ARB.P./108/2024 of GPM ACID JV Vs UNION OF INDIA

*IN THE HIGH COURT OF DELHI AT NEW DELHI+ARB.P. 108/2024 & I.A. 1874/2024, I.A. 6978/2025GPM ACID JV

.....Petitioner

Through:Mr. Joydeep Mazumdar, Mr. PrabhatSil, Ms. Upma Srivastava, Mr. Nishchaye Sharma,Advs.versusSil, Ms. Upma Srivastava, Mr. Nishchaye Sharma,Advs.versus

UNION OF INDIA

.....Respondent

Through:Mr. Shashang Garg, Sr. Adv. with MrRaghav Bhatia, Ms. Aradhana Chaturvedi, Advs.Raghav Bhatia, Ms. Aradhana Chaturvedi, Advs.

CORAM:

HON'BLE MR. JUSTICE JASMEET SINGHO R R%18.03.2025

1.This is petition under Section 11(6) of the Arbitration andConciliation Act, 1996 (“the Act”) seeking for the appointment of anArbitrator for adjudication of disputes between the parties.Conciliation Act, 1996 (“the Act”) seeking for the appointment of anArbitrator for adjudication of disputes between the parties.

2.The brief facts of the case are that the petitioner and the respondentexecuted contract for Detailed Engineering and Project ManagementConsultant(“DEPMC”)forconstructionofresidentialaccommodation for defence personnel at Binnaguri, Cooch Behar,Military Station (“the project”) vide agreement bearing CA No.DGMAP/PHASE-II/DEPMC/PKG-18dated20.05.2009(“theContract”).executed contract for Detailed Engineering and Project ManagementConsultant(“DEPMC”)forconstructionofresidentialaccommodation for defence personnel at Binnaguri, Cooch Behar,Military Station (“the project”) vide agreement bearing CA No.DGMAP/PHASE-II/DEPMC/PKG-18dated20.05.2009(“theContract”).

3.The petitioner was appointed as the DEPMC for the project.

4.The date of commencement of work was 12.06.2009 and the buildingcontractor had completed the work on 18.07.2016 and the defectcontractor had completed the work on 18.07.2016 and the defect

liability period got over on 17.07.2018.

5.The payment of the petitioner’s bill at Stage-4 (95% of the paymentconditions of the contract) was made on 16.10.2017.conditions of the contract) was made on 16.10.2017.

6.However, for claiming the Stage-5 payment (remaining 5% of thepayment conditions of the contract), the petitioner had beenrequesting the respondent for certain additional payments, i.e.payments for the increased cost of work from the unanticipated andunreasonabletimeover-runbeyondthestipulatedperiodofcompletion, which the respondent has refused to approve of andhence, the dispute arose between the parties.payment conditions of the contract), the petitioner had beenrequesting the respondent for certain additional payments, i.e.payments for the increased cost of work from the unanticipated andunreasonabletimeover-runbeyondthestipulatedperiodofcompletion, which the respondent has refused to approve of andhence, the dispute arose between the parties.

7.Consequently, the petitioner addressed letter dated 05.03.2018detailing the amounts due and payable to the petitioner and paragraph14 of the said letter reads as under:-detailing the amounts due and payable to the petitioner and paragraph14 of the said letter reads as under:-

“14. Under the circumstances and as last instant weappeal for amicable settlement of this ambiguity withinthe framework of the contract Agreement binding us,within 30 days of receipt of this letter failing which wewould have no option but to consider the denial asdispute within the meaning of Article 17 of the ContractAgreement liable to be adjudicated through arbitration.And in such case, we also reserve our right to claim thecost of arbitration.”appeal for amicable settlement of this ambiguity withinthe framework of the contract Agreement binding us,within 30 days of receipt of this letter failing which wewould have no option but to consider the denial asdispute within the meaning of Article 17 of the ContractAgreement liable to be adjudicated through arbitration.And in such case, we also reserve our right to claim thecost of arbitration.”8.Since the amounts were not paid, the petitioner issued legal noticedated 02.03.2023 and thereafter, filed the present petition on28.09.2023.dated 02.03.2023 and thereafter, filed the present petition on28.09.2023.

9.Article 17 of the Contract contains the arbitration clause as under:-

“ARTICLE 17SETTLEMENTS OF DISPUTES

All disputes, between the parties to the contract (otherthan those for which the decision of the DGMAP or anyother person is by the contract expressed to be final andbinding) shall, after written notice by earlier party to theContract to the other of item, be referred to the solearbitrationofservingofficerhavingdegreeinEngineering or equivalent or having passed Final/ DirectFinal Examination of Sub Division II of Institution ofSurveyors (India) recognised by the Govt. of India to beappointed by the Engineer-in-Chief, E-in-C’s Branch,Kashmir House, New Delhi-11 or Director General ofWorks if specifically delegated in writing by Engineer-in-Chief, Army Headquarters, New Delhi whose decisionshall be final, conclusive and binding. The Arbitrationshall be governed by Arbitration and Conciliation Act,1996.

Unless both parties agree in writing, such reference shallnot take place until after the completion or allegedcompletion of the Works or termination or determinationof the Contract under conditions of this contract.

Provided that in the event of abandonment of the worksor cancellation of the Contract under conditions of thiscontract, such reference shall not take place untilalternative arrangements have been finalized by theOWNER to get the works completed by or through anyother consultant or consultants or Agency or agencies.

Provided always that commencement or continuance ofany arbitration proceeding hereunder or otherwise shallnot in any manner militate against the Owner’s right ofrecovery from the consultant as provided in conditions of

this contract.

If the Arbitrator so appointed resigns his appointment orvacates his office or is unable or unwilling to act due toany reason whatsoever, the authority appointing him mayappoint new Arbitrator to act in his place.

The Arbitrator may proceed with the arbitration, exparte,if either party, inspite of notice from the Arbitrator, failsto take part in the proceedings.

The Arbitrator shall give his reasoned award in writingon all matters referred to him and shall indicate hisfindings, along with sums awarded, separately on eachindividual item of dispute.

The venue of arbitration shall be such place or places asmay be fixed by the Arbitrator in his discretion.

The language of the arbitration proceedings and that ofall documents any communications between the partiesshall be “English”.

The award of the Arbitrator shall be final and binding onboth the parties to the contract.

Notwithstanding the fact that the stations of work areanywhere in India, only the courts at Delhi/New Delhishall have the jurisdiction to adjudicate and settle anydisputes between OWNER and the consultant. No othercourt outside Delhi/New Delhi shall have any jurisdictionon any matter requiring reference to Civil Court.”

10.Mr. Mazumdar, learned counsel appearing on behalf of the petitioner,states that the entire claim is within the period of limitation and hence,the petition is maintainable.

11.Mr. Garg, learned senior counsel appearing on behalf of therespondent, opposes the petition on the ground of limitation in view ofthe paragraph 14 of the letter dated 05.03.2018 (reproduced above).respondent, opposes the petition on the ground of limitation in view ofthe paragraph 14 of the letter dated 05.03.2018 (reproduced above).

12.I have heard learned counsel for the parties and perused the materialavailable on record.available on record.

13.In the present case, vide the letter dated 05.03.2018, the petitioneritself has quantified its claims as being due and payable by therespondent.itself has quantified its claims as being due and payable by therespondent.

14.Additionally, in paragraph 14 of the said letter, the petitioner hasclearly stated that in case the amounts are not paid, the petitionerwould invoke the arbitration in terms of Article 17 of the Contract.clearly stated that in case the amounts are not paid, the petitionerwould invoke the arbitration in terms of Article 17 of the Contract.15.The Hon’ble Supreme Court in the case of & T AG v. Union ofIndia, (2024) 5 SCC 358, has categorically held as under:-India, (2024) 5 SCC 358, has categorically held as under:-

“74. In Panchu Gopal Bose v. Port of Calcutta [PanchuGopal Bose v. Port of Calcutta, (1993) 4 SCC 338] , thisCourt had held that the provisions of the 1963 Act wouldapply to arbitrations and notwithstanding any term in thecontract to the contrary, cause of arbitration for thepurpose of limitation shall be deemed to have accrued tothe party, in respect of any such matter at the time whenit should have accrued but for the contract. Cause ofarbitration shall be deemed to have commenced whenone party serves the notice on the other party requiringthe appointment of an arbitrator. The question was whenthe cause of arbitration arises in the absence of issuanceof notice or omission to issue notice for long time

after the contract was executed? Arbitration implies tocharterouttimeouscommencementofarbitrationavailing of the arbitral agreement, as soon as differenceor dispute has arisen. Delay defeats justice and equityaids promptitude and resultant consequences. Defaultingparty should bear the hardship and should not transmitthe hardship to the other party, after the claim in thecause of arbitration was allowed to be barred. It wasfurther held that where the arbitration agreement doesnot really exist or ceased to exist or where the disputeapplies outside the scope of arbitration agreementallowing the claim, after considerable lapse of time,would be harassment to the opposite party. It wasaccordingly held in that case that since the petitionerslept over his rights for more than 10 years, by hisconduct he allowed the arbitration to be barred bylimitation and the Court would be justified in relievingthe party from arbitration agreement under Sections 5and 12(2)(b) of the Act. [See : State of Orissa v.Damodar Das [State of Orissa v. Damodar Das, (1996) 2SCC 216].”

16.Additionally, in SBI General Insurance Co. Ltd. v. Krish Spinning,

2024 SCC OnLine SC 1754, in paragraph 128, it has beencategorically held as under:-

“128. On the first issue, it was observed by us that theLimitation Act, 1963 is applicable to the applications

filed under Section 11(6) of the Act, 1996. Further, wealso held that it is the duty of the referral court toexamine that the application under Section 11(6) of theAct, 1996 is not barred by period of limitation asprescribed under Article 137 of the Limitation Act, 1963,i.e., 3 years from the date when the right to apply accruesin favour of the applicant. To determine as to when theright to apply would accrue, we had observed inparagraph 56 of the said decision that “the limitationperiod for filing petition under Section 11(6) of the Act,1996 can only commence once valid notice invokingarbitration has been sent by the applicant to the otherparty, and there has been failure or refusal on part ofthat other party in complying with the requirementsmentioned in such notice.”also held that it is the duty of the referral court toexamine that the application under Section 11(6) of theAct, 1996 is not barred by period of limitation asprescribed under Article 137 of the Limitation Act, 1963,i.e., 3 years from the date when the right to apply accruesin favour of the applicant. To determine as to when theright to apply would accrue, we had observed inparagraph 56 of the said decision that “the limitationperiod for filing petition under Section 11(6) of the Act,1996 can only commence once valid notice invokingarbitration has been sent by the applicant to the otherparty, and there has been failure or refusal on part ofthat other party in complying with the requirementsmentioned in such notice.”

17.On perusal, I am of the view that in the present case, the cause ofaction for initiating the arbitration was crystallised on 05.03.2018 asregards the following claims:action for initiating the arbitration was crystallised on 05.03.2018 asregards the following claims:

A. Claim No.1: Reimbursement of increased cost of work in theprolonged period;prolonged period;

B. Claim No.2: Claim for work done not paid arising from denial toinclude the payment made to contractor under the price escalationclause; andinclude the payment made to contractor under the price escalationclause; and

C. Claim No.3: Claim for interest @ 18% per annum on the aboveclaims from the date of occurrence to the date of actual payment.claims from the date of occurrence to the date of actual payment.18.Thus, the Section 11 petition should have been filed on or before

04.03.2021 as per the law of limitation. Even after adding the periodof Covid-19 pandemic, the petition should have been filed on orbefore 17.02.2023.

19.Hence, in the present case, the claims are barred by limitation andcannot be referred to arbitration.cannot be referred to arbitration.

20.However, the petitioner is entitled to 0.5% of the settled fee aftercompletion of the defect liability period of 2 years or submission offinal report or settlement of all disputes with contractors in arbitration,whichever is later.completion of the defect liability period of 2 years or submission offinal report or settlement of all disputes with contractors in arbitration,whichever is later.

21.Since the disputes with the contractors are still pending, the 0.5% ofthe settled fee is within the period of limitation.the settled fee is within the period of limitation.

22.The learned senior counsel for the respondent, on instructions of therespondent, has no objection if the same is referred to the arbitrator.respondent, has no objection if the same is referred to the arbitrator.23.For the said reasons, the issue of the entitlement of the petitioner to0.5% of the settled fee is referred to the arbitration.0.5% of the settled fee is referred to the arbitration.

24.The petition is allowed and the following directions are issued:-

i) Ms. Justice Rekha Palli, (Retd. Judge Delhi High Court) (Mob.No. [REDACTED]) is appointed as Sole Arbitrator to adjudicatethe disputes between the parties.No. [REDACTED]) is appointed as Sole Arbitrator to adjudicatethe disputes between the parties.

ii) The arbitration will be held under the aegis of the DelhiInternational Arbitration Centre, Delhi High Court, Sher ShahRoad, New Delhi (“DIAC”).International Arbitration Centre, Delhi High Court, Sher ShahRoad, New Delhi (“DIAC”).

iii)The remuneration of the learned Arbitrator shall be in terms ofDIAC (Administrative Cost and Arbitrators’ Fees) Rules, 2018.DIAC (Administrative Cost and Arbitrators’ Fees) Rules, 2018.

iv) The learned Arbitrator is requested to furnish declaration interms of Section 12 of the Act prior to entering into theterms of Section 12 of the Act prior to entering into the

reference.

v) It is made clear that all the rights and contentions of the parties,including as to the arbitrability of any of the claim, any otherpreliminary objection, as well as claims/counter-claims andmerits of the dispute of either of the parties, are left open foradjudication by the learned arbitrator.including as to the arbitrability of any of the claim, any otherpreliminary objection, as well as claims/counter-claims andmerits of the dispute of either of the parties, are left open foradjudication by the learned arbitrator.

vi) The parties shall approach the learned Arbitrator within threeweeks from today.weeks from today.

25.The present petition is disposed of accordingly.

MARCH 18, 2025 / (MS)

JASMEET SINGH, J

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