D.P. Sood, J.@mdash"The arbitrality of the disputes raised by the Plaintiff" is the only question which is to be determined in the instant suit.
2. The Plaintiff is a private limited company executing the contract works through the firm named and styled as M/s. Manohar Lal Gupta and Company. It entered into a contract with the State of Himachal Pradesh through its Public Works Department The earth work for the construction of airport at Gaggal in Tehsil and District Kangra, Himachal Pradesh was entrusted to the Plaintiff vide Agreement No. 27 of 1988-89 The said work was to be completed on May 28, 1989 as per the terms of the agreement, but the work continued even on the date of filing of the instant suit on November 6, 1989 However, during the progress of the work, some disputes arose between the parties and the Plaintiff submitted his claims and made a request to the Engineer-in-Chief on June 30, 1989 to appoint an Arbitrator for the adjudication of the disputes as per Arbitration Clause No. 25 of the Asbitration Agreement referred to above.
3. The disputed claims put up by him are:
Srl. No. Brief description Amount claimed 1. The claimants claim on account Rs. 15,00,000 of extra rates claimed by them for the agreement item No. 1 -- Earth work in excavation, executed beyond stipulated quantity. 2. The claimants claim on account Rs. 76,92,000 of additional lead of 1 km. beyond airstrip area--not paid by the deptt. 3. The claimants claim on account Rs. 5,00,000 of extra work of taking out heavy roots of bigger dia trees, not paid by the department. 4. The claimants claim on account Rs. 30,00,000 of damages/losses due to increase in market price, idle labour and T. & P., loss of profitability etc. due to pro- longation of the contract beyond stipulated date of completion. 5. The claimants claim pre-suit, pendente lite and future interest @ 24% per annum on the amount claimed. 6. The claimants claim towards Rs. 50,000 cost of arbitration proceedings.
The total amount so claimed amounted to Rs. 1,27,42,000.
4. The Defendants disputed the entire items of the claimants referred to above on the ground that Item No. 1 was covered by Clause 12-A of the Agreement and Item No. 4(1) is covered by Clause 2-E-ii of the Arbitration Agreement. The liability with respect to the other items was refuted on the ground that they were not justified nor genuine.
5. The Chief Engineer did not take any action on the request in writing so made by the claimant for the appointment of the Arbitrator in pursuance of Clause 25 of the Arbitration Agreement, consequent to which the claimant filed the present application u/s 20 of the Arbitration Act, 1940 before this Court seeking a direction to the Defendants for the production of the Arbitration Agreement and also for appointment of an Arbitrator for the final adjudication of the disputes in terms of Clause 25 thereof The aforesaid suit has been registered as civil suit No. 110 of 1989.
6. The Defendants in their written statement admitted the entrustment of the work to the Plaintiff pursuant to the agreement referred to above containing Arbitration Clause 25 therein. They also admitted the work being executed by the Plaintiff, but according to them, they refuted the liability in its entirety on the grounds mentioned above.
7. On the pleadings of the parties, this Court vide its order dated March 7, 1990 framed the following issues:
1. Whether disputes exist between the parties calling for arbitration?
2. Relief.
8. The parties were also directed to adduce their evidence by way of filing objections. Both the parties have complied with the said order.
9. On behalf of the Plaintiff Shri Arun Gupta, Director of the aforesaid firm has submitted his affidavit dated March 9, 1990 in support of his claim. The deponent reiterated the disputed claims falling within the ambit of Clause 25 of the Arbitration Agreement and thus, reiterated the fact that as per the said clause, the appointment of the Arbitrator is a must for the final adjudication of the disputes raised by him. He has also deposed that plea of the Superintending Engineer or that of the Defendants that the claims of he Plaintiff are not genuine, is a unilateral plea ; that the Defendants cannot become Judge of their own cause by taking unilateral decisions in their own favour and in view thereof, the Plaintiff has got a right to have its claims adjudicated upon in accordance with the terms of the Arbitration Agreement.
10. In reply, the Defendants have put in counter-affidavit of Shri T.C. Bhagoria, Superintending Engineer, 5th Circle, H.P.P.W.D. Palampur. He has again refuted the claims referring to the terms of the Agreement In respect of claim No. 1 regarding extra claim for earth work executed beyond stipulated quantity, he has stated that it is covered by Clause E-2 as the Plaintiff was bound to execute 30% deviated quantity at the rates quoted in the agreement. He further deposed that the firm has still not completed the deviated quantity as per the terms and conditions of the agreement.
11. Regarding Item No. 1, as per his deposition, the surplus excavated soil is covered by schedule of quantity required to be executed in the agreement and this work was to be done by the Contractor to any lead and lift at per direction of the Engineer Incharge. Thus, he states that this claim for additional claim is baseless and unjustified. Item No. 3 is refuted on the ground that it falls within Clause 2.1 of the Arbitration Agreement and thus outside the scope thereof. Claim No. 4, according to him, is covered by Clause 10(c) and is not liable to be arbitrated by an Arbitrator Further it has been stated that despite the department having requested the contractor to submit his claim duly supported by the documents in proper proforma vice a letter dated July 22, 1989, he did not submit his claim and as such the same could not be settled. Thus, according to the Defendants'' evidence, the entire claim so put up by the Plaintiff is beyond the scope of Clause 25 for the reason that some of the disputed items are covered by the terms of the contract as stated above and others are unjustified.
No other evidence except the affidavits referred to above has been adduced by the rival parties. At this stage, it would be pertinent to note that none of the deponents have been cross-examined by the opposite party. In the circumstances, from the claims and counter-claims so put up by the rival parties, it is not clear as to how and under what circumstances and to what extent the work in respect of each item had been executed by the Plaintiff or what amount was paid to him, and if so, at what rate There is also no oral or documentary evidence on record to show as to how and under what circumstances, the Plaintiff failed to complete the work within the stipulated period or whether it was on account of the fault committed by the Plaintiff or that of the Defendants. Thus, this Court in view of the evidence adduced by both the parties, has to consider issue No. 1 with respect to the fact whether the arbitrable disputes exist or not.
Issue No. 1:
In order to dispose of this issue, reproduction of Clause 25 of the Arbitration Agreement is necessitated which reads as under:
25. Settlement of disputes by arbitration.--Except where otherwise provided in the contract, all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, matter or thing whatsoever, in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instruction, order, or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the person appointed by the Chief Engineer, Himachal Pradesh, Public Works Department...
12. Before discussing the contentions of the rival parties on this issue, some salient facts may be noted. There is hardly any matter on which there is not a contest between the parties I have mentioned the items of disputes as alleged in the plaint as also the liability thereto as emerged from the written statement filed by the Defendants to show that this is not only a fit case where all the items except a portion of Item No. 4, that is, claim of damages or losses in respect of the increase in the market price, should be referred to arbitration. The argument that there is no dispute which should be referred to arbitration, appears to me to be meaningless, devoid of any force and has to be rejected for the reasons as hereinafter discussed.
It is well settled that a dispute implies an assertion of a right by one party and repudiation thereof by another The repudiation by the other party may be either expressed or implied and may be by words or by conduct. What is required is that one party should affirm and the other deny his liability. As has been laid down by Their Lordships in
13. It is to be noted that the aforesaid principles are to be applied in view of the nature of the Arbitration Clause existing in the Arbitration Agreement.
14. In the instant case, both the parties depend upon the Arbitration Agreement referred to above and Arbitration Clause No. 25 thereof which has been quoted in-extenso. The expression "except where otherwise provided in the contract" has been interpreted by the Supreme Court in the case of
15. As has been observed above, the Arbitration Clause in the instant case is in the same words as was before the Supreme Court in the case of Vishwanath Sood (supra). Now, applying the aforesaid principle to the facts and circumstances of the instant case, at this stage at the cost of repetition, it may again be stated that there is no relevant, proper and convincing evidence whereby it can be said that the claims claimed by the Plaintiff fall within a particular clause. Why such evidence oral or documentary, has not been adduced, is known to the parties alone. Anyhow, on the basis of the evidence so adduced by the parties, the claim with respect to damages/losses due to the increase in the market price, in my considered view, only falls within Clause 2-E-ii of the Arbitration Agreement and thus the same falls outside the purview of Clause 25. In respect of claim of Item No. 1 pertaining to earth work executed beyond stipulated quantity, it has yet to be found out as to whether the claimant has actually executed the work beyond the stipulated quantity and if so, to what extent. Similarly, with respect to items 2, 3 and other claims with respect to item No. 4, both parties are depending upon and having recourse to the terms of the contract specifically. The interpretation of the clauses in the absence of the evidence cannot be gone into by this Court. Thus, in that view of the matter as well, the said claims are liable to be referred to arbitration. In other words, the Plaintiff has claimed the disputes, the existence of which has been denied by the Defendants. Thus, keeping in view the entire facts and circumstances of the instant case, to my mind, the disputes exist. The Plaintiff on the basis of the pleadings and the evidence so adduced has been able to establish issue No. 1 in affirmative As such the same is decided accordingly.
16. At this stage, it would also be important to detail that as per the arbitration clause both parties have by agreement given powers to Engineer-in-Chief/Chief Engineer to appoint an Arbitrator for settling the disputes as per Clause 25 of the Arbitration Agreement. Also, both the learned Counsel appearing on behalf of the rival parties did not dispute this fact. Rather they submitted that direction if given to the persona designata for appointing the arbitrable disputes to finally adjudicate upon the claims expeditiously be given specifically.
Relief:
17. In view of the aforesaid, the application is allowed with no order as to costs in the peculiar circumstances of the case. Defendant No. 2 is thus directed to appoint an Arbitrator to settle the disputes in terms of Clause 25 of the Arbitration Agreement referred to above as also in the light of the observations so made. It is further directed that Defendant No. 2 should refer the disputes to Arbitrator within two months from today. Decree sheet be prepared and the file be consigned to the records.
