ANAND BUILDERS Vs. UNION OF INDIA

JUDGEMENT

(1.) BY this suit, the plaintiffs seek an order under section 20 of the Arbitration Act, 1940 (for short, the Act) to file the Arbitration agreement in this Court as also an order of reference of plaintiffs claim to arbitration in accordance therewith.

(2.) THE Western Railway Survey and Construction Department through the Executive Engineer (S and C) (Vasai Bridge) Churchgate, Bombay had by a Tender No. XEN (C) VB/ 6 invited open tenders for the Earthwork for embankment with contractors own earth in filling from Ch. (-)546 M to Ch. (-)1410 M in Bhayander Yard (Loop Lines) in connection with construction of Railway Bridge Nos. 73 and 75 on Vasai Creek. On 4th October, 1985 the plaintiffs tender was accepted by the defendants and a Contract Agreement bearing No. XEN (C) VB/ccg/23 dated 15th October, 1985 was duly executed between the plaintiffs and the Executive Engineer (Sandc) Vasai Bridge, Western Railway, Churchgate, Bombay, for and on behalf of the President of India for performance of the work of the said Tender. The General Conditions of contract corrected upto printed/advance correction Slip No. 79 dated 14th June, 1985 and the specifications of the Western Railway contained in the works Hand Book Part III corrected upto printed/advance correction slip No. 2 dated 30th October, 1984 and Sanitary Works Hand Book corrected upto date 1977 edition and the Schedule of Rates of the Western Railway Part I corrected upto date 1984 edition and Schedule of Rates Part II corrected upto date 1984 edition formed part of the said contract. The said work was completed on 12th April, 1986. The plaintiffs had signed the final bill in respect thereof on 5th June, 1986 but by their letter dated 9th June, 1986, the plaintiffs had placed on record that the final quantities computed and billed by the defendants were far less than the quantities done by the plaintiffs. By their letter dated 18th June, 1986, the defendants refuted the said contention of the plaintiffs. By their letter dated 20th June, 1986, the plaintiffs demanded refund of the security deposit from the defendants. By their further letter dated 28th July, 1986, the defendants replied to the plaintiffs that the plaintiffs were adequately paid and the quantities computed by the defendants were, correct. By their letter dated 29th July, 1986, the plaintiffs again called upon the defendants to furnish the cross-sections of each and every chainage where the earthwork was done and the quantities so computed chainagewise were also required to be given on the said cross-section. By their letter dated 18th August, 1986 addressed to the Deputy Chief Engineer (Sandc), Vasai Bridge Project of the defendants, the plaintiffs preferred 14 claims for different sums against the defendants as mentioned therein. By the letter dated 1st September, 1986 addressed to the plaintiffs, the Deputy Chief Engineer (Sandc) Vasai Bridge, project of the defendants replied to the plaintiffs rejecting all the claims of the plaintiffs as mentioned therein. By their Advocates letters dated 6th October, 1986 addressed to the Chief Engineer (Sandc) of the defendants, the plaintiffs reiterated all their final claims and called upon him for taking final decision under Clause 63 of the General Conditions of Contract. By the letters dated Nil May 1987 addressed by the Chief Engineer (C) South of the defendants to the plaintiffs, the defendants rejected all the claims of the plaintiffs stating that neither of them was tenable. By their Advocates letters dated 14th March, 1987 addressed to the Chief Engineer (Sandc) of the defendants, the plaintiffs invoked arbitration as per the arbitration agreement contained in the General Conditions of Contract forming part of the said contract and desired that the matters of disputes and difference as mentioned in the plaintiffs Advocates said letter dated 6th October, 1986 be referred to arbitration. By the letter dated 14th July, 1987 addressed by the Chief Engineer (Construction) South of the defendants, the defendants informed the plaintiffs that since neither of the claims preferred by the plaintiffs was tenable, the question of making reference to arbitration did not arise.

(3.) MS. Shah, learned Counsel for the defendants, has submitted that the claims made by the plaintiffs against the defendants fall under the category of "excepted matters" and as such the question of making reference thereof to arbitration does not arise. It is correct that if the plaintiffs claims fall in the category of "excepted matters", in view of the General Conditions of Contract binding on the parties hereto, the same would not be referrable to arbitration. However, as the defendants had initially rejected the plaintiffs claims on merits and not on the ground that the same fall in the category of "excepted matters" the defendants are no more entitled to decline the reference thereof to arbitration on ground that the same fall in the category of "excepted matters". Subsequent plea of plaintiffs claims falling in the category of "excepted matters" on behalf of the defendants is an after-thought on the part of the defendants. In the earlier case between the parties hereto i. e. in the Arbitration Suit No. 2222 of 1985 decided on 7th January, 1988, Pendse, J. , of our Court held that when after the institution of the suit, the defendants had informed the plaintiffs that the claims made fall within the category of "excepted matters" the plaintiffs were entitled to have the arbitration agreement filed in Court and relief under section 20 of the Act since such plea on the part of the defendants was an after thought. Similarly, in the case (Elite Construction Company v. Union of India) Arbitration Suit No. 453 of 1979 decided on 17th January, 1980 and 25th January, 1980, Pendse, J. , has held that unless the Railways determine the claim of the contractor within a reasonable time holding that the claim falls within the category of "excepted matters", it is not permissible thereafter to deprive the plaintiffs from the right of reference to arbitration. Once the decision to reject the claim on merits is taken, then it is no longer open for the Railways to claim that the claim of the plaintiffs also fall within the category of excepted matters. In the case of (Messrs. Bhawani Construction Co. v. Union of India) Appeal No. 820 of 1988 from Arbitration Suit No. 454 of 1979 decided on 20th April, 1992 the Division Bench of our Court while interpreting Clause 45 of the General Conditions of Contract has held that it is only when measurements are taken in accordance with Clause 45 that they are excluded from the ambit of the arbitration clause. It is further held that in fact, Clause 45 provides for an objection which the contractor may take to any measurements which are recorded and it also provides for a forum in which such an objection can be examined. In the facts of the case, it was held that even if the claim related to measurements, it could not be excluded from the arbitration Clause by resorting to clause 45 and was required to be examined by the arbitrator as it did not fall in the category of excepted matter.