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TMI Blog2008 (3) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... work was completed within the stipulated time period of five months where after the work was inspected by the officials of the MCD and measurements were taken in the Measurements Book. The applicant has alleged that the respondents have not made the final payment despite his representations dated 08.05.2003 and 05.05.2005. The applicant is stated to has sent a legal notice dated 18.09.2006 to the respondents demanding arbitration for adjudication of disputes regarding final payment but the respondents are stated to have not responded to the said legal notice and therefore, the applicant has filed an application under Section 11(6) for appointment of an arbitrator in terms of the arbitration clause contained in the work order. Case No. 2: A.A. No. 24/2007 titled Sh. Rajesh Kumar Garg v. MCD and Anr. 5. The respondents had awarded a contract to the applicant described as CC Channel Back Lines, Blocks A B, Surajmal Vihar, C-80, Shahdara Zone vide work order No. 434 dated 12.01.1998. The tender amount was Rs. 4,83,326/- and the contract amount was Rs. 4,97,830/-. In terms of contract between the parties, the work was to be completed within five months from the date of the work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der. 8. Ms. Gautam appearing on behalf of the respondents has opposed the appointment of arbitrator in all the above four cases on the ground of limitation. She has relied upon two unreported orders of this Court in Arb. P. No. 264/2007 titled Rajinder Kumar Goel v. MCD and Anr. decided on 28.11.2007 and A.A. No. 267/2007 titled Rajinder Kumar Goel v. MCD and Anr. decided on 28.11.2007. In both these cases, this Court had dismissed the petition for appointment of arbitrator on the ground of limitation on similar facts. However, Mr. Singh, the learned Counsel appearing on behalf of the petitioners/contractors has relied upon another judgment of this Court in Sham Sunder v. MCD, 133(2006) DLT 545 where also the facts were identical to the facts of the present case but in that case the Court directed appointment of an arbitrator treating the petition within limitation holding that the limitation to apply under Section 11(6) would apply from the date of legal notice issued by the contractor to the respondent for invoking the arbitration clause. 9. The counsel for the parties have relied upon two divergent views of this Court on the point of limitation and therefore it becomes nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and the existence of the arbitration agreement between the parties and whether such party has approached the Court for appointment of the arbitrator within limitation period or not. The question of limitation normally is a mixed question of law and facts. In case the Chief Justice or his designate finds that the claims sought to be referred to the arbitrator are ex-facie time barred then reference of such dispute for arbitration would be exercise in futility. The Hon'ble Supreme Court in Shree Ram Mills Ltd. v. Utility Premises (P) Ltd. (2007) 4 SCC 599 has noted with approval the above observations of the Hon'ble Supreme Court in M/s S.B.P. Co. v. M/s Patel Engineering Ltd. and Anr.'s case (Supra) and has discussed in para 27 of its judgment that the Chief Justice or his designate has to record his satisfaction that prima facie the issue has not become dead by lapse of time or that any party to the agreement has not slept over his right beyond the time permitted by law to agitate the issue covered by the agreement. 12. Section 43 of the Arbitration and Conciliation Act, 1996 provides that the provisions of Limitation Act would apply to the arbitration in the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 20 of the Arbitration Act. On these facts, it was held by the Hon'ble Supreme Court that the application filed for appointment of arbitrator was barred by limitation under Article 137 of the Limitation Act, 1963 since the right to apply for arbitration had accrued to the appellant in 1974 when notice demanding assessed loss was served upon the appellant. Hence it may be seen from the Judgment of the Supreme Court in S. Rajan's case (Supra) that the Supreme Court does not say that the limitation for filing an application for appointment of an arbitrator under Section 11 would start from the date of service of legal notice demanding arbitration. The ratio of judgment in S. Rajan's case (Supra) is that the limitation for filing an application under Section 11 would start on the date of accrual of cause of action. In that case, cause of action accrued when the State made a demand upon the contractor to pay the assessed loss since the contract work was got completed from another contractor. 15. In Major (Retd.) Inder Singh Rekhi v. DDA , the DDA vide its letter dated 05.10.1976 had accepted the tender of the appellant for construction of 240 Janta Houses at the estima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stribution of the said immovable properties could not be effected by 31.05.1987 as contemplated by the deed of dissolution. Ultimately in February 1988, the three groups each appointed a nominee to work out an arrangement whereby distribution of the said immovable properties of the said dissolved firm could be made and effected in the manner acceptable to all. The nominees held several meetings but no agreement of distribution could be arrived at. Further, there were numerous letters written by both the parties to find a way to settle the dispute pertaining to the division of assets. The last letter that was exchanged in this regard was a letter dated 29.09.1989. On 08.05.1992 a plaint under Section 20 of the Arbitration Act, 1940 was filed before the High Court by the appellants. On these facts the Supreme Court found the petition to be within time holding that the right to apply under Section 20 accrued to the appellants only on the date of last correspondence between the parties and the period of limitation was reckoned from the date of last communication which was on 29.09.1989. In para 24 of its judgment in Hari Shankar Singhania's case (Supra), it was observed by the Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on account of amount admissible shall be made by the Engineer-in-Charge certifying the sum to which the contractor is considered entitled by way of interim payment at such rates as decided by the Engineer-in-Charge. The amount admissible shall be paid by 10th working day after the day of presentation of the bill by the contractor to the Engineer-in-Charge of his Asstt. Engineer together with the account of the material is issued by the department, or dismantled materials, if any. All such interim payments shall be regarded as payment by way of advances against final payment only and shall not preclude the requiring of bad, unsound and imperfect or unskilled work to be rejected, removed, taken away and reconstructed reerected. Any certificate given by the Engineer-in-Charge relating to the work done or materials delivered forming part of such payment, may be modified or corrected by any subsequent such certificate(s) or by the final certificate and shall not by itself be conclusive evidence that any work or materials to which it relates is/are in accordance with the contract and specifications. Any such interim payment, or any part thereof shall not in any respect conclude, det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondents that their final bills were ready for payment. It was contended by the learned Counsel that the applicants could have filed an application for appointment of arbitrator within 120 days of receiving the said intimation from the Engineer-in-Charge of the respondents. The relevant portion of Clause 25 of the agreement is extracted here-in-below: CLAUSE 25 Settlement of Disputes Arbitration ...It is also a term of this contract that if the contractor does not make any demand for appointment of arbitrator in respect of any claims in writing as aforesaid within 120 days of receiving the intimation from the Engineer-in-Charge that the final bill is ready for payment, the claim of the contractor shall be deemed to have been waived and absolutely barred and the MCD shall be discharged and released of all liabilities under the contract in respect of these claims. 20. It is an admitted case of the applicants that they had completed the contract work within the scheduled time and that they had given legal notice demanding arbitration after more than 6-8 years of completion of the work by them. It is not their case in the applications that the final bills were not prepar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e it is held that the limitation would start from the date of issuance of legal notice for demanding arbitration. In Sham Sunder's case (Supra), the relevant clauses of the contract were not considered and even the relevancy of the judgments referred therein has not been discussed. In the facts and circumstances of the case, I tend to agree with the view on the point of limitation taken by this Court in the two cases of Rajinder Kumar Goel referred above. 21. Reverting to the facts of the case in hand, it may be seen that in two out of four cases under consideration the work was completed by the applicants in 1988 and the payment was also received in 1988. The legal notice demanding arbitration in those two cases was sent by the applicants after about 8 years of the completion of the work on 18.09.2006 and the applications for appointment of arbitrator under Section 11 were filed on 12.01.2007. In the third case, the work was completed in the year 2000 whereas notice demanding arbitration was sent on 12.06.2007 i.e. after about 7 years of the completion of the work and when dispute arose regarding payment. In the fourth case, the work was completed in the year 2001 and the n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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