UNION OF INDIA Vs. RAJ BROTHERS

JUDGEMENT

(1.) The present appeal under Section 39 of the Arbitration Act, 1940 has been filed for challenging the judgment and order dated 16-11-92 passed by Shri K. K. Nag, Assistant District Judge, Sonitpur, Tezpur in T. S. (Arb) No. 24 of 1991 directing the defendant No. 2, Chief Engineer, Shillong Zone to appoint an arbitrator within a period of one month. It was further directed that the said arbitrator must be appointed within the stipulated time failing which the Court shall appoint an arbitrator.

(2.) Brief facts of the case are that the plaintiff M/s. Raj Brothers is a registered partnership firm having its registered head office at Calcutta and branch office at Tezpur. It engages in the business of contract work for construction of road, building etc. The plaintiff was allotted contract by the Chief Engineer, Shillong Zone on behalf of the President of India for provision of Technical Accommodation including necessary services. The contract agreement being No. CE (RCP)/97 of 82-83 under the Chief Engineer (RCP) Sufdarjung Aerodrome, New Delhi and a formal contract agreement was signed between the plaintiff and Chief Engineer. According to the stipulations in the contract the appellant was under the obligation to supply Schedule 'B' stores to him to enable him to proceed with the performance of the contract work. However on account of non-supply of Schedule 'B' stores and non-payment of R.A.R. bills he suffered huge loss. Periodical Bills were submitted including for the losses where claims in respect of the losses were made with def. No. 3 from time to time requesting him to pay the same who assured the plaintiff at every occasion that the claims in respect of the losses and extra cost will be paid to him at the time of the payment of the final bill. However the def. No. 3 failed to include the claims of losses and extra costs in the final bill. Plaintiff at first signed the final bill under protest reserving his right to the claim but def. No. 3 by his letter dated 30-3-89 informed the plaintiff that the payment of the bill will not be made until the plaintiff withdrew the endorsement made by him in the final bill. Def. No. 3 also requested the plaintiff to withdraw the endorsement with a view to keep good relation with the department in future days to come. Hard pressed for the need of money to pay the workers etc. plaintiff removed the endorsement of protest and received the payment of the final bill on 31-3-89. Thereafter the plaintiff by his letter dated 3-4-89 informed def. No. 3 that he had withdraw his endorsement of protest from the final under duress and compulsion and will soon be preferring his claim for the losses. By letter dated 4-4-89 the plaintiff lodged his claim with the Chief Engineer with the provision that if the payment of claims were not made within 15 days the matter (Claims) will be treated as disputed. No attention however, was paid to the appellants claims as by letters dated 23-5-89 and 25-5-89 defendant No. 3 refuted plaintiffs claim. The Plaintiff thereafter by letter dated asked the Chief Engineer to appoint arbitrator under the terms of the contract. Getting no response in that regard from the Chief Engineer an application under Sections 2-8-20 of the Arbitration Act was filed by the Plaintiff in the Civil Court with the prayer that the Chief Engineer may be directed to file the arbitration agreement in the Court and to direct the defendants to refer the dispute with regard to the claim between the appellant and the respondent for arbitration failing which the Court may itself appoint an arbitrator with regard to the disputed claims for adjudication by an arbitrator as per the arbitration agreement.

(3.) Defence taken up by appellant in the trial Court was that no dispute in regard to any of the Plaintiff claims subsisted for being referred for arbitration in view of the certificate of final settlement given by the Plaintiff at the time of making payment of the final bill. This however, was denied by the respondent with the contention that final settlement of the claims and certificate in respect thereof was given by him under coercion and duress hence such certificate of final settlement given by him did not prevent him from making the claim for the losses and extra costs incurred on account of non-supply of Schedule 'B' stores. The contention of the respondent has been upheld by the trial Court. The trial Court decreed the suit and issued the direction to the appellant for referring thedispute in regard to plaintiff respondents claims to the arbitrator within a period of one month failing which it reserved to itself the power to pass necessary order to refer the matter of dispute for arbitration to the arbitrator. Aggrieved by the said order and direction, present appeal has been filed by the defendants u/S. 39 of the Arbitration Act.