supply of drawings, details and materials (cement and steel etc.) in time the whole work was to be completed within 8 months has been delayed for a quite long and we have been put to suffer unnecessary losses. We claim damages for the extra time consumed and extra expenses incurred and other damages in the shape of unearned profit etc. suffered by us as mentioned below:-

5. Claim :

(1)Rs. 51,440.65being amount of 7th running bill(2)Rs. 10,000.00on account of unmeasured work (after 7th running bill)(3)Rs. 1056.92Interest on delayed payment after certificate of Architects.(4)Rs. 3339.07interest on account of delay in issuing certificate byArchitects up to 9-4-1977.(5)Rs. 2471.98interest towards unauthorised deductions up to 9-4-77 6. Damages :

(1)Rs. 12,240/-Staff salary with effect from 10-10-76 to9-4-77 @ Rs.2040/- P.M.(2)Rs. 6300/-L.S. on account of Labour charges up to 9-4-77(wastage)(3)Rs. 20,000/-towards cost of site stores, water tanks andlayout hutments etc.(4)Rs. 3000/-towards contingencies from 10-10-76 to 9-4-77(5)Rs. 6000/-towards hire charges of T & P andshuttering materials from 10-10-76 to 9-4-77 @ Rs. 1000/- per month.(6)Rs. 56250/-towards net profit on unexecuted work at therate of 15% on Rs. 375,000/-(7)(1) Rs. 9600/-towards costs of 12 mm to 30 mm stone ballast6000 cft @ 160 per 1000 cft(2) Rs. 1320/-towards costs of coars sand-1200 cft @ Rs. 1.10per cft.(3) Rs. 540/-towards cost of bricks- 4000 nos. @ 135/- per1000.(4) Rs. 350/-towards Octroi on bricks purchased from UP asagreed by Chairman.' 4. The counsel for the respondent sent a notice dated April 29,1977 to the appellant, through its architects. In the said notice, it was stated that the agreement dated Jan. 20, 1976 contained therein an arbitration clause. Reference was invited to the respondent's earlier letter dated April 11, 1977 wherein disputes were enumerated. It was also mentioned that the termination of the contract by the appellant was wrongful and the respondent had become entitled to recover damages on that account also. The respondent suggested the name of S.C. Pradhan of Pradhan Ghosh & Associates, Chartered Architects as the sole arbitrator in the matter. It was also mentioned that in case the appellant did not concur to the appointment of Pradhan, then the matter should be referred to two arbitrators. Thereafter, the respondent received a letter dated May 25,1977 from the appellant's architects purporting to convey the decision on the claims of the respondent.

5. The respondent thereafter filed a petition under Section 20 of the Arbitration Act, being suit No. 478 of 1977. The aforesaid facts were reiterated in the petition and it was prayed that the arbitration agreement should be got filed in Court and the disputes mentioned in the aforesaid letters dated April 11, 1977 and April 29, 1977 should be referred to the sole arbitration of S.G. Pradhan.

6. The appellant herein contested the said suit. In the reply filed it was, inter alia, pleaded that according to article 4 of the Articles of Agreement, the decision of architects with regard to all matters of dispute as to the material, workmanship, etc. and also as to the intended interpretation of the clauses of the agreement was final and binding on both the parties. The claim of the respondent was denied. It was also contended that according to the final certificate issued by the architects on May 25, 1977 the matters in controversy were excepted matters and the decision of architects was final.

7. The respondent filed his rejoinder and denied that any of the matters in dispute was an excepted matter.

8. On the pleadings of the parties, the fallowing two issues were framed :--

(1) Whether the disputes are not referable to arbitration as pleaded in paras 4 and 11 of the written statement

(2) Relief.

9. The learned single Judge vide judgment dated March 12, 1980,came to the conclusion that the respondent had done everything in his powerfor initiation of arbitration and while doing so, he had acted strictly in accordance with the provisions of Clause 37 of the Agreement between theparties. It was also held that the claim of the respondent was not in regardto any of the excepted matters, as has been contended by the appellant herein. Both the issues were decided in favor of the respondent. The petitionwas allowed and it was ordered that the appellant herein shall appoint itsarbitrator who along with S.C. Pradhan, will enter upon the reference andgive their award.

10. In the present appeal, thereforee, the aforesaid order is sought to be impugned.

11. In order to appreciate the matter in controversy it is necessary to set out Clause 37 of the agreement dated January 20, 1976. The material portion of this arbitration clause reads as follows:-

'(37) All disputes and differences of any kind whatever arising out or in connection with the Contract or the carrying out of the works (whether during the progress of the works or after their completion, and whether before or after the determination, abandonment or breach of the Contract) shall be referred to and settled by the Architects who shall state their decision in writing. Such decision may be in the form of a final certificate or otherwise. The decision of the Architects with respect to any of the excepted matters shall be final and without Appeal as stated in Clause No. 35. But if either the Employer or the Contractor be dissatisfied with the decision of the Architects on any matter, question or the dispute of any kind (except any of the excepted matters) or as to the withholding by the Architects of any certificate to which the Contractor may claim to be entitled, then and in any such case either party (the Employer or the Contractor may within twenty eight days after receiving notice to such decision give a written notice to the other party through the Architects requiring that such matters in dispute be arbitracted upon. Such written notice shall specify the matters which are in dispute and such dispute or difference of which such written notice has been given and no other shall be and is hereby referred to the arbitration and final decision of a single Arbitrator being a Fellow of the Indian Institute of Architects to be agreed upon and appointed by the parties or in case of disagreement as to the appointment of a single Arbitrator, to the arbitration of two Arbitrators being both Fellows of the Indian Institute of Architects one to be appointed by each party, which Arbitrators shall before taking upon themselves the burden of Reference appoint an Umpire. Clause 35 refers to matters which arc called excepted matters. The said clause reads as under :--

'(35) The decision, opinion, direction certificate or valuation with respect to all or any of the matters under Clauses 2, 4, 8, 14, 20 (a, b, c, d, f & h) 28, 32 and 33 hereof (which matters are herein referred to as excepted matters) shall be final and conclusive and binding on the parties hereto and shall be without Appeal. Any other decision, opinion, direction, certificate or valuation of the Architects or any refusal of the Architects to give any of the same shall be subject to the right of Arbitration and review in the same way in all respects (including the provision as to opening the Reference) as if it were a decision of the Architects under Clause No. 37.' The main contention before us of Shri Gokhale was that the disputes sought to be raised in two letters dated April 11, 1977 and April 29, 1977 were really in respect of the excepted matters and the same could not be referred to arbitration. We are unable to agree with the submission. Under Clause 37 all disputes and differences of any kind whatsoever could be referred to arbitration except of the excepted matters. It become necessary to interpret Clause 35, which sets out the excepted matters. The first portion of Clause 35 refers to any decision, opinion, direction etc. which has already been given by the architects with regard to matters referred to in the various clauses of the agreement, set out in the said clause. Finality is given, by Clause 35, to such decisions etc. Admittedly, at the time when demand for arbitration was made and when the respondent had nominated his arbitrator, no decision, opinion, direction or certificate had been given by the architects on the demands raised by the respondent. The later part of Clause 35 clearly shows, on the other hand, that the refusal by the architects to give any decision would be a matter which can be referred to arbitration.

12. In the present case, from the aforesaid letters of April 11, 1977 and April 29, 1977, it is clear that the main grievance of the respondent was with regard to refusal of the architects of the appellant to act. The respondent had complained that the architects had not issued certificate for payment of the 7th running bill. Complaint was also made with regard to illegal deduction and of the refusal of the architects to settle the rates in respect of extra items, etc.

13. We may also refer, at this stage, to letter dated April 14, 1977 written by the appellant's architects. This letter was written in reply to the respondent's letter dated April 11, 1977. In the said letter, it was, inter alia, stated by the architects as follows :

'It is only after measuring up and finally certifying and accounting that you may come forward to a dispute, outside the scope of excepted matters, for properly recommending to the Employers to Arbitrate and not before, we feel there is no dispute yet from your side.' Along with the said letter the architects returned the respondent's letter of April 11, 1977. It is clear, thereforee, that there was a refusal on the part of the architects to act according to Clause 35 of the Agreement dated January 20, 1976. This refusal on the part of the architects to act would not come within the excepted matters. The decision of the learned single Judge in this behalf is, thereforee, clearly unassailable.

14. The respondent had acted in terms of the aforesaid Clause 37. There was no decision which had been taken by the architects of the appellant which could be regarded as being an excepted matter. The disputes which were sought to be raised between the parties clearly fell within the ambit and scope of the said arbitration clause, and the subsequent letter dated May 25, 1977 which was written by the appellant's architects was clearly an afterthought and an attempt to defeat the move for arbitration which had already been initiated by the respondent. Certain dispute had arisen between the parties and the respondent had taken steps to initiate arbitration proceedings and had nominated his own arbitrator. This right which had been exercised by the respondent could not be nullified by the so-called final decision purported to have been taken by the architects of the appellant vide letter dated May 25, 1977. If final decision had been taken by the architects before demand for arbitration had been raised, that it might have been possible for the appellant to contend that in respect of the excepted matter arbitration was not available. In the present case, however, the architects had refused to take a decision on the matters agitated by the respondent. This being so, the so called final decision of the architects dated May 25, 1977 taken after the respondent had appointed his arbitrator, is clearly non-est and of no avail and the same cannot be regarded as a decision which can possibly preclude the applicability of the arbitration clause to the disputes already raised.

15. For the aforesaid reasons, we do not find any force in this appeal. The same is dismissed with costs. Counsel fee Rs. 500/-.


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