STATE Vs. NATESAN

JUDGEMENT

(1.) Challenge in this appeal at the instance of State of Kerala and two others is against the judgment of Principal Sub Judge of Trivandrum in OS (Arb) No. 92/86. The respondent herein was the plaintiff and the appellants were defendants. The respondent herein had taken on contract the execution of work NH 47 widening and strengthening of single lane section to two lines - Quilon, Alleppey road portion from KM 416/2 to 421 / 4 road formation balance works. He had entered into an agreement on 9.8.1976 and the site was handed over to him on 20.8.1976. As per the stipulation in the contract he should have completed the work on 19.2.77. But actually the work was completed only on 15.7.1977. Payments as per final bill was made on 24.6.1978.

(2.) According to the appellants, the respondent received the final bill without any demur. He filed a petition on 12.11.1981 to the Chief Engineer, National Highway raising certain objection regarding payment. Thereafter, he filed a claim petition before the Arbitrator on 30.3.1983. The Arbitrator thereupon issued notice to the parties. The appellants contended that in view of the provisions contained under Clause.23 of the terms of contract between the parties, the claim has to be rejected. As per the above provision, if the contractor does not make any demand for arbitration in respect of any claims in writing within 90 days of receiving the intimation from the Government that the final bill is ready for payment, the right of the contractor for arbitration in respect of all matters connected with the contract shall stand forfeited absolutely and the Government shall be discharged and released of all liabilities in respect of the contract. The Arbitrator upheld the objection raised by the appellants. The respondent then filed a petition under S.2, 5, 8 and 20 of the Arbitration Act for filing the arbitration agreement and referring the matter for arbitration to an Arbitrator. It was contended by the appellants that petition is not maintainable, since the Arbitrator has already made an award rejecting the claim and therefore, the remedy if at all any of the respondent was to get the award set aside before filing an application under S.20. It was also contended that the petition under S.20 is barred by limitation.

(3.) The court below took the view that the order passed by the Arbitratoris "against the total spirit and tenor of arbitration agreement which favours adjudication in all respects". According to the court below, "If the conditions in NIT are not properly adhered to that too can be varied and the time stipulated in the NIT can be enlarged by the Arbitrator or by the Court. If it is found that the valid claims are not honoured and admitted the bill paid reasonable becomes only a part bill and Arbitrator can come to a reasonable conclusion only after verifying all matters related with the execution of the work and its reasonable assessment and payment is done. So a hasty decision without looking into the details and considering the preliminary objections about is unwarranted as per the agreement conditions and this act amounts only to a partial investigation into that matters and the decision taken without considering the total merits is wrong and unsustainable. The Court below did not consider the question of limitation at all. It directed the dispute to be referred to a Chief Engineer whose name was suggested by the counsel for the plaintiff.