DELHI DEVELOPMENT AUTHORITY Vs. HINDUSTAN PREFAB LTD

JUDGEMENT

(1.) AGGRIEVED by the order passed by learned Additional District Judge, the petitioner has filed the present writ petition. It is contended by Ms. Salwan, learned counsel appearing for the petitioner, that in view of clause 2 of the agreement entered into between the parties, the subject matter pertaining to clause 2 was outside the scope of reference to the arbitration. Our attention was drawn to the language of clause 2 of the agreement and clause 14 as it would be relevant to determine the controversy agitated before us by the petitioner. The relevant clauses of the contract are reproduced below: Clause 2: The time allowed for carrying out the supply and the dates of delivery of the materials mentioned in the tender shall be strictly observed by the contractor and shall deemed to be of the essence of the contract and the contractor shall deliver the material on or before the dates mentioned in the tender. Should the contractor fail to deliver the materials on or before the stipulated dates, he shall pay as agreed liquidated damages, and not by way of penalty, an amount equal to one per cent or such smaller amount as the Suptdg. Engineer/Director (Material Management DDA (whose decision in writing shall be final) may decide on the amount of the cost of the whole work as shown in the tender for every day that the contractor shall exceed the time of the delivery and the delivery of the material may be in arrears. Provided always that the entire amount of liquidated damages shall not exceed 10% (ten percent) of the estimated cost of the work as shown in the tender. Clause-14 Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions here in before mentioned and as to the quality of workmanship or materials as used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders 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 Engineer Member DDA at the time of dispute. It will be no objection to any such appointment that the arbitrator so appointed is a DDA employee that he had to deal with the matters to which the contract related and that in course of his duties is DDA employees he had expressed view on all or any of the matters in dispute or difference. The Arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason such engineer Member DDA as aforesaid at the time of such transfer vacation of office or inability to act shall appoint another person to act as Arbitrator in accordance with the terms of the contract. Such persons shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other than a person appointed by such Engineer Member DDA as aforesaid should act as arbitrator and if for any reason that is not possible, the matter is not to be referred to arbitration at all. In all cases where the amount of the claim in dispute is Rs.50,000/- (Rupees Fifty Thousand and above). The Arbitrator will give reason for the Award. Subject as aforesaid the provision of Arbitration Act, 1940 or any statutory modifications or reanectment thereof the rules made thereunder and for the time being in force, shall apply to the arbitration proceeding under this clause. It is also a term of the contract that the party involving arbitration shall specify the dispute or disputes to be referred to arbitration under this clause together with the amount of amounts claimed in respect of such dispute. It is also term of the contract that if the contractor do/does not make any demand for arbitration in respect of any claims in writing within 90 days of receiving the intimation from the DDA that the final bill is ready for payment, the claims of the contractors will be deemed to have been waived and absolutely barred and the DDA shall be discharged and released of all liabilities under the contract in respect of these claims. The arbitrator(s) may from time to time with the consent of the parties enlarge the time for making and publishing the award.

(2.) IN support of her contention, learned counsel for the petitioner has also relied upon Vishwanath Sood v. Union of INdia AIR 1998 SC 952 as well as DDA vs. Sudhir Brothers 1995 (2) ALR 306. The learned designated authority placing reliance on P.Anand Gajapathi Raju and Ors. v. PVG raju 2000(4) SCC 539 and Hindustan Petroleum Corporation Ltd. vs. Pink City Midway Petroleums 2003(6) SCC 503, VV held that if there is an arbitration clause in the agreement between the parties i.e. clause 14 in this case, then under the new Arbitration and Conciliation Act 1996, all disputes are to be referred to the Arbitrator. IN the present case, in our opinion, whether the dispute, if any, can arise or has arisen qua clause 2 of the agreement is also to be decided by the Arbitrator, because in our view there are some words in clause 14 like matter or thing whatsoever in any way arising out of or relating to the contract ........ or otherwise concerning the works of the execution ........... which are prima facie contradictory to clause 2 of the agreement. The learned Additional District Judge's judgment is based on the decision of the Supreme Court and reliance by the learned counsel for the petitioner on the authority which was prior to coming into effect of the new Arbitration and Conciliation Act 1996, to our mind, is misplaced. The designated authority has only referred the connected matter for arbitration as per clause 14 of the agreement and it is the engineer member of the petitioner who has been directed to appoint Arbitrator in terms of the said arbitration clause. Considering the totality of the facts and circumstances, we find no merits in this petition, the same is dismissed. Nothing said herein will tantamount to expression of opinion on the merits of the case/disputes which shall be decided by the arbitrator.