JUDGMENT
M. Jagannatha Rao, C.J.
1. This is an appeal against the order of a learned Single Judge of this court dated 19.8.1994. In a suit filed under Section 20 of the Arbitration Act, by the said order the learned Single Judge came to the conclusion that the arbitration clause requires “notified claims” alone to be referred to arbitration and in the present case the appellant does not have a “notified claim” which could be sent for adjudication by an Arbitrator. Hence the application was refused.
2. Aggrieved by the said order, the appellant has come up with this appeal. The brief facts of the case are that the appellant tendered for interior works (part II) furniture, furnishing etc. for construction of CMTI, Gurgaon, Haryana with the Indian Oil Corporation. A formal agreement dated 22.7.1993 was executed between the parties. The estimated value of the works was Rs. 77,71,667 based on schedule of rates annexed with letter dated 31.3.1993. The appellant was required to deposit a sum of Rs. 1,94,300/- as security deposit being 2.5% of the accepted value as stipulated under clause 2.12 of the General Conditions of Contract. The appellant furnished bank guarantee for Rs. 1,94,300/-. According to the appellant, he completed the work to the tune of Rs. 13,30,933/-, but the respondent company did not make payment of the running bill. On that ground, the appellant gave a telegram on 20.2.1994 to the respondent informing that the appellant does not intend to proceed with the execution of the work. The appellant claimed Rs. 13,30,933/- towards work done for which running bill has been submitted Rs. 6,50,000/- towards loss of profit which the appellant would have earned, if he had been allowed to complete the work, and also sought release of the bank guarantee of Rs. 1,94,300/-.
3. When the appellant filed the case for reference to arbitration, the respondent contended that the court could not refer the matter to arbitration inasmuch as the appellant had no “notified claim”. What is meant by a “notified claim”, much be gathered from clauses 6.6.1.0. and 6.6.3.0 of the contract. A reading of the above clause 6.6.1.0 would show that in case the contractor considered “that he was entitled to any extra payment or compensation in respect of the works over and above the amounts due in terms of the contract as specified in clause 6.3.1.0. or in case the contractor wanted to dispute the validity of any deductions made or threatened by the owner from any running account bills or any payments due to him in terms of the contract, the contractor shall forthwith give notice in writing of his claim in this behalf to the Engineer-in-Charge and the Site Engineer within ten days from the date of the issue of orders or instructions relative to any works for which the contractor claim such additional payment or compensation. The said notice shall give full particulars of the nature of such claim, grounds on which it was based, and the amount claimed.” The clause makes it clear that unless the contractor has a notified claim by following this procedure, “the contractor shall not be entiled to raise any claim nor shall the owner anywise be liable in respect of any claim by the contractor unless notice of such claim shall have been given by the contractor to the Engineer-in-Charge the Site Engineer in the manner and within the time as aforesaid”. The clause further mentions what happens if the contractor does not follow this procedure. It says “the contractor shall be cleaned to have waived any or all the claims and all his rights in respect of any claim not notified to the Engineer-in-Charge and the Site Engineer in writing in the manner and within the time aforesaid”.
4. So far as the other clause 6.6.3.0 is concerned, it makes it clear that “any or all claims of the contractor notified in the manner in which provided in clause 6.6.1.0 shall remain at the time of preparation of final bill by the contractor, then the same could be separately included in the final bill in the form of a statement of claim attached thereto, giving particulars of the contractor in the claim, ground on which it is based, and the amount claimed and shall be supported by copies of the notices sent in respect thereof to the Engineer-in-Charge and the Site Engineer under clause 6.6.1.0.
5. Then comes the arbitration clause 9.0.1.0 which reads as follows :
“Subject to the provisions of Clauses 6.7.1.0 and 6.7.2.0 here of, any dispute or difference between the parties hereto arising out of any “notified claim of the contractor included in his final bill in accordance with the provisions of clause 6.6.3.0 hereof and/or arising out of any amount claimed by the owner (whether or not the amount claimed by the owner or any part thereof shall have been deducted from the final bill of the contractor or any amount paid by the owner to the contractor in respect of the work) shall be referred to arbitration by a Sole Arbitrator selected by the contractor from a panel of three persons nominated by the General Manager.”
owner’ here means the respondent, Indian Oil Corporation.
6. A reading of the arbitration clause shows that subject to certain other clauses, referred to therein “any dispute or difference between the parties hereto arising out of any “notified claim” of the contractor included in his final bill in accordance with the provisions of clause 6.6.3.0 hereof and/of arising out of any amount claimed by the owner (Indian Oil Corporation here) …… shall be referred to arbitration by a Sole Arbitrator selected by the contractor from a panel of three persons nominated by the General Manager”.
7. It is, therefore, clear that arbitration at the instance of the contractor is available under clause 9.0.1.0 only in respect of “notified claim”. That would mean that the contractor must have gone through the procedure-indicated in clause 6.6.1.0 and 6.6.3.0 and notified his claims to the Engineer-in-Charge and the Site Engineer within the period of ten day of the date of issue of orders or instructions relative to any works for which the contractor was claiming such additional payment or compensation. In such a situation it is obvious that if the claim is not a “notified claim”, the arbitration clause cannot be invoked by the contractor.
8. In the present case, when we asked the counsel as to whether the claims sought to be referred to arbitration are claims notified to the Engineer-in-Charge or Site Engineer as above mentioned, learned counsel for the appellant passed on certain papers to us, which we found, were not notices to the above said officers, but were notices to the General Manager of the respondent seeking arbitration under clause 9.0.1.0. Learned counsel for the appellant has not been able to place before us any notice to the particular officers designated in the contract so that it could be said that he had “notified claims” to be referred to arbitration.
9. The clauses relating to arbitration in the present cases before us are similar to the clauses contained in the agreements entered into by the same company, viz. Indian Oil Corporation, which came up before this court for adjudication earlier. The first such case is the one relating to M/s. Uttam Singh Duggal & Co. (O) Ltd. v. Indian Oil Corporation Ltd. and another (Suit No. 967-A of 1983) decided by P. D. Wadhwa, J. on 8.1.1985. By a very elaborate Judgment the learned Judge has referred to various rulings. Initially he referred to the decision of the Supreme Court in Vulcan Insurance Co. v. Maharaj Singh. In that case the Supreme Court held the following clause in an insurance policy to be valid :
“In no case whatever shall the company be liable for any loss or damage after the expiration of twelve months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration.”
10. The learned Judge also followed the decision of the court of Appeal in Babanath International v. Avant Petroleum. ((1982) 3 All. E.R. 244) In that case the arbitration clause provided that any or all disputes of whatsoever nature arising out of a chartered party be put to arbitration in the City of London. It contained no time limited for commencing arbitration proceedings. There was another clause being clause M2 which was separate from the arbitration clause which read as follows :
“Chatterers shall be discharged and released from all liability in respect of any claims owners may have under this Charter Party ………… unless a claim has been presented to Chatterers in writing with all available supporting documents, within 90 (ninety) days from completion of discharge of the cargo concerned under this Charter Party.”
In that case it was held by the Court of Appeal that the making of a claim does not by itself commence the arbitration proceedings or necessarily lead to their being commenced. The claims may be conceded or settled amicably. The Court of Appeal held that Section 27 of the English Arbitration Act did not permit the court to extend any time limit other than in respect of the categories mentioned in that section and, therefore, the court could not extend time for the making of a claim. Following the said judgment, Wadhwa, J. held that a claim had to be notified as required by clause 9.0.1.0 and to become a “notified claim” the contractor must have given notice thereof in writing before the Engineer-in-Charge and the Site Engineer within ten days from the date of the issue of orders or instructions relative to any works for which the contractor claimed such additional payment or compensation and that it was not open to the court to extend the said time. Otherwise, reference to arbitration was not permissible.
11. We are in entire agreement with the view taken by Wadhwa J. in the above said case. The said decision was followed by B. N. Kirpal, J. (as he then was) in M/s. Associated Hybilds Pvt. Ltd. v. Indian Oil Corporation Ltd. (Suit No. 2399-A 1985 decided on 15.10.1987). This case was again followed by P. K. Bahri, J. in M/s. Bansal Construction Co. v. Indian Oil Corporation and another (Suit No. 255-A of 1982 decided on 2.8.1991). In all these three cases the contract was with the Indian Oil Corporation and the very same clauses 9.0.1.0, 6.6.1.0 and 6.6.3.0 fell for consideration and the view was taken that unless the claim was a “notified claim” there could be no reference to arbitration. The effect of the above decision would be that if the claim was not a “notified claim”, the party could not invoke the arbitration clause, but must resort to other civil remedies, subject of course to any other conditions incorporated in the contract between the parties.
12. Learned counsel for the appellant, however, relied on another decision of Bahri, J. in M/s. P. K. Kukreja v. D.D.A. and others (Suit No. 3552/92 decided on 17.8.1994), and yet another decision of the same learned Judge in M/s. Saraswati Construction Company v. East Delhi Co-operative Group Housing Society Limited. (Suit No. 785A/93 decided on 12.8.1994) In these two later cases, the learned Judge took the view that the court could refer the matter to arbitration and certain clauses filing time limits for raising claims could not be treated as mandatory. We do not express any opinion whether such a clause could not be treated as mandatory. However, in the first of these cases Bahri, J. followed an earlier Full Bench decision of the Delhi High Court in Ved Prakash Mittal v. Union of India , in which similar clause for arbitration had come up for consideration. The Pull Bench came to the conclusion that the question whether the claims have been raised or not within 90 days and the effect of not raising the claim within 94 days, was for the arbitrator to decide but reference to arbitration could be made. To that extent, there is no difficulty, as stated below. But that does not offend the view taken by this court in relation to the cases of Indian Oil Corporation. We shall explain the position a little more in detail.
13. In our view, the principle of the Full Bench in Ved Prakash Mittal’s case now stands accepted by the Supreme Court in Union of India v. M/s. L. K. Ahuja & Co., (a case which came up from Allahabad) Sabyasachi Mukherjee, J. (as he then was) after referring to Jiwnani Engg. Works (P) Ltd. v. Union of India , decided by His Lordship while in Calcutta High Court, observed that “it will be entirely be wrong to mix up the two aspects, namely, whether there was any valid claim for reference under Section 20 of the Act, and secondly, whether the claim to be adjudicated by the arbitrator, was barred by lapse of time. The second is a matter which the arbitrator would decide unless, however, if on admitted facts, a claim is found at the time of making an order Section 20 of the Arbitration Act, to be barred by limitation”. Therefore, the distinction is clear enough. While in the case before us and before Wadhwa J., the question was whether the claim, not being a ‘notified claim’ was referable, the position before the Full Bench in Ved Prakashs’ case was whether the claim was barred. It the latter case, it would be for the arbitrator to decide whether the claim was barred.
14. The distinction in these types of cases has been brought out clearly in yet another judgment of this court decided by one of us (Anil Dev Singh, J) in Gas Authority of India Ltd. v. Spie Copag (1993 (4) Delhi Lawyer 192) After referring to several cases of the English Courts, it was held that there is a distinction between “a claim being barred” which is for the arbitrator to decide and “an arbitration or reference being barred” in respect of specific disputes which is for the court to decide when the reference is sought or when stay of suit is applied for. In that case, the judgment of Wadhwa J. in Indian Oil Corporation’s case was considered and clauses therein were referred to. On facts, following the principle in the Indian Oil Corporation cases it was held that the clause in Gas Authority India Ltd. case also barred the court to make a reference in respect of the claim and that it was not a case where the question was merely whether the claim was barred or waived, which would be for the arbitrator to decide.
15. We find that Full Bench case in Ved Prakash Mittal was in fact distinguished by Wadhwa, J. in Uttam Singh Duggal’s case, already referred to. It was pointed out that in Ved Prakash Mittal’s case the contractor had issued a letter on 29.6.1981 asking the respondent therein to appoint an arbitrator. The Chief Engineer refused to make the appointment. The reason he gave was that the contractor had made the request for appointment of an arbitrator after the expiry of 90 days and it was a term of the clause that such a request should be made with 90 days, otherwise the Government shall be discharged and released of all liabilities and all claims would be deemed to have been waived. It was held that at the stage of reference, the court had only to see whether there were disputes and whether all those disputes were to be referred to arbitration and as to whether the claims were waived or not, was for the arbitrator to decide. That was the view of the Full Bench that, at the stage of reference, the court was not concerned with the question whether any claim was barred by time. Wadhwa, J. held that the question involved in Uttam Singh Duggal’s case was whether the claim was a “notified claim” which alone could be referred to arbitration and not whether the claim was barred by time, as an Ved Prakash’ Mittal’s case. Likewise, the learned Judge distinguished Jai Chand Bhasin v. Union of India which was a Division Bench case approved by the Full Bench.
16. We are in entire agreement with the view taken in the Indian Oil Corporation’s case by Wadhwa, J. and the manner in which the learned Judge distinguished the decision of the Full Bench in Ved Prakash Mittal’s and the decision of the Division Bench in Jai Chand Bhasin v. Union of India, (supra). We bold that the two latter decisions of Bahri, J. in Kukreja & Saraswati Construction cases are, for the same reasons assigned by Wadhwa J. distinguishable.
17. The question before us is whether the claim is a “notified claim” so as to be referred to the arbitrator. If the claim is not a notified claim, there is no agreement to refer claim to arbitration. The words “notified claim” are given a particular meaning in the agreement of the parties. It is only those claims which can be referred. We are not here concerned with the question whether a claim is time barred and therefore deemed to be waived by the party as in the Full Bench case. If the matter goes to the civil court because we are declining arbitration, it will be for that court to decide whether the claim is barred or whether there is any waiver of the claim.
18. For the aforesaid reasons, the appeal fails and is dismissed.