9911796707
TMI Blog2024 (8) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the subject tender work for a sum of Rs. 2,16,91,366/-and declared the applicant as successful bidder vide proceedings dt.06.02.2020. It is further case of applicant that bid amounts quoted were only for completion of work by the applicant and the said bid amount was excluding the GST @ 12% and labour welfare cess @ 1% and it was expressly agreed between the applicant and the Respondents that the GST and labour welfare cess are to be charged over and above the bid amounts. However, during internal financial audit it came to light that the Respondent Nos. 1 and 2 have been deducting the GST @ 12% and labour welfare cess @ 1% from the principal bid amount instead of paying additional amounts to the tune of 13% which includes GST and labour welfare cess over and above the bid consideration. The applicant submitted a letter dated 22.01.2022 to the Respondent No. 3 and informed the disparity in the internal financial audit and requested the Respondents to immediately release the amounts of the taxes and repay tax amounts deducted along with interest @ 24% per annum including penalties, if any, till the date of payment. The Accounts Officer addressed a letter dated 14.02.2022, to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the Arbitration and Conciliation Act, 1996. 3. A counter affidavit has been filed by the respondent No. 1, wherein inter alia it is stated that the applicant-firm was awarded a contract bearing No. CE (Fy)/HYD/MDK/02 of 2019-20 for Replacement of existing AC sheets with Galvalume sheets in Store Buildings (05 Nos. Bldg No. 19/01, 19/02, 19/03, 19/04 & 19/05) including Gas House Building No. 17 inside Factory at Ordinance Factory Medak for an amount of Rs. 2,16,91,366/-. As per the work order, the work was commenced on 01.03.2020 and the work was physically completed by the contractor on 29.05.2021 subject to completion of rectification of defects as pointed out while issuing completion certificate by AGE (Indep) Fy Eddumilaram vide letter No. 8220/CE/84/E8 dated 29.05.2021 and requested to rectify the defects by 28.06.2021. It is further submitted that the complete details of recovered amount on account of GST/LEC against CA No. CE (Fy)/HYD/MDK/26 of 2019-20 also intimated to the applicant contractor vide letter dated 23.06.2022. Inspite of receiving all the details of payments, applicant is making allegations against the Department that the statutory taxes were neithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction of the amounts contrary to the terms of the agreement and those are required to be determined by the Arbitrator. Since the respondents have not turned up to settle the disputes before the Arbitrator as per the notice dated 18.06.2022, the applicant was constrained to approach this Court invoking the jurisdiction under Section 11(6) of the Act. 6. Per contra, Smt. L.Pranathi Reddy, learned Standing Counsel for Government appearing for the respondents has vehemently contended that as per Condition No. 65 of IAFW-2249, no further claims shall be made by the contractor after submission of final bill and the claims shall be deemed to have been waived and extinguished and therefore, even though the agreement provides arbitration clause, the subject dispute cannot be referred to arbitral tribunal. It is further contended by the learned Standing counsel that since the applicant accepted the Final Bill without any reservation and as the Final Bill was processed and paid to the contractor, no claims whatsoever is maintainable and the application filed under Section 11(6) of the Act is liable to be dismissed as barred by limitation. 7. In reply, learned counsel for the applicant rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by either party to the Contract to the other of them, be referred to the sole arbitration of an Engineer officer to be appointed by the authority mentioned in the tender documents. Unless both parties agree in writing such reference shall not take place until after the completion or alleged completion of the Work or termination or determination of the Contract under Condition Nos. 55, 56 and 57 hereof. Provided that in the event of abandonment of the Works or cancellation of the Contract under Condition Nos. 52, 53 or 54 hereof, such reference shall not take place until alternative arrangements have been finalized by the Government to get the Works completed by or through any other Contractor or Contractors or Agency or Agencies. Provided always that commencement or continuance of any arbitration proceeding hereunder or otherwise shall not in any manner militate against the Government's right of recovery from the contractor as provided in Condition 67 hereof. If the Arbitrator so appointed resigns his appointment or vacates his office or is unable or unwilling to act due to any reason whatsoever, the authority appointing him may appoint a new Arbitrator to act in his p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, at para 59, has held as under: "The scope of the power under Section 11(6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. [SBP and Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] and Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117]. This position continued till the amendment brought about in 2015. After the amendment, all that the courts need to see is whether an arbitration agreement exists nothing more, nothing less. The legislative policy and purpose is essentially to minimise the Court's intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11(6-A) ought to be respected." 13. It is settled law that in a commercial dispute, mere failure to pay may not give rise to a cause of action. Once the applicant has asserted his claim and the respondent fails to respond to such claim, such failure will be treated as a denial of the applicant's claim giving rise to a dispute, and thus it is the cause of action for reference to arbitration. In the case on hand, it is the case of applicant that having found in internal financial audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Limitation Act which provides that the period of limitation is three years for any other application for which no period of limitation is provided elsewhere in the division. The time limit starts from the period when the right to apply accrues. Admittedly, in the instant case, the Final Bill of the applicant has been settled on 06.09.2022 and even before the expiry of the three years limitation period prescribed under Article 137 of the Limitation Act, 1963, the applicant has raised a dispute and sought reference to the Arbitrator. Therefore, viewing the case from any angle, the dispute sought for reference to the arbitrator is not barred by limitation. Adding further, whether the claim is barred by lapse of time is a matter which requires to be decided by the Arbitrator at the time of making an order under Section 20 of the Arbitration and Conciliation Act, 1996. 15. For the aforementioned reasons, Sri Tariq Khan, Advocate (resident of 21st Floor, Vijay Krishna Towers, Nanakramguda, Gachibowli, Hyderabad-32, Mobile No. 9999663628) is appointed as Arbitrator to adjudicate the disputes between the parties. The learned Arbitrator is requested to enter upon reference and take furt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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