Disposed

Messrs Shanti Enterprises v. the Chief Engineer (Navy) and Anr.

Bombay HC29 Jan 2024ARP/13/2020

Case brief

AI extract

What is this about?

Petitioner invoked arbitration under a MES term contract claiming unpaid dues, interest and losses; respondent argued clause 4A made the J.E.'s decision final, excluding referral. Court held only decisions expressly given finality are excluded from clause 70 arbitration, appointed Kainaz Irani as sole arbitrator.

What did the court decide?

Appointment of Ms. Kainaz Irani as sole arbitrator; parties to bear costs equally; all rights and contentions kept open.

Messrs Shanti Enterprises Vs the Chief Engineer (Navy) and Anr. — Arbitration | Bombay HC (2024)

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1/6 32 ARP 13-20.doc

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION ARBITRATION PETITION NO. 13 OF 2020 WITH ARBITRATION PETITION NO. 14 OF 2020

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M/s.Shanti Enterprises .. Petitioner Versus .. The Chief Engineer (Navy) and anr Respondents

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Mr.Bernardo Reis i/b Viraj Kandpile for the petitioner. Ms.Leena Patil for the respondents.

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CORAM: BHARATI DANGRE, J. DATED : 29^th JANUARY 2024

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P.C:-

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1 The present application filed under Section 11 of the Arbitration and Conciliation Act, 1996, seek appointment of an Arbitrator to resolve the dispute, that is highlighted in the notice dated 5/6/2018 addressed by the applicant, to the Chief Engineer (Navy), Mumbai in reference to the Term Contract Agreement dated 28/8/2015, awarded in it’s favour pursuant to a tender notice for completing the work, within the period of 12 months. It is the specific claim of the petitioner that the work was awarded with stipulated date of commencement as on the date of handing over of site and it was to be executed under the supervision of the G.E Daman.

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Tilak

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2/6 32 ARP 13-20.doc

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The scope of the work contemplated carrying out of Artificer Works at TRV Area ICGAS Daman and the contractual period stipulated is of 12 months. The financial bid expected to take into account the material cost, labour force, overheads, taxes and profit margin.

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2 It is the claim of the applicant that there was delay in handing over the site and the work could not be completed within the time frames and in the notice addressed to the respondent, he has claimed the computation of the prolonged period and staked his claim, under various captions like “work done not paid, interest for delayed payment”, under utilization of overheads and labour force, loss of business opportunities as well as cost of litigation and interest @ 24% on the claimed amount.

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Thereafter, a specific timeline was stipulated in responding to the notice invoking arbitration, which received a simple reply that all claims/final bills have been paid to him under the Work Order Nos. 1 to 8, and since there are no dues pending with the Department, there can be no appointment of Arbitrator.

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Pursuant thereto, there is exchange of communication to and fro and though the exisence of the arbitration agreement is not denied in specific, the maintainability of the claim before the Arbitrator was put forth.

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Tilak

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32 ARP 13-20.doc

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2 In the affidavit in reply filed on 24/11/2022, a stand for the first time is taken to the effect that the contract is governed by the Military Engineer Services General Conditions of Contract I.A.F.W. 2249 and condition no.17 with reference to condition no.4A of the General Conditions of Contract is insisted for, since the decision of J.E is final and the dispute cannot be made to Arbitration.

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3 Ms.Leena Patil, the learned counsel for the respondent has invited my attention to clause no.4A of the General Conditions of Contract which is styled as “Works to be carried out’ (applicable only to Term Contracts) and it stipulate all those works which are required to be carried out and which can be priced under the M.E.S Schedule for which the total estimate of contract rates of any single work, job or service, as defined in 4A shall not exceed 1,50,000/- and distinct services are then enlisted.

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A perusal of it would reveal that this would extend to the periodical services like painting, lime or colour washing, distempering, construction of field defences and shelters within the Contract Area, maintenance of runways, taxi tracks, aprons, landing grounds etc.

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Clause (f) clearly stipulate that item of work which is part of a Major Work costing over 1,50,000 shall be excluded from the contract.

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Tilak

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4/6 32 ARP 13-20.doc

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Ms.Patil has specifically relied upon the following

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clause:-

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“The estimates referred to above shall be based on the Contract Rates and shall include contingencies, but exclude the surplus M.E.S. Stores referred to in Condition 10 hereof and any stores to be obtained under special contract; the G.E. shall be the sole judge as to what constitutes a single work, job or service or to treat the Contract Area as a whole for the purpose of grouping work as may be convenient, and his decision in these matters shall be final and binding.”

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4 Trying to draw comparison with this clause being juxtaposed against the excepted clause in form of para 70 of the GCC, which provide for arbitration, it is her submission that since the decision of JE is final, it cannot be referred to arbitration.

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In my considered opinion, on reading of clause no.70 read with proviso appended to Section 4A, the argument is without any merit. Clause no.70 in particular, reads to the following :-

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“70 Arbitration – All disputes, between the parties to the Contract (other than those for which the decision of the C.W.E. or any other person is by the Contract expressed to be final and binding) shall, after written notice by eitheir party to the Contract to the other of them, be referred to the sole arbitration of a Serving Officer having degree in Engineering or equivalent or having passed final/direct final Examination of sub-division II of Institution of Surveyor (India) recognised by the Govt. Of India) to be appointed by the authority mentioned in the tender documents.”

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Tilak

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5/6 32 ARP 13-20.doc

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5 A bare reading of the aforesaid clauses would reveal that what is excluded from the category of disputes being referred to arbitration, are those decisions to which finality is awarded i.e. the decision of the C.W.E or any other person, and what is referred to as an exception in the clause which is part of clause 4A, is regards the decision of the J.E on the aspect as to what constitutes a single work, job or service, or how the contract area shall be treated.

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Admittedly, the decision of JE is not accorded a finality as regards the disputes which are set out in the invocation notice, including the various claims, like amount due for work done not paid, interest on delayed payment of bills, under utilization of labour force, loss of job opportunities, etc.

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6 In the wake of the above, since I see no reason for placing the case of the applicant in the excepted category under clause 70. Since arbitration has been invoked by the applicant, it is imperative that the dispute must be refrrred to arbitration. Whether the claims staked are justified or not, is ultimately a matter for the learned Arbitrator to determine.

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7 In the wake of the above, Ms.Kainaz Irani, Advocate is appointed as Sole Arbitrator to adjudicate the disputes and differences that have arisen between the applicant and the respondent. The details of the Arbitrator are as follows:-

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Tilak

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6/6 32 ARP 13-20.doc

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Ms.Kainaz Irani, Mobile No. 9819301839 Email : [email protected]

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The Arbitrator shall, within a period of 15 days before entering the arbitration reference forward a statement of disclosure as contemplated u/s.11(8) r/w Section 12 of the Arbitration and Conciliation Act, 1996, to the Prothonotary and Senior Master of this Court to be placed on record.

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The Arbitrator, shall after entering the reference fix the date of first hearing and issue further directions as are necessary.

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The Sole Arbitrator shall be entitled for the fees as per Bombay High Court (Fee Payable to Arbitrators) Rules, 2018 and the arbitral costs and fees of the Arbitrator shall be borne by the parties in equal portion and shall be subject to the final Award that may be passed by the Tribunal.

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All rights and contentions of the parties are kept open.

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( SMT. BHARATI DANGRE, J.)

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Tilak

Messrs Shanti Enterprises v. the Chief Engineer (Navy) and Anr.

Case brief

What is this about?

What did the court decide?

Messrs Shanti Enterprises v. the Chief Engineer (Navy) and Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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