IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 8TH DAY OF FEBRUARY 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE C.M.P. NO.78 OF 2018 BETWEEN:
SRI. C. NARAYANA SWAMY NAIDU AGED ABOUT 74 YEARS S/O LATE SRI. GOPAL NAIDU NO.44/14, 3RD MAIN, SUNKENAHALLI MOUNT JOY EXTENSION BENGALURU-560 019 REPRESENTED BY GPA HOLDER SRI. S. RAMACHANDRA NAIDU AGED ABOUT 66 YEARS S/O C. GOPAL NAIDU.
(By Mr. ABHINAV R, ADV.) AND:
BENGALURU VIHARA KENDRA A SOCIETY REGISTERED UNDER THE KARNATAKA SOCIETIES REGISTRATION ACT HAVING ITS REGISTERED OFFICE AT NO.8, BSK II STAGE BENGALURU-560 070 REP. BY ITS HONY. SECRETARY.
… PETITIONER … RESPONDENT (By Mr. H.R. ANANTHA KRISHNA MURTHY, ADV.,) - - -
THIS CMP IS FILED UNDER SECTION 11(6) OF THE ARBITRATION AND CONCILIATION ACT, 1996 PRAYING TO APPOINT A SOLE ARBITRATOR WHO IS/WAS AN ENGINEER, TO ADJUDICATE THE CLAIMS AND DISPUTES THAT HAVE ARISEN BETWEEN THE PETITONER AND THE RESPONDENT IN RELATION TO THE CONTRACT AGREEMENT DATED 5-11-2014 AT ANNEXURE- A & ETC.
THIS CMP COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER Mr.Abhinav.R , learned counsel for the petitioner.
Mr.H.R.Ananthakrishna, learned counsel for the respondent.
2. The petition is admitted for hearing. With consent of the parties, the same is heard finally.
3. By means of this petition under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’ for short) the petitioner inter alia seeks appointment of a sole Arbitrator to adjudicate the dispute, which have arisen between the parties.
4. Facts giving rise to the filing of the petition briefly stated are that petitioner entered into an agreement dated 05.11.2014 with the respondent. Under the aforesaid agreement, the petitioner under took the work of construction of building. The petitioner submitted the final bill of EMD & FDS amount, which was due for payment. Thereafter, the petitioner sent the communications on 08.07.2017 20.11.2017 and 08.12.2017. The respondent, however, by communication dated 06.02.2018 approved the final bill for a sum of Rs.4,66,41,648/- and declined to make full payment. In the aforesaid factual background, the petitioner has approached this court.
5. Learned counsel for the petitioner submitted that the agreement executed between the parties contained an arbitral clause and notwithstanding the execution of full and final discharge voucher/receipt by one of the parties, if such party is able to establish that he is entitled to further amount for which he has adequate materials, he is not debarred from claiming such amount. On the other hand, learned counsel for the respondent submits that an Arbitrator was appointed and the petitioner by communication dated 26.03.2017 has accepted the rates finalized by the management of Bengaluru Vihar Kendra in final settlement and the respondent is also ready and willing to pay the amount of EMD therefore, there is no arbitral dispute and the petition is liable to be dismissed.
6. I have considered the submissions made on both the sides and have perused the record. The relevant extract of the agreement which contains the arbitral clause is reproduced below:
“In the event of any dispute arising in connection with this contract, it is further agreed that such disputes shall be referred to the sole arbitration of an Engineer or members to be got approved by the Honorary Secretary, Bangalore Vihara Kendra.”
7. From the communication dated 26.03.2017, it is evident that one Mr.N.Rangathimmegowda has scrutinized the fifth and final running bill of the petitioner to the annexed building and has held that the total value of the bill is Rs.4,66,41,648/-. The aforesaid communication, which is addressed to the Secretary of the respondent by no stretch of imagination can be said as an award passed by the Arbitrator From the communication dated 26.03.2017 sent by the petitioner, which reads as under:
“With reference to the above subject matter I would like to bring to your attention that as per the discussions had with the management, and as agreed upon I am hereby agreeing for the rates finalized by the management of the Bangalore Vihara Kendra as full and final settlement. Kindly release the payment immediately.”
8. However, from the communication, which is sent on 08.07.2018 subsequently, the petitioner has claimed a sum of Rs.1,32,58,006.50/-. From perusal of the averments made in para 4 of the objections filed by the respondent, it is evident that the respondent has taken a stand that no permission was obtained from the contractor for putting up construction for non-tender items. Thus, it appears that the dispute between the parties is with regard to non-tender items. The Supreme Court in ‘R.L.KALATHIA & COMPANY VS. STATE OF GUJARAT’, (2011) 2 SCC 400 in para 13 has held as under :
13. From the above conclusions of this Court, the following principles emerge:
(i) Merely because the contractor has issued “no-dues certificate”, if there is an acceptable claim, the court cannot reject the same on the ground of issuance of “no-dues certificate”.
(ii) Inasmuch as it is common that unless a discharge certificate is given in advance by the contractor, payment of bills are generally delayed, hence such a clause in the contract would not be an absolute bar to a contractor raising claims which are genuine at a later date even after submission of such “no-claim certificate”.
(iii) Even after execution of full and final discharge voucher/receipt by one of the parties, if the said party is able to establish that he is entitled to further amount for which he is having adequate materials, he is not barred from claiming such amount merely because of acceptance of the final bill by mentioning “without prejudice” or by issuing “no-dues certificate”.
9. In view of aforesaid enunciation of law and in the facts refereed to supra, it is evident that the petitioner has prima facie been able to establish that he has a claim with regard to the further amount, which is evident from the material available on record. Thus an arbitrable dispute is in existence, which is to be adjudicated by an Arbitrator. With the consent of the parties, Dr.G.Aswathanarayana, Former Secretary PWD, Government of Karnataka is appointed as an sole Arbitrator to adjudicate the dispute between the parties.
Needless to state that the respondent is at liberty to take such plea as available to him under the law before the Arbitrator.
Accordingly, petition is disposed of.
Sd/- JUDGE SS