{"id":219290,"date":"2009-02-17T00:00:00","date_gmt":"2009-02-16T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/deepak-kumar-bansal-vs-union-of-india-anr-on-17-february-2009"},"modified":"2017-06-21T20:57:37","modified_gmt":"2017-06-21T15:27:37","slug":"deepak-kumar-bansal-vs-union-of-india-anr-on-17-february-2009","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/deepak-kumar-bansal-vs-union-of-india-anr-on-17-february-2009","title":{"rendered":"Deepak Kumar Bansal vs Union Of India & Anr on 17 February, 2009"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Deepak Kumar Bansal vs Union Of India & Anr on 17 February, 2009<\/div>\n
Author: T Chatterjee<\/div>\n
Bench: Tarun Chatterjee, V.S. Sirpurkar<\/div>\n
                                                     REPORTABL\n                                              E\n\n              IN THE SUPREME COURT OF INDIA\n               CIVIL APPELLATE JURISDICTION\n\n              CIVIL APPEAL NO.1089 OF 2009\n           (Arising out of SLP)No.15730 of 2007)\n\n\n\n  Deepak Kumar Bansal                        ...\n\n  Appellant\n\n  Versus\n\n  Union of India & Anr.                     ..Respondents\n\n\n\n                      JUDGMENT\n<\/pre>\n
TARUN CHATTERJEE,J.\n<\/p>\n<\/p>\n
1.   Leave granted.\n<\/p>\n
2.   This appeal is directed against the judgment and order<\/p>\n
     dated 25th of May, 2007 passed by a learned Judge of<\/p>\n
     the High Court of Judicature for Rajasthan at Jaipur<\/p>\n
     Bench in S.B. Arbitration Application No.31 of 2005 by<\/p>\n
     which the learned Judge had rejected the application<\/p>\n
                                                       1<\/span>
\n     under Section 11(6) of the Arbitration and Conciliation<\/p>\n
     Act, 1996 (in short `the Act’) filed at the instance of the<\/p>\n
     appellant.\n<\/p>\n<\/p>\n
3.   The respondent-Union of India invited tenders for<\/p>\n
     construction of 6 unit Type-II and 24 unit Type-I new<\/p>\n
     quarters at Phulera Sub Division Office under Railway<\/p>\n
     Inspector, Kishangarh. An agreement was executed<\/p>\n
     between the parties on 24th of April, 1996 under which<\/p>\n
     in   response   to   the   said   tender,   the   appellant<\/p>\n
     submitted his offer, which was accepted and after<\/p>\n
     completion of all kinds of formalities, the work order<\/p>\n
     was issued to the appellant on 22nd of September,<\/p>\n
     1996.     The initial estimated cost of the work was<\/p>\n
     Rs.32,74,904.37. In the said agreement, there is a<\/p>\n
     Clause 64 in which the arbitration clause has been<\/p>\n
     inserted. Clause 64 of the arbitration clause runs as<\/p>\n
     under:-\n<\/p>\n
     “(i) In the event of any dispute or difference
\n     between the parties hereto as to the construction or
\n     operation of this contract, or the respective rights<\/p>\n
                                                            2<\/span>
\n     and liabilities of the parties on any matter in
\n     question, dispute or differences on any account, or
\n     as to the withholding by the Railway of any
\n     certificate to which the contractor may claim to be
\n     entitled to or if the Railway fails to make a decision
\n     within 120 days then and in any such case but
\n     except in any of the excepted matters referred to in
\n     clause 63 of these conditions, the contractor after
\n     120 days but within 180 days of his presenting
\n     his final claim on disputed matters shall demand
\n     in writing that the dispute or difference be referred
\n     to arbitration.\n<\/p>\n
     (ii) The demand for arbitration shall specify the
\n     matters which are in question. Dispute or
\n     difference only such disputes or differences in
\n     respect of which the demand has been made shall
\n     be referred to arbitration and other matters shall
\n     not be included in the reference.”\n<\/p>\n<\/p>\n
4.   The appellant, upon sanction of the work, requested<\/p>\n
the respondents for issuing him a work order so that he<\/p>\n
could commence the work. On his request, work order<\/p>\n
dated 22nd of February, 1996 for a sum of Rs.32, 17, 641.29<\/p>\n
indicating the date of completion of work as 21st of<\/p>\n
February, 1997 was issued to the appellant, which was<\/p>\n
received by him on 7th of May, 1996. Since the quantity of<\/p>\n
the work was much more than the work order was issued,<\/p>\n
supplementary work order was subsequently issued by the<\/p>\n
                                                              3<\/span>
\nrespondents on 30th of December, 1997 for a sum of<\/p>\n
Rs.4,99,471.36 and further another supplementary work<\/p>\n
order issued on the same date i.e. 30th of December, 1997<\/p>\n
for a sum of Rs.3,25,865.02.     Thereafter, another work<\/p>\n
order to the tune of Rs. 2,17,748.63 was issued on 22nd of<\/p>\n
June, 1998. Hence, the total work orders for a cost of Rs.<\/p>\n
42,60,726.30 were issued to the appellant. When some<\/p>\n
disputes arose between the parties on the question of<\/p>\n
payment of money, which was withheld by the respondents,<\/p>\n
the appellant requested the respondent from time to time to<\/p>\n
take deposition of the material remained and prepare his<\/p>\n
final bill, but his request was not acceded to. Accordingly,<\/p>\n
finding no other alternative, the appellant raised a dispute<\/p>\n
by issuing a notice dated 27th of December, 2004 and<\/p>\n
requested for appointment of an Arbitrator in terms of<\/p>\n
Clause 64 of the General Conditions of Contract appended<\/p>\n
with the agreement.    When the respondent had failed to<\/p>\n
appoint an arbitrator in terms of Clause 64 of the General<\/p>\n
Conditions of Contract, the appellant filed an application<\/p>\n
under Section 11(6) of the Act before the High Court of<\/p>\n
                                                        4<\/span>
\nRajasthan       at    Jaipur   Bench   for    appointment     of       an<\/p>\n
Arbitrator.\n<\/p>\n
5.   As noted herein earlier, by the impugned order, the<\/p>\n
application for appointment of an Arbitrator under Section<\/p>\n
11(6) of the Act was rejected by the High Court on the<\/p>\n
ground that since the value of the claim was more than<\/p>\n
20% of the value of the work, the disputes could not be<\/p>\n
referred to Arbitrator in view of the Circular issued by the<\/p>\n
respondent intimating their intention to incorporate Clause<\/p>\n
18   in   the        General   Conditions    of   Contract   limiting<\/p>\n
arbitration proceedings to only such claims, which are less<\/p>\n
than 20% of the value of the contract. It may be mentioned<\/p>\n
herein that the Circular was issued on 11th of June, 2003<\/p>\n
whereas the agreement entered into by the parties was long<\/p>\n
before issuance of the said circular and it is also not in<\/p>\n
dispute that the original work order and supplementary<\/p>\n
work orders were issued on 22.02.1996 (original) and<\/p>\n
30.12.1997, 30.12.1997 and 22.06.1998.<\/p>\n
6.   The application for appointment of an Arbitrator was<\/p>\n
also rejected by relying on a decision in the case of State of<\/p>\n
                                                                   5<\/span>
\nAP. & Another vs. Obulu Reddy [1999(9) SCC 568]. It is<\/p>\n
this order, which is under challenge before us by way of a<\/p>\n
Special Leave Petition, which on grant of leave, was heard<\/p>\n
by us in presence of the learned counsel for the parties.<\/p>\n
7.    We have heard Ms. Saahila Lamba, learned counsel<\/p>\n
for the appellant and Ms. B. Sunita Rao, learned counsel<\/p>\n
for the respondents\/Union of India. We have examined the<\/p>\n
impugned order of the High Court rejecting the application<\/p>\n
under Section 11(6) of the Act and also the materials on<\/p>\n
record including the notice issued by the appellant for<\/p>\n
appointment of an Arbitrator to the respondents and also<\/p>\n
the application itself under Section 11(6) of the Act and the<\/p>\n
objections filed by the respondents thereto. Having heard<\/p>\n
the learned counsel for the parties and after going through<\/p>\n
the materials on record, we are of the view that the<\/p>\n
impugned order of the High Court is liable to be set aside<\/p>\n
for the reasons stated hereinafter.\n<\/p>\n
8.    The respondents, in their objection to the application<\/p>\n
under Section 11(6) of the Act, raised a plea that question<\/p>\n
of   appointment   of   an   Arbitrator,   in   the   facts   and<\/p>\n
                                                              6<\/span>
\ncircumstances of the present case, could not arise in view<\/p>\n
of the fact that the claim, as put forward by the appellant,<\/p>\n
was an amount being an excess of 20% of total cost of the<\/p>\n
work, which is prohibited in terms of the Circular issued on<\/p>\n
11.06.2003.     The High Court accepted this plea of the<\/p>\n
respondent and rejected the application on the grounds<\/p>\n
mentioned herein earlier.\n<\/p>\n
9.    In our view, the High Court has mis-directed itself in<\/p>\n
holding that the claim was in excess of 20% of the total cost<\/p>\n
of the work.      Admittedly, the work was for a sum of<\/p>\n
Rs.32,17,641.29     (original)   and   three   additions   viz.<\/p>\n
Rs.4,99,471.36,     Rs.3,25,865.02     and     Rs.2,17,748.63<\/p>\n
totalling Rs. 42,60,726.30\/-, which cannot be in excess of<\/p>\n
20% of the total cost of the work.\n<\/p>\n
10.   The High Court has only considered the original work<\/p>\n
order that was Rs.32,17,641.29, which, in our view, must<\/p>\n
be taken into account along with three supplementary work<\/p>\n
orders     of     Rs.4,99,471.36,      Rs.3,25,865,02      and<\/p>\n
Rs.2,17,748.63 as mentioned herein earlier. Therefore, the<\/p>\n
High Court was wrong in holding that since the value of the<\/p>\n
                                                           7<\/span>
\nclaim of the appellant was more than 20% of the value of<\/p>\n
the work and in view of the Circular issued by the<\/p>\n
respondent, the claim must be held to be more than 20% of<\/p>\n
the value of the work and, therefore, disputes could not be<\/p>\n
referred to Arbitration. Even assuming that the claim was<\/p>\n
in excess of 20% of the total cost of the work, even then, the<\/p>\n
Circular, which came into effect from 11.06.2003 would not<\/p>\n
be applicable in the case of the appellant. There cannot be<\/p>\n
any dispute that the Circular intimating Clause 18 and<\/p>\n
issued on 11.06.2003 could not be applied in the case of<\/p>\n
the appellant as the said Circular came into force only from<\/p>\n
that date i.e. 11.06.2003 and not before that, in the<\/p>\n
absence of any subsequent insertion of that Clause in the<\/p>\n
original contract, namely, Clause 64 of the General<\/p>\n
Conditions of Contract.\n<\/p>\n
11.   Accordingly, question of applicability of the said<\/p>\n
Circular intimating intention of the respondent to insert<\/p>\n
Clause 18 could not arise at all. That being the position,<\/p>\n
we are unable to sustain the impugned order of the High<\/p>\n
Court and accordingly, the appeal is allowed and the<\/p>\n
                                                          8<\/span>
\napplication under Section 11(6) of the Act stands allowed.<\/p>\n
In view of our discussions made hereinabove, the decision<\/p>\n
cited by the High Court in the case of State of AP & Anr.<\/p>\n
Vs. Obulu Reddy (supra) may not be dealt with. The<\/p>\n
application is now directed to be posted to the concerned<\/p>\n
Judge of the High Court and to appoint an Arbitrator in<\/p>\n
compliance with Clause 64 of the General Conditions of<\/p>\n
Contract entered into by the parties.\n<\/p>\n
12.   The impugned order is set aside. The appeal is thus<\/p>\n
allowed to the extent indicated above.         There will be no<\/p>\n
order as to costs.\n<\/p>\n
                                      …………………………J.\n<\/p>\n
                                    [TARUN CHATTERJEE]<\/p>\n
NEW DELHI;                              …………………………J.
\nFEBRUARY 17, 2009.                        [V.S. SIRPURKAR]<\/p>\n
                                                                  9<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Deepak Kumar Bansal vs Union Of India & Anr on 17 February, 2009 Author: T Chatterjee Bench: Tarun Chatterjee, V.S. Sirpurkar REPORTABL E IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.1089 OF 2009 (Arising out of SLP)No.15730 of 2007) Deepak Kumar Bansal … Appellant Versus Union of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-219290","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nDeepak Kumar Bansal vs Union Of India & Anr on 17 February, 2009 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/deepak-kumar-bansal-vs-union-of-india-anr-on-17-february-2009\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Deepak Kumar Bansal vs Union Of India & Anr on 17 February, 2009 - 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