IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 8th DAY OF MARCH 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE C.M.P.NO.136/2018 BETWEEN:
M/S. RAILONE PROJECTS PVT LTD REPRESENTED BY ITS DIRECTOR MR. B.V.V. KRISHNA REDDY S/O SRI. VENKATESWARA REDDY AGED ABOUT 34 YEARS HAVING ITS OFFICE AT H.NO.8-2-268/1/D/B/S2, 558 SWARNA HEIGHTS, ARORA COLONY ROAD NO.3, BANJARA HILLS HYDERABAD 500034.
(BY SRI. L.M. CHIDANANDAYYA, ADV.) AND:
1. GOVERNMENT OF INDIA DEPARTMENT OF RAILWAYS RAIL BHAVAN, RAISINA ROAD NEW DELHI-110001 REP. BY SECRETARY, RAILWAY.
2. THE CHIEF ADMINISTRATIVE OFFICER CONSTRUCTION, SOUTH WESTERN RAILWAY No.18, MILLERS ROAD BANGALORE-560 046.
3. THE GENERAL MANAGER SOUTH WESTERN RAILWAY 3RD FLOOR, EAST WING RAIL SOUDHA, GADAG ROAD HUBBALLI – 580020.
… PETITIONER … RESPONDENTS (BY SRI. N.S. SANJAY GOWDA, ADV., FOR R1 TO R3) This C.M.P. is filed under Section.11(5, 6) of the Arbitration and Conciliation Act 1996, praying to appoint independent neutral arbitrator in terms of Clause No.27 of the Special Conditions of Contract and Clause No.64.1 of General Conditions of Contract of Bid document in terms of the Agreement dated 25/4/2013 bearing No.CAO/CN/BNC/73556/A vide Annexure-A, who is having sound technical and contractual knowledge in the matter of construction contract to adjudicate the dispute between the petitioner and the Respondents in the interest of justice & etc.
This C.M.P. coming on for Admission this day, the Court made the following:-
ORDER Mr.L.M.Chidanandayya, learned counsel for the petitioner.
Mr.N.S.Sanjay Gowda, learned counsel for the respondent Nos.1 to 3.
2. The Petition is admitted for hearing. With consent of the parties, the same is heard finally.
3. By means of this petition filed under Section 11(5) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’ for short), the petitioner interalia seeks appointment of independent arbitrator in terms of Clause 27 of the Special Conditions of Contract and Clause 64.1 of the General Conditions of contract of bid document in terms of agreement dated 25.04.2013.
4. Facts giving rise to filing of this petition briefly stated are that Respondents invited tender for construction of New Broad-gauge line earthwork in forming bank, cutting construction of minor bridges, major bridges, RUBs, side drains and other allied works between Tumkur-Urikeri Section (Ch.2/700 to 12/000) (for short hereinafter referred to as “Project Work” for short). The Petitioner being the successful bidder, was awarded the contract and an agreement was executed between the parties on 25.04.2013. It is averred by the petitioner in the petition that since the possession of the land was not handed over to the petitioner, on 07.07.2014, the petitioner requested the respondents to fore-close the contract subject to the claims. The petitioner also furnished no-claim certificate on 07.07.2014. Thereupon, the bank guarantee and earnest money deposit was refunded to the petitioner on 31.07.2015. The petitioner thereafter sent the notice on 01.08.2017 seeking appointment of an arbitrator. However, the aforesaid request of the petitioner was not acceded to by the respondents on the ground that the contract has already been fore-closed and no due certificate has been furnished by the petitioner. In the aforesaid factual back-ground, the petitioner has approached this Court 5. Learned counsel for the petitioner submitted that he has published no claim certificate under economic duress and therefore, the petitioner was well within its right to invoke the arbitration clause. Learned counsel for the petitioner further submitted that since the arbitration clause has been invoked after the commencement of the Act No.3 of 2016, therefore, this Court is only required to examine the existence of an arbitration agreement under Section 11(6A) of the Act.
In support of his submissions, learned counsel for the petitioner has placed reliance on decision of the Supreme Court in ‘NATIONAL INSURANCE COMPANY LIMITED v/s.BOGHARA POLYFAB PRIVATE LIMITED’, (2009) 1 SCC 267).
6. On the other hand, learned counsel for the respondents submitted that the project work in question was foreclosed by the railways on 31.07.2015 and as a result of foreclosure, the performance bank guarantee and earnest money deposit was returned to the petitioner on 31.07.2015. It is also pointed out that petitioner had furnished no claim certificate and had received the amount of performance bank guarantee and earnest money on 31.07.2015. However, nearly after a period two years, the petitioner issued a notice on 01.08.2017 invoking the arbitration clause for which no explanation has been offered. In support of his arguments, learned counsel for the respondents has placed reliance on decision of the Supreme Court in M/S.ONGC MANGALORE PETROCHEMICALS LTD. v/s. M/S.ANS CONSTRUCTION LTD. AND ANR. (AIR 2018 SC 796).
7. I have considered the submissions made by learned counsel for the parties and have perused the record. At this stage, it is apposite to take note of clause 64(1)(iv) of the general conditions of the contract which reads as under:
“No new claim shall be added during proceedings by either party. However, a party may amend or supplement the original claim or defence thereof during the course of arbitration proceedings subject to acceptance by Tribunal having due regard to the delay in making it.”
8. In the instant case, admittedly, the petitioner himself on 07.07.2014, made a request to the respondents to foreclose the contract and furnished the no-claim certificate unconditionally. The no-claim certificate furnished by the petitioner reads as under:
“Vide the above referred agreement, we have not executed any work and there is no payment pending for us. We have no claims against the above agreement. We request for foreclosure of the above agreement.”
9. Thereafter, the performance bank guarantee and earnest money deposit of Rs.83,20,017/- and Rs.9,16,920/- respectively were released in favour of the petitioner on 31.07.2015. The petitioner also accepted the same without any objection. The petitioner did not prefer any claim within a period of 90 days after receiving the payment. The petitioner has not furnished any explanation as to why for two long years he did not take any action for either revocation of ‘no dues certificate’ or for invocation of the arbitration clause. Thereafter, the petitioner on 01.08.2017, sends a notice approximately after a period of two years from the date of receiving the payment, seeking invocation of the arbitration clause. The conduct of the petitioner unequivocally shows that he had furnished the ‘no dues certificate’ voluntarily and on petitioner’s request, the contract was foreclosed and the amount of performance bank guarantee and earnest money deposit was paid to him. Therefore, on 01.08.2017, no rights or obligation existed between the parties and in the absence of any dispute between the parties, the power under Section 11 of the Act cannot be invoked in the fact situation of the case. Therefore, the amendment made in the Act which came into force with effect from 23.10.2015 is of no assistance to the petitioner. Reference in this connection may be made to decision of the Supreme Court in the case of M/S.ONGC MANGALORE PETROCHEMICALS LTD., supra.
10. In view of preceding analysis, I do not find any merit in the petition. The same fails and hereby disposed of with a liberty to the petitioner to take recourse to such remedy as may be available to the petitioner under the law.
Sd/- JUDGE BNV