GURNAM SINGH Vs. SACRED HEART SEN. SEC. SCHOOL

JUDGEMENT

(1.) This is an application filed under Sec. 11 read with Sec. 12 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act' for short), praying for appointment of an independent Arbitrator to resolve the dispute between the petitioner and the respondents.

(2.) The petitioner is a proprietorship firm and Shri Gurnam Singh is its sole proprietor. The respondent with an intent to construct Sacred Heart Senior Secondary school, Junior Wing, Garden Villa, at Dalhousie, entered into an agreement with the petitioner on 6/4/2017. As per the terms and conditions of the agreement, the construction was to be raised strictly in accordance with the drawings and specifications to be provided by the respondent and has been elaborated in the schedule of the agreement. However, according to the petitioner, it was required to start the construction only after receipt of the drawings and specifications duly approved by the respondent which were provided by the respondent after a delay of about five months on 7/9/2017. The construction work was to be completed on or before 7/9/2018, failing which, the respondent had the right to impose the penalty of Rs.1500.00 per day. According to the agreement, two separate buildings were required to be constructed, i.e., construction of one M.S. shed and another Garden Villa, school building. When the construction of the M.S. shed was at the final stage, its area was ordered to be extended from approximately 16250 sq. feet to more than 18000 sq. feet. Besides this extension, many other additions and alterations were ordered to be made to the shed, e.g, construction of new steps after dismantling the old steps for sitting arrangement and three staircases. According to the petitioner it had completed the construction within the stipulated time frame. However, the respondent made the payments quite belatedly and, that too, in parts inasmuch as no payment against the dismantling of old steps, construction of new steps and for construction of staircases was made. However, for the alteration of the work, the petitioner had to divert his major resources, manpower and machinery for the construction of the shed, which has caused delay in the construction of Garden Villa School building. As per the agreement between the parties, the electricity and water was to be supplied uninterruptedly by the respondent. The electricity remained disconnected for a considerable long time for which no efforts were made by the respondent to get the same resumed. The petitioner had to incur additional costs for that on its own level. This has resulted in delay in construction and missing the deadline for the constriction owing to which the petitioner could not complete the work on 7/9/2018 and requested the respondent to extend the time period upto 31/10/2018. However, respondent agreed to extend the time only upto 15/10/2018. Even the respondent ordered various additions, alterations and modifications for the construction of Garden Villa, the respondent was required to make the payment approximately Rs.2,67,30,000.00 however, the total payment made by the respondent till date against the said construction is only approximately Rs.2,27,70,000.00. No payment for additions, alternations and modifications has been made.

(3.) According to the petitioner, the respondent was obliged to pay 25% of the construction amount, being approximately Rs.83,23,000.00 in advance as mobilization amount. However, the respondent paid only sum of Rs.60,00,000.00 as mobilization advance and, that too, in many installments. According to Clause 19 of the agreement, window of 5-7 days against the running /final bills is provided, however, all the payments were made beyond 7 days. The petitioner in the month of November, 2018 served a legal notice for seeking the appointment of arbitrator for resolution of dispute. However, despite due service no reply was sent by the respondent. The respondent also issued legal notice dtd. 10/11/2018 claiming that the petitioner has not completed the construction work within the stipulated time and that the construction should be resumed on or before 14/11/2018, failing which the agreement would be terminated. The petitioner thereafter served another legal notice dtd. 19/11/2018 whereby the agreement dtd. 6/4/2017 was arbitrarily terminated unilaterally and the security deposited with the respondent at the time of agreement was forfeited. The respondent further refused to make the balance payment. On the contrary, respondent served letter dtd. 26/2/2019, showing an amount of Rs.10,73,015.00 as recoverable from the petitioner. As per Clause 23 of the agreement, respondent was required to refer the dispute for arbitration before termination of the contract. The respondent requested several times to the respondent to appoint some arbitrator so that dispute could be resolved amicably but of no avail, hence this application.