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M/s. Emm Enn Associates Versus Commander Works Engineer & Others

2016 (7) TMI 51 - SUPREME COURT

Arbitration proceedings - whether the disputed claim is live claim or not - Hon’ble Chief Justice giving the reasons rejected the application in Arbitration Case No. 89 of 2006 holding that the claim made by the appellant is not a live claim. - Held that:- In sub-Clause (g) the period of two years under which the Government is entitled to make recovery is “from the date of payment of the undisputed portion of the final bill”. The examination of the additional materials brought on this appeal, do .....

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ving never been adjudicated, we are of the view that there was a dispute which needed an adjudication after looking into all relevant documents, bills and certificates which could have been appropriately examined by Arbitral Tribunal and the observation of the Chief Justice “As the appellant has failed to prima facie show this court that there was a live claim of the appellant” does not commend us. - The claim raised by petitioner in the facts of the case could not have been said to be a dea .....

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ogether and are being decided by this common judgment. For deciding both the appeals, it shall be sufficient to refer to facts and pleadings in Civil Appeal No. 7184 of 2008. Appeal No. 7184 of 2008 has been filed against judgment of Chief Justice of Punjab & Haryana High Court in Arbitration Case No. 184 of 2006 by which judgment learned Chief Justice has dismissed the application, filed by appellant for referring the dispute to an arbitrator in exercise of power under Section 11 of the Arb .....

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at Mullanpur. The work was completed on 10.7.2000. Work completion certificate was issued. Final bill was prepared on 20.2.2001 and the payment of final bill was made to the petitioner on 10.04.2001. Payment of the undisputed part of the final bill was made by cheque dated 10.04.2001. 4. Although Clause 67 of general conditions of contract contemplated for recovery from contractor in several contingencies one of which as referred in sub-Clause (f) was that if as a result of any audit and technic .....

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vernment. Contractor by letter dated 23.02.2005 served a notice stating that final bill amount as paid during April, 2001 did not include the payments due to contractor against several items which were claimed as per appendix A annexed to the notice. 6. It was further stated that the decision be communicated within thirty days failing which it shall be assumed that the claim is disputed and contractor shall be left with no remedy except to seek adjudication by an arbitrator appointed in terms of .....

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the Contract may kindly be appointed to adjudicate the dispute. The appellant thereafter filed an application under Section 11 of the Arbitration Act before District Judge, Ropar. The application was ultimately taken by Chief Justice of the High Court and by an order dated 12.03.2007, the application was rejected taking the view that appellant s claim is not a live claim. Aggrieved against the above judgment dated 12.03.2007 in Arbitration Case No. 184 of 2006, Appeal No. 7184 of 2008 has been .....

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No. 89 of 2006 holding that the claim made by the appellant is not a live claim. Hon ble Chief Justice by order dated 12.03.2007 took the view that final bill has been paid on 10.04.2001, the notice having been given only on 23.02.2005 the period of limitation was over. With regard to the Clause 67 of the contract, it was observed by the Chief Justice that Embargo of two years as per sub-Clause (f) and (g) is with regard to the right of the Government for effecting recovery from the contractor .....

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Act. It is contended that the issues as to whether the claim is barred by time are the issues which ought to have been left for decision of arbitrator. It is contended that payment in respect to the final bill made on 10.04.2001, was payment with regard to undisputed amount. Apart from undisputed amount there were other claims of the contractor and the No Liability certificate given by the appellant was only with regard to undisputed claim. Payment made on 10.04.2001 was the payment only in ref .....

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y of the aforesaid period of two years. 14. The respondents never adjudicated the disputed part of the final bill and after serving notice the appellant had rightly sought for adjudication by an arbitrator which application has been rejected by Hon ble Chief Justice not on valid considerations. 15. Learned counsel appearing for the respondents supported the judgment of the Chief Justice and contends that for filing any application limitation is three years as per Article 137 of the Limitation Ac .....

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hile deciding an application under Section 11 of the Act has elaborately been considered by Seven Judge Bench of this court in SBP & CO. versus Patel Engineering Ltd and another (2005) 8 SCC 618. In para 47 of the judgment, conclusions were recorded by the larger Bench. Conclusion IV is relevant for the present case which is quoted as below: 47. We, therefore, sum up our conclusions as follows: (iv) The Chief Justice or the designated Judge will have the right to decide the preliminary aspec .....

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(8) of the Act if the need arises but the order appointing the arbitrator could only be that of the Chief Justice or the designated Judge. 17. The Chief Justice exercises the judicial power while passing an order under Section 11 of the Act thus can examine the question as to whether the claim which has been raised before him survives and needs to be adjudicated. It goes without saying that if Chief Justice finds that claim is a dead claim, he can exercise jurisdiction in rejecting the applicati .....

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the parties have, by recording satisfaction, exhausted all rights, obligations and remedies under the contract, so that neither the contract nor the arbitration agreement survived. When it is said that the Chief Justice or his designate may choose to decide whether the claim is a dead claim, it is implied that he will do so only when the claim is evidently and patently a long time-barred claim and there is no need for any detailed consideration of evidence. We may elucidate by an illustration: .....

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k, and alleges that the final bill was drawn up and payments were made within three years before the claim, the Court will not enter into a disputed question whether the claim was barred by limitation or not. The Court will leave the matter to the decision of the Tribunal. If the distinction between apparent and obvious dead claims, and claims involving disputed issues of limitation is not kept in view, the Chief Justice or his designate will end up deciding the question of limitation in all app .....

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tion under Section 11 of the Act is expected to contain pleadings about the existence of a dispute and the existence of an arbitration agreement to decide such dispute. The applicant is not expected to justify the claim or plead exhaustively in regard to limitation or produce documents to demonstrate that the claim is within time in a proceeding under Section 11 of the Act. That issue should normally be left to the Arbitral Tribunal. If the Chief Justice or his designate is of the view that in a .....

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s of jurisdiction and existence of arbitration agreement between the parties will be considered in such proceedings. 20. From the above, it is clear that Chief Justice may chose to hold a claim as a dead claim only when the claim is evidently and patently long time barred claim and there is no need for any detailed consideration of evidence. An illustration have been given in para 14 as extracted above. The above illustration becomes relevant for the facts of the present case. In the present cas .....

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disputed and the payment received on 10.4.2001 was with regard to undisputed claim. There being no adjudication with regard to disputed claim the claim raised by notice dated 23.02.2005 cannot be said to be barred by time or a dead claim. 22. In the present appeal by IA No. 03 of 2012, the appellant has brought certain additional materials for consideration of the Court. By annexure 16 certain certificates which were given by the contractor on 20.02.2001 that is when the final bill was prepared .....

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hellip;.. Sd/- Contractor 4. Payment by Cheque of the undisputed part of the Final Bill made by the dispersing officer, mentioned-herein-below:- Cheque No. H - 916930 dated 10.4.2001 for ₹ 57532/- issued in favour of M/s Emm Enn Associates on SBI AF Chandigarh Treasury. Sd/- Signature of Dispersing Office 23. Para 04 of the above certificate as quoted above clearly mentions payment by cheque of the undisputed part of the final bill and above certificate also clearly indicates that payment .....

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pect of the work done under this Contract, the contractor shall on demand make payment of a sum equal to the amount of over-payment or agree for effecting necessary adjustment from any amounts due to him by Government. If however, he refuses or neglects to make the payment on demand or does not agree for effecting adjustment from any amounts due to him, Government shall be entitled to take action as in sub-para (a) hereinbefore. If as a result of such audit and technical examination any under pa .....

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ctor or from Security Deposit or Security Bond amount and adjust under payment, shall not extend beyond a period of two years from the date of payment of the undisputed portion of the Final Bill or in the case of minus Bill, from the date, the net amount of the final bill is communicated to the Contractor. 25. In sub-Clause (g) the period of two years under which the Government is entitled to make recovery is from the date of payment of the undisputed portion of the final bill . The examination .....

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aim to the disputed part. 26. In view of the Division Bench judgment in Indian Oil Corporation Ltd. supra para 14 as extracted above, the present was the case which ought to have been left for the decision by the Tribunal. We, however, have proceeded further to examine the claim raised by the appellant in his notice dated 23.02.2005. The pleadings of the appellant are categorical to the effect that the final payment made on 10.04.2001 was only with regard to undisputed portion and he has reserve .....

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