ORDER
C.M. Nayar, J.
1. The present application has been filed by the applicant under Section 11(6) of the Arbitration and Conciliation Act, 1996 for issuance of directions to the respondents-DDA to file the original Agreement containing arbitration Clause 25 and for appointment of an Arbitrator as provided under that clause.
2. The brief facts of the case are that Delhi Development Authority, respondent herein, invited tenders for execution of the work named and styled as “C/0356 SFS Houses Cat-II in Pocket-Ill at Madipur SH : C/o 132 houses Category-II Madipur Ph-1, Gr-I. In response to the said invitation to tender the applicant submitted his tender which was accepted and the subject work was awarded to the applicant by the respondent vide letter dated May 27, 1988. The Agreement bearing No. 3/EE/WD-I/DDA/88-89 was executed between the applicant and the respondents which is governed by the General Conditions of Contract providing for settlement of disputes arising out of and relating to the subject work/contract by way of Arbitration under Clause 25. Clause 25 of the Agreement reads as follows:
“CLAUSE 25.
Settlement of
disputes by
Arbitration
Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instruction herein before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right matter or thing whatsoever, in any way arising out of or relating to the contract designs drawings, specifications, estimates, instruction, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the person appointed by the Engineer Member. Delhi Development Authority at the lime of dispute. It will be no objection to any such appointment that the arbitrator as appointed is a Delhi Development Authority employee, that he had to deal with the matters to which the contract relates and that in the course of his duties as Delhi Development Authority employee he had expressed views on all or any of the matters in dispute of difference. The arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, such Engineer as member of Delhi Development Authority as aforesaid at the time of such transfer, vacation of office or inability to act, shall appoint another person to act as arbitrator in accordance with the terms of the contract. Such persons shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other than a person appointed by such Engineer Member, Delhi Development Authority as aforesaid should act as arbitrator and, if for any reason that is not possible, the matter is not to be referred to arbitration at all. In all cases where the amount of the claim in dispute is Rs. 75,000/-(Rupees Seventy five thousand) and above, and arbitrator will give reasons for the award.
Subject as aforesaid the provisions of the Arbitration Act, 1940 or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this clause. It is a term of the contract that the party invoking arbitration shall specify the dispute or disputes to be referred to arbitration under this clause together with the amount or amounts claimed in respect of each such dispute.
It is also a term of the contract that, if the contractor(s) does/do not make any demand for arbitration in respect of any claim(s) in writing within 90 days of receiving the intimation from the Engineer-in-charge that the bill is ready for payment, the claim(s) of the contractor(s) will be deemed to have been waived and absolutely barred and the Delhi Development Authority shall be discharged and released of all liabilities under the contract in respect of those claims.
3. The applicant has further contended that the work was completed on January 15, 1993 to the entire satisfaction of the respondents and since the date of completion of the work the applicant has been requesting the respondents to finalise the account and pay the final bill and release the security in the form of Bank Guarantee. The respondents instead of paying the final bill and releasing the security has been making the payment on account. In this context it is stated that the respondents made two on account payment in July, 1994 and October, 1994 and thereafter neither any payment has been made nor account has been finalised till today. The applicant kept on extending the Bank Guarantee till January 18. 1996. The claims and disputes of the applicant which are stated to have arisen between the parties are referred to in Para 7(ix) and read as follows:
(a) Rs. 1,40,000/-Refundofwrongfullrebate, payment of final bill and security.
(b) Rs. 1,00,000/-. Release of Bank Guarantee.
(c) Rs. 1,50,000/- amount withheld/not paid in the bills on account of RIS, DIS, Q.C. etc.
(d) Rs. 1,50,000/- amount reduced/not paid in X C.C. Bill.
(e) Rs. 25,00,000/- losses and damages on account of infructuous expenses, overheads, establishments, increased market rates of labour and material beyond stipulated period till actual date of completion.
(f) Rs. 40,0007- infructuous expenses incurred on Bank Guarantee charges.
(g) Presuit, pendente lite and future interest @ 24% per annum w.c.f. November, 1993 till the date of payment.
(h) Rs. 50,0007- cost of Arbitration proceedings.
4. The respondents have filed reply to the application where the following pleas are taken:
(I) The applicant was required to submit his final bill within a period of one month from the date of completion of work and thereafter to invoke arbitration under Clause 25 within 90 days of intimation that the bill was ready for payment. In the present case the applicant did not submit his final bill at all and, therefore, he is debarred from raising any claims from the respondent as such claims are presumed to have been waived.
(II) The claims of losses and damages now sought to be raised by the applicant are an afterthought and are time-barred. No such claims were ever raised during the execution of work or thereafter till the invocation of arbitration clause vide communication dated May 29, 1996.
(III) The project, admittedly was completed on January 15, 1993 and the claims having been raised at a belated stage by the applicant on May 29, 1996 are admittedly and clearly time-barred and the Arbitrator has no jurisdiction to entertain or award these claims.
(IV) The applicant has already settled the accounts and accepted the final payments of his claims while accepting the measurements of the final bill as well as the final bill prepared by the respondents and having accepted the payment in that account cannot now raise any disputes whatsoever.
5. The main plea which arises for consideration is as to whether the claims which are now submitted for adjudication are time-barred in terms of the provisions of Clause 25 of the Agreements. The applicant has, however, contested the averments of the respondents on the basis that the matter has been kept open by the respondents and they even continued to pay on account payments even in July, 1994 and October, 1994 and the respondents have not yet settled the final bill. These questions relate to the examination of facts and will require evidence to be recorded and the Arbitrator will also have to consider the interpretation of the terms of the Agreement to adjudicate the claims of the applicant. The law is settled by the judgment of the Supreme Court in, Union of India v. M/s. L.K. Ahuja and Co., that such questions are required to be looked into by the Arbitrator who has the exclusive jurisdiction to decide the questions when both the parties have disputed the averments made by each other. Similar view has been taken by this Court in, Budhiraj Electricals v. M/s. Rites (1998) I AD (Delhi) 401. The Arbitrator will be at liberty to construe the terms of the Agreement and the effect of a particular clause and will be entitled to take a view after giving opportunity to both the parties to address on that question.
6. In view of the above, the respondents shall appoint an arbitrator within six weeks from today * The arbitrator as a consequence shall enter upon the reference and decide the claims as well as counter claims, if any, of the respondent Authority in accordance with law. This application is allowed in the above terms. There will be no order as to costs.
7. The learned counsel for the applicant states that he will keep the Bank Guarantee for the sum of Rs. one lac alive during the pendency of the arbitration proceedings. This will be subject to any further directions by the learned Arbitrator.