VILLAYATI RAM MITTAL Vs. UNION OF INDIA

JUDGEMENT

(1.) [Petitioner Constructed a Govt. hospital which was Completed on 25.4.75. Some deductions were made from his running bill, and in last bill of 18-9-76, a sum of Rs. 5171.11 was demanded from him. By letter dt. 5-1-77, he demanded reference, to arbitation, dispute about his claims for Rs. 1,40,000.00 On failue, he applied to Court u/s 20. The defence was that claims were barred by time as these were not made within 90 days as required by clause 25 of the Contract. The Court found this clause some what obnoxious.] It observed. (6) This clause States that if contractor does not demand arbitration within 90 days of receiving information from the Government that the bill is ready for payment, the claim will stand waived. The question that is puzzling is which is the bill and when it is ready for payment. I would understand a case if the date of the bill was fixed by the contract but that is not so. Reference has been made to clause 8 of the contract which shows that a monthly bill hasj to be submitted and then a final bill. Assuming, the dispute relates to the first bill or the third bill, and so on, it would indicate that a demand for arbitration has to be made within 90 days of its rejection by a bill. But surely, the dispute must relate to that bill. For instence, if the first bill is paid in January and the last bill is paid in December, this clause can also mean that the claim relating to the last bill has to be raised six months earlier than the bill is submitted. The meaning of the clause is absolutely obscure and so must be given some understandable meaning. At first sight, it would appear that the provision is void as being against public policy because it debars and totally debars the contractor's claim if he does not apply for arbitration within 90 days. On the contrary, it does not seem to debar the Government from making the claim and, therefore, seems to be a unilateral embargo. There being two parties to the contract and there being a bar only onne of them, it seems to be totally against public policy. I would have struck it down immediately as being bad against public policy and based on undue influence, but I am reluctant to strike it down in this particular case as it does not appear to be very necessary to decids this case from this angle.

(2.) THERE is no doubt that a similar clause exists in insurance policies where if a claim is not made within one year, it is deemed to be given up as was held by a Full Bench decision of the Punjab High Court in Pearl Insurance Co. v. Atma Ram, A.I.R. 1960, Punjab 236. Such clauses are justified in insurance cases because insurance is an urgent matter. When a claim arises under an insurance policy, it has to be verified at a very early date, because if investigation is not made promptly, the evidence is likely to disappear. THERE isjustification for such a restriction and the matter has been analysed fully by the Punjab High Court and other judgments need not be referred to. 1 cannot see any justification for an equivalent clause existing in contract for construction works, where the works can easily be measured and at any time the amount determined. A work of construction like a hospital cannot be deemed to be a transitory work and if claims arise even after 90 days, I see no justification why the normal Limitation Act, should not apply in such cases. To my mind, the clause appears to be both against public policy and against natural justice being onesided.