Full Text
HIGH COURT OF DELHI
Date of Order : 16th January, 2023
UBTECH PVT. LTD. ..... Petitioner
Through: Mr. Atul Kumar and Ms. Deepali, Advocates
Through: Mr. Aviral Saxena and Mr. Abhinav Sharma, Advocates
CHANDRA DHARI SINGH, J (Oral)
ORDER
1. The present petition has been filed on behalf of the petitioner seeking the appointment of a Sole Arbitrator under the provision of Section 11 of the Arbitration and Conciliation Act, 1996 qua the dispute arising out of the letter of intent dated 14th August, 2014 as well as agreement dated 30th May,
2015.
2. Learned counsel appearing on behalf of the petitioner submitted that the petitioner company was founded in 1983 as an electrical engineering and contracting firm. Furthermore, with its strategy of quality, safety, dependability, and timely project completion, the petitioner has successfully carved out a name for itself in the electrical engineering and contracting of EHV Substation and Transmission Lines across India.
3. It has further been submitted on behalf of the petitioner that the work was assigned to the petitioner in accordance with LOI 7324/PVNL/ MT/ RGGVY-II/ 1231/2013-14 (12th Plan) dated 14th August, 2014 and LOI 137781 PVVNL/ MT/ SAUBHAGYA/ 17-18 dated 30th November, 2017. The work was to be finished by 14th August, 2016 of the first LOI and by 30th December,2018 of the second LOI.
4. It has been submitted on behalf of the petitioner that in accordance with the requirements mentioned in the said Letter of Intent dated 14th August, 2014, the petitioner was required to complete the assigned work under the said LOI within 24 months from the date of its issuance, i.e. by 3rd March, 2016. The work was to commence upon the Respondent's execution of the agreement in favour of the Petitioner, and the submitted work was to be made accessible to the Petitioner. To the contrary, the agreement was not completed by the respondent in favour of the petitioner until 30th May, 2015, after the respondent's protracted delay had harmed the petitioner's interests.
5. It has further been submitted on behalf of the petitioner that in accordance with the aforementioned LOI dated 14th August, 2014 and the agreement dated 30th May, 2015, the petitioner was assigned the Rural Electrification work to be carried out in the villages falling within 11 Blocks of the District Bijnor, including the erection and commissioning of 33/11 KV Sub-Station and its associated works. According to the agreement dated 30th May, 2015, the petitioner was also responsible for the 11 KV Line works and the release of service connections to BPL Card users.
6. Learned counsel for the petitioner submitted that petitioner conducted numerous foot surveys in the various villages falling within the 11 Blocks of the District Bijnor and discovered that some works were to be completed by another company under the same plan prior to the assignment of work to the Petitioner under the said agreement. The petitioner also discovered that the necessary works were not completed by the contractor in whose favour the initial work was done. Pursuant to conducting foot surveys regarding the work field, the petitioner submitted a number of letters updating the respondent on the condition of the work field and requesting that issues resulting from the previous company's incomplete work be resolved as soon as possible so that the petitioner may begin its assigned works.
7. It has been submitted on behalf of the petitioner that the Chief Engineer of the respondent issued a letter dated 22nd July, 2016 annexing two copies of the agendum agreement to the original/initial agreement dated 30th May, 2015, which was said to have been approved by the state Level Standing Committee of the holding company, in consideration of the request made by the petitioner via letter dated 14th January, 2016, and the petitioner was asked to sign the said two agendum agreements. The Chief Engineer of the respondent indicated in the aforementioned letter dated 22nd July, 2016 that the petitioner is only needed to finish electrifying 158 habitations in Block Noorpur, District Bijnor.
8. It has been submitted on behalf of the petitioner that the petitioner was required to complete the assigned work up until 13th August, 2016 in accordance with the terms of the LOI dated 14th August, 2014 issued by the respondent's competent officer, but the initial agreement was only executed in the Petitioner's favour on 30th May, 2015 i.e. 9 ½ months after the date of the issuance of the LOI dated 14th August, 2014.
9. In light of the submissions made above, it has been submitted by the petitioner that the delay is attributable to the respondent, as the petitioner was not authorised to begin the given work for about two years, despite the fact that the LOI issued by the respondent on 14th August, 2014 stipulates that the assigned work must be completed by 13th August, 2016. Moreover, the petitioner could only initiate the contractual work in the Month of August, 2016.
10. It has further been submitted on behalf of the petitioner that apart from the mentioned inconsistencies, the respondent also continually changed the sub-station placements from the allocated sites based on their own priorities and convenience, preventing the petitioner from proceeding with the project in a timely manner and causing an excessive delay in project completion.
11. It has been submitted on behalf of the petitioner that a series of letters have been sent to the competent officers of the Respondent detailing the state of affairs and requesting that the issues raised by such people and the obstructions created by them in further proceeding with the work be resolved at the earliest, as such obstructions are causing an inordinate delay in completing the assigned work, whereas the Petitioner was given a timebound schedule for completion of the project.
12. It has been submitted on behalf of the petitioner that the respondent failed to fulfil its contractual and legal responsibility regarding the payment of the petitioner's operating expenses. Despite numerous requests, the nonpayment of outstanding bills to the petitioner created an excessive delay in performing the provided task in a timely way. Moreover, it is argued that delay in receipt of due payments was a major factor in the delay of project completion, even in the absence of sufficient payments of running bills, by taking loans from banks and other financial institutions on the assurance given by the respondent that the final payment would be made to the Petitioner upon handing over the project and submitting closure documents.
13. It has been submitted on behalf of the petitioner that even though no formal order extending the deadline for completion of the work assigned to the petitioner, was issued by the competent officer of the respondent, the petitioner was regularly assured that it may continue with the work and complete the project by 31st December, 2018 and that the bills so submitted by the petitioner would be examined subsequent thereto, the payments would be released in favour of the petitioner at the earliest without causing any delay. That the petitioner in good faith continued with the project and finished the project assigned to it under the concerned tender before 31st December, 2018 based on assurances from the respondent's competent authorities. It is further submitted that following the advice of the respondent's competent authorities, the petitioner electrified 167 villages (9 extra villages) in block Noorpur, District Bijnor, even though the addendums of agreement required electrification only in 158 villages.
14. It is further submitted that subsequent thereto, on 31st December, 2018 the petitioner submitted the final bills on the respondent. Moreover, closing documents pertaining the said project was also handed over to the respondent.
15. Learned counsel appearing on behalf of the petitioner submitted that despite various intimations and reminders by the petitioner, the respondent failed to clear the dues pending towards the petitioner and stated that the petitioner failed to complete the contractual work within the stipulated time frame. Furthermore, neither has any formal extension been sought nor has been granted by the respondent.
16. It has been submitted on behalf of the petitioner that on failure of all efforts to resolve the dispute amicably, the petitioner was constrained to invoke the arbitration clause i.e. Clause-39 of Section-IV of Volume-I of the Standard Building Contract vide legal notice dated 15th April, 2022.
17. Per contra learned counsel on behalf of the respondent vehemently opposed the averments made by learned counsel for the petitioner and submitted that the present petition filed by the petitioner is barred by limitation in light of section 28 of the Indian Contract Act, 1872. The same reads as follows:
18. In response to the aforementioned averment of the respondent, the petitioner, during the course of arguments, relied upon the judgment of this Court titled as Sagar Constructions vs. Govt. of NCT of Delhi; 2021 SCC OnLine Del 4648. The relevant paragraphs of the said judgment are reproduced hereunder: “13. The contention that the claims made by the petitioner are time barred is also without merit. There is a distinction between the disputes being barred by limitation and the petition under Section 11 of the A&C being barred by limitation. The period of limitation for filing the petition would run from receipt of notice under Section 21 of the A&C Act and since no specific period is specified, Article 137 of Limitation Act, 1963 would apply (See - Bharat Sanchar Nigam Limited v. Nortel Networks India Private Limited: (2021) 5 SCC 738).
14. The period of limitation for the disputes will commence from the date of cause of action till invocation of the agreement to refer the disputes to arbitration. The question whether the disputes are within the period of limitation falls within the jurisdiction of the Arbitral Tribunal and unless it is, ex facie, apparent that the disputes are barred by limitation, the parties are required to be referred to arbitration (See -Vidya Drolia v. Durga Trading Corporation: (2021) 2 SCC 1).
15. This Court is also unable to readily accept that the claims made by the petitioner are barred by limitation. It is clearly a contentious issue and it is not necessary for this Court to address the said issue in this proceeding as the same would be required to be considered by the Arbitral Tribunal.
16. The present petition was listed on 07.09.2021 when the learned counsel for the respondent accepted notice and had sought time to file a reply. The respondent was granted two weeks' time to file the reply. However, no reply has been filed by the respondent as yet.
17. In view of the above, the material averments made in the present petition are accepted as uncontroverted. However, it is clarified that this will not preclude the parties in any manner from canvassing such contentions as advised before the Arbitral Tribunal.”
19. The learned counsel for the petitioner further placed reliance upon the order dated 11th march, 2022 passed by the Hon’ble Apex Court in S.L.P
(C) No. 3978/2022 titled as The Oriental Insurance Company Limited vs.
Sanjesh & Anr. The relevant para of the said order is reproduced hereunder: “We do not find any merit in the said arguments in view of Section 28 of the Indian Contract Act, 1872 (for short, „the Act‟) which reads as under:- “28. Agreements in restraint of legal proceedings, void.— [Every agreement,— (a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal 2 proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or (b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent.]” In view of the aforesaid Section, the condition of lodging claim within a period of one month, extendable by another one month is contrary to Section 28 of the Act and thus void.”
20. Thus, this Court finds force in the arguments of the learned counsel for the petitioner that the objection raised on behalf of the respondent under section 28 of the Indian Contract Act, 1872 cannot come to its rescue and further is of the view that the dispute in question is arbitral in nature.
21. In view of the request made by the petitioner, to resolve the dispute arising under the letter of intent dated 14th August, 2014 as well as agreement dated 30th May, 2015, the said disputes and differences arising between the parties are referred to arbitration, by appointing a Sole Arbitrator. Hence, the following Order: ORDER
(i) Mr. Dilip B Bhosale, Former Chief Justice, Allahabad
High Court is appointed as a sole arbitrator to adjudicate the disputes between the parties which have arisen under the Work Order dated 22nd August, 2018;
(ii) The learned sole arbitrator, before entering the arbitration reference, shall ensure the compliance of Section 12(1) of the Arbitration and Conciliation Act, 1996;
(iii) The learned sole arbitrator shall be paid fees as prescribed under the Fourth Schedule of the Arbitration and Conciliation Act, 1996;
(iv) At the first instance, the parties shall appear before the learned sole arbitrator within 10 days from today on a date which may be mutually fixed by the learned sole arbitrator;
(v) All contentions of the parties are expressly kept open;
(vi) A copy of the order be forwarded to the learned sole arbitrator on the following address: Mr. Dilip B Bhosale, Former Chief Justice Allahabad High Court 6, Bhagyodaya Bldg., 79, Nagindas Master Road, Fort, Mumbai – 400001 Mobile/Tel. Nos. +91-9494940122, +91-9833300555, (022) 22675858/59 Email Id: dbbarbitration@gmail.com, bhosale.dilip56@gmail.com
22. The petition is disposed of in the aforesaid terms along with pending applications, if any.
JUDGE JANUARY 16, 2023 gs/ug