Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
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Date of Decision: 30 April, 2019
+ CS(COMM) 580/2016
M/S VED PRAKASH MITHAL AND SONS ..... Plaintiff
Through Mr. Peeyoosh Kalra and Mr. L. S.
Aincol, Advocates (M: 7042729055)
Versus
KIRORIMAL COLLEGE & ORS. ..... Defendants
Through Mr. Santosh Kumar, Mr. Bibin
Kurian and Mr. Sarthak Agarwal,
Advocates for D-1 & D-2 (M.
No.9818309301)
Mr. Hardik Rupal and Mr. Prang
Newmai, Advocates for University of
Delhi (M.No.9811151216)
CORAM:
JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J. (Oral)
1. The Plaintiff has filed the present suit for recovery of a sum of Rs.
2,59,95,243/- along with interest against the Principal, Kirorimal College –
Defendant no.1 and its Chairman Secretary, The Management/Governing
Body of Kirorimal College – Defendant no.2.
2. No relief is pressed for against Defendant no.3 – Vice Chancellor,
Delhi University. Accordingly, Defendant No.3 is deleted from the array of
parties.
3. A tender was floated by Kirorimal College, University of Delhi, for
construction and renovation of the second floor at the college campus vide
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letter dated 13 January, 2009. Pursuant to the said letter, agreement dated
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14 January, 2009 was entered into between the parties, which contains the
CS(COMM) 580/2016 Page 1 of 12
following clauses:-
“9. Apart from the agreement, terms and
conditions mentioned in the bidding document and
General Conditions of Contract for Central P.W.D.
Works 2008 are also part of the agreement.
10. All disputes arising out of or in any way
connected with this Agreement shall be deemed to
have arisen in Delhi and only the court in Delhi
shall have jurisdiction to determine the same.”
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4. The work was to be completed by 19 January, 2010. However, there
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was some delay and finally the work was completed on 31 July, 2010, as
per the Plaintiff. According to the contractor, it was entitled to various
claims towards extra works, escalation and also refund of the security
deposit which was, however, not acceded to by Defendant No.1. Hence the
present suit. Initially the plaint was filed in 2014 however, thereafter some
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amendments were sought in the plaint. Vide order dated 6 December,
2018, the amendments were allowed and the amended written statement was
directed to be filed within 30 days.
5. Defendant Nos. 1 and 2, vide the amended written statement, have
raised an objection that there is an arbitration clause in the contract in view
of the General Conditions of Contract for Central P.W.D. Works 2008. The
Defendants have also moved an application under Section 8 of the
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Arbitration and Conciliation Act, 1996. The said IA was listed on 15
April, 2019. The plaintiff was directed to file its reply, however, no reply
was filed and the matter was listed today. Ld. counsel for the Defendant had
pointed out to the Court the various clauses, beginning with the tender. The
counsel for the Defendant has pointed out that Clause 25 of the GCC which
clearly provides for reference of suit arbitration. Learned counsel for the
CS(COMM) 580/2016 Page 2 of 12
Defendants, submits that the averment in the plaint in paragraph 8A shows
that the Plaintiff has itself relied upon the GCC. As per the GCC, the Chief
Engineer is the appointing authority. However, the Plaintiff has also agreed
in paragraph 8A that the powers of the Engineer are to be exercised by the
Principal, Kirorimal College, University of Delhi, which was the employer.
In any event, he submits that his client has no objection if an independent
Arbitrator is appointed.
6. Mr. Peeyoosh Kalra, Ld. counsel for the Plaintiff submits that the
objection as to the existence of the arbitration clause was not taken in the
initial written statement which the Defendant Nos.1 and 2 had filed before
this Court. Thus, the Defendants have waived the arbitration clause since
the first statement of defence has already been filed. He further submits that
the amendment cannot give a new right to the Defendant to rely on the
arbitration clause as the amendment was limited to the extent of adding an
amount which was missed out and nothing more.
7. It is a matter of fact that the plaint was amended and the amendment
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application was allowed on 6 December, 2018. The Defendant Nos. 1 and
2 have not taken objections as to the arbitration clause in the amended
written statement. Once an amendment is allowed, the amendment relates
back to the date of filing of the suit and so the filing of the written statement
would relate back to the initial stage. In any event, the amendment in respect
of an amount of Rs.81,71,122/-, which was added, gave an opportunity to
the Defendant to raise the plea of arbitration in its amended written
statement, as also by filing of an application under Section 8. Once an
arbitration clause is pleaded qua one of the amounts claimed, then part
reference to arbitration is not permissible. This is clear from a reading of the
CS(COMM) 580/2016 Page 3 of 12
judgment of the Supreme Court in Sukanya Holdings (P) Ltd. v. Jayesh H.
Pandya (2003) 5 SCC 531.
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The order dated 6 December, 2018, allowing the amendment reads as
under:
“The instant suit for recovery is based on a
construction contract by which the Plaintiff Contractor
was engaged by the Defendants No.1 College. Disputes
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had arisen under the agreement dated 14 January,
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2009. The works were completed on 31 July, 2010. It
is submitted by learned counsel for the Plaintiff that
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part payment was released on 11 November, 2011.
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Present suit was filed on 4 September, 2014. The suit
prays for recovery of sum of Rs.1,78,24,131/-. By way
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of the present amendment application filed on 29
April, 2016, the Plaintiff seeks to add an additional
claim for recovery of Rs.81,71,122/-.
It is submitted by learned counsel for the Defendants
that the claim, sought to be added is barred by
limitation and hence the amendment ought not to be
permitted. On the other hand, learned counsel for
Plaintiff relies on Rajesh @ Raj Choudhary and Ors.
v. Asha Choudhary and Ors, 2015 SCC OnLine Del
13936 and A.G. Neochem Pvt. Ltd. v. Chandra Kant
Arora and Ors. 2011 LawSuit (Del) 4345 to submit
that so long as the subsequent claim is within the same
cause of action, which was basis of the suit, the
amendment is liable to be allowed.
This Court has perused the application for
amendment. Plaintiff seeks to add paragraph 8A and
modify paragraphs 11 & 14 as also add prayer clause
(i). All the averments are towards adding the claim of
Rs.81,71,122/-.
Keeping the objections of limitation open, in respect
of the amount of Rs.81,71,122/-, the amendment is
allowed. Amended plaint, as per the Rules, ought to
have been filed with the application for amendment.
CS(COMM) 580/2016 Page 4 of 12
Plaintiff is now directed to file the amended plaint,
within two week, only by incorporating paragraph 8A
and modifications in paragraphs 11 & 14 and prayer
clause (i). No other amendment would be incorporated
in the plaint.
I.A. is disposed of in the above terms.
CS(COMM) 580/2016
Amended plaint be filed within two weeks. Amended
written statement be filed within thirty days thereafter,
At the time of framing of issues, the question of
limitation in respect of the sum of Rs.81,71,122/- shall
be framed as an issue. All the pleadings shall be
accompanied with the affidavits of admission/denial, if
any. Any unjustified denial of documents will be liable
to be burdened with costs.
………”
8. Upon the amendment being allowed, the Defendant got a right to file
an amended written statement, in respect of the said amendment. The
Defendant has raised an objection that there existed an arbitration clause
between the parties in paragraph 5 of the amended written statement. The
said written statement would relate back to the filing of the suit itself.
9. The amended written statement which would date back to the stage of
filing of suit would have to be reckoned as the first statement of defence and
it is sufficient if an objection is taken in the same under Section 8 of the Act.
Recently, a Ld. Single Judge of this Court in Parasramka Holdings Pvt.
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Ltd. v. Ambience Pvt. Ltd. [CS(OS) 125/2017 decided on 15 January,
2018] has held that once a plea is taken in the written statement, even an
application under Section 8 of the Arbitration and Conciliation Act, 1996 is
not required.
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10. The notice inviting tender dated 6 November, 2018, contains the
CS(COMM) 580/2016 Page 5 of 12
following note:-
Note:
1. The general condition of contract mentioned
here should be read in conjunction of the CPWD
General Condition of contact 2008. In the
eventuality of a conflict in conditions the CPWD
GCC 2008 shall be applicable.
2. The Earnest money in the form of Bank Draft
drawn in favour of the: "Principal, Kirorimal
Collage" should be accompanied with the tender
3. Successful contractor will have to execute an
agreement with the Kirorimal College Printed
Form.
4: The tender should quote the rates for different
sub head separately in the following manner:
Total Amount
Rs.
5. The Kirorimal Collage however reserves the
right to award thework either as a whole or in
parts as perabove sub heads.
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11. A similar clause also is contained in the agreement dated 14 January,
2009 being, Clause 9. The said clause reads as under:-
“9. Apart from the agreement, terms and
conditions mentioned in the bidding document and
General Conditions of Contract for Central P.W.D.
Works 2008 are also part of the agreement.”
12. A perusal of the above two clauses shows that the contract is clearly
governed by the GCC. Clause 25 of the GCC clearly provides for reference
to arbitration in the event of any dispute. The said clause reads as under:
“Clause 25: Except where otherwise provided in the
contract, all questions and disputes relating to the
meaning of the specifications, design, drawings and
CS(COMM) 580/2016 Page 6 of 12
instructions here-in 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, instructions, 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 cancellation,
termination, completion or abandonment thereof shall
be dealt with as mentioned hereinafter.
(i) If the contractor considers any work demanded
of him to be outside the requirements of the
contract, or disputes any drawings, record or
decision given in writing by the Engineer-in-
Charge on any matter in connection with or arising
out of the contract or carrying out of the work, to
ne unacceptable, he shall promptly within 15 days
request the Superintending Engineer in writing for
written instruction or decision. Thereupon, the
Superintending Engineer shall give his written
instructions or decision within a period of one
month from the receipt of the contractor‟s letter.
If the Superintending Engineer fails to give his
instructions or decision in writing within the
aforesaid period or if the contractor is dissatisfied
with the instructions or decision of the
Superintending Engineer, the contractor may,
within -15 days of the receipt of Superintending
Engineer's decision, appeal to the Chief/Engineer
who shall afford an opportunity to the contractor to
be heard, if the latter so desires, and to offer
evidence in support of his appeal. The Chief
Engineer shall give his decision within 30 days of
receipt of contractor‟s appeal. If the contractor is
dissatisfied with this decision, the contractor shall
within a period of 30 days from receipt of the
decision, give notice to the Chief Engineer or
CS(COMM) 580/2016 Page 7 of 12
appointment of arbitrator failing which the said
decision shall be final binding and conclusive and
not referable to adjudication by the arbitrator.
(ii) Except where the decision has become final,
binding and conclusive in terms of Sub-Para(i)
above, disputes or difference shall be referred for
adjudication through arbitration by a sole
arbitrator appointed by the Chief Engineer,
CPWD, in charge of the work or if there be no
Chief Engineer, the Additional Director General of
the concerned region of CPWD or if there be no
Additional Director General, the Director General
of Works, CPWD. If the arbitrator so appointed is
unable or unwilling to act or resigns his
appointment or vacates his office due to any reason
whatsoever, another sole arbitrator shall be
appointed in the manner aforesaid. Such person
shall be entitled to proceed with the reference from
the stage at which it was left by his predecessor.
It is a term of this contract that the party invoking
arbitration shall give a list of disputes with amounts
claimed in respect of each such dispute along with the
notice for appointment of arbitrator and giving
reference to the rejection by the Chief Engineer of the
appeal.
It is also a term of this contract that no person, other
than a person appointed by such Chief Engineer
CPWD or the administrative head of the CPWD, as
aforesaid, should act as arbitrator and if for any
reason that is not possible, the matter shall not be
referred to arbitration at all.
It is also a term of this contract if the contractor does
not make any demand for appointment of arbitrator in
respect of any claims in writing as aforesaid within
120 days of receiving the intimation from the
CS(COMM) 580/2016 Page 8 of 12
Engineer-in-charge that the final bill is ready for
payment, the claim of the contractor shall be deemed
to have been waived and absolutely barred and the
Government shall be discharged and released of all
liabilities under the contract in respect of these
claims.
The arbitration shall-be conducted in accordance
with the provisions of the Arbitration and
Conciliation Act, 1996 (26 of 1996) or any statutory
modifications 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 also a term of this contract that the arbitrator
shall adjudicate on only such disputes as are referred
to him by the appointing authority and give separate
award against each dispute and claim referred to him
and in all cases where the total amount of the claims
by any party exceeds Rs. 1,00,000/-, the arbitrator
shall give reasons for the award.
It is also the term of the contract that if any fees are
payable to the arbitrator, these shall be paid
equally/by both the parties.
It is also a term of the contract that the arbitrator
shall be deemed to have entered on the reference on
the date he issues notice to both the parties calling
them to submit their statement of claims and counter
statement of claims. The venue of the arbitration
shall be such place as may be fixed by the arbitrator
in his sole discretion. The fees, if any, of the
arbitrator shall, if required to be paid before the
award is made and published, be paid half and half
by each of the parties. The cost of the reference and
of the award (including the fees, if any, of the
arbitrator) shall be in the discretion of the arbitrator
CS(COMM) 580/2016 Page 9 of 12
who may direct to any by whom and in what manner,'
such costs or any part thereof shall be paid and fix or
settle the amount of costs to be so paid.”
13. In addition to the above clauses in the NIT and the agreement, the
Plaintiff, in paragraph 8A of the plaint has averred as under:
“8A. It is submitted that the agreement dated
14.01.2009 clearly stipulated in clause 9 that apart
from the agreement, terms & conditions in the
bidding documents & conditions mentioned in the
bidding documents & general conditions of the
Central PWD Works 2008 would also form the part
of the agreement. It is a matter of record that the
work executed by the Plaintiff exceeded beyond the
scope of the limits specified by the said agreement.
In such a scenario clause 12.2 of the Central PWD
Works 2008 becomes applicable and in terms of the
said, the Plaintiff is entitled to payment towards the
deviated quantity at the market rate prevailing at
that point of time. As per the approved and admitted
measurements, the quantities deviated from the
agreed limits notified as per the agreement and
therefore, for the said deviated quantities, the
Plaintiff is entitled to payments at the market rate.
The Plaintiff is filing a detailed chart showing
deviation in the quantities beyond limits and as per
the said chart a sum of Rs. 81,71,122/- (Rupees
Eighty One Lacs Seventy One Thousand One
Hundred and Twenty Two only) is due and payable
to the Plaintiff by the Defendants.”
14. Thus, the Plaintiff’s case in the Plaint is that the General Conditions
of Contract for CPWD 2008 ( hereinafter, „GCC‟ ) are part of the agreement.
The Plaintiff has on the one hand relied upon various stipulations in the
GCC in respect of extra works, deviations, escalation etc. On the other hand
CS(COMM) 580/2016 Page 10 of 12
it chooses to ignore the arbitration clause contained in the GCC. Such a
partial reliance on the GCC is impermissible. Since the Plaintiff itself admits
that the contract is governed by GCC, the arbitration clause is fully
applicable. Though under CPWD – GCC 2008, the Chief Engineer would be
the appointing authority, who in the present case, could be the Defendant
no.2 who is the employer, the Defendant has no objection to an independent
arbitrator being appointed.
15. Under these circumstances and also in view of the consent given by
Defendant Nos. 1 and 2, an independent Arbitrator is appointed to adjudicate
the disputes between the parties. Hon’ble Mr. Justice S. P. Garg (Retd) –
(M: 9910384631, Add: D-72, Saket Court Residential Complex, Saket,
New Delhi - 110017) retired judge of this Court is appointed as the Sole
Arbitrator to adjudicate the disputes between the parties. The claims raised
by the Plaintiff in the amended plaint, shall be treated as the Claims before
the Arbitrator. Both parties agree that the arbitration may be conducted
under the aegis of the Delhi International Arbitration Centre (DIAC) and its
Rules.
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16. None of the observations made, either in the order dated 6
December, 2018 or in today’s order would bind the Arbitrator in terms of
the adjudication of issues which may arise. All issues and objections are left
open to both the parties.
17. In view of the fact that the matter is now been referred to Arbitration,
keeping in mind the provisions of Section 89 CPC this court deems it
appropriate to refund 50% of the court fee of Rs.2,60,000/- and direct refund
of Rs.1,30,000/- in favour of the Plaintiff. The refund be processed within
four weeks.
CS(COMM) 580/2016 Page 11 of 12
18. The suit is, accordingly, disposed of. All pending applications also
stand disposed of.
PRATHIBA M. SINGH
JUDGE
APRIL 30, 2019/b
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(corrected and released on 7 May, 2019)
CS(COMM) 580/2016 Page 12 of 12