Dismissed

United Construction v. C.G.M.,Office of the Principal Chief Engineer

Orissa HC1 Oct 2021ARBP/69/2018

Case brief

AI extract

What is this about?

This disposal concerns a Section 11 application for appointment of an arbitrator under the Arbitration and Conciliation Act, 1996. The High Court held that since the claim was manifestly time-barred with no explanation for the delay, the petition was dismissed without referring the matter to arbitration.

What did the court decide?

Petition for reference to arbitration dismissed; no order as to costs.

United Construction Vs C.G.M.,Office of the Principal Chief… — Arbitration | Orissa HC (2021)

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IN THE HIGH COURT OF ORISSA AT CUTTACK

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ARBP No.69 of 2018

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United Construction

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…. Petitioner Mr. S.S. Rao, Sr. Advocate

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-versus-

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The Chief General Manager, Office of the Principal Chief …. Engineer, Rail Sadan, Opp. Parties Bhubaneswar and others

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Mr. A.K. Mishra, Advocate

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CORAM: THE CHIEF JUSTICE

ORDER

Order No.

01.10.2021

Dr. S. Muralidhar, ACJ

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This petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (‘Act’) seeks appointment of an Arbitrator to adjudicate the disputes between the Petitioner and the Opposite Parties East Coast Railways (ECR) arising from the award of work in favour of the Petitioner on 19^th April, 2010 for replacement of the existing steel channel sleepers with new galvanized fastenings.

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The case of the Petitioner is that under Clause-64 of the General Conditions of Contract (GCC), governing the award of the above work, as amended on 11^th November, 2016, the disputes involving claims of total value not exceeding One Crore were to be referred to the sole Arbitrator who shall be a Gazetted Officer of the Railway not below the rank of J.A.

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cadre nominated by the General Manager, who shall be appointed within 60 days from the date of demand. In other cases, the disputes were to be referred to a panel of three Gazetted Railway Officers not below the J.A. cadre or two Railway Gazetted Officers not below the J.A. cadre and a retired Railway Officer not below the rank of an SAG Officer.

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The Petitioner states that in view of the amendment made to the Act in 2015, an option was given to the parties to waive of the applicability of Section 12 (5) of the Act. According to the Petitioner he prayed for extension of time for completion of the work but this request was not accepted. Therefore, by a letter dated 12^th November 2012 he requested the ECR to close the work and release the funds.

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The Petitioner by letter dated 25^th June, 2018 is stated to have raised a demand and sought the appointment of an Arbitrator. In paragraph 6 of the petition it is stated by the Petitioner that by a letter dated 6^th July, 2018 he was advised by the General Manager, Arbitration, of the ECR to sign a letter exempting the applicability of the Section 12 (5) of the Act. The Petitioner declined and wrote back on 21^st July, 2018 asking the General Manager to suggest a panel of Arbitrators. It is stated that on 4^th September, 2018 the Chief General Manager (CGM) wrote to the Petitioner disputing the correctness of the demand and declined the request.

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On 14^th September, 2018 the Petitioner’s request for the appointment of Arbitrator was rejected. The ECR stated in the said letter that the claim of the Petitioner was baseless and would not be required to be referred to arbitration. It is in the above circumstances, the present petition was filed on 21^st December, 2018.

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The ECR has filed a reply to the petition on 24^th July, 2019. It is stated therein that the work was completed within the extended date, i.e., 31^st March, 2013. The final bills (one each for Asst. Divisional Engineer/Bhubaneswar and Dhenkanal) had been passed and the contractor submitted ‘No Claim Certificate’ (NCC) on both the final bills. Thereafter, the final bills were passed and the security deposit was released on the Petitioner submitting the NCC.

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In its reply the ECR has pointed out how five years after the release of the money, the Petitioner applied by a letter dated 25^th June, 2018 for the appointment of an Arbitrator. The claim was time-barred and was accordingly rejected.

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At the hearing of the present petition on 5^th July, 2021 the Court noticed that the NCC had been signed by the Petitioner on 16^th November, 2013 whereas the fresh notice by the Petitioner to the ECR making a claim was sent on 25^th June, 2018. The Petitioner was asked to explain the gap of over four years between these dates. Mr. Rao, learned Senior counsel

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appearing for the Petitioner then sought time for instructions regarding the delay.

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The Court heard the submissions of Mr.S.S. Rao, learned Senior counsel appearing for the Petitioner and Mr. A.K. Mishra, learned counsel appearing for the ECR.

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Mr. Rao referred to the decision dated 10^th March, 2021 of the Supreme Court of India in Civil Appeal Nos.843-844 of 2021 ( Bharat Sanchar Nigam Ltd. v. M/s. Nortel Networks India Pvt. Ltd. ) and submitted that the issue whether the claims for time barred should be best left to the Arbitrator. He however frankly stated that he had no material to explain the delay between the date of Petitioner signing the NCC and the date of making the claim. However, he submitted that this also should also be left to be decided by the Arbitrator.

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The Court has examined the above decision. The law has been summarized by the Supreme Court in paragraph 40 of the judgment as under:

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“40. Conclusion Accordingly, we hold that:

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(i) The period of limitation for filing an application under Section 11 would be governed by Article 137 of the First Schedule of the Limitation Act, 1963. The period of limitation will begin to run from the date when there is failure to appoint the arbitrator;

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It has been suggested that the Parliament may consider amending Section 11 of the 1996 Act to provide a period of limitation for filing an

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application under this provision, which is in consonance with the object of expeditious disposal of arbitration proceedings;

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(ii) In rare and exceptional cases, where the claims are ex facie time-barred, and it is manifest that there is no subsisting dispute, the Court may refuse to make the reference.”

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The question is here about the delay between the date, the NCC was signed and the date on which the Petitioner made a fresh claim. Since this gap is well over four years, it was incumbent by the Petitioner to satisfactorily explain to the Court, even prima-facie, that the claim is not barred by limitation. There is no such material available with the Petitioner. Therefore, even if the dispute were to be referred to arbitration, the result would be no different.

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In the considered view of the Court the claims of the Petitioner appear ex facie time barred and therefore cannot be referred to arbitration. In that view of the matter, the Court declines to accept the prayer of the Petitioner for the reference of the dispute to arbitration. The arbitration petition is accordingly dismissed but in the circumstances no order as to costs.

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(Dr. S. Muralidhar)

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Chief Justice

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KC Bisoi

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United Construction v. C.G.M.,Office of the Principal Chief Engineer

Case brief

What is this about?

What did the court decide?

United Construction v. C.G.M.,Office of the Principal Chief Engineer

Case brief

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What did the court decide?

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