UNION OF INDIA Vs. KAY KUBE KO

JUDGEMENT

(1.) THIS order shall dispose of three revision petitions bearing Nos.4556, 7644 and 7723 of 2014 because similar issue is involved therein. However, for the sake of convenience, the facts are being extracted from CR No.4556 of 2014 titled as Union of India Vs. M/s Kay Kube Ko.

(2.) IN short, the petitioner/Union of India through its Executive Engineer, entered into an agreement No.37/EE/CCD/1989 -1998 with the respondent for the construction of residential quarter for defence audit in Sector 32 -A, Chandigarh Sub Head Type -I/9 nos.(T/s) and Type -II/24 (T/S) numbers including water supply, sanitary installation, drainage etc. The construction work was commenced from 22.9.1989 and was to be completed by 21.7.1990 but the respondent/Contractor failed to complete the job within the stipulated time, allegedly despite issuing slow progress notices dated 16.3.1992 and 3.4.1992. According to the petitioner, respondent was liable to pay the compensation for his failure to complete the job within the stipulated time as per Clause 2 of the agreement which empowers Superintending Engineer to levy compensation as per the rate prescribed in the Contract Agreement and his decision for levy of compensation has been held to be final and binding. According to the petitioner, levy of compensation under Clause 2 in the contract agreement is an excepted matter and is not a subject of the arbitration. Before levy of compensation, Superintending Engineer issued show cause notice dated 10.6.1993 under registered post, proposing the levy of compensation under Clause 2 of the contract agreement, affording him an opportunity to represent against the said proposal. The respondent filed reply to the show cause notice on 30.6.1993. The Superintending Engineer, after examining the matter and considering the reply, exercising his powers under clause 2 of the Agreement held the respondent liable to pay a sum of Rs. 2,09,946/ - by way of compensation for not completing the work as per time Schedule provided in Clause 2 of the Agreement, at the rate of 10% on the estimated cost of the work shown in the agreement and accordingly passed the order dated 26.8.1993. Since the respondent raised certain disputes and the petitioner also raised its demand, under Clause 25 of the agreement, the matter was referred to the sole Arbitrator Sh.P.K.Kohli, New Delhi to adjudicate upon the dispute between the parties in which the petitioner highlighted the claim of levy of compensation under Clause 2 of the Agreement but, the same was withdrawn from the proceedings of the Arbitrator vide letter dated 15.10.2007 and suit for recovery was filed. The respondent thereafter filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 (for short 'the Act') to refer the matter for arbitration which was allowed by order dated 23.12.2013 which is under challenge in the revision petition.

(3.) IT would be pertinent to mention that there were four cases of the similar nature in which application under Section 8 was filed by the contractor. The application was allowed in two cases whereas in two other cases it was declined. The revision petition from which the facts have been extracted i.e. Union of India Vs. M/s Kay Kube Ko is only in one case. Counsel for the petitioner has submitted that he is not aware about the other two cases but in any case at present there are three revision petitions before this Court out of which two revision petitions have been filed by the Contractor against the order passed by the Civil Court dismissing their application filed under Section 8.