Judgment:
Reva Khetrapal, J.
1. By filing the present petition, the petitioner seeks appointment of an arbitrator under Section 11(6) of the Arbitration & Conciliation Act, 1996.
2. The petitioner's case is that the respondents invited tenders for execution of the work of Construction of Dhalao in MPL, Ward No. C-80 in Karkardooma Village, Shahdara (South), for a total contractual value of Rs. 2,47,142/-. The petitioner in response thereto submitted his tender which was accepted by the respondents. Consequently, the said work was awarded to the petitioner vide work order bearing No. 756 dated 4th February, 1999 by the respondent No. 2 on behalf of respondent No. 1. As per the agreed terms of the work order, the work was to be completed within the stipulated time. According to the petitioner, he started the work as per the work order and completed the same without any delay and to the satisfaction of the Engineer-in-Charge within the stipulated period. According to the petitioner also, after the completion of the work executed by him, the Engineer-in-Charge had surveyed the site and found the work up to the mark and according to the specifications of the work order, but on account of procedural delay the measurement could not be effected and the final bill prepared. The petitioner has alleged that when he insisted for preparation of the final bill, he was informed that the same could not be prepared due to the absence of the file in the division, as the same was not traceable. The M.C.D officials also started disputing the work of the petitioner on one ground or the other. Thus, despite the measurement taken and the entry made in the Measurement Book, the final bill of the petitioner was not passed by the department due to reasons best known to them. Accordingly, the petitioner had no option left but to get issued a legal notice through his counsel dated 2nd July, 2005 on the Commissioner, Municipal Corporation of Delhi along with the concerned Engineer, calling upon them to appoint an arbitrator to settle the disputes in terms of Clause-25 of the General Conditions of Contract. However, despite service of the said legal notice upon the respondents on 4th July, 2005, no action has been initiated towards appointment of the arbitrator till date. Copies of the work order, Clause-25 of the General Conditions of contract and the legal notice dated 2nd July, 2005 invoking the arbitration clause are annexed with the petition as ANNEXURES A-1, A-2 & A-3 respectively.
3. Notice of the institution of the petition was served upon the respondents, who filed a reply asserting that no work was executed by the petitioner in pursuance of the work order dated 4th February, 1999 and, as such, the present petition was not maintainable and liable to be dismissed, that the petitioner has not come to the court with clean hands and that he has suppressed material facts and that the petition is even otherwise barred by the provisions of the Limitation Act. As regards limitation, it was pointed out that the work order mentioned in the petition was of 4th February, 1999 and the present petition was filed in the year 2005, after a long lapse of six years. The petition was, thereforee, hopelessly barred by time and liable to be dismissed under the provisions of Arbitration & Conciliation Act, 1996 and the law laid down by this Court in A.A.No.354/1999 Gupta Construction v. M.C.D, decided on 4th May, 2000.
4. learned Counsel for the petitioner sought to contend that the law regarding appointment of an arbitrator is now settled by the Apex Court in Konkan Railway Ltd. and Ors. v. Mehul Construction Co. JT 2000 (9) S C 362. The Supreme Court, he contended, had held in the said case that the arbitral process should be set in motion without any delay whatsoever and all contentious issues be left to be raised before the Arbitral Tribunal. The following passage of the judgment of the Apex Court in Konkan Railway (supra) was relied upon by the counsel for the petitioner: (Page 368 of the Report)
4. ...The Act has designated the Chief Justice of a High Court in cases of domestic arbitration and the Chief Justice of India in cases of international commercial arbitration, to be authority to perform the function of appointment of arbitration whereas under the Model Law the said power has been vested with the Court. When the matter is placed before the Chief Justice or his nominee under Section 11 of the Act it is imperative for the said Chief Justice or his nominee to bear in mind the legislative intent that the arbitral process should be set in motion without any delay whatsoever and all contentious issues are left to be raised before the Arbitral Tribunal itself.It would be proper for the Chief Justice or his nominee just to appoint an Arbitrator without wasting any time or without entertaining any contentious issues at that stage, by a party objecting to the appointment of an Arbitrator..
5. Similarly, counsel for the petitioner contended that in Madhvan High Tech Engineers Pvt.Ltd. v. Union of India 2001 A L R 611, it was held that the scope and the jurisdiction of the Court in proceedings under Section 11(6) of the Arbitration & Conciliation Act, 1996 is very limited and Court cannot go into the merits of the matter.
6. In Shree Subha Laxmi Fabrics (supra) also,, it was reiterated that the constant view taken by the Supreme Court is that the contentious issues should not be gone into or decided at the stage of appointment of an arbitrator and no time should be wasted in such exercise. A remedy to the aggrieved party is to raise objection before the arbitral tribunal, as under Section 16 of the Act it is empowered to rule about its own jurisdiction. Reliance was placed in this case upon the ratio of the judgment in Konkan Railway Corporation Ltd.(supra).
7. Reliance was also placed by the counsel for petitioner on the judgments of this Court in Northern Sanitation v. N.D.M.C and Ors. : 111(2004)DLT756 and Suresh Chander v. Delhi Development Authority : 103(2003)DLT35 . In the former case, it was held that a dispute whether the arbitration agreement has exhumed or exhausted itself due to its termination is not a dispute which would fall for determination within the scope of exercise of jurisdiction under Section 11 of the Act. Reference may be made to paragraphs-8,9 & 10 at page 758 of the Report which read as under:
8. The above observations do not advance the respondents case at all. In the instant case, the existence of arbitration agreement is not disputed. What is sought to be claimed is that the arbitration agreement has exhumed or exhausted itself due to its termination. This is not the dispute which would fall for determination within the scope of exercise of jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996. The observation of the Supreme Court in the case of Hythro Power (supra) are relevant. While the Supreme Court in Willington Associates (supra) had observed that where the very existence of the arbitration agreement was denied the jurisdiction of the Chief Justice of India or the designate to decide the question was not excluded by Section 16. The supreme Court in Hythro Power (supra) held that the designate of the Chief Justice under Section 11 could not adjudicate upon the disputes regarding the validity and existence of the arbitration agreement and hold that the dispute was not referable. The relevant passage had already been reproduced above.
9. Applying the above dictum of the Supreme Court, there has been failure on the part of the respondent to appoint an arbitrator despite invocation of the arbitration agreement. Whether the claims are maintainable or not or have become unenforceable by non-adherence to the procedure prescribed are questions which will fall exclusively within the domain of the arbitrator.
8. In Suresh Chander(supra) it was opined that the moment this Court finds that there is an arbitration clause in existence between the parties, the matter has to be referred to arbitration and all disputed questions including the plea of time barred nature of the claim would have to be decided by the arbitrator in accordance with the law.
9. I am afraid that the ratio of the pronouncements of the Apex Court in Konkan Railway, Madhvan Hightech Engineers Pvt.Ltd and Shree Subha Laxmi (supra) as also the decisions of this Court in Northern Sanitation and in Suresh Chander (supra) are of no avail to the petitioner in view of the recent pronouncement of a seven-Judge Bench of the Apex Court in S.B.P. & Co. v. Patel Engineering and Anr. 2005 6 SCC 288, wherein the Apex Court has held that the ground of ensuring minimum judicial intervention by itself is not a ground to hold that the power exercised by the Chief Justice or his designate is only an administrative function. In paragraph-46(i) & (iv) of its judgment, while summing up the conclusions, the Apex Court held that the power exercised by the Chief Justice of the High Court or the Chief Justice of India under Section 11(6) of the Act is not an administrative power. It is a judicial power. The Chief Justice or the designated Judge will have the right to decide the preliminary aspects and these will be, his own jurisdiction to entertain the request for appointment of an arbitrator, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercises of his power and on the qualifications of the arbitrator or arbitrators.
10. In view of the above judgment of the Hon'ble Supreme Court in M/s. Patel Engineering (supra), thereforee, it is incumbent upon me, as a designate of the Chief Justice, to examine the aforesaid aspects of the matter, including the existence of an arbitration agreement between the parties, existence of a live and subsisting dispute between the parties and the entitlement of the petitioner to the appointment of an arbitrator. This being so, I proceed to examine the respective contentions of the parties on the aforesaid aspects of the matter.
11. Counsel for the petitioner to overcome the hurdle of limitation, relied upon the judgment of the Apex Court in Major (Retired) Inder Singh Rekhi v. Delhi Development Authority : [1988]3SCR351 and in Asia Resorts Ltd. v. Usha Breco Ltd. : AIR2002SC55 In the first case, after holding that in view of the decision in Kerala State Electricity Board, Trivendrum v. T.P.K.K. Amsom (1979) 1 SCR 996, it is now well settled that Article 137 of the Limitation Act would apply to any petition or application filed in a civil court, the Apex Court at Page 1008 of the Report held as follows:
Para-4...It is true that on completion of the work, the right to get payment would normally arise but where the final bills as in this case have not been prepared as appears from the record and when the assertion of the claimant was made on 28th February, 1983 and there was non-payment, the cause of action arose from that date, that is to say, 28th February, 1983. It is also true that the party cannot postpone the accrual of cause of action by writing reminders or sending reminders but where the bill had not been finally prepared, the claim made by the claimant is the accrual of the cause of action. A dispute arises where there is a claim and denial and a repudiation of the claim.... There should be dispute and there can only be a dispute when a claim is asserted by one party and denied by other on whatsoever grounds. Mere failure or inaction does not lead to the inference or existence of the dispute. Dispute entails element and assertion in denying, not merely inaction to accede to a claim or a request. When in a particular case a dispute has arisen or not has to be found out from the facts & circumstances of the case....
12. In Asia Resorts Ltd. (supra), the Apex Court in a case where the appellant had issued notice through its Advocate intimating the respondent that they would take legal action against them, but a petition under Section 20 of the Arbitration act was filed more than three years after issuance of the said notice, held that the period of limitation for filing an application under Section 20 of the Arbitration Act, 1940 is as prescribed under Article 137 of the Limitation Act but the benefit of Section 5 of the Limitation Act could be availed by the applicant and in appropriate cases the court could condone the delay in filing of the application.
13. From the aforesaid, in my view, there can be no manner of doubt that the cause of action for filing the petition in the instant case arose on 2nd July, 2005 when legal notice was issued by the petitioner to the respondent invoking Clause-25 of the Agreement and calling upon the respondents to appoint an arbitrator for adjudication of its claims as set out in the notice within thirty days from the receipt of notice. Admittedly, the respondents did not care to reply to the said notice and by necessary inference, the averments made in the notice must be deemed to be admitted. Having received no response from the respondents, the present petition was filed by the petitioner on 23rd August, 2005, i.e., after the expiry of thirty days of the issuance of notice. The petition is accordingly well within time.
14. It would be apposite at this juncture to notice that in the course of hearing of the petition, a specific query was put by this Court to the counsel for respondents/MCD to point out the letter rescinding the contract. This query was put to the counsel in view of the assertion made by the respondents in their reply that no work was executed by the petitioner-contractor. Counsel for the respondent stated that the contract was not rescinded, though the work was not executed by the petitioner.
15. In view of the foregoing, I am of the considered opinion that the contention of the petitioner that by denying the completion and execution of work done by the petitioner, the respondents have admitted the existence of disputes and differences, must be accepted. The respondents have not denied the work order issued to the petitioner. The respondents have also not denied that Clause-25 of the General Conditions of the Contract contains the arbitration Clause between the parties. I have, thereforee, no hesitation in holding that the petitioner is entitled to the relief of appointment of an arbitrator to adjudicate upon the claims raised by him in the notice (Annexure A-3 to the petition).
16. The petitioner has prayed for appointment of an independent arbitrator and in the alternative for a direction to the Commissioner, Municipal Corporation of Delhi to appoint an arbitrator to settle/arbitrate upon the disputes detailed in para-7(vii) of the petition.
17. In the circumstances, the Commissioner, Municipal Corporation of Delhi, is directed to appoint an independent arbitrator to arbitrate upon the disputes raised by the petitioner in Para-7(vii) of the petition. The said appointment shall be made by the Commissioner of MCD within a period of two weeks from the date of receipt of the order of this Court.
18. Petition stands disposed of in the above terms.
19. A copy of this order be sent to the Commissioner, MCD for necessary compliance forthwith.