Judgments On Limitation On Behalf of Claimant

BEFORE SHRI O.P.
GOEL
HON’BLE SOLE ARBITRATOR
(FORMER DIRECTOR GENERAL, CPWD& PAST PRESIDENT, INSTITUTION OF
ENGINEERS (INDIA))
IN THE MATTER OF ARBITRATION
BETWEEN:
M/s. TBPR Infra Projects Pvt. Ltd. ... Claimant

AND
M/s. Engineering Projects (India) Ltd. ... Respondents
COMPILATION OF JUDGMENTS ON BEHALF OF CLAIMANT
S.No Particulars Date of Judgment
AIR 2006 SC 2488

Hari Shankar Singhania and ors vs. Gaur Hari Singhania
1 04.04.2006
and Ors.
AIR 2007 SC 2441

Maharshi Dayanand University and ors vs. Anand
2 25.04.2007
Coop.L/C society Ltd and ors
AIR 2008 SC 1363

J.C.Budhraja vs Chairman, Orissa Mining Corporation
3 18.01.2008
Ltd and ors
OMP No. 735/2012 of Hon’ble Delhi High Court.

M/s. National Highway Authority of India vs
4 19.05.2014
Progressive Construction Ltd
OMP (T) (Comm.) 32/2020 of Hon’ble Delhi High

Court.
5 20.07.2020
Shri Pankaj Arora vs AVV Hospitality LLP & Ors.
Date: 16.09.2020
Hyderabad.
1
MANU/SC/1686/2006
Equivalent Citation: AIR2006SC 2488, 2006(4)ALT1(SC ), 2006(2)ARBLR1(SC ), 2006(3)BomC R10, 2006(2)C TC 597, JT2006(4)SC 251,
(2006)3MLJ243(SC ), 2006(3)PLJR50, 2006(2)RC R(C ivil)454, 2006(4)SC ALE74, (2006)4SC C 658, 2006(2)UC 1236, 2006(1)UJ423
IN THE SUPREME COURT OF INDIA

Civil Appeal No. 126 of 2005
Decided On: 04.04.2006
Appellants:Hari Shankar Singhania and Ors.
Vs.
Respondent:Gaur Hari Singhania and Ors.
Hon'ble Judges/Coram:
H.K. Sema and A.R. Lakshmanan, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Abhishek Manu Singhvi and Parag P. Tripathi, Sr. Advs.,
Pradip Kumar Khaitan, Gauri Rasgotra, Shiladitya Rakshit, Advs. for Khaitan & Co. A.O.R
For Respondents/Defendant: Anil B. Divan and S. Ganesh, Sr. Advs., Bhargava V. Desai,
S.V. Mehta, Rahul Gupta, Nupur Kanungo, Vinod B. Agarwala, Arvind Kumar, Advs. for
Gagrat & Co.
Case Note:
(1) Arbitration Act, 1940 (since repealed) - Sections 8 and 20--Limitation Act,
1963--Article 137--Arbitration suit--Limitation--Is three years from date when
right to apply accrues--Such right accrued to appellants only on date of last
correspondence dated 29.9.1989 between parties when no chance of
amicable settlement remained--Hence, application filed under Section 20 on
8.5.1992 was well within period of limitation--Finding of High Court that
application was beyond period of limitation--Erroneous--Justice S. N. Variava
retired Judge of Supreme Court appointed as sole arbitrator--Impugned orders
of High Court set aside.
(2) Hindu law - Family arrangement/settlement -- Such settlement generally
meets with approval of courts--Technicalities of limitation, etc.--Should not
be put at risk of implementation of settlement drawn by family essential for
maintaining peace and harmony in family--Duty of courts to uphold and give
full effect to family settlement.
Judgment and order dated 8/9.6.2004 of High Court of Bombay in Appeal No.
440 of 1996 in Arbitration Suit No. 1904 of 1992, reversed.
Case Category:
ARBITRATION MATTERS
JUDGMENT
A.R. Lakshmanan, J.
1 . This appeal was directed against the final judgment and order dated 8/9th June,
2004 passed by the Division Bench of the High Court of Judicature at Bombay in Appeal
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No. 440 of 1996 in Arbitration Suit No. 1904 of 1992 whereby the High Court dismissed
the appellants' appeal and upheld the order of the learned single Judge dismissing the
appellants' application under Section 20 of the Arbitration Act, 1940 as being barred by
the law of limitation.
2. The short facts of the case are as follows:- A partnership firm was formed by three
brothers of the Singhania family. The family owned considerable amount of immovable
property, which was brought into the firm's business. In 1987, the partnership firm was
dissolved by way of dissolution deed as a family settlement. Under the dissolution deed,
Clause 13 which enabled the parties or any party to go for arbitration in case there was
a dispute between them reads as follows:
13. That if at any time any dispute, doubt or question shall arise between the
parties hereto or their respective legal representative, either on the construction
of interpretation of these presents or respecting the accounts, transactions,
profit or loss of business or their respective rights and obligations of the parties
hereto or otherwise in relation to the winding up of the partnership, then any
such dispute, doubt or question shall be referred to the arbitration of a single
Arbitrator. In case, however, the parties are unable to agree upon a single
Arbitrator, a panel of three Arbitrators shall be appointed, one of them to be
appointed by Shri Hari Shankar Singhania or failing him by the Sixth Party, or
failing the Sixth Party by the Seventh Party, or failing the Seventh party, by the
Eighth party and the second to be appointed by Dr. Gaur Hari Singhania and
failing him by the second party and failing the second party by the ninth party
and the third to be appointed by Shri Vijaypat Singhania and failing him by the
fourth party, provided always that the decision and/or award by the said panel
of the arbitrators shall have to be unanimous and in the event of unanimity not
being reached by the panel of arbitrators, they shall appoint an Umpire whose
decision shall be final. All the proceedings, before the sole arbitrator and/or
panel of arbitrators shall be governed by the provisions contained in the
Arbitration Act, 1940 or by any statutory modification or re-enactment thereof.
3. Disagreement between the parties took place as to the division of the assets involved
in the partnership firm. Therefore, the distribution of the said Immovable properties
could not be effected by 31st May 1987 as contemplated by the Deed of Dissolution.
Ultimately in February 1988, the three groups each appointed a nominee to work out an
arrangement whereby distribution of the said Immovable properties of the said
dissolved firm could be made and effected in the manner acceptable to all. The
nominees held several meetings but no agreement of distribution could be arrived at.
Further it can be observed that there were numerous letters written by both parties to
find a way to settle the dispute pertaining to the division of assets involved in the
partnership firm which was dissolved. The last letter that was exchanged in this regard
was a letter dated 29 September, 1989.
4 . On May 8, 1992, a plaint under Section 20 of the Arbitration Act, 1940 was filed
before the High Court of Judicature at Bombay by the appellants (1-7 ousted group). On
September 19, 1992, respondent No. 1 herein, Dr. Gaur Hari Singhania group
(contesting respondent Nos. 1-9) filed an affidavit in opposition stating and submitting
that, the suit filed by the appellant in the High Court is barred by limitation and that the
High Court had no jurisdiction to entertain the suit and, therefore, the same is liable to
be dismissed.
5. It is pertinent to notice that respondent Nos. 10-20 supported the claim made by the

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appellants. A learned Single Judge of the Bombay High Court on April 09, 1996
dismissed the Arbitration Suit of the appellants on the ground of limitation being 50
days beyond the period of three years computed from March 18, 1989. An appeal was
preferred by appellant Nos. 1-7 and learned Judges of the Division Bench of the
Bombay High Court dismissed the appeal on the ground of limitation and that oral
prayer for condonation of delay will not be entertained by the Courts.
6 . Against this order of the Bombay High Court, the appellants have come by way of
special leave petition before this Court. Leave was granted on 03.01.2005 by this Court.
We heard Dr. Abhishek Manu Singhvi, learned Senior Counsel appearing for appellants
1-7, Mr. S. Ganesh, learned senior counsel appearing for respondents 10-20 and Mr.
Anil Diwan, learned Senior Counsel appearing for the respondents 1- 9.
7 . The claim of the appellants was that, after the dissolution of the partnership there
were a series of communication between the appellants and the respondents on the
division of the assets which was a part of the dissolved firm in order to arrive at an
amicable settlement as evident from the words used in the letters of correspondence
like, to not cause unduly delay in the distribution of the property/expedite the matter of
dissolution (letter dated 29th September, 1989) etc. Therefore, according to Dr.
Abhishek Manu Singhvi, learned Counsel appearing for the appellants, the right to apply
under Section 20 of the Arbitration Act, 1940 accrued to the appellants on the date of
the last communication between the parties to reach a settlement, which is the letter
dated 29th September, 1989. Therefore, limitation period will start running for three
years as stated under Article 137 of the Limitation Act, 1963 only from that date. The
thrust of the argument on behalf of the appellants is that the right to apply under
Section 20 of the Arbitration Act, 1940 accrued to the appellants on receipt of the letter
dated 29th September, 1989.
8. According to the contesting respondents, the differences and disputes with respect to
distribution of immovable properties amongst the partners of the dissolved firm arose
before 31st May, 1987 and that is why the distribution of the said immovable properties
could not be effected as contemplated by the Deed of Dissolution. The respondents
further claimed that the appointment of nominees by the parties was enough evidence
of disagreement and differences between the parties which arose on 29th February,
1988. Further the respondent also relied on communications dated 4th October, 1988,
13th February, 1989 [notice] and 18th March 1989, to prove differences among the
parties.
9 . It is now well settled that Article 137 of the Limitation Act, 1963 applies to an
application under Section 20 of the Arbitration Act, 1940. Accordingly, an application
under Section 20 of the Act for filing the arbitration agreement in Court and for
reference of disputes to arbitration in accordance therewith is required to be filed within
a period of three years when the right to apply accrues. The right to apply accrues when
difference or dispute arises between the parties to the arbitration agreement. In the
facts of the case, it is therefore necessary to find out as to when the right to apply
accrued.
10. Therefore, the questions before us that deserve consideration are:
1. When the right to file the application under Section 20 of the Arbitration Act
has accrued and when it becomes time barred; and
2. Whether in the context of Section 20 of the Arbitration Act, 1940 a difference
or dispute can be said to have arisen between the parties without there being

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any denial or repudiation of a claim by a party?

1 1 . We have heard both the parties extensively. We have carefully perused all the
letters, annexures and the orders passed by the High Court produced in Court. Letter
dated 16th September, 1988 is a letter by Shri Hari Shankar Singhania to Shri Gaur Hari
Singhania specifically stating that "I request that the distribution of immovable
properties is being delayed and I will request you to please make all attempts to expedite
the same."
12. Letter dated 4th October, 1988 is a letter by Shri Gaur Hari Singhania to Shri Hari
Shankar Singhania stating that "I on my part have given all the information and
materials and done everything possible to expedite the distribution. The Committee
appointed by the partners is seized of the matter. I am equally anxious that the matter
should be amicably sorted out as early as possible."
13. Letter dated 18th October, 1988 is a letter by Shri Hari Shankar Singhania to Shri
Gaur Hari Singhania wherein it is stated that "I only requested you to make all attempts
to expedite. You can judge for yourselves what is the reason for the delay. In my view,
unless there is sincere desire to solve the matter expeditiously the matter will drag on
and I can only repeat that this will not be to the benefit of any one. I can only request
you to do all you can to get the matter expedited."
14. Letter dated 24th November, 1988 is a letter by Shri Gaur Hari Singhania to Shri
Hari Shankar Singhania wherein it is stated that, "I am sending the modified account for
your kindly returning the same duly signed by you and all the other partners at your
end." Letter dated 13th February, 1989 is a letter by Shri Vijaypat Singhania, Shri
Ajaypat Singhania, Shri Raghupati Singhania, Shri Hari Shankar Singhania and Shri
Bharat Hari Singhania to Shri Gaur Hari Singhania wherein it is stated that"As regards
Ganga Kuti, your comments on the Licence Agreement dated 2.1.1986 do not meet the
issue raised in the letter of Shri Hari Shankar, dated 18th October, 1988. As pointed out,
the said agreement stipulates payment of Licence fee of Rs.24,000 per annum payable
by monthly installments of Rs.2000 to be paid in advance on the 5th day of every
month. Neither the mode of payment nor the amount paid were in conformity with the
said agreement. Due to violation of this key provision, the licence is no more valid and it
should be treated as such and the monies received on this account should be returned
and suitable corrective entries made in the accounts. Moreover, such arrears of rent
were received after the dissolution which should not be accepted and given effect to, in
the spirit of the terms of dissolutions. Apparently it is not bona fide. We are returning
the accounts for the period (20th March, 1987 to 31st March, 1988) for necessary
rectification. The property should henceforth not be rented/licensed to anyone."
15. Letter dated 18th March, 1989 is a letter by Shri Gaur Hari Singhania to Shri Hari
Shankar Singhania wherein it is stated that "The licence is subsisting and cannot be
treated as null and void. Since you have returned the account unsigned, I am sending
the accounts once again to you with a request to kindly sign the accounts and forward
the same to me for signature of Shri Vijaypat and Shri Ajaypat."
16. Letter dated 22nd May, 1989 is a letter by Shri Vijaypat Singhania, shri Ajaypat
Singhania, Shri Raghupati Singhania, Shri Hari Shankar Singhania and Shri Bharat Hari
Singhania to Shri Gaur Hari Singhania wherein it is stated that "As regards Ganga Kuti,
we had in our letter dated February 13, 1989 stated the factual position in regard to the
licence agreement dated 2nd January, 1986 and the fact of the licence remaining no
more valid particularly in view of the continuous violation of the essential provisions of

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the licence agreement for two years from 1.4.1985.... The spirit of the terms of
dissolution has certainly not been adhered to in this regard and it is only fair in the
fitness of the circumstances that the licence agreement should no more be treated as
valid and appropriate amendment be made in that regard by returning the monies
received and making suitable corrective entries in the accounts. We are returning the
accounts for the period 20th March, 1987 to 31st March, 1988 for necessary
rectification."
17. Letter dated 8th July, 1989 is a letter by Shri Gaur Hari Singhania to Shri Hari
Shankar Singhania wherein it is stated that "However, as stated above, the distribution
of the immovable properties is being delayed due to entirely the unreasonable stand
taken by or on your behalf and due to insistence on your behalf of the distribution to be
effected in a particular mode which is neither feasible nor reasonable and proper.... It is,
therefore, not only in the interest of all the partners but imperative that you should not
hold up the signing of the accounts. I, therefore, once again send to you the said
accounts with a request to return the same duly signed. I need not add that if as a result
of your not signing the said accounts any adverse orders are passed by the Income Tax
Officer in the pending assessment of the said firm for the said two assessment years
1987-1988 and 1988-1989, you alone will be held responsible."
18. Letter dated 29th September, 1989 is a letter from Shri Vijaypat Singhania, Shri
Ajaypat Singhania, Shri Raghupati Singhania, Shri Hari Shankar Singhania and Shri
Bharat Hari Singhania to Shri Gaur Hari Singhania wherein it is stated that"It is not fair
to impute impropriety or to say that the stand taken by us is an attempt to bring
pressure upon immovable properties of the dissolved partnership. It is equally not fair to
say that the distribution of immovable properties remains pending because of the
unreasonable or improper stand taken by us. The Deed of Dissolution and the
understanding among the partners is quite clear as to the mode of distribution and as
such there is no question of any partner dictating the mode of distribution.... We are
sure that you will expedite the matter of dissolution of the immovable properties in the
same spirit as was envisaged at the time of dissolving the firm."
19. It is seen from the above letters that on 29.02.1988, the parties decided to appoint
one representative each who would endeavour to arrive at an agreed distribution
acceptable to all parties. This only shows that it is the modality of distribution which
were tried to be worked out. The contemporary correspondence, above referred to,
would also show that the letters exchanged between the brothers were in amiable
language. It is thus clear that at this stage the parties had not reached a stage of break
where an adjudication of dispute had become inevitable. Thereafter, in September, 1988
letters were written as to the distribution of properties. The letter written by the
appellants on 16.09.1988 and its reply of 04.10.1998 clearly show that there was not
yet a break down of the agreement, in fact, on behalf of the respondents. It was
suggested that a Committee appointed by the partners is seized of the matter. It is clear
from a reading of this letter that the parties, as late as in October, 1988 were trying to
obtain an amicable resolution. This situation continued on 18.03.1989 as well. The
accounts were sent by the respondents. The letter, inter alia, annexed certain
confirmatory letters and requested that the accounts be confirmed by the appellants. In
reply thereto in May, 1989 the accounts were sent back, as the letter disclosed that
there were some differences as to one of the properties. On 08.07.1989, the respondent
reiterated that the accounts were correct and sent back for the confirmation and also
alleged that the matter of distribution of immovable properties remained pending
because of the unreasonable and improper stand taken by the appellants. It was argued
that at best it could be suggested that by this date, the stage has reached where the

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partners could have contemplated the adjudication of their disputes. This would show
that the petition would clearly be within time. Suit under Section 20 of the Arbitration
Act was filed on 8.5.1992.
2 0 . On 29.09.1989, a letter was written by Shri Vijaypat Singhania, Shri Ajaypat
Singhania, Shri Hari Shankar Singhania and Bharat Hari Singhania to Shri Gaur Hari
Singhania, respondent wherein it is stated that it is not fair to impute impropriety or to
say that the stand taken by the appellants is an attempt to bring pressure upon
immovable properties of dissolved partnership. It is also stated therein that the
respondent will expedite the matter of dissolution of the immovable properties in the
same spirit as was envisaged at the time of dissolving the firm. If this letter dated
29.09.1989 is taken into account, it would show that Section 20 suit would clearly be
within time. In our opinion, the High Court has committed an error in construing Article
137 in a manner, which would unduly restrict the remedy of arbitration especially in
family disputes of the present kind. It is a well-settled policy of law in the first instance
is always to promote a settlement between the parties wherever possible and
particularly in family disputes.
21. Where a settlement with or without conciliation is not possible, then comes the
stage of adjudication by way of arbitration. Article 137, as construed in this sense, then
as long as parties are in dialogue and even the differences would have surfaced it
cannot be asserted that a limitation under Article 137 has commenced. Such an
interpretation will compel the parties to resort to litigation/arbitration even where there
is serious hope of the parties themselves resolving the issues. The learned Judges of
the High Court, in our view, have erred in dismissing the appellants appeal and
affirming the findings of the learned Single Judge to the effect that the application made
by the appellants under Section 20 of the Act, 1940 asking for reference was beyond
time under Article 137 of the Limitation Act. The learned Judges ought to have allowed
the appeal and quashed and set aside the impugned order passed by the learned Single
Judge and ought to have restored and allowed arbitration suit filed by the appellants. As
already noticed, the correspondence between the parties, in fact, bears out that every
attempt was being made to comply with and carry out the reciprocal obligations spelt
out in the agreement between the parties. As rightly pointed out by learned Counsel for
the appellant that the learned Judges of the Division Bench have erred in coming to the
conclusion that the distribution of immovable properties in specie as provided in the
Deed of Dissolution dated 26.03.1987 and a Supplementary Agreement dated
20.03.1987 could not be done before 31.05.1987 due to some differences. There is
absolutely no material on record on the basis of which the learned Judges could have
come to such a conclusion. None of the correspondence referred to by the learned
Judges spells out the existence of any disputes as a result of which the properties could
not be distributed prior to 31.05.1987.
22. The High Court, in our view, has erred in coming to the conclusion that because no
distribution of the property had been made till 29.02.1988, it was indicative of the fact
that there were disputes and differences between the parties. The High Court, in our
view, has failed to appreciate that merely because parties did not take steps for
distribution of the immovable properties it did not automatically follow that disputes
and differences had arisen between them in this regard. In fact, from the
correspondence on record, it is clear that the parties were making efforts to complete
the distribution of the immovable properties as per the terms of the agreement between
them. It is submitted that the correspondence between the parties does not indicate that
any dispute or difference had arisen between them on or before 18.03.1989 and the
finding of the learned Judges to the effect that the correspondence exchanged between
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the parties leaves no manner of doubt that the dispute had arisen between the parties in
any case on 18.03.1989 is erroneous, contrary to the record and unsustainable. We
shall now advert to the various decisions cited by both the parties.
Law on the Subject:
23. Article 137 of the Limitation Act is reproduced hereunder:-
The period of three years prescribed in Article 137 of the Limitation Act, 1963 is
applicable to file an application under Section 20 of the Arbitration Act, 1940 as decided
by this Court in the case of Vulcan Insurance Co. Ltd. v. Maharaj Singh
MANU/SC/0333/1975 : [1976]2SCR62 . The limitation period starts running from
the time the right to apply accrue. An application filed under Section 20 of the
Arbitration Act has to be filed within three years from the date when the right to apply
accrues.
2 4 . In the case of State of Orissa v. Damodar Das MANU/SC/0250/1996 :
AIR1996SC942 , this Court held that, the right to apply accrues under Section 20,
Arbitration Act, 1940, as soon as dispute or difference arises on unequivocal denial of
claim by one party to the other party as a result of which the claimant acquires a right
to refer the dispute to arbitration.
2 5 . In the case of S. Rajan v. State of Kerala MANU/SC/0371/1992 :
[1992]3SCR649 , the right to apply accrues when the difference arises or differences
arise between the parties involved. It is thus a question of fact, not a question of law as
urged by the respondents, and should be determined in each case having regard to the
facts of the case.
2 6 . I n Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority
MANU/SC/0271/1988 : [1988]3SCR351 , this Court holding that the application
under Section 20 was filed within time examined that:
...a 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 cause of action. A dispute arises where
there is a claim and a denial and repudiation of the claim....
There should be a dispute and there can only be a dispute when a claim is asserted by
one party and denied by the other on whatever grounds. Mere failure or inaction to pay
does not lead to the inference of the existence of dispute. Dispute entails a positive
element and assertion of denying, not merely inaction to accede to a claim or request.
Whether in a particular case dispute has arisen or not has to be found out from the facts
and circumstances of the case.
27. In the instant case, correspondence was not merely in the nature of reminders but
also instruments to resolve the matter and amicably negotiate. Therefore, when the
negotiations were taking place between the parties by way of various letters written by

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both parties the right to apply can be said to accrue when it becomes necessary to
apply, that is to say when a dispute in fact arose. Furthermore, the respondent did not
ever dispute the claim of the appellants.
28. Learned counsel appearing for the appellants placed reliance on Oriental Building
and Furnishing Co. Ltd. v. Union of India AIR 1981 Del 293, where the material
question was what is the starting point of limitation for moving a petition under Section
20 of the Arbitration Act, 1940. It was held that: Neither party can move the Court
without the existence of a difference between them. So, the material question is, when
the difference arose between the parties and not when the lease expired, nor when it
was entered into." The court further observed, "...a difference can arise long after some
work has been done under a contract. There can be negotiations between the parties
and all sorts of correspondence. But it is only when they come to the conclusion that
they cannot resolve the dispute between them, it can be said that a difference arises. A
difference under the arbitration agreement is a claim made by one party, which is refuted
by the other party. At that stage, it is open to the parties or any one of them to go for
arbitration to get this difference or differences settled and it is only at this stage it is
possible to say that a difference has arisen between the parties.
29. This decision of the Delhi High Court squarely covers the case on hand as a close
perusal of the letters exchanged between the parties show clearly that there was
intention to arrive at an amicable settlement between the family members with regard to
the division of assets in question.
30. It cannot be said that merely because nominees were appointed for working out an
arrangement, which could not ultimately be arrived at, a dispute or difference arose way
back in February 1988. In fact, even immediately after this, the correspondence
exchanged between the parties reveals a forthcoming attitude and amiable efforts made
towards implementing the deed of dissolution.
3 1 . An examination of the correspondence can give us valuable insight as to the
"differences" if any among the parties. The first such communication was made on 16
September, 1988 from Shri Hari Shankar Singhania [appellant] to Gaur Hari Singhania
[Respondent] requesting the respondent to make all attempts to expedite distribution of
the immovable properties. In reply to this was the communication relied on by the
respondents from Dr.Gaur Hari Singhania [Respondent] to Shri Hari Shankar Singhania
[appellant No. 1] dated 4th October, 1988. This communication also does not reveal
either hostility or dispute and only exposes an effort "to expedite the distribution". The
last sentence of the above mentioned communication reads: "I am equally anxious that
this matter should be amicably sorted out as early as possible."
32. Therefore, we observe that the right to apply under Section 20 of the Arbitration
Act, 1940 accrued to the appellants only on the date of the last correspondence between
the parties and the period of limitation commences from the date of the last
communication between the parties. Therefore, the finding of the High Court that the
application under Section 20 of the Arbitration Act, 1940, is beyond the period of
limitation is erroneous.
3 3 . Further, in an English decision rendered by the Court of Appeal in Hughes v.
Metropolitan Rly. Co., it was held that, where negotiations for settlement are
pending, the strict rights of the parties do not come into play. It is also pertinent to
note that under the new Act, namely the Arbitration and Conciliation Act, 1996 that
came into force in 1996, the intervention of the Court in the matter of arbitration

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proceedings has been minimized to a great extent. Further, there is no provision in the
Arbitration and Conciliation Act, 1996 that is similar to Section 8 (power of court to
appoint arbitrator), Section 20 (application to file in Court the Arbitration Agreement)
and Section 33 (Arbitration agreement or award to be contested by application), which
were present in the Arbitration Act of 1940.
34. Another thing that should not miss the attention of the Court is that, the assets in
question are with the contesting respondent Nos. 1 to 9 and an amicable settlement for
the division of the assets have not been arrived at since last 18 years as clear from the
facts. Hence it is observed that the contesting respondents are the ones who are
enjoying the assets in question and therefore we observe that, the respondents are
merely trying to drag the proceedings endlessly forever and for another period of
uninterrupted enjoyment of the assets.
35. Furthermore the contesting respondents cannot allege that moving the Court is a
better-suited remedy than arbitration proceeding as they have of their own free will only
adopted the arbitration clause in the Deed of Dissolution.
Family Arrangement/Family Settlement:-
36. Another fact that assumes importance at this stage is that, a family settlement is
treated differently from any other formal commercial settlement as such settlement in
the eyes of law ensures peace and goodwill among the family members. Such family
settlements generally meet with approval of the Courts. Such settlements are governed
by a special equity principle where the terms are fair and bona fide, taking into account
the well being of a family.
37. The concept of 'family arrangement or settlement' and the present one in hand, in
our opinion, should be treated differently. Technicalities of limitation etc should not be
put at risk of the implementation of a settlement drawn by a family, which is essential
for maintaining peace and harmony in a family. Also it can be seen from decided cases
of this Court that, any such arrangement would be upheld if family settlements were
entered into to ally disputes existing or apprehended and even any dispute or difference
apart, if it was entered into bona fide to maintain peace or to bring about harmony in
the family. Even a semblance of a claim or some other ground, as say affection, may
suffice as observed by this Court in the case of Ram Charan v. Girija Nandini
MANU/SC/0358/1965 : [1965]3SCR841 .
3 7 . 1 I n Lala Khunni Lal v. Kunwar Gobind Krishna Narain
MANU/PR/0069/1911 : (1911)13BOMLR427 the Privy Council examined that it is the
duty of the courts to uphold and give full effect to a family arrangement.
37.2. In Sahu Madho Das and Ors v. Pandit Mukand Ram and Anr.
MANU/SC/0132/1955 : AIR1955SC481 [Vivian Bose Jagannadhadas and BP Sinha
JJ.] placing reliance on Clifton v. Cockburn (1834) 3 My &K 76 and William v.
William (1866) LR 2Ch 29, this Court held that a family arrangement can, as a matter
of law, be implied from a long course of dealings between the parties. It was held that
"..so strongly do the courts lean in favour of family arrangements that bring about
harmony in a family and do justice to its various members and avoid, in anticipation,
future disputes which might ruin them all, that we have no hesitation in taking the next
step (fraud apart) and upholding an arrangement.."
37.3. The real question in this case as framed by the Court was whether the
appellant/plaintiff assented to the family arrangement. The court examined that "the

10
family arrangement was one composite whole in which the several dispositions formed
parts of the same transaction"
37.4. In Ram Charan Das v. Girjanadini Devi (Supra), this Court observed as
follows:
Courts give effect to a family settlement upon the broad and general ground
that its object is to settle existing or future disputes regarding property
amongst members of a family.... The consideration for such a settlement will
result in establishing or ensuring amity and good will amongst persons bearing
relationship with one another.
37.5. In Maturi Pullaiah v. Maturi Narasimham MANU/SC/0328/1966 :
AIR1966SC1836 , this Court held that "although conflict of legal claims in praesenti or
in future is generally a condition for the validity of family arrangements, it is not
necessarily so. Even bona fide disputes, present or possible, which may not involve
legal claims, will suffice. Members of a joint Hindu family may, to maintain peace or to
bring about harmony in the family, enter into such a family arrangement. If such an
arrangement is entered into bona fide and the terms thereof are fair in the
circumstances of a particular case, courts will more readily give assent to such an
arrangement than to avoid it."
37.6. Further in Krishna Biharilal v. Gulabchand MANU/SC/0478/1971 :
AIR1971SC1041 , this Court reiterated the approach of courts to lean strongly in favour
of family arrangements to bring about harmony in a family and do justice to its various
members and avoid in anticipation future disputes which might ruin them all. This
approach was again re-emphasised in S. Shanmugam Pillai v. K. Shanmugam Pillai
MANU/SC/0398/1972 : [1973]1SCR570 where it was declared that this Court will be
reluctant to disturb a family arrangement.
3 7 . 7 I n Kale and Ors. v. Deputy Director of Consolidation and Ors.
MANU/SC/0529/1976 : [1976]3SCR202 [VR Krishna Iyer, RS Sarkaria & S Murtaza
Fazal Ali, JJ.] this Court examined the effect and value of family arrangements entered
into between the parties with a view to resolving disputes for all. This Court observed
that "By virtue of a family settlement or arrangement members of a family descending
from a common ancestor or a near relation seek to sink their differences and disputes,
settle and resolve their conflicting claims or disputed titles once for all in order to buy
peace of mind and bring about complete harmony and goodwill in the family. The family
arrangements are governed by a special equity peculiar to themselves and would be
enforced if honestly made... the object of the arrangement is to protect the family from
long drawn litigation or perpetual strives which mar the unity and solidarity of the
family and create hatred and bad blood between the various members of the family.
Today when we are striving to build up an egalitarian society and are trying for a
complete reconstruction of the society, to maintain and uphold the unity and
homogeneity of the family which ultimately results in the unification of the society and
therefore, of the entire country, is the prime need of the hour... the courts have,
therefore, leaned in favour of upholding a family arrangement instead of disturbing the
same on technical or trivial grounds. Where the courts find that the family arrangement
suffers from a legal lacuna or a formal defect the rule of estoppel is pressed into service
and is applied to shut out plea of the person who being a party to family arrangement
seeks to unsettle a settled dispute and claims to revoke the family arrangement.... The
law in England on this point is almost the same."
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3 8 . The valuable treatise Kerr on Fraud at p.364 explains the position of law, "the
principles which apply to the case of ordinary compromise between strangers do not
equally apply to the case of compromises in the nature of family arrangements. Family
arrangements are governed by a special equity peculiar to themselves, and will be
enforced if honestly made, although they have not been meant as a compromise, but
have proceeded from an error of all parties originating in mistake or ignorance of fact
as to what their rights actually are, or of the points on which their rights actually
depend." Halsbury's Laws of England, Vol.17, Third edition at pp.215-216.
38.1. In K.K. Modi v. KN Modi and Ors. MANU/SC/0092/1998 :[1998]1SCR601
[Sujata Manohar & DP Wadhwa, JJ. ], it was held that the true intent and purport of the
arbitration agreement must be examined- [para 21] Further the court examined that
"...a family settlement which settles disputes within the family should not be lightly
interfered with especially when the settlement has been already acted upon by some
members of the family. In the present case, from 1989 to 1995 the Memorandum of
Understanding has been substantially acted upon and hence the parties must be held to
the settlement which is in the interest of the family and which avoids disputes between
the members of the family. Such settlements have to be viewed a little differently from
ordinary contracts and their internal mechanism for working out the settlement should
not be lightly disturbed." Therefore, in our opinion, technical considerations should give
way to peace and harmony in enforcement of family arrangements or settlements.
39. The observation made by the Bombay High Court while dismissing the appeal of the
appellants was that, an oral application for condonation of delay will not be entertained
in Court of law according to the laws present in our judicial system. This observation, in
our opinion, is not pertinent in the present case because, condonation of delay needs to
be asked for only if there is a delay in fling a suit and in the fact situation of this case,
there is no delay in the filing of the Arbitration suit as observed earlier and the suit for
arbitration filed by the appellants is within time prescribed under Article 137 of the
Limitation Act, 1963.
40. Thus we conclude by observing that, the Arbitration suit filed by the appellants is
well within time as the dispute is deemed to have arisen only after the last
communication between the parties dated 29th September, 1989, whereby, there were
efforts made to amicably settle the dispute between the parties. Also as an admitted fact
the appellants and respondent Nos. 10 to 20 were at all material times and still are
ready and willing to do all the things necessary for the proper conduct of the arbitration
including the appointment of Arbitrator.
41. Further it is not fair on the appellants to let this dispute continue, with the assets in
question under the control and enjoyment of the contesting respondents 1-9. It may be
mentioned that even though the plea of extension of limitation has not been taken into
account by the appellants in the application filed and the learned Counsel for the
respondents has objected to the learned Counsel for the appellants making submission
pertaining to extension of limitation to file the present application, learned Single Judge
of the High Court has permitted the learned Counsel for the appellant to make
submissions in this regard without the plea of extension of limitation being taken in the
application.
Why the dispute between members of family should be settled:-
In the instant case, the partnership firm was dissolved w.e.f. March, 1987 by consent of
parties. The Deed of Dissolution was also entered into between the parties on March 26,

12
1987. In 1988, the three groups each appointed a nominee to work out an arrangement
whereby the distribution of the properties of the dissolved firm could be made and
effected. The nominees held several meetings but no agreement of distribution could be
arrived at. Meeting of the partners took place on various occasions in regard to the
issue of distribution of assets which has been considerably delayed. Several
correspondences exchanged between the heads of three branches regarding amicable
distribution of all the immovable properties in specie. It is stated that 14 properties are
situated in Kanpur and 1 property in Bombay which are very valuable. Respondents 1-9
being in enjoyment were simply delaying distribution in specie. In the circumstances,
appellant No. 1 herein and the other members of the branch of Lakshmipat Singhania
wanted to take recourse to due process of law for getting distribution and allotment in
specie of their one-third share in those 15 immovable properties. Hence, application
under Section 20 of the Arbitration Act, 1940 was filed in the High Court of Bombay on
08.05.1992. Other group opposed the application on the ground of limitation and the
lack of jurisdiction. Single Judge rejected the plea of the lack of jurisdiction but upheld
the plea of limitation on the basis that disputes and differences arose on 18.03.1989
whereas the application was filed on 08.05.1992 i.e. to say 50 days beyond the period
of 3 years. The Division Bench also dismissed the appeal filed by the appellant on the
ground of limitation.
42. It is an admitted fact that the three branches of Singhania family are each entitled
to one-third share in immovable properties. It is stated that the rents of the properties
situated at Kanpur from family companies and other in whose favour tenancy had been
shown at nominal rents long time back after the dissolution of the partnership firm are
being collected by the branch of Padam pat Singhania and deposited in the bank
account titled J.K. Bankers (since dissolved). The said bank account was opened by the
erstwhile partners of J.K. Bankers upon dissolution of J.K. Bankers the rental income
from the properties in Kanpur, it is alleged is being credited by the branch of Padampat
Singhania to the credit of ex-partners account of J.K. Bankers in accordance with their
shares i.e. one-third share each after paying their very property tax and other
outgoings. Such credit balance in the account of such bankers is being paid to the
branches of Singhania family from time to time. The three branches of Singhania family
are showing the rental income in their returns of income tax as income from house
property and have to pay income-tax thereon in accordance with law. Furthermore, the
three branches of Singhania family are showing these properties having their own
undivided proportionate share in their wealth tax returns and have to pay wealth tax
therein in accordance with law. It is stated that Hari Shankar Singhania, appellant No. 1
and other members of Lakshmi Pat Singhania branch are not being credited with or paid
any monies/income whatsoever in respect of the Bombay property since the date of
dissolution of J.K. Bankers although they have to pay wealth tax returns. It is stated by
the appellants that the immovable properties in possession of the various respondents
are extremely valuable and required to be protected pending disposal of arbitration. It is
also stated that similar interim reliefs have been granted to the appellants as far back as
21.05.1992 passed by the Single Judge. Also learned Division Bench had passed an
interim order dated 15.04.1996. While dismissing the appeal on the ground of limitation
Division Bench of the High Court has extended the interim order by 12 weeks. This
Court on 27.08.2004 suggested to counsel appearing for all parties without looking into
the relationship of the parties and the nature of disputes, why not all the disputes
among the parties be directed to be placed for adjudication by an arbitrator or for
resolution by a conciliator. At the time of hearing, all the learned Counsel for the parties
assured that the interim order passed by the High Court shall be honoured by all the
parties until the matter comes up for hearing. On 03.01.2005, it was reported by
learned senior counsel appearing for respondent Nos. 1-9 that the parties are not

13
agreeable for settlement by conciliation. This Court, thereafter, granted leave and
posted the appeal for final hearing in the month of March, 2005. The matter was listed
on 06.09.2005. After hearing the parties, this Court passed the following order:-
Heard the parties
Having regard to the nature of dispute and the fact that the contesting parties
are close relatives, we are clearly of the view that it is still better that such
dispute is resolved through conciliation, so that the past ill
feelings/misunderstandings, if any, are evaporated in the thin air with the
resolution of the dispute. In response to our suggestion the parties agree to
refer to conciliator to be appointed by the Court. Accordingly, we appoint
Hon'ble Mr. Justice N. Santosh Hegde, retired Judge of this Court to be the
Conciliator to resolve the dispute through conciliation. The terms and
conditions and the place of sitting shall be decided by the Conciliator himself.
The fees and other expenses of the Conciliator shall be borne equally by the
three disputing parties.
We hope and trust that the parties will resolve their dispute through conciliation
with a view to maintain good relationship between the parties. This order is
passed without prejudice to the rights and contentions of the parties that may
raise in the proceedings. But it must be grasped that the approach of the parties
must be accommodative and keep no records of wrong.
List it after three months.
4 3 . Hon'ble Mr. Justice N. Santosh Hegde addressed a letter on 02.02.2006 to the
Registrar General, Supreme Court of India, New Delhi - 110 001 with reference to the
conciliation in the matter. The letter reads thus:
The Hon'ble Supreme Court of India vide its Order dated 06.09.2005 referred
the above matter for conciliation by me. I have held many meetings between
the parties and at one stage I was under the impression that a conciliation
could be possible, but unfortunately at a later stage it is found that such a
result could not be achieved. Having considered all the possibilities, I am to
report to the Hon'ble Court that the conciliation in the case referred to above,
has failed. Hence, I request you to kindly inform the Court accordingly.
I express my gratitude to the Court for having referred the conciliation to me.
44. It is thus seen that the above facts would clearly go to show that the contesting
respondent Nos. 1-9 are not at all interested in any conciliation, mediation or arbitration
but only interested in enjoying the bulk of the immovable properties of the firm and
refusing to carry out their obligations under and pursuant to the said Deed of
Dissolution by permitting the distribution of the said properties in specie and free from
any encumbrance as contemplated by the said Deed of Dissolution dated 26.03.1987
and the supplementary agreement dated 28.03.1987.
45. At the time of hearing, it was argued by learned senior counsel for respondent Nos.
1-9 that since the appellants have filed the suit, the same may be continued by the
appellants and a direction be issued to the Court concerned to dispose of the same
within a particular time frame. In reply, it was submitted that the suit was filed by the
appellants without prejudice to their rights and contentions under the arbitration clause
in the agreement and that the arbitration is the only effective and quick remedy. We

14
have extracted Clause 13 of the arbitration agreement which enable the parties to go for
arbitration in case there was a dispute between them. It has now come to a stage that
the real dispute has arisen between the parties. Already the matter is pending
adjudication from 1987 onwards, respondent Nos. 1-9 are admittedly in possession and
enjoyment of the valuable immovable properties depriving the valuable rights of the
appellants the other respondent Nos. 10-20. We should not, therefore, allow respondent
Nos. 1-9 to drag the proceedings any further. Parties have to settle their disputes one
day or the other. In our opinion, the time has now come to nominate a single Arbitrator
as provided under Clause 13 of the agreement. It was argued that in case this Court
allows the appeal, the matter may be remitted to the High Court for appointment of a
single Arbitrator and in case the parties are unable to agree upon a single Arbitrator a
panel of three Arbitrators shall be appointed as provided in the said agreement. We feel
that such a course, if adopted, would only enable the contesting respondent Nos. 1-9 to
squat on the property and enjoy the benefits, income etc. arising therefrom.
4 6 . We, therefore, appoint Hon'ble Mr. Justice S.N. Variava, a retired Judge of this
Court as a single Arbitrator and decide the dispute between the parties within 6 months
from the date of entering upon the reference. The occasion, if any, warrants the sole
Arbitrator may extend further reasonable time for completion of the Arbitration
proceedings. Learned Arbitrator is at liberty to fix his fees etc. and other expenses
which shall be borne equally by three parties. The arbitration shall be at Bombay or as
decided by the Arbitrator in consultation with the parties. The proceedings before the
Arbitrator shall be governed by the provisions contained in the Indian Arbitration Act,
1940 or by any statutory modification or re-enactment thereof.
47. It is seen from the plaint filed in the arbitration suit the following disputes and
differences, amongst others, have arisen between the parties and which are to be
resolved by the sole Arbitrator pursuant to the agreement:-
(a) To the extent defendant themselves are occupying such properties, the
defendants should be directed to vacate the properties to enable distribution of
the said properties in specie free from encumbrances;
(b) The defendants obligation to have vacant possession of the Immovable
properties listed at items 1 to 13 of Exhibit D hereto and to ensure that persons
other than themselves actually vacate the said properties so that the same are
available for distribution in specie free from encumbrances between the
plaintiffs and defendants pursuant to the said Deed of Dissolution;
(c) Directions and steps be taken by defendants to achieve the vacant
possession mentioned in paragraph (a) and (b) above;
(d) Distribution of the abovementioned properties in specie free from
encumbrances between the plaintiffs and defendants;
(e) Distribution of the properties mentioned at items 14 and 15 of the Exhibit D
hereto subject to the encumbrances;
(f) Fixation of equalization amount, if necessary;
(g) If for any reason any of the defendants do not permit and comply with
direction for getting vacant possession of any of the Immovable properties
listed in items 1 to 13 of Ex "D" to the plaint, then the same should be valued
on the basis of vacant possession and the plaintiffs should be paid their share

15
on the basis of the vacant possession by the defendants.

48. The aforesaid disputes are all covered by the arbitration clause and fall within the
scope and ambit thereof. The parties are at liberty to file their further pleadings, claims
etc. before the sole Arbitrator.
Conclusion: Better late than never
4 9 . We have already referred to the concept of family arrangement and settlement.
Parties are members of three different groups and are leading business people. We,
therefore, advise the parties instead of litigating in Court they may as well concentrate
on their business and, at the same time, settle the disputes amicably which, in our
opinion, is essential for maintaining peace and harmony in the family. Even though the
parties with a good intention have entered into the Deed of Dissolution and to divide
the properties in equal measure in 1987, the attitude and conduct of the parties have
changed, unfortunately in a different direction. Therefore, it is the duty of the Court that
such an arrangement and the terms thereof should be given effect to in letter and spirit.
The appellants and the respondents are the members of the family descending from a
common ancestor. At least now, they must sink their disputes and differences, settle
and resolve their conflicting claims once and for all in order to buy peace of mind and
bring about complete harmony and goodwill in the family.
50. For the foregoing reasons, we allow this appeal and set aside the orders passed by
the learned Single Judge and as affirmed by the Division Bench in Appeal No. 440/1996
in arbitration Suit No. 1904/1992 dated 09.06.2004. Parties are directed to bear their
own costs.
51. We direct all the parties to appear before the Arbitrator on 03.05.2006. The interim
order passed by the High Court shall be honoured by all the parties till the disposal of
the matter by the Arbitrator. Parties are at liberty to take further orders from the
Arbitrator.
© Manupatra Information Solutions Pvt. Ltd.

16
MANU/SC/7344/2007
Equivalent Citation: AIR2007SC 2441, 2007(2)ARBLR294(SC ), 2007 (3) AWC 2363 (SC ), 2007(3)ESC 412(SC ), JT2007(6)SC 175,
2007(3)RC R(C ivil)128, 2007(6)SC ALE164, (2007)5SC C 295, [2007]5SC R596, (2007)3UPLBEC 2112

Civil Appeal No. 2133 of 2007 (Arising out of SLP(C) No. 20764 of 2005)
Appellants: Maharshi Dayanand University and Ors.
Vs.
Respondent: Anand Coop. L/C Society Ltd. and Ors.
Tarun Chatterjee and P.K. Balasubramanyan, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Nidhesh Gupta, U.N. Shukla and S. Janani, Advs
Case Note:
Arbitration and Conciliation Act, 1996 - Sections 7 and 11--Appointment of
Arbitrator--Validity --District Judge, controlled then as he was by decision in
Konkan Railway Construction Ltd., (2002) 2 SCC 388 : 2001 (1) AWC 59 (SC),
appointed Arbitrator relying on Clause 25A in tender conditions--In S.B.P. &
Co., (2005) 8 SCC 618 : 2006 (1) SCCD 278 : 2003 (4) AWC 2880 (SC),
Constitution Bench overruled Konkan Railway Construction Ltd. (supra)--But
under para 46 of that decision prior orders and proceedings have been saved--
Hence, question whether when tender accepted, acceptance conveyed, time
for completing work stipulated to start from acceptance, work to commence
on basis of acceptance but no payment to be made until formal contract
signed--Left to be decided by Arbitrator--Same is position regarding Clause 13
of tender--Arbitrator, in first instance, to decide whether existence of
arbitration agreement in terms of Section 7 established--Parties at liberty to
raise all contentions based on lack of jurisdiction of arbitral Tribunal before
Arbitrator.
Ratio Decidendi:
"Arbitrator - Appointment of - Arbitrator had jurisdiction to decide whether in
absence of parties signing the contract containing detailed specifications in
respect of appointment of arbitrator in case of dispute whether party would
be precluded from seeking arbitration"
Case Category:
ARBITRATION MATTERS
JUDGMENT
P.K. Balasubramanyan, J.
1. Leave granted.
2. In spite of service of notice and in spite of repeated conveying of information about
the posting of the petition for special leave to appeal for final disposal, the respondent

17
has not chosen to appear. We think we have waited enough for the appearance of the
respondent and no further indulgence is warranted. Heard counsel for the appellant.
3. The appellant invited tenders for construction of sheds near its Swimming Pool at an
estimated cost of Rs. 10.70 lakhs. Respondent No. 1 submitted its tender. The tender
form submitted by the respondent contained the following clause:
Clause 25A. (1) If any dispute or difference of any kind whatsoever shall arise
between the vice-Chancellor M.D.U. Rohtak, and the contractor in connection
with or arising out of the contract, or the execution of the work that is (i)
whether before its commencement or during the progress of the work or after
its completion, (ii) and whether before or after the termination, abandonment
or breach of the contract it shall in the first instance be referred to for being
settled by the Executive Engineer in charge of the work at the time and he shall
within a period of sixty days after being requested in writing by the contractor
to do so, convey his decision to the contractor, and subject to arbitration as
herein after provided, such decision in respect of every matter so referred, shall
be final and binding upon the contractor. In case the work is already in
progress, the contractor will proceed with the execution of the work on the
receipt of the decision of the Execution Engineer-in-charge as aforesaid, with
all due diligence whether he or Vice-Chancellor, M.D.U., Rohtak requires
arbitration as hereinafter provided or not. If the Executive Engineer, in-charge
of the work has conveyed his decision to the contractor and no claim to
arbitration has been filed with him by the contractor within a period of sixty
days from the receipt of letter communicating the decision, the said decision
shall be final and binding upon the contractor and will not be subject matter of
arbitration at all. If the Executive Engineer in-charge of the work fails to convey
his decision within a period of sixty days, after being requested, as aforesaid,
the contractor may, within further sixty days of the expiry of first sixty days
from the date on which request has been made to the Executive Engineer in-
charge request the Vice- Chancellor, that the matter in dispute be referred to
arbitration, as hereinafter provided.
(2) All disputes or differences in respect of which the decision not final and
conclusive shall at the request in writing of either party, made in
communication sent through registered A.D. Post, be referred to the sole
arbitration to Vice-Chancellor, M.D.U., Rohtak at the relevant time. It will be no
objection to any such appointment that the arbitrator so appointed is a
Government servant or that he had to deal with the matters to which the
contract relates and that in the course of his duties as a Government servant,
he had expressed his views on all or any of the matters in dispute. The
arbitrator to whom the matter is originally referred being transferred or
vacating his office, his successor-in-office, as such shall be entitled to proceed
with the reference from the stage at which it was left by his procedure.
In case the arbitration nominated by the Vice- Chancellor, M.D.U., Rohtak is
unable to act as such for any reason, whatsoever the Vice- Chancellor,M.D.U.,
Rohtak shall be competent to appoint and nominate and other Superintending
Engineer or Chief Engineer, as the case may be as arbitrator in his place and
the Arbitrator so appointed shall be entitled to proceed with the reference.
(3) It is also a term of this arbitration agreement that no person appointed by
the Vice-Chancellor,M.D.U., Rohtak shall act as arbitrator and if for any reason

18
that is not possible the matter shall not be referred to arbitration at all.
In all cases where the aggregate amount awarded exceeds Rs. 25,000/- the
arbitrator must invariably give reason for his award in respect of each claim and
counter claim separately.
(4) The arbitrator shall award against each claim and dispute raised by either
party including any counter claim individually and that any lump-sum award
shall not be legally enforceable.
(5) The following matters shall not lie within the purview of arbitration:
(a) Any dispute relating to the levy of compensation as liquidated
damages which has already been referred to the Superintending
Engineer and is being heard or/and has been finally decided by the
Superintending Engineer in-charge of the work.
(b) Any dispute in respect of substituted, altered, additional
work/committed work/defective work referred by contractor for the
decision of the Superintending Engineer, in-charge of the work if it is
being heard or has already been decided by the said Superintending
Engineer.
(c) Any dispute regarding the scope of the work or its execution or
suspension or abandonment has been referred by the contractor for the
decision of the Vice- Chancellor, M.D.U., Rohtak and has been so
decided finally by the Vice-Chancellor,M.D.U., Rohtak.
(6) The independent claim of the party other than the one getting the arbitrator
appointed, as also counter-claims of any party will be entertained by the
arbitrator notwithstanding that the arbitrator had been appointed at the instance
of the other party.
(7) It is also a term of this arbitration agreement that where the party invoking
arbitration is the contractor, no reference for arbitration shall be maintainable
unless the contractor furnishes to the satisfaction of the Executive Engineer in-
charge of the work, a security deposit of a sum determined according to details
given below and the sum so deposited shall, on the termination of the
arbitration proceedings, be adjusted against the cost, if any, awarded by the
arbitration against the claimant party and the balance after such adjustment in
the absence of any such cost being awarded, the whole of the sum will be
refunded to him within one month from the date of the awards:
The stamp fee due on the award shall be payable by the party as desired by the
arbitrator and in the event of such party's default the stamp fee shall be
recoverable from any other sum due to such party under this or any other

19
contract.
(8) The venue of the arbitrator shall be such place or places as may be fixed by
the arbitrator in his sole discretion. The work under the contract shall continue
during the arbitration proceeding.
(9) Neither party shall be entitled to bring a claim for arbitration if appointed
for such arbitrator has not been applied within six months.
(a) of the date of completing of the work as certified by the Executive
Engineer in-charge, or
(b) of the date of abandonment of the work, or
(c) of its non-commencement within 6 months from the date of
abandonment or written orders to commence the work as applicable, or
(e) of the completion of the work through any alternative agency or
means after withdrawal of the work from the contractor in whole or in
part and/or its recession, or
(f) of receiving an intimation from the Executive Engineer in-charge of
the work that final payment due to or recovery from the contractor had
been determined which he may acknowledge and/or receive. Whichever
of (a) to (e) is the latest.
If the matter is not referred to arbitration within the period prescribed above,
all the rights and claim of any party under the contractor shall be deemed to
have been forfeited and absolutely barred by time even for civil litigation now
with standing.
(10) It is also a term of this arbitration agreement that no question relating to
this contract shall be brought before any civil court without first involving and
completing the arbitration proceedings as above, if the scope of the arbitration
specified herein covers issues that can be brought before the arbitrator i.e. any
matter that can be referred to arbitration shall not be brought before a civil
court. The pendency of arbitration proceedings shall not disentitle the Vice-
Chancellor,M.D.U., Rohtak to terminate the contract and make alternative
arrangements for the completion of the work.
(11) The arbitrator shall be deemed to have entered on the reference on the day
he issues notices to the parties fixing the first date of hearing. The arbitrator
may, from time to time, with the consent of the parties enlarge the initial time
for making and publishing the award.
(12) It is also a term of this arbitration agreement that subject to the
stipulation herein mentioned, the arbitration proceedings shall be concluded in
poor ordinance with the provisions of the Arbitration Act, 1940 or any other law
in force for the time being.
Obviously, this tender form was signed on behalf of respondent No. 1 when it was
submitted to the appellant. It was dated 12.09.2003.
4 . The tender so submitted by the respondent was accepted by the appellant. It was
stated in the letter of acceptance, dated 22.11.2003, singed on behalf of the appellant:

20
As approved by the tender committee in its meeting held on 12.10.2003 and

further approved by the competent authorities, the acceptance of your tender
for the work cited as subject, is further conveyed to you on behalf of the
Registrar, M.D.U., Rohtak at the rates contained in your tender dated
12.9.2003. This is subject to the terms and conditions of the approved Detailed
notice inviting tender (INIT) of the above works.
(emphasis supplied)
The date of start of the work was indicated to be "from the date of issue of this letter."
The time limit was fixed as four months. It contained a further stipulation:
You are requested to contact the SDE (C-1) M.D.U. Rohtak for taking the work
in hand. The document containing the detailed terms and conditions of the
contract are ready and you are requested to attend this office on any working
day for signing the same. No payment will be made to you unless you sign the
contract agreement. The contract stands concluded with the issue of this
communication.
(emphasis supplied)
The respondent, admittedly deposited an earnest money of Rs. 10,700/-.
5. It is the case of the appellant that the site was not demarcated. It is common case
that a document containing detailed terms and conditions of the contract as envisaged
by the acceptance letter was not signed by the parties. In the letter dated 8.3.2004 the
appellant informed the respondent that it had decided not to get the work executed. The
letter also called upon the respondent to get the earnest money of Rs. 10,700/-
refunded.
6 . The respondent issued a notice to the appellant invoking Clause 25A of the tender
conditions quoted above, calling upon the appellant to appoint an arbitrator in terms of
that clause on a claim that on acceptance of his tender, the respondent had made
arrangements for commencing the work, had put up sheds, had engaged labourers and
had procured materials and on cancellation, losses have been incurred and the
respondent was entitled to recover the same from the appellant. The appellant took the
stand that under Clause 13 of the tender conditions, the appellant was entitled to decide
not to proceed with the work and no claim, as made on the side of the respondent, was
maintainable. Clause 25A had no application. The claims were also factually disputed.
7. In that context, respondent No. 1 invoked the jurisdiction of the District Court under
Section 11 of the Arbitration and Reconciliation Act, 1996 (for short 'the Act') seeking
the appointment of an arbitrator. After referring to the invitation for tenders, its
submission of tender, and of its acceptance, the respondent also disclosed that no
agreement was signed between the parties but asserted that the conditions mentioned
in the tender form were made applicable. The respondent requested to the court to call
upon the appellant to produce the original tender form submitted by the respondent.
The appellant accepted the fact that the tender of the respondent had been accepted.
But the appellant was not liable to pay any damages in view of Clause 13 of the tender
conditions. No payment was to be made unless the contract agreement was signed. It
also contended that the dispute that was sought to be raised by the respondent was
outside Clause 25A of the tender conditions relied on by the respondent.
8. The District Judge, controlled as he then was, by the decision in Konkan Railway
Corporation Ltd. and Anr. v. Rani Construction Pvt. Ltd. MANU/SC/0053/2002 :

21
[2002]1SCR728 , appointed the Superintending Engineer as arbitrator by relying on

Clause 25A of the tender conditions, leaving it to the parties to raise all objections,
including the objection to his jurisdiction, before the arbitrator in terms of Section 16 of
the Act. Feeling dissatisfied, the appellant filed a writ petition before the High Court
relying on the decision of this Court that since the order based on the application under
Section 11 was an administrative order, a writ petition was maintainable, by referring to
State of Orissa and Ors. v. Gokulananda Jena MANU/SC/0510/2003 :
AIR2003SC4207 . The High Court held that the objections sought to be raised could be
raised by the appellant before the arbitrator and there was no reason for the High Court
to interfere with the order appointing an arbitrator in the circumstances of the case. It is
feeling aggrieved thereby that the appellant has come up with this appeal by special
leave.
9. learned Counsel for the appellant submitted that no contract as contemplated by the
parties containing the detailed terms and conditions was signed by the parties and in
the circumstances there was no arbitration agreement as understood in the Act
justifying the appointment of an arbitrator. Counsel brought to our notice Section 7 of
the Act. Counsel also referred to the fact that in the subsequent decision in S.B.P. &
Company v. Patel Engineering Ltd. and Anr. MANU/SC/1787/2005 : AIR2006SC450
this Court has overruled the decision in Konkan Railway Corporation Ltd. and Anr.
(supra) and the ratio thereof is no more available to the respondent. Counsel also
referred to the decision in Willington Associates Ltd. v. Kirit Meta
MANU/SC/0232/2000 : AIR2000SC1379 to submit that a question whether there was an
arbitration clause or not, had to be decided by the court even under the dispensation
recognized by the earlier decision in Konkan Railway Corporation Ltd. and Anr.
(supra). Counsel submitted that in view of the fact that a contract in writing had not
come into existence by both the parties by affixing their signatures as contemplated by
them, there was no concluded contract in the case on hand and it was just and
necessary to interfere with the order appointing the arbitrator. As we have indicated
earlier, the respondent has not chosen to appear before us to answer these contentions.
10. The present case is governed by the procedure that was available when Konkan
Railway Corporation Ltd. and Anr. (supra) held the field. That orders already made
were not to be affected by the ratio of the decision in S.B.P. & Company (supra) is
clear from paragraph 46 of that decision wherein prior orders and proceedings have
been saved. Therefore, the only question for decision is whether the fact that the parties
have not signed the contract containing the detailed specifications as contemplated by
the letter of acceptance would preclude the respondent from seeking an arbitration by
falling back on Clause 25A of the tender conditions quoted above. It is true that when
parties during negotiations contemplate the execution of a formal agreement
incorporating the terms of the bargain, so long as a formal agreement has not been
entered into, it may be open to contend that there was no concluded contract between
the parties. As against this, what is the position in a case where the tender submitted is
accepted, its acceptance conveyed and the time for completing the work is stipulated to
start from such acceptance, and the work was to commence on the basis of that
acceptance but no payment was to be made until a formal contract was signed, is the
first question that arises in this case. We think that in the circumstances, this is a
question that must be left to be decided by the arbitrator, since in terms of Section 16
of the Act the question can be raised before the arbitrator. Considering that we are
dealing with the pre S.B.P. & Company (supra) dispensation, we do not think that it is
necessary or proper for us to go into that question and decide the same in these
proceedings. Same is the position regarding the scope of Clause 13 of the tender and
the clauses relied on by counsel for the appellant in his attempt to take the present

22
claim out of Clause 25A of the tender conditions. We are, therefore, satisfied that it
would be appropriate to leave this question, as also the other questions to be decided
by the arbitrator rather than our trying to answer them at this stage in view of the fact
that this case is not governed by the principles recognized by S.B.P. & Company
(supra).
11. But we make it clear that the arbitrator, in the first instance, has to decide whether
the existence of an arbitration agreement in terms of Section 7 of the Act is established
and also to decide whether the claim now made is a claim that comes within the
purview of Clause 25A of the tender conditions in case it is found to be an agreement
within the meaning of Section 7 of the Act. Only on deciding these two aspects can the
arbitrator go into the merits of the claim made by the respondent. But we clarify that it
does not mean, that he should treat these two aspects as preliminary issues and decide
them first; but only that he must decide them without fail while proceeding to finally
pronounce his award.
12. In this view of the matter, we see no reason to interfere with the appointment of an
arbitrator. We dismiss this appeal giving liberty to the parties to raise all their
contentions based on lack of jurisdiction of the arbitral tribunal before the arbitrator.
The arbitrator will permit the appellant to amend or supplement the objections already
filed by it if it is felt necessary by the appellant. We make no order as to costs.
‰-08-2020 (Page 7 of 7) www.manupatra.com AMIT GEORGE

23
MANU/SC/0602/2008
Equivalent Citation: AIR2008SC 1363, 2008(1)ARBLR238(SC ), JT2008(1)SC 514, 2008(3)MhLj33, 2008(3)MhLJ33(SC ), (2008)8MLJ179(SC ),
2008MPLJ261(SC ), 2008(2)PLJR41, 2008(1)RC R(C ivil)934, 2008(1)SC ALE597, (2008)2SC C 444

Civil Appeal Nos. 1971-1973 of 2000
Appellants:J.C. Budhraja
Vs.
Respondent:Chairman, Orissa Mining Corporation Ltd. and Ors.
H.K. Sema, G.P. Mathur and R.V. Raveendran, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: A.K. Panda and T.S. Doabia, Sr. Advs., Rutwik Panda
and Mridul Aggarwal, Advs
For Respondents/Defendant: C.S. Vaidyanathan, Sr. Adv., K.V. Viswanathan, Rajeev
Singh and Anup Kumar Singh, Advs.
Case Note:
Arbitration - Dispute regarding claims - Reference to Arbitrator - Limitation -
Section 18 of Limitation Act, 1963 - Work was completed on 15th June, 1975
as per the contractual agreement between the parties - Dispute between
contractor-Appellant and the Respondent regarding various claims - Final bill
signed by the contractor under protest on 14th April, 1977 - Respondent
wrote a letter on 28th October, 1978 acknowledging the pending claims of
the contractor - Notice invoking arbitration was issued on 4th June, 1980 -
Arbitrator awarded certain amount in favour of the contractor - Contractor
filed a suit for making the award rule of the Court on the file of the Civil
Judge - Objections to the award filed by the Respondent was overruled by the
Court and directed that the award of the Arbitrator be made the rule of the
Court and a decree be drawn in terms of the award - Respondent filed a
Miscellaneous appeal, challenging the decision of the Civil Judge refusing to
set aside the award - Contractor also filed a Miscellaneous Appeal and Civil
Revision claiming future interest from the date of decree - High Court allowed
the appeal filed by the Respondent and dismissed the appeals filed by the
contractor as barred by limitation - Hence, the present appeal - Whether the
claim made before the Arbitrator or any part thereof was barred by limitation?
- Held, by virtue of Section 18(1) of Limitation Act, where, before the
expiration of the prescribed period for a suit or application in respect of any
right, an acknowledgement of liability in respect of such right has been made
in writing signed by the party against whom such right is claimed, a fresh
period of limitation shall be computed from the time when the
acknowledgement was so signed - An acknowledgement should be of a
present subsisting liability - An acknowledgment made with reference to a
liability, cannot extend limitation for a time barred liability or a claim that
was not made at the time of acknowledgment or some other liability relating
to other transactions - Any admission of jural relationship in regard to the

24
ascertained sum due or a pending claim, cannot be an acknowledgement for a

new additional claim for damages - In the present case, in view of the
acknowledgement in writing on 28th October, 1978 and payment of certain
amount on 4th March, 1980, the limitation stood extended by three years
from 4th March, 1980 - Further, it was not in dispute that the contractor
issued the notice invoking arbitration on 4th June, 1980 and immediately
filed a petition under Section 8(2) of the Act for appointment of Arbitrator -
Therefore, whatever claims made before the Arbitrator which was part of the
claim was within time, having been made within three years from 28th
October, 1978 and 4th June, 1980 - Impugned Judgment set aside - Appeals
partly allowed
Arbitration - Award - Setting aside of - Exceeding of jurisdiction - Ground of -
Whether the award liable to be set aside on the ground that the Arbitrator
exceeded his jurisdiction? - Held, by awarding more than what was claimed in
the claim statement, the Arbitrator clearly exceeded his jurisdiction -
Arbitrator thereby committed a legal misconduct and the award to that extent
liable to be set aside - Award of the Arbitrator in respect of time barred claim
is an error apparent on the face of the award - Part of the claims, which were
not barred by limitation and validly raised before the Arbitrator is separable
and need not be set aside - Hence, those claims which were barred by
limitation are liable to be set aside on ground of Arbitrator exceeding
jurisdiction
Ratio Decidendi:
"A fresh period of limitation shall be computed from the time when the
acknowledgement of liability was signed in respect of a right by the party
against whom such right is claimed."
"If the Arbitrator awarded more than what was claimed then the Arbitrator is
said to have exceeded his jurisdiction."
Case Category:
ARBITRATION MATTERS
JUDGMENT
R.V. Raveendran, J
1 . These appeals are filed against the common judgment dated 15.10.1999 passed by
the High Court of Orissa in Misc. Appeal No. 296/1998 filed by the respondents and
Misc. Appeal No. 198/1998 and Civil Revision No. 109/1998 filed by the appellant.
2 . The appellant is stated to be legal heir and successor in interest of N.C. Budhraja
(hereinafter referred to as the contractor). M/s. Orissa Mining Corporation Ltd. (for
short OMC or respondent) entered into an agreement dated 16.9.1967 (Agreement No.
30/F-2) for removal of over-burden at Kaliapani (Cuttack District) by excavation in all
kinds of soil (including stoney earth and gravel mixed with boulders), and
depositing/disposing of the same, as directed. The maximum lift was 6m including
initial lift of one metre. The order to commence work was issued on 23.9.1967. Parties
also entered into three supplementary agreements in regard to the said contract No.
30/F-2, on 2.8.1969, 7.3.1970 and 10.2.1972. [Note : OMC had also entered into other
contracts with the contractor including contract dated 22.2.1968 (Contract No. 2/F/2)

25
for raising Chrome Ore by open excavation from the said mining area. We are not
concerned with those contracts in these appeals].
3. The main agreement enumerated two items of work in its schedule. The first, second,
and third supplementary agreements enumerated respectively eight items, one item and
four items in their respective schedules. The work was completed by the contractor on
15.6.1975. The final bill in respect of the work was prepared by OMC on 21.10.1976. It
was revised in March-April 1977 by OMC. The final Bill It showed the total value of the
work done (under several items in the schedule to main and three supplementary
agreements) as Rs. 1,49,190,76.74. The contractor countersigned the said bill on
14.4.1977 under protest, but, however, certified and confirmed that the measurements
shown therein were correct.
4 . According to the contractor, having regard to the zig-zag route by which the over
burden had to be carried, the actual lead was much longer and actual lift was much
higher than what were stipulated in the agreement. He contended that the amounts
shown as due for the work done was as per contract rates which was for removing
overburden to the extent of lift and lead provided in the contract schedules; and at
several places, he had to cut and remove the over-burden beyond the extent of lift and
lead provided in the contract, and he should be paid for such extra leads and lifts. He
claimed to have executed certain additional works not provided in the contract
schedules, on the directions of OMC. He therefore represented that the matter may be
examined and enquired into for determination of proper amounts due. In view of the
several representations made by the contractor in respect of the contract No. 30/F-2 as
also other contracts, OMC sent the following letter dated 28.10.1978 to the contractor :
Re : Settlement of pending claims.
You had called on Chairman, OMC, recently and apprised him of the dues
receivable by you in respect of certain long pending matters such as mine
benches work and raising at Kaliapani Quarry-I. In the matter of Kaliapani it
has been decided to constitute a committee which will go separately into your
claims and other facts, in which connection you are requested to give all
possible help and assistance, so that your dues, if any, will be ascertainable.
In regard to other pending matters, you had indicated yourself that you will
give the details of claims and payment received by you. This may be given
within a day or two so as to enable OMC to settle up the above at the earliest.
5 . The contractor sent a reply dated 16.11.1978 enclosing therewith a statement
quantifying his claims relating to contract No. 30F-2 (subject matter of these appeals)
as also another contract (no. 2F-2). A Committee was constituted by OMC to scrutinize
and recommend on the admissibility of the claims made by the contractor in regard to
Agreement No. 30/F-2 and Agreement No. 2/F-2. Several meetings were held by the
said Committee and the claims of the contractor aggregating to Rs. 50,15,820 in regard
to contract No. 30.F2 were considered. Ultimately the Committee submitted a final
report dated 7.12.1979 expressing the view that the contractor could be paid only a
sum of Rs. 3,52,916/- in regard to his claims in respect of the two contracts. The
contractor, thereafter, wrote a letter dated 29.2.1980 stating that he had come to know
that the Committee had submitted its final report and requested for a copy of the report
and for payments of the amounts due. OMC sent a reply dated 4.3.1980 stating that the
claims were not accepted yet but however agreed to release a sum of Rs. 3.5 lakhs and
released the said sum on that day.

26
6 . The contractor sent a notice dated 4.6.1980 invoking the Arbitration Agreement
(Clause 23) in respect of pending claims relating to Contract No. 30F-2 and two other
contracts. He suggested a panel of names and requested OMC to appoint one of them as
Arbitrator. Immediately, thereafter, the contractor filed Misc. Case No. 306/80 in regard
to the contract in the Court of the Sub-Judge, Bhubaneswar, under Section 8(2) of
Arbitration Act, 1940 ('Act' for short) for appointment of an Arbitrator. The court
allowed the said petition by order dated 6.10.1980 appointing Mr. Justice Balakrishna
Patro, a retired Judge of the Orissa High Court as Arbitrator by consent. On 16.12.1982,
an application was made by the present appellant under Order 22 Rule 3 CPC claiming
to be the son of legatee of the contractor and for substituting him in place of the
deceased N.C. Budhraja, as his legal heir. The said application was allowed by the court
on 15.11.1985. In the meanwhile, Arbitration Act, 1940 ('Act' for short) was amended
by the Arbitration (Orissa Amendment) Act, 1984, inserting Section 41A providing for
constitution of and reference to the Arbitration Tribunal. By Notification dated 3.5.1986,
(amended by Memo dated 23.6.1986) the State Government constituted a one Member
Special Arbitral Tribunal with Justice N. K. Das as Arbitral Tribunal to settle the disputes
between the contractor and OMC in regard to contract No. 30/F-2.
7. The contractor filed a claim statement dated 27.6.1986 before the arbitrator praying
for an award of Rs. 3,41,42,040 with interest from 1.6.1986, as detailed below:
In the claim statement filed before the arbitrator, the nature and quantum of claim made
was different from what was claimed in the letter dated 16.11.1978 which was
considered by the Committee. In the claim statement the contractor abandoned claims
to an extent of Rs. 21,83,692 out of the claim of Rs. 50,15,820/- made on 16.11.1978
and claimed only Rs. 26,32,128 from the original claim. The balance of the claim was
fresh claims, not made earlier. The claim of Rs. 95,96,616 made before the arbitrator
was made up of two parts, first being a part of the original claim made in the letter
dated 16.11.1978 and the second being completely fresh claims made for the first time
in the claim statement, as detailed below :
8 . The Arbitrator made a reasoned award dated 28.11.1986 holding that the appellant
was entitled to a sum of Rs. 1,02,66,901.36 (which was more than the claim of Rs.

27
95,96,616) with interest at 12% per annum from 1.8.1977 till date of award, and future
interest at the rate of 6% P.A. from the expiry of one month from the date of the award
till date of decree. The award is in respect of 35 claims. Out of 35 claims, Items 1 to 16
related to the schedule in items of work under the contract (main agreement and the
supplementary agreement 1 to 3). Items 17 to 34 were in respect of work which did not
form part of the contract schedule. Claim 35 related to escalation in cost of labour and
material on account of delay in execution.
8.1) The details of the items 1 to 16, (that is description of work, total amount claimed,
amount admitted, difference in dispute and amount awarded) are as under :
SI. Description of item Claim of Amount Amount in Award by
No. Contractor admitted by dispute Arbitrator
OMC
1 Removal of 50802.98 45040.32 5762.66 5762.66
overburden in all
kinds of soil etc.
within a lead of 100
m. (Maximum lift
6M)
2 Removal of 406881.20 406581.20 300.00 300.00
overburden etc.
within a lead of one
km beyond initial
lead of 30 m
(maximum lift -
6m)
3 Transportation of 676228.94 616245.60 59983.34 59983.34
excavated
overburdened etc.,
within a lead of 1
km beyond initial
lead of 6m
4 Transportation of 5361.09 5361.09 0 0
excavated over
burdened etc.,
within a lead of
2km beyond one
km.
5 Clearing heavy 6201.72 3303.72 2898.00 0
jungle etc.,
6 Cutting and 29800.80 14205.60 15595.20 0
uprooting trees etc.,
5' grith
7 Cutting and 11352.00 3360.00 7992.00 0
uprooting trees etc.,
5' to 10' grith
8 Excavation of 3689850.00 3390979.12 298870.88 298870.88
overburden in all
kinds of rocks etc.,
upto 60m lead
9 Excavation of10379041.20 10379041.20 0 0

28
9 Excavation of 10379041.20 10379041.20 0 0

overburden in all
kinds of rock etc.,
upto 2km distance
and within lifts of
35m
10 Lift beyond 15m 5066.85 5054.84 12.01 12.01
upto 16m depth
11 Lift beyond 16m 9858.70 9785.55 73.15 73.15
upto 17m
12 Lift beyond 17m 12647.79 12373.84 273.95 273.95
upto 18m
13 Lift beyond 18m 13358.54 13037.07 321.47 321.47
upto 19m
14 Lift beyond 19m 9812.25 9447.79 364.46 364.46
upto 20m
15 Lift beyond 20 upto 5070.33 4882.89 187.44 187.44
21m
16 Lift beyond 21m 89.71 76.89 12.82 12.82
upto 22m
1,53,16,507.00149,19,076/72 397,430/28 365,62/18
Though in the claim statement, the appellant had clearly stated that he had in all
received Rs. 149,88,566/90, and given credit for the said sum, during the hearing, the
appellant contended that instead of Rs. 149,88,566/90, he had appropriated only Rs.
120,01,695/90 towards this contract and that the balance of Rs. 29,86,871/- had been
adjusted towards some other contacts. Even though the claim statement was not
amended, the Arbitrator proceeded on that basis and awarded Rs. 32,83,243 in respect
of items 1 to 16 as under :
8.2) Claims of contractor at Sl. No. 17 to 34 related to items of work not covered in the
schedule to the contract, for which claim was made on the basis of damages/quantum
meruit. As against the total of Rs. 70,56,573/55 claimed in regard to these 18 items
(Items 17 to 34), the Arbitrator awarded in all Rs. 52,56,847/36. The details of the
claims made by the appellant and the amount awarded in respect of each of them are as
under :
S. No. Description of item Amount Amount
Claimed Awarded
17 Extra Mead Lead for 90 m 2810144.10 2450042.88
18 Removal of excavated 54888.60 50858.60
materials from the edge of

29
the quarry
19 Unmeasured quantity of 848372.64 664720.00
excavation
20 Catch Water Drain 278842.50 27842.50
21 Removal of slipped earth 143646.00 Nil
from side slopes
22 Restoration of benches to 186761.16 140070.87
proper shape
23 Bullah Pilling to prevent15722.70 Nil
slipping of benches
.24 Dry rubble packing 202499.00 122856.40
25 Extra lift during construction 262837.73 262837.73
of Haul Road
26 Extra lift for excavated 360690.49 270517.88
materials dumped at quarry
edge.
27 Extra lift measured by 1396128.63 1047096.50
Surveyor but not paid
28 Idle labour due to non- 145577.00 Nil
supply of working plan
29 Idle labour due to want of 76850.00 Nil
working site
30 Idle labour due. To stoppage 389288.00 194644.00
of work by the respondent
and restriction of working
area
31 Repairing of Haul road 10640.00 Nil
damaged by cyclone
32 Reconstruction of Damsala 25370.00 25370.00
Embankment
33 Barbed wire fencing 27315.00 Nil
34 Supply of electricity to work 72000,00 Nil
site and respondent's colony
Rs. Rs.
70.56,573/55 52.56,847/36
8.3) The last item of claim of the appellant, namely item No. 35 was for Rs.
22,17,188/34 as escalation in cost between 1972 and 1975 on account of increase in
cost of labour and material, based on the General Price Index. The Arbitrator
determined the value of work executed after 1.4.1973 as Rs. 52,96,967/-. He awarded
an escalation of 32.6% on the said value of work and awarded Rs. 17,26,811.00 as
escalation in cost of labour and material.
8.4) Thus the Arbitrator awarded Rs. 102,66,901.66 to the appellant as detailed below
(exclusive of interest), as against the claim of Rs. 95,96,616/- (exclusive of interest)
made by the appellant :

30
9. The contractor filed OS No. 224/1986 for making the award rule of the court, on the
file of the Civil Judge, Sr. Division, Bhubaneswar. The objections to the said award filed
by OMC were registered as Misc. Case No. 5/1987. The said court, by common
judgment dated 21.3.1998, overruled the objections and directed that the award of the
arbitrator be made the rule of the court and a decree be drawn in terms of the award.
10. Feeling aggrieved, OMC filed Misc. Appeal No. 296/1998, challenging the decision
of the Civil Judge refusing to set aside the award, directing a decree in terms of the
award. The contractor filed Misc. Appeal No. 198/1998 and Civil Revision No. 109/1998
claiming future interest from the date of decree as the judgment of the Civil Judge was
silent on that aspect. The High Court heard and disposed of the said appeals and
revision petition by common judgment 15.10.1999. It allowed Misc. Appeal No.
296/1998 filed by OMC and dismissed M.A. No. 198/1998 and C.R. No. 109/1998 filed
by the contractor. The High Court held :
(i) The claim of the contractor was barred by limitation and therefore the award
was liable to be set aside.
(ii) The arbitrator acted beyond his jurisdiction in awarding huge amounts
towards alleged extra work, even though there was nothing to indicate that
conditions contemplated in proviso to Clause 11 (relating to additional work)
were satisfied.
(iii) Though the award purported to be a reasoned award, the award in regard
to Items 17, 18, 19 and 25 to 27 was not supported by any reason and
therefore, the award was liable to be set aside.
(iv) The award in respect of escalation in cost (item 35) at the rate of 32.6% of
the value of work was without basis, (when the claim itself was for a lesser
rate), in the absence of any provision in the contract for escalation, amounted
to legal misconduct.
(v) The award being in excess of the claim made by the contractor shocked the
judicial conscience of the court.
(vi) Interest could have been awarded by the arbitrator only from the date of
reference (6.10.1980) and could not be awarded in regard to any pre-reference
period.
(vii) Though in the normal course, some of the issues would have necessitated
remitting the matter to the arbitrator for fresh consideration, it was not
necessary to remit the matter as the entire award was being set aside on the
ground of limitation.
The said decision of the High Court is challenged by the appellant in this appeal by
special leave.

31
11. On the contentions urged, the following questions arise for consideration :
(i) Whether the claim made before the arbitrator or any part thereof was barred
by limitation?
(ii) Whether the award is liable to be set aside on the ground of legal
misconduct and the error apparent on the face of the award?
(iii) Whether the award is liable to be set aside on the ground that the
arbitrator exceeded his jurisdiction ?
(iv) To what relief the parties are entitled?
Questions (i) and (ii) :
12. The Arbitrator held that the claims were not barred. He held :
In the case of a suit, the date on which the cause of action arises is the date
from which the limitation period starts. Under Section 20, it is the date on
which the right to apply accrues that determines the starting point. That starting
point does not coincide with the date on which the cause of action for filing a
suit arises. The same principle would apply to an application under Section 8 of
the Act.... The claimant signed the final bill on 14.4.1977 under protest. It is
not correct to say that the claimant accepted the final bill.... All these factors
show that negotiation was going on and the matter was in a nebulous and fluid
stage. The committee gave its report in December, 1979. In March, 1980 some
portion out of the money said to have been found due by the committee was
paid on ad hoc basis. Notice was given by the contractor on 14.6.80. So, the
dispute as to final bill still continues. Till the final bill is prepared and accepted
by the contractor, limitation would not accrue. When the matter went to court in
1980, it was not barred by limitation...
1 3 . The High Court found that the work was completed on 15.6.1975, final
measurement was taken on 16.6.1975 and the final bill was signed by the contractor
under protest on 14.4.1977 and therefore held that the cause of action for the
contractor to make a claim arose on 14.4.1977. According to the High Court, as the
notice invoking arbitration was issued on 4.6.1980 and the petition under Section 8(2)
of the Act was filed thereafter, beyond three years from 14.4.1977, the entire claim was
barred by limitation. The High Court further held that as the final bill was signed under
protest by the contractor, it could be said that the cause of action arose on a date
subsequent to the date of signing of the final bill. It further held that the fact that the
Departmental Committee considered the claims in 1979, subsequent to the signing of
the final bill under protest, did not have the effect of saving/extending limitation in the
absence of any acknowledgement in writing as required under Section 18 of the Act.
14. Section 18 of the Limitation Act, 1963 deals with effect of acknowledgement in
writing. Sub-section (1) thereof provides that where, before the expiration of the
prescribed period for a suit or application in respect of any right, an acknowledgement
of liability in respect of such right has been made in writing signed by the party against
whom such right is claimed, a fresh period of limitation shall be computed from the
time when the acknowledgement was so signed. The explanation to the section provides
that an acknowledgement may be sufficient though it omits to specify the exact nature
of the right or avers that the time for payment has not yet come or is accompanied by a
refusal to pay, or is coupled with a claim to set off, or is addressed to a person other

32
than a person entitled to the right. Interpreting Section 19 of the Limitation Act, 1908
(corresponding to Section 18 of the Limitation Act, 1963) this Court in Shapur Freedom
Mazda v. Durga Prosad Chamaria MANU/SC/0254/1961 : [1962]1SCR140 , held :
...acknowledgement as prescribed by Section 19 merely renews debt; it does
not create a new right of action. It is a mere acknowledgement of the liability in
respect of the right in question; it need not be accompanied by a promise to
pay either expressly or even by implication.
The statement on which a plea of acknowledgement is based must relate to a
present subsisting liability though the exact nature or the specific character of
the said liability may not be indicated in words. Words used in the
acknowledgement must, however, indicate the existence of jural relationship
between the parties such as that of debtor and creditor, and it must appear that
the statement is made with the intention to admit such jural relationship. Such
intention can be inferred by implication from the nature of the admission, and
need not be expressed in words. If the statement is fairly clear, then the
intention to admit jural relationship may be implied from it. The admission in
question need not be express but must be made in circumstances and in words
from which the court can reasonably infer that the person making the admission
intended to refer to a subsisting liability as at the date of the statement. Stated
generally, courts lean in favour of a liberal construction of such statements
though it does not mean that where no admission is made one should be
inferred, or where a statement was made clearly without intending to admit the
existence of jural relationship such intention could be fastened on the maker of
the statement by an involved or far-fetched process of reasoning.
In construing words used in the statements made in writing on which a plea of
acknowledgement rests oral evidence has been expressly excluded but
surrounding circumstances can always be considered....
The effect of the words used in a particular document must inevitably depend upon the
context in which the words are used and would always be conditioned by the tenor of
the said document...
15. It is now well settled that a writing to be an acknowledgement of liability must
involve an admission of a subsisting jural relationship between the parties and a
conscious affirmation of an intention of continuing such relationship in regard to an
existing liability. The admission need not be in regard to any precise amount nor by
expressed words. If a defendant writes to the plaintiff requesting him to send his claim
for verification and payment, it amounts to an acknowledgement. But if the defendant
merely says, without admitting liability, it would like to examine the claim or the
accounts, it may not amount to acknowledgement. In other words, a writing, to be
treated as an acknowledgement of liability should consciously admit his liability to pay
or admit his intention to pay the debt. Let us illustrate. If a creditor sends a demand
notice demanding payment of Rs. 1 lakh due under a promissory note executed by the
debtor and the debtor sends a reply stating that he would pay the amount due, without
mentioning the amount, it will still be an acknowledgement of liability. If a writing is
relied on as an acknowledgement for extending the period of limitation in respect of the
amount or right claimed in the suit, the acknowledgement should necessarily be in
respect of the subject matter of the suit. If a person executes a work and issues a
demand letter making a claim for the amount due as per the final bill and the defendant
agrees to verify the bill and pay the amount, the acknowledgement will save limitation

33
for a suit for recovery of only such bill amount, but will not extend the limitation in
regard to any fresh or additional claim for damages made in the suit, which was not a
part of the bill or the demand letter. Again we may illustrate. If a house is constructed
under the item rate contract and the amount due in regard to work executed is Rs. two
lakhs and certain part payments say aggregating to Rs. 1,25,0000/- have been made
and the contractor demands payment of the balance of Rs. 75,000/- due towards the bill
and the employer acknowledges liability, that acknowledgement will be only in regard
to the sum of Rs. 75,000/- which is due. If the contractor files a suit for recovery of the
said Rs. 75,000/- due in regard to work done and also for recovery of Rs. 50,000/- as
damages for breach by the employer and the said suit is filed beyond three years from
completion of work and submission of the bill but within three years from the date of
acknowledgement, the suit will be saved from bar of limitation only in regard to the
liability that was acknowledged namely Rs. 75,000/- and not in regard to the fresh or
additional claim of Rs. 50,000/- which was not the subject matter of acknowledgement.
What can be acknowledged is a present subsisting liability. An acknowledgment made
with reference to a liability, cannot extend limitation for a time barred liability or a
claim that was not made at the time of acknowledgment or some other liability relating
to other transactions. Any admission of jural relationship in regard to the ascertained
sum due or a pending claim, cannot be an acknowledgement for a new additional claim
for damages.
16. We will now examine this case with reference to the said principles. In this case,
the cause of action accrued on 14.4.1977 when the final bill was signed by the
contractor. It is not in dispute that the final bill showed that a sum of Rs. 17,69,608.73
was payable to the contractor (after giving credit to the payments made and after
withholding a sum of Rs. 7,45,953.83 as 5% security deposit). Towards the said sum of
Rs. 17,69,608.73. Rs. 17 lacs was paid on 25.2.1976 and Rs. 70,000/- was paid on
6.8.1977. The contractor had made some claims and OMC wrote a letter dated
28.10.1978 in regard to the pending claims of the contractor. In regard to Kaliapani
matters, OMC informed the contractor that it has been decided to constitute a
Committee which will go into the claims of the contractor so that the dues, if any, could
be ascertained. It further stated that on the details of the claims and payments received
being given to the contractor, OMC will settle up the pending matters at the earliest.
This clearly showed an intention on the part of OMC to admit the jural relationship of
contractor and employer and an intention to settle the pending claims after being
satisfied about them. Therefore, the letter dated 28.10.1978 was clearly an
acknowledgement in writing in so far as the 'pending claims' of the contractor. What
were the pending claims is made clear in the letter dated 16.11.1978 written by the
contractor enclosing a statement showing that in all, a sum of Rs. 50,15,820/- was due.
The Committee constituted by the OMC examined these claims and admitted the claims
only to an extent of Rs. 3,52,916/- as per its final report dated 7.12.1979. OMC paid Rs.
3,50,000/- on 4.3.1980. In view of the acknowledgement in writing on 28.10.1978 and
payment of the Rs. 3,50,000/- on 4.3.1980, it can be said that in regard to the pending
claims of the contractor, the limitation stood extended by three years from 4.3.1980 and
at all events by three years from 28.10.1978. It is not in dispute that the contractor
issued the notice invoking arbitration on 4.6.1980 and immediately filed a petition
under Section 8(2) of the Act for appointment of Arbitrator which was allowed on
6.10.1980. Therefore, whatever claims were made before the Arbitrator which was part
of the claim of Rs. 50,15,820, was within time, having been made within three years
from 28.10.1978 and 4.6.1980.
17. In regard to the claims aggregating to Rs. 95,96,616/- made in the claim statement
filed before the Arbitrator, only claims aggregating to Rs. 28,32,138 related to and

34
formed part of the said pending claim of Rs. 50,15,820. The appellant did not make a
claim in regard to the remaining Rs. 21,83,692. Therefore, out of the claim of Rs.
95,96,616 made by the appellant before the Arbitrator, the claim for only Rs.
28,32,138/- was not barred by limitation. The remaining claims of the appellant
aggregating to Rs. 67,64,488/- out of the total of Rs. 95,96,616/- being fresh claims,
were not 'pending claims' in respect of which the acknowledgement was made.
Therefore the said fresh claims aggregating to Rs. 67,64,488 made for the first time in
the claims statement filed on 27.6.1986 were clearly barred by limitation.
18. The learned Counsel for the appellant submitted that the limitation would begun to
run from the date on which a difference arose between the parties, and in this case the
difference arose only when OMC refused to comply with the notice dated 4.6.1980
seeking reference to arbitration. We are afraid, the contention is without merit. The
appellant is obviously confusing the limitation for a petition under Section 8(2) of the
Arbitration Act, 1940 with the limitation for the claim itself. The limitation for a suit is
calculated as on the date of filing of the suit. In the case of arbitration, limitation for
the claim is to be calculated on the date on which the arbitration is deemed to have
commenced. Section 37(3) of the Act provides that for the purpose of Limitation Act, an
arbitration is deemed to have been commenced when one party to the arbitration
agreement serves on the other party thereto, a notice requiring the appointment of an
arbitrator. Such a notice having been served on 4.6.1980, it has to be seen whether the
claims were in time as on that date. If the claims were barred on 4.6.1980, it follows
that the claims had to be rejected by the arbitrator on the ground that the claims were
barred by limitation. The said period has nothing to do with the period of limitation for
filing a petition under Section 8(2) of the Act. Insofar as a petition under Section 8(2),
the cause of action would arise when the other party fails to comply with the notice
invoking arbitration. Therefore, the period of limitation for filing a petition under
Section 8(2) seeking appointment of an arbitrator cannot be confused with the period of
limitation for making a claim. The decisions of this Court in Inder Singh Rekhi v. Delhi
Development Authority MANU/SC/0271/1988 :[1988]3SCR351 , Panchu Gopal Bose v.
Board of Trustees for Port of Calcutta MANU/SC/0385/1994[1993]3SCR361 and Utkal
Commercial Corporation v. Central Coal Fields MANU/SC/0028/1999 :[1999]1SCR166
also make this position clear.
19. The appellant next contended, relying on Section 18 of Limitation Act, that as there
was acknowledgement of liability in regard to Contract No. 30/F-2 in the letter dated
28.10.1978, and the notice invoking arbitration was issued on 4.6.1980 within 3 years
from 28.10.1978, he was at liberty to make any claim in regard to the contract before
the arbitrator, (even though such claims had not been earlier made) and all such claims
shall have to be treated as being within the period of limitation. Such a contention
cannot be countenanced. As noticed above, the cause of action arose on 14.4.1977. But
for the acknowledgement on 28.10.1978, on the date of invoking arbitration (4.6.1980),
the claims would have been barred by time as being beyond the period of limitation.
The limitation is extended only in regard to the liability which was acknowledged in the
letter dated 28.10.1978. It is not in dispute that either on 28.10.1978 or on 4.3.1980,
the contractor had not made the fresh claims aggregating to Rs. 67,64,488 and the
question of such claims made in future for the first time on 27.6.1986, being
acknowledged by OMC on 28.10.1998 did not arise.
2 0 . Another aspect requires to be noticed. The contractor was N.C.Budhraja. The
original claim (which was the subject matter of letter dated 28.10.1978, subjected to
examination by the Committee as per report dated 7.12.1979, and towards which Rs.
3,50,000/- was paid) made by the contractor N.C. Budhraja aggregated to Rs.

35
50,15,820. The Appellant who is his LR cannot for the first time make a fresh claim
before the Arbitrator, which was never made by N.C. Budhraja. The Appellant could only
pursue the claim made by N.C. Budhraja, which were pending or subsisting when N.C.
Budhraja issued the notice dated 4.6.1980
21. The arbitrator committed an error apparent on the face of the record and a legal
misconduct in holding that the entire claim was within time. His assumption that if the
application filed by the contractor in 1980 under Section 8(2) of Arbitration Act for
appointment of an Arbitrator was in time, all claims made in the claim statement filed
before the Arbitrator appointed in such proceeding under Section 8(2) are also in time,
is patently erroneous and is an error apparent on the face of the record. The reasoning
of the arbitrator that on account of the formation of the Committee by OMC to scrutinize
the pending claims in pursuance of the OMC's letter dated 28.10.1978, and the payment
of Rs. 3,50,000/- on 4.3.1980 in pursuance of the Committee giving its final report on
7.12.1979, every claim of the contract including new claims which were made for the
first time in the claim statement filed in 1986 (as contrasted with 'pending claims'
considered by OMC), are not barred by limitation, is also an error apparent in the face
of the award. Under Section 18 an acknowledgement in writing extends the limitation.
Under Section 19 a payment made on account of a debt, enables a fresh period of
limitation being computed. Therefore, the letter of OMC dated 28.10.1978 and the
payment of Rs. 3,50,000/- by OMC, would result in a fresh period of limitation being
computed only in regard to the 'existing debt' in respect of which acknowledgment and
payment was made. Admittedly, as at that time, the claim of the contractor was only for
a sum of Rs. 50,15,820. Therefore, the letter dated 28.10.1978 and payment on
4.3.1980 extended the limitation only in respect of the claims which were part of the
said claim of Rs. 50,15,820. Therefore, the fresh claims of Rs. 67,64,488/- (out of the
total claim of Rs. 95,96,616) is barred by limitation and the award made in that behalf
is liable to be set aside. Consequently, we hold that only that part of the claim before
the Arbitrator which was part of the claim of Rs. 5015,820/- made by the contractor,
that was existing or pending as on 28.10.1978 and 4.3.1980, namely Rs. 28,32,128
(out of Rs. 95,96,616) could have been considered by the Arbitrator.
Question (iii) & (iv) :
22. In the claim statement filed before the arbitrator the appellant showed the value of
work done as Rs. 2,45,85,183.89 and the total payments made by OMC as Rs.
149,88,566.90. Thus he claimed the balance due as Rs. 95,96,616. Even while
calculating the interest on the amount outstanding, the claimant proceeded on the basis
that he has received in all, Rs. 1,49,88,566.90 from OMC. The prayer before the
arbitrator in the claim statement was for the award of Rs. 95,96,616 in regard to the
work done after giving credit of Rs. 1,49,88,566.90. The categorical stand of the
contractor and the appellant all along has been that OMC had paid in all a sum of Rs.
149,88,566.90. But during the course of the arbitration proceedings, the appellant
contended that out of Rs. 149,88,566.90 received from OMC and taken into credit
towards this contract, a sum of Rs. 29,86,871/- was being appropriated towards other
contracts and therefore the payments made by OMC towards this contract should be
taken as Rs. 120,01,695.90. The arbitrator has mechanically accepted the said altered
stand contrary to the claim statement and proceeded to determine the amount payable
by OMC, by taking the amount paid by OMC as Rs. 120,01,659.90 towards this contract,
even though the claim statement showing that OMC had paid Rs. 149,88,566.90
remained unaltered. The claim statement was not amended to show that only Rs.
120,01,659.90 had been received from OMC in regard to the contract. When the claim
made in the claim statement is after adjusting Rs. 149,88,566.90 paid by OMC towards

36
the work, the arbitrator cannot proceed on the basis that only Rs. 120,01,659.90 was
paid towards the work. As a result though the Arbitrator found that the amount payable
towards claims at Items 1 to 16 was only Rs. 365,862.18, he awarded Rs. 32,83,243/-
to the appellant, thereby increasing the liability of OMC by Rs. 29,86,871/-. By
awarding more than what was claimed in the claim statement (by showing a lesser
amount as having been paid by OMC though claim statement showed a higher amount),
the Arbitrator clearly exceeded his jurisdiction. The Arbitrator thus committed a legal
misconduct and the award to that extent is liable to be set aside. Therefore the amount
awarded in respect of claims at items 1 to 16 by the Arbitrator is to be reduced by Rs.
29,86,871/-.
2 3 . The Arbitrator has exceeded his jurisdiction in another respect. The total claim
made by the contractor before the Arbitration was Rs. 95,96,616/- (excluding interest).
But the amount awarded by the arbitrator towards the said claim was Rs.
1,02,66,901/36 (excluding interest). Making an award in excess of the claim itself by
Rs. 6,70,285 is a clear act of exceeding the jurisdiction and amounts to a legal
misconduct and to that extent of Rs. 6,70,285/- the award is invalid.
24. In regard to item 35, that is escalation in cost, the claim in the claim statement was
at the rate of 15% for the value of work done in 1972-73, 28.5% in respect of value of
work done in 1973-74 and 32% in respect of work done in 1974-75. But the Arbitrator
has awarded escalation at a flat rate of 32.6% on the entire cost of work done from
1.4.1973 and thereby awarded an escalation in excess of what was claimed. This also
amounts to exceeding the jurisdiction and therefore legal misconduct. The award in
excess of what was claimed was invalid.
25. The award of the arbitrator in respect of time barred claim of Rs. 67,64,488 is an
error apparent on the face of the award. Award of amounts in excess of claim (referred
to in paras 22, 23 and 24) clearly amount to exceeding the jurisdiction. All these, that is
awarding amount towards time barred part of the claim of Rs. 67,64,488, and awarding
amounts of Rs. 29,86,871, Rs. 670,285 and escalation in cost at a rate more than what
is claimed, are all legal misconducts and the award in regard to those amounts are null
and void. There is however some overlapping of the aforesaid amounts.
26. Does it mean that the entire award should be set aside? The answer is no. That part
of the award which is valid and separable can be upheld. That part relates to the claims
which were validly before the Arbitrator, which were part of the existing or pending
claims of Rs. 50,15,820 and which were not barred by limitation. As stated above they
were the claims which were existing or pending in 1978, 1979 and 1980 (considered by
the committee and payment made by OMC) which were carried before the Arbitrator to
an extent of Rs. 28,32,128. Only the amounts awarded by the Arbitrator against those
claims can be considered as award validly made in Arbitration, falling within
jurisdiction. They are clearly severable from the other portions of the award. The
particulars of the claims and corresponding awards are as follows:
Item Description Item No.Contractor s Contractor s Award by
' in letter claim c l ai m before Arbitrator
No. dated originally Arbitrator
16.11.78 made
16.11.78
7. Cutting and 5 20,869.32 11,352.00 Nil
uprooting trees
17. Extra head lead7(a) 2,61,926.40 28,10,144.0024,50,042.88

37
17. Extra head lead 7(a) 2,61,926.40 28,10,144.0024,50,042.88

for 90 M
(261,926.40)*
18. Removal of 3 3,43,360.58 54,888.60 50,858.60
excavated
material from
edge of quarry
19. Unmeasured 4 8,44,360.00 8,48,372.64 6,64,720.00
quantity of
excavation
20. Catch water drain 12 1,55,400.00 27,842.50 27,842.50
21. Removal of 15 3,42,960.00 1,43,646.00 Nil
slipped earth
from side slopes
26. Extra lift for 7(e) 42,370.00 3,60,690.49 270,517.88
excavated
material dumped (42,370.00)*
at. quarry edge
27. Extra lift7(b) 1,25,642.00 13,96,128.6710,47,096.50
measured by
surveyor (125,642.00)*
28. Idle labour (non 9(a) 1,45,575.00 1,45,575.00 Nil
supply of plans)
29. Idle labour (for 9(c) 75,450.00 76,850.00 Nil
want of site)
30. Idle labour (due 9(b) & 2,61,205.00 3,89,288.00 194,644.00
to stoppage of (d)
work and
r e s t r i c t i o n of
working area)
31. Repairing road 10(iii) 10,640.00 10,640.00 Nil
damaged by
cyclone
32. Reconstruction of 10(vii) 25,370.00 25,370.00 25,370.00
Embasskent
33. Wire fencing 13 1,05,000.00 27,315.00 Nil
34. Electricity supply 6(b) 72,000.00 72,000.00 Nil
to work site and
colony 28,32,128.30 13,93,373.50
[Note : The figures shown by (*) in the column 'Award by Arbitrator', refer to the
maximum that could have been awarded by the Arbitrator having regard to claim that
was not barred by limitation].
Thus the total amount awarded by the Arbitrator against claims which were not barred
by limitation was only Rs. 13,93,373.50. The award to this extent is not open to
challenge. This part of the award does not suffer from any legal misconduct. There is
also no error apparent on the face of the award in respect of the amount. It is not open
to challenge.
The scope of interference is limited. In Hindustan Construction Co. Ltd. v. Governor of
Orissa MANU/SC/0436/1995 : [1995]2SCR441 , this Court held :
‡-09-2020 (Page 15 of 16) www.manupatra.com AMIT GEORGE

38
It is well known that the court while considering the question whether the
award should be set aside, does not examine that question as an appellant
court. While exercising the said power, the court cannot reappreciate all the
materials on the record for the purpose of recording a finding whether in the
facts and circumstances of a particular case the award in question could have
been made. Such award can be set aside on any of the grounds specified in
Section 30 of the Act.
In Hindustan Tea Co. v. K. Sashikant & Co. MANU/SC/0002/1986 :AIR1987SC81 , this
Court observed thus :
The Award is reasoned one. The objections which have been raised against the
Award are such that they cannot indeed be taken into consideration within the
limited ambit of challenge admissible under the scheme of the Arbitration Act.
Under the law, the Arbitrator is made the final arbiter of the dispute between
the parties. The award is not open to challenge on the ground that the
Arbitrator has reached a wrong conclusion or has failed to appreciate facts.
Therefore, the Award of the Arbitrator has to be upheld to an extent of Rs.
13,93,373.50.
27. In view of the foregoing, we allow these appeals in part, set aside the judgment of
the High Court and direct a decree in terms of the award for a sum of Rs. 13,93,373.50
with interest at the rate of 12% P.A. from 1.8.1977 to date of award (28.11.1986) and
at the rate of 6% P.A. thereafter, that is from 29.11.1986 till date of payment. Parties to
bear their respective costs.

39
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: May 19, 2014
+ O.M.P. No.735/2012
M/S NATIONAL HIGHWAYS AUTHORITY OF INDIA

..... Petitioner
Through Mr.Rajiv Kapoor, Adv. with
Mr.Anil Kumar, Adv.
versus
PROGRESSIVE CONSTRUCTION LTD ..... Respondent

Through Mr.Amit George, Adv. with
Ms.Rajshree Ajay, Adv.
CORAM:
HON'BLE MR.JUSTICE MANMOHAN SINGH
MANMOHAN SINGH, J.
1. The petitioner has preferred the present petition under Section 34 of

the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the
‘Act’) challenging the arbitral award dated 21st March, 2012.
2. Brief facts are that:-
(i) The petitioner (NHAI) entered into a contract agreement with the
respondent, Progressive Constructions Ltd., for the work of four
laning of Km. 410.000 to Km. 419.000, and Km. 470.000 to Km.
476.150 of Purnea-Gayakota Section of the National Highway
(Package EW-4), in the State of Bihar on 12th August, 1999.
OMP No.735/2012 Page 1 of 21

40
(ii) During the course of execution of the work, due to certain site
conditions and the decision to construct an additional 4 Km. of
service road, the quantities of some items of the BOQ increased
substantially compared to the original provision in the BOQ. The
Engineer, by four separate letters dated 26th March, 2003 issued
Variation Orders (‘VOs’) for changes in the quantities of items
3.01, 3.02, 3.03 and 4.04 of the BOQ. The rate for quantities of
these items which amounted to 1% of the contract price was kept
the same as was quoted by the contractor while tendering. It was
also stated by the Engineer that the Variation Order for balance
quantity beyond 1% of the Contract Price which has to be
approved by the petitioner, will be issued separately after getting
concurrence of the competent authority.
(iii) The respondent asked for a revision in the rates of the BOQ items
in question owing to the large scale variations that were instructed
as also keeping in mind the massive increase in cost by the time
the variations were issued as compared to the prevailing cost at the
time of tendering. However, the petitioner rejected the demand of
the respondent and stated that it was not agreeable to the revision
of rates for the BOQ items.
(iv) A dispute having accordingly arisen between the parties, the

respondent invoked the dispute resolution procedure as contained
in the contract agreement and the disputes were referred for the
purpose of final adjudication of the claims of the respondent to a
three member arbitral tribunal, comprised of three retired
OMP No.735/2012 Page 2 of 21

41
engineers, which was jointly constituted by the parties as provided

for under the contract agreement.
(v) After completion of pleadings of the parties and considering

submissions of the parties, the arbitral award dated 21st March,
2012. The Arbitral Tribunal allowed the claims of the respondent.
3. The respondent submits that the petition filed by the petitioner under
section 34 of an Act is completely devoid of merits and deserves to be
dismissed as the Court has limited jurisdiction. In the objections to the
award, the petitioner has not placed any material facts nor made out any
grounds whatsoever that are relevant under the above Section for setting
aside the award, as in the present case, the arbitral award is a comprehensive
and well-reasoned award which is in consonance with the contract between
the parties.
4. Parties were heard on 27th March, 2014. Time was granted for filing
the written submissions. The petitioner has not filed the same. The matter,
therefore, is kept for orders on 19th May, 2014.
5. Coming to the case of merit, the second submission of the petitioner is

that the claim of the respondent is not meritorious and not supported by the
conditions of the contract. In the way, the submission is that there is no
provision in the contract for the revision of the rate. The Arbitral Tribunal,
however, came to the conclusion contrary to the submissions of the
petitioner, as there are specific clauses in the contract between the parties
where respondent is entitled to seek a revision in the rates. The relevant
clauses 38.1 and 40.2 of the contract are as under:-
OMP No.735/2012 Page 3 of 21

42
“38. Changes in Quantities

38.1 If the final quantities of the work done differs from
the quantity in the Bill of Quantities for the particular item
by more than 25% provided the change exceeds 1% of the
initial contract price, the Engineer shall adjust the rate to
allow for the change.
“40. Payments for Variations
40.2 If the work in the Variation corresponds with an
item description in the Bill of Quantities, and if, in the
opinion of the Engineer, the quantity of work above the
limit stated in Sub Clause 38.1 or the timing of its execution
do not cause the cost per unit of quantity to change, the rate
in the Bill of Quantities shall be used to calculate the value
of the variation. If the cost per unit of quantity changes, or if
the nature or timing of work in the variation does not
correspond with the items in the Bill of Quantities, the
quotation by the Contractor shall be in the form of new rates
for the relevant item of the work”. (Emphasis supplied)
6. The Arbitral Tribunal on interpretation of the aforesaid clauses held as
under:
“9.02 The contract GCC Clause 38.1 stipulates that if the final
quantity in the BOQ for a particular item by more than 25%
provided the change exceeds 1% of the initial contract price, the
Engineer shall adjust the rate to allow for the change. In the
present case, the Claimant has claimed that there are four such
items viz. BOQ items 3.01, 3.02, 3.03 and 4.04. These items
would be examined for these tests as to whether they qualify for
revision of rates as per the above clause or not. Item 3.01 for
GSB as catered for in BOQ is 28793 cum against which the final
executed quantity is 61394 cum which is 113.25% more than the
original quantity of BOQ and 3.17% of the contract price, and as
such passes the requisite tests. Similarly item 3.02 for WMM as
catered for in BOQ is 40907 cum against which the final
executed quantity is 56491 cum which is 38.1% more than the
OMP No.735/2012 Page 4 of 21

43
original quantity of BOQ and 2.26% of the contract price, and as

such passes the requisite tests. Also item 3.03 for WMM PCC as
catered for in BOQ is 2000 cum against which the final executed
quantity is 8673.388 cum which is 833.67% more than the
original quantity of BOQ and 2.69% of the contract price and as
such passes the requisite tests. As regards item 4.04 for DBM,
the quantity as catered for in the BOQ is 30768 cum against
which the final executed quantity is 36996 cum which is 20.24%
more than the original quantity of BOQ and 2.91% of the
contract price. It can be seen that while the percent of contract
price condition is satisfied in this case, the 25% excess quantity
condition is not satisfied, as such it does not qualify revision of
rates as per clause 38.1. Therefore, the AT keeps its further
discussions limited to only the three BOQ items 3.01, 3.02 and
3.03.
9.03 The Claimant had submitted revised rates of Rs. 1872.70,
Rs.2121.43 and Rs.2321.43 per cum for BOQ items 3,01, 3.02
and 3.03 respectively; as per its letter No.PCL/KANKI/
EW4/685/6857/2004 dated 5.4.2004 (Exh C-24). But he has
claimed for these items at the rates of Rs.1360, Rs.1494 and
Rs.1694 per cum in the quantification of the claim, whereas the
Engineer has recommended rates of Rs.1510, Rs.1650 and
Rs.1650 per cum these items to NHAI along with the details
analysis vide his letter No. SS/99101/3321 dated 21 December
2004 (page 129 of R-8). The AT has examined the analysis of the
rates submitted by the claimant and considers the rates claimed to
be reasonable. It is also observed by the AT that the rates claimed
by the Claimant for two items 3.01 and 3.02 are lower than the
rates worked out by the Engineer. As regards BOQ item 3.03,
which pertains to WMM to be used in PCC it is a work executed
in small area/ items and its rate cannot be at the same as that for
WMM work in large quantities (item 3.02). A reasonable
approach is to keep the rate in the same proportion as was quoted
originally by the Claimant at the time of tendering. The rates for
BOQ items 3.02 and 3.03 as quoted in the tender are Rs.810 and
Rs.900 per cum. The revised rate for BOQ item 3.03 thus would
work out to Rs.1494*900/810 = Rs.1660 per cum.
OMP No.735/2012 Page 5 of 21

44
9.05 The contract clause 40.2 which stipulates “If the work in
the Variation corresponds with an item description in the Bill of
Quantities, and if, in the opinion of the Engineer, the quantity of
work above the limit stated in Sub Clause 38.1 or the timing of
its execution do not cause the cost per unit of quantity to change,
the rate in the Bill of Quantities shall be used to calculate the
value of the variation. If the cost per unit of quantity changes, or
if the nature or timing of work in the variation does not
correspond with the items in the Bill of Quantities, the quotation
by the Contractor shall be in the form of new rates for the
relevant item of the work”.
The Engineer had not decided that the rates for the varied items
would be kept same, on the contrary he himself worked out new
rates and recommended to the Employer for approval. As such, it
is clear that the Engineer was of the view that rates were to be
revised.”
7. The Arbitral Tribunal has meticulously dealt with the relevant terms
of the contract and thereafter applied the percentage benchmarks in the
contract to finally come to a conclusion as to whether the respondent is
entitled to a rate revision or not. On applying the parameters of Clause 38.1
and 40.2, the Arbitral Tribunal has found that only three BOQ items 3.01,
3.02 and 3.03 satisfy the same and has accordingly rejected the claim
towards BOQ item 3.04. In fact, the contention of the petitioner that the
respondent is not entitled to the claim has been rejected by the Arbitral
Tribunal by assigning the reasonable findings. Therefore, in view of settled
law, the said view cannot be interfered with even on merits.
8. With regard to the issue of revised rate to the BOQ item in question,
the same is answered by the Arbitral Tribunal. The Arbitral Tribunal has
arrived at a unanimous interpretation that the contract envisages alteration of
the existing BOQ rate or price as a whole. The Arbitral Tribunal has also
OMP No.735/2012 Page 6 of 21

45
noted the conduct of the parties during the performance of the contract and
particularly, the intention of the petitioner and the Engineer to alter the
existing BOQ rate or price as a whole.
9. The relevant findings of the Arbitral Tribunal in this regard are as

under:
“9.06 An important point raised during the course of

hearings was whether the revised rates are to be applied to
the whole of the executed quantity of an affected item or
only to the quantity beyond the original BOQ quantity. The
AT has considered this point carefully.
The conduct of the Engineer and the Respondent indicates
that they were of the view that the revised rates were to be
applied to the entire executed quantities and not just the
varied quantities, Clause 38.2 of the contract agreement
states.
“The Engineer shall not adjust rates from changes in
quantity, if thereby the initial contract price is exceeded by
15% except with the prior appeal of the Employer.”
In the present case, if the change in cost is worked out with
only varied quantities of the four items, the contract price
does not exceed 15%. As such, the approval of the VOs
would fall within the competence of the Engineer.
But if the cost of the four items with full executed quantities
is worked out with the revised rates, the Contract Price
would increase by more than 15% of the Contract Price and
in this case, as per Clause 38.2, prior Approval of the
Employer would be required.
The Engineer sought the Employer’s approval to the revised
rates for quantities of each item exceeding 1% of the
Contract price. This was necessary only if he considered
that revised rate would be payable for the entire executed
quantity of each item.
OMP No.735/2012 Page 7 of 21

46
Further, Employer’s letter dated 19.08.2008 (page 107 of

RD-8) also speaks of approval of rates for the entire
quantity of the BOQ items and not just for the varied
quantities. It says “In reference to the above letter, it is to
intimate that the variation proposal was approved by the
Variation Committee in year 2003, for entire quantity of
three BOQ items namely GSB(3.01), WMM ( 3.02) WMM-
PCC (3.03) on the basis of recommendations made by the
Engineer on BOQ rates…………”
Considering the above, the AT is of the view the Contract
Clause 38.1 addresses not only the rate applicable to the
varied work but alteration of the existing BOQ rate or price.
It talks of a rate or price contained in the contract which, by
reason of such varied work, is rendered inappropriate on
inapplicable. Thus, if a variation comprised, say a 30%
difference in quantities of an item, this clause requires that
the rate for that item, should be adjusted, and not just the
rate for the additional work. This Clause is for adjustment it
rates or prices provides for changing the rates or prices of
entire items of the work and not only for the varied work.
9.08 Further the AT has observed the following
regarding the conduct of the parties. The Engineer proposed
variations for some items of the BOQ but has issued VOs
for quantity amounting to only1% of the original contract
price and for balance quantity stated that the VO would be
issued later after getting the concurrence of NHAI Later, he
directed the Contractor to send his new rates and reminded
him also. When the revised rates are received he makes
some observations and asks the contractor amend them as
per certain procedure. On receipt of the amended rates, he of
his own works out the rates which are nearly the same as
submitted by the contractor or slightly more. These rates are
sent to the Employer who feels that these are high and as for
revising the same. For revision, a Committee is formed
which works on parameters other than the site conditions
and no disposal of the committee report is out coming.
When the proposal is sent to NHAI again, it is rejected on
OMP No.735/2012 Page 8 of 21

47
the plea that it would not be possible to consider the

revision of rates at such belated stage. This shows that the
intention of the Respondent all along was to revise the rates
but as the process took unduly long time due to some reason
or the other, the revision was eventually not done.”
10. The Arbitral Tribunal has discussed Clause 38 and has rightly held
that for a change in the rate of the item as a whole and not only for the
varied work and noted the conduct of the petitioner and the Engineer at the
relevant time which would show the intention of the petitioner and the
Engineer.
11. The second plea raised by the petitioner is that the Arbitral Tribunal
should not have awarded escalation to the respondent. The said plea that the
claim of escalation could not be awarded was not specifically taken by the
petitioner before the Arbitral Tribunal. Thus, the petitioner cannot be
permitted to raise such a plea at this stage.
The settled law in this regard has been recently reiterated by a

Division Bench of this Court in the case of KEI Industries Ltd. v. D.V.B.
and Ors., MANU/DE/0852/2012 as under:
“22. There can be no quarrel with the proposition that a plea

not taken before the arbitrator cannot be raised in a challenge to
the award. (See the decision of the Supreme Court reported as
J.G. Engineers Pvt. Ltd. v Calcutta Improvement Trust AIR 2002
SC 766 and a decision of a Division Bench of this Court in FAO
(OS) No. 27/2007 titled as "Union of India v TRG Industries Pvt.
Ltd." decided on 27.10.2009.)”
12. The Arbitral Tribunal has given detailed reasons for allowing the
claim of escalation. The same reads as under:
OMP No.735/2012 Page 9 of 21

48
“9.10 As regards the escalation, it is part of the contract

and if the market rate at the time of execution of the work
are not paid, the escalation has to be paid to compensate the
market rate which affects the contract cost. The rates for the
aggregate were ascertained in the year 2003 and machinery
and equipment rates have been adopted from the Standard
Data Book as in the year 2002. Hence, the Claimant is
entitled for escalation on the above rates. The average
escalation has been worked out by the Claimant as
26.8258% which is consonant with the amount of escalation
paid under the contract as per details given in Appendix ‘B’
(Revised) in the Rejoinder and not disputed any time during
the hearing. This has not been contested by the Respondent.
As such, the amount of Rs.2,86,01,800 i.e. 26.8258% of Rs.
10,66,20,494 towards escalation is considered payable on
account of reasons stated hereinabove.”
13. The contract between the parties contains a price adjustment clause,
namely clause 47.1. This clause provides that the contract price shall be
adjusted for increase or decrease in rates and price of labour, materials, fuels
and lubricants. As per Clause 47.1, the prices escalation on the variation
items is to be paid and the terms of determining the same can be worked out
between the petitioner and the respondent. As the petitioner refused to pay
the price escalation to the respondent, the respondent was entitled to
approach the learned Arbitral Tribunal which awarded the escalation.
14. The relevant portion of clause 47.1 extracted as under:
“47.1 Contract price shall be adjusted for increase or

decrease in rates and price of labor, materials, fuels and
lubricants in accordance with the following principles and
procedures and as per formula given in the contract data.
(a) The Price adjustment shall apply for the work done
from the start date given in the contract data upto end of the
OMP No.735/2012 Page 10 of 21

49
initial intended completion date or extension granted by the

Engineer and shall not apply to the work carried out beyond
the stipulated time of reasons attributable to the contractor.
(b) The Price adjustment shall be determined during
each month from the formula given in the contract Data.
(c) Following expressions and meanings are assigned
to the work done during each month.
R= Total value of work done during the month. It would
include the value of materials on which secured advance has
been granted, if any, during the month, less the value of
materials in respect of which the secured advance has been
recovered, if any during the month. It will exclude value for
works executed under variations for which price adjustment
will be worked separately based on the terms mutually
agreed”.
15. The Arbitral Tribunal has held that the revised rates sought by the
respondent were un-escalated in as much as the rates for the aggregate were
ascertained in the year 2003 and machinery and equipment rates have been
adopted from the Standard Data Book as in the year 2002, whereas the work
was executed across the entire duration of the contract. Thus, there is no
obvious error in the award of escalation. The contention of the petitioner in
this regard cannot be accepted.
16. The contentions of the petitioner in the present objections is that

instead of the interpretation arrived at by the Arbitral Tribunal, another
interpretation of the contract terms is possible.
Law on this aspect is well settled that even if two interpretations are
possible and in case the interpretation given by the Arbitral Tribunal is a
possible view, even though the Court may have a different view, the Award
OMP No.735/2012 Page 11 of 21

50
will not be interfered with by the Court under Section 34 of the Act. The
Supreme Court in the case of M/s. Arosan Enterprises Ltd. v. Union of
India, (1999) 9 SCC 449, has held as under:
“39. ….The court as a matter of fact, cannot substitute

its evaluation and come to the conclusion that the arbitrator
had acted contrary to the bargain between the parties. If the
view of the arbitrator is a possible view the award or the
reasoning contained therein cannot be examined.”
17. It has also been held that an error relatable to interpretation of the
contract by an arbitrator is an error within his jurisdiction. The Hon’ble
Supreme Court in the case of Steel Authority of India Ltd. Vs. Gupta
Brother Steel Tubes Ltd., (2009) 10 SCC 63 has summarized the law on this
point, in paragraph 26 of the said judgment, as under:
“26.(ii) An error relatable to interpretation of the contract

by an arbitrator is an error within his jurisdiction and such error
is not amenable to correction by Courts as such error is not an
error on the face of the award.”
18. Lastly the contention of the petitioner is that the claims were barred
by limitation. The submission of the petitioner is that the cause of action for
the respondent to initiate arbitration arose on 26th March, 2003 when the
variation orders for changes in the quantities of items were issued, therefore
the petitioner contends that the period of limitation would have to be
counted from 26th March, 2003. As the invocation of the dispute resolution
procedure by the respondent was done beyond a period of three years from
the aforesaid date, the claims were barred by limitation.
OMP No.735/2012 Page 12 of 21

51
19. The findings of the Arbitral Tribunal in this regard are read who has
considered the said plea of the petitioner in detail in the award, and has
opined as follows:
“(c) It is thus amply clear that the Engineer had not

issued the VOs for the entire quantity but only for additional
quantity amounting to 1% of contract price above those in
the original BOQ. For the balance quantity he has clearly
stated that the same has to be approved by the NHAI and the
VO would separately be issued for the same after getting the
approval from the Competent Authority. It means that the
cause of action did not start on 26.3.2003 as the VOs for the
entire quantity had not been issued on 26.3.2003. The
Claimant had not agreed to the VOs with only existing rates
and wrote to the Team Leader vide his letter dated
20.3.2003 Exh C-18 that the VOs with only existing rates
are not acceptable to them as these are prepared by not
considering the Clause 38.1 of the GCC making them to
forego right for revised rates in such cases and also
requested for the review the rate of the VOs.
(d) The Engineer wrote to the Contractor vide his
letter dated 3.4.2003 (Exh C-9) to submit revised rates for
the BOQ items as per Clause 38.1 for his scrutiny
verification and onward submission to the Competent
Authority. He again reminded the Contractor vide his letter
dated 24.5.2003 to submit the revised rates for BOQ which
have exceeded in quantity by 25% or 1% of original
contract price as per the provisions of Clause 38.1 of the
GCC. Thereafter, the Claimant submitted revised rates vide
letter dated 29.5.2003 (Exhibit C-21) for the BOQ item
3.01 – GSB , BOQ item 3.02 – WMM, BOQ item 3.03-
PCC with WMM and BOQ item 4.04-DBM stating that the
anticipated quantities of above work was exceeding BOQ
provision and satisfied Clause 38.1 and Clause 40.2 of
General Condition of Contract. The Claimant vide letter
dated 9.3.2004 Exhibit C-22) brought out that the revision
of rates required in conformity with the provisions of
OMP No.735/2012 Page 13 of 21

52
Clauses 38.1 and 40.2 of GCC has been discussed with

CGM (EW) during his site visit at Islampur on 28.2.2004
who instructed all concerned to review and reconsider all
such cases and to send all such eligible cases for rate
revision to NHAI, New Delhi for necessary approval.
Accordingly, the Term Leader was requested by the
contractor to process the case of revised of rates to obtain
approval from NHAI immediately.
(e) The Team Leader raised certain observations on
revised rates submitted by Claimant, vide his letter dated
15.3.2004 (Exhibit C-23). He agreed that there is an
increase in GSB quantities (BOQ item 3.01 ) and PCC with
WMM (BOQ item 3.03) which had crossed the threshold
limit as specified in Clause 38.1 of GCC, but he expressed
that the other items 3.02, 3.03 and 4.04 of BOQ, the revised
quantities had not crossed the threshold limit as specified in
Clause 38.1. He also raised certain observations and wanted
the analysis should be based on latest Standard Data Book
of 2003.
(g) The Claimant vide letter dated 20.02.2009 (C-45)
informed the Respondent that project has been completed on
30.04.2008 and completion certificate issued by Engineer on
28.08.08 but the revised rates had not been approved till
then by the Respondent. The case for approval of competent
authority had been sent by the Engineer to HQ NHAI vide
letter dated 21.12.2004 (Exh. RD-8, page 129).
(h) In the meantime, not having received any decision
from the Engineer, the Claimant vide Letter bearing No.
PCL/ND/EW4/2009/7261 dated 30.03.2009 (Exhibit C-46),
referred the dispute to the Dispute Review Expert in terms
of the provisions contained in condition 24.1 of the
Contract. Vide the said letter, the DRE was requested to
give his decision within the time frame set out in the said
Condition 25.1 of the Contract i.e. within 28 days of receipt
of notification of the dispute. As no decision was received
from the DRE (During the course of hearing it was also
brought out that the DRE was non-existent at that time)
OMP No.735/2012 Page 14 of 21

53
within the time frame stipulated in condition 25.1 of the

Contract Agreement and even thereafter, the Claimant
referred the dispute for adjudication to arbitration as
provided in Condition 25.3 of the Conditions of contract and
condition 3 of the Special Conditions of Contract.
(i) The Engineer vide Letter No.SS/99101/378 dated
27.04.2009 (Exhibit C-47), finally conveyed that the
competent authority in the NHAI has not agreed with the
revision of the rates of GSB, WMM, PCC with WMM and
DBM. It is observed by the AT that the revision of rates was
turned down by the Respondent on 27.04.2009 after nearly
6 years of submission of the revised rates by the Claimant
vide letter dated 29.05.2003 (Exhibit C-21). During that
long period, the Engineer asked for the revised rates based
on Standard Data Book 2003, the Respondent formed a
Committee for revising the rates and forwarding the revised
rates to NHAI for approval. The conduct of the Engineer
and the Respondent shows that the Claimant’s request for
revision of rates had remained under consideration of the
Respondent for a very long time from 29.05.2003 to
27.04.2009. Since the present dispute was undeniably under
consideration by the Respondent, the limitation for
arbitration cannot be deemed to have commenced before the
date of issuance the Letter dated 27.04.2009 (Exhibit C-47).
(j) The cause of action did not start on 26.3.2003 as
stated by the Respondent in view of the fact that the VOs for
the entire increased quantity was not issued on 26.3.2003.
The Engineer issued VO for a small additional quantity with
a specified statement that the case for the increased quantity
would be separately sent to the competent authority for their
approval. Final rejection of the proposal for revised rates
came only on 27.4.2009 and the cause of action accrues on
this date. Therefore, it is clear that the limitation for the case
starts not from 26.3.2003 but from 27.4.2009. The case was
to be referred to the DRE before 11.5.2009 and in this
period, the DRE was non existent; as such processing the
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54
case through the pre-arbitration mechanism was not

possible.
(k) Moreover, the contractor’s final bill was not paid
by then and as per GCC clause 57.1 the contractor is entitled
to claim the total amount that it considers payable under the
Contract before the Defect Liability Period. This in other
words means that the amount for the disputed items, if not
claimed earlier, can be claimed by the Contractor up to the
end of Defect Liability Period and the case would become
time barred after a period of three years thereafter.”
20. On reading of the findings of the Arbitral Tribunal it would disclose
that the arguments of the petitioner on the issue of limitation are without any
force, as there is a finding of fact by the Arbitral Tribunal that the Variation
Orders for the entire increased quantity were not issued on 26 th March, 2003,
and yet further the issue as to the revision of the rates was under the active
consideration of the respondent for a very long time from 29th May, 2003,
to 27th April, 2009, as the respondent had formed a Committee for revising
the rates and forwarding the revised rates to NHAI for approval, and the
respondent had also appeared before the Committee in an attempt to
amicably resolve the issue. The respondent rejected the proposal for revised
rates only on 27th April, 2009, and therefore the contention of the petitioner
is that the cause of action began on 26th March, 2003, cannot be accepted. It
is settled law that when the parties are actively trying to resolve the disputes,
then the cause of action for resorting to arbitration cannot be said to have
commenced. In this regard, the Hon’ble Supreme Court has held in the case
of Hari Shankar Singhania and Ors. v. Gaur Hari Singhania and Ors.,
(2006) 4 SCC 658, as under:
OMP No.735/2012 Page 16 of 21

55
“21. Where a settlement with or without conciliation is not

possible, then comes the stage of adjudication by way of
arbitration. Article 137, as construed in this sense, then as long as
parties are in dialogue and even the differences would have
surfaced it cannot be asserted that a limitation under Article 137
has commenced. Such an interpretation will compel the parties to
resort to litigation/arbitration even where there is serious hope of
the parties themselves resolving the issues.”
The said principle was further reiterated by the Hon’ble Supreme
Court in the case of Shree Ram Mills Ltd. v. Utility Premises (P) Ltd.,
(2007) 4 SCC 599 wherein it was held that if the disputes under a contract
are under negotiation or consideration, then the limitation for arbitration
purpose would be deemed to not have commenced.
21. Even otherwise, Clause 57.1 of the contract between the parties
permits the respondent to demand any amount it considers payable under the
Contract up to the end of the Defect Liability Period in its ‘final statement’
and the present claim was raised before the submission of the final statement
by the respondent. Clause 57.1 of the contract is as under:
“57 Final Account

57.1 The Contractor shall supply to the Engineer a detailed
account of the total amount that the Contractor considers payable
under the Contract before the end of the Defects Liability Period.
The Engineer shall issue a Defect Liability Certificate and certify
any final payment that is due to the Contractor within 56 days of
receiving the Contractor’s account if it is correct and complete. If
it is not, the Engineer shall issue within 56 days a schedule that
states the scope of the corrections or additions that are necessary.
If the Final Account is still unsatisfactory after it has been
resubmitted, the Engineer shall decide on the amount payable to
the Contractor and issue a payment certificate, within 56 days of
receiving the Contractor’s revised account.”
OMP No.735/2012 Page 17 of 21

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Clause 57.1 provides that the intention behind the final bill is to avoid
a situation where for each minor dispute or difference which may arise at
different stages of the contract, the parties are forced to immediately invoke
arbitration with the result that by the time the work is completed multiple
arbitrations would already be ongoing between the parties. In a similar vein,
a learned Single Judge of this Court in the case of M/s. Naraindas R. Israni
v. Union of India, AIR 1993 Delhi 78 has also taken the view that the right
to recover the claims survives till the stage of the final bill, and has held in
this regard as under:
16. …I am supported in my above view by the observations

of P. C, Mallick, J, as made in AIR1963Cal 277, M. L. Dalmiya
and Co. v. Union of India..... "If any payment is made on a
running bill, such sum will be deducted from the final bill as
being an advance payment on account of the final bill. If one or
more of the running bills submitted by the contractor has or have
not been paid and the cause of action for the realization of the
same has become time barred due to the passage of time,
nevertheless, the contractor will be entitled to recover the same
as a part of the final bill. Failure to pay the final bill constitutes a
new cause of action and the starting point of limitation for
payment will arise from the date of default in the payment of the
final bill."
22. In view of the aforesaid, it is apparent that the issue of limitation has
become a mixed question of law and facts for the abovementioned reasons
and as per Clause 57.1, if read in meaningful manner. The finding of
the Arbitral Tribunal cannot be interfered in view of settled law on this
aspect.
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23. The Supreme Court, in the similar situation, has held in the case of
Maharashtra State Electricity Board v. Sterilite Industries (India) and
Anr., (2001) 8 SCC 482, as under:
“9. ..…the arbitrator's award both on facts and law is final;

that there is no appeal from this verdict; that the court cannot
review his award and correct any mistake in his adjudication,
unless the objection to the legality of the award is apparent on the
face of it.”
24. It is settled law and not necessary to repeat that the Court is not
expected to sit in appeal over the findings of the Arbitral Tribunal or to re-
appreciate evidence as an appellate court. Even if the additional grounds
under Section 34 of the Act, as laid down by the Supreme Court in the case
of Oil and Natural Gas Corporation Ltd. vs. Saw Pipes Ltd., AIR 2003 SC
2629 are considered, which are patent illegality arising from statutory
provisions or contract provisions or that the award shocks the conscience of
the Court, no such facts are narrated in the petition. The endeavor of the
petitioner is thus to convert the challenge to the arbitral award into an
appellate proceeding involving a total re-hearing of the matter and re-
appreciation of evidence, and which endeavor as per the consistent dicta of
the Supreme Court is impermissible in law. A recent observation of the
Supreme Court in the case of P.R. Shah, Shares and Stock Brokers Private
Limited vs. B.H.H. Securities Private Limited and Others, (2012) 1 SCC
594, is apposite in this regard and is reproduced as under:
“21. A Court does not sit in appeal over the award of an Arbitral
Tribunal by reassessing or re-appreciating the evidence. An
award can be challenged only under the grounds mentioned in
Section 34 (2) of the Act. Therefore, in the absence of any
ground under section 34 (2) of the Act, it is not possible to re-
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58
examine the facts to find out whether a different decision can be

arrived at”.
25. The Supreme Court has further expounded the said scope in the case
of Markfed Vanaspati and Allied Industries v. Union of India, (2007) 7
SCC 679, wherein it was observed as under:
“17. Arbitration is a mechanism or a method of resolution of

disputes that unlike court takes place in private, pursuant to
agreement between the parties. The parties agree to be bound by
the decision rendered by a chosen arbitrator after giving hearing.
The endeavor of the court should be to honour and support the
award as far as possible”.
26. The limited scope of interference under Section 34 of the Act has also
been succinctly elucidated by a Ld. Single Judge of this Court in the case of
Bhagwati Contractors v. Union of India (UOI) and Anr. 2009 Indlaw Del
3647 wherein it was held as under:
“7. Arbitration is intended to be a faster and less expensive

alternative to the courts. If this is one's motivation and
expectation, then the finality of the arbitral award is very
important. The remedy provided in Section 34 against an award
is in no sense an appeal. The legislative intent in Section 34
was to make the result of the annulment procedure prescribed
therein potentially different from that in an appeal. In appeal,
the decision under review not only may be confirmed, but may
also be modified. In annulment, on the other hand the decision
under review only may be invalidated in whole or in part or be
left to stand if the plea for annulment is rejected. Annulment
operates to negate a decision, in whole or in part, thereby
depriving the portion negated of legal force and returning the
parties, as to that portion, to their original litigating positions.
Annulment can void, while appeal can modify. Section 34 is
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59
found to provide for annulment only on the grounds affecting

legitimacy of the process of decision as distinct from
substantive correctness of the contents of the decision. A
remedy of appeal focuses upon both legitimacy of the process
of decision and the substantive correctness of the decision.
Annulment, in the case of arbitration focuses not on the
correctness of decision but rather more narrowly considers
whether, regardless of errors in application of law or
determination of facts, the decision resulted from a legitimate
process.”
27. In view of the abovementioned reason, the findings of the learned

Arbitral Tribunal are on the basis of facts and interpretation of various
clauses of the contract. The Arbitral Tribunal has given valid reasons by
discussing the relevant clauses of the contract. The objections, thus, are
without any merit and are dismissed.
28. No costs.
(MANMOHAN SINGH)
JUDGE
MAY 19, 2014
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$~10 (Original)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P.(T) (COMM.) 32/2020 & I.As. 5832-5833/2020
SHRI PANKAJ ARORA ..... Petitioner
Through: Mr. Nishit Kush and Ms. Mercy
Hussain, Advs.
versus
AVV HOSPITALITY LLP & ORS. .... Respondents

Through: Mr. Deepak Dhingra and
Ms. Rachita Garg, Advs.
CORAM:
HON'BLE MR. JUSTICE C .HARI SHANKAR
JUDGMENT (ORAL)
% 20.07.2020
(video-conferencing)
O.M.P. (T) (COMM.) 32/2020
1. This petition, under Section 14 and 15 of the Arbitration &

Conciliation Act, 1996, seeks termination of the mandate of the
learned Sole Arbitrator, arbitrating on the disputes between the
petitioner and the respondents. However, towards the conclusion of
his submissions, Mr. Kush, learned Counsel for the petitioner has
submitted that his only request was that the learned Sole Arbitrator be
directed to decide the application, preferred by his client under
Section 16 of the Arbitration & Conciliation Act, 1996 (hereinafter
referred to as ―the 1996 Act‖).
OMP (T) (COMM.) 32/2020 Page 1 of 12

61
2. The contention of the petitioner, in the aforesaid application,

under Section 16 of the 1996 Act, was that the learned Sole Arbitrator
did not possess the jurisdiction to adjudicate on the counter-claims of
the respondent. Vide order dated 15th June, 2020, the learned Sole
Arbitrator has disposed of the said application, keeping the issue
regarding his jurisdiction, as ventilated in the said application, open,
to be decided after recording of evidence and at the stage of final
arguments.
3. Essentially, therefore, all that this Court is required to decide, in

the present petition, is whether the learned Sole Arbitrator has
mandatorily to be directed to adjudicate on the issue of his jurisdiction
(to entertain the counter claims of the respondents) at this stage itself,
without deferring the issue to the stage of final arguments.
4. In view of the limited nature of the controversy, a brief allusion,

to the facts, would suffice.
5. Respondents 2 and 3, in this petition, are partners in the

Respondent 1-firm, which runs a restaurant, under the name and style
of ―Firki Bar‖. Disputes arose, between the petitioner and
Respondents 2 and 3, in connection with a document which, according
to the petitioner, was a Memorandum of Understanding (MoU), dated
28th September, 2017, to which the petitioner and said respondents
were parties, and whereunder the petitioner was required to be
inducted as a partner in the said firm. Clause 9 of the MoU
constituted the Arbitration Agreement and read thus :
OMP (T) (COMM.) 32/2020 Page 2 of 12

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"9. That all the disputes/differences, of any nature arising

between the parties regarding their rights, obligation, the
interpretation of these presents, and all matters arising under
this agreement, will be resolved through co-operation and
consultation. If the said disputes etc. cannot be resolved by
co-operation and consultation, the said matter shall be
referred to an arbitrator, who shall be appointed with the
mutual consent of all the parties to this MOU. The arbitrator
under this clause will be an arbitrator under the Arbitration
and Conciliation Act, 1996 or any statutory modification or
re-enactment thereof."
6. It is not necessary to enter into the details of the dispute.

Suffice it to state that, disputes having arisen, this Court was
approached, for appointment of an arbitrator and that, ultimately, the
learned Sole Arbitrator, a retired Judge of this Court, was appointed
under the aegis of the Delhi International Arbitration Centre (DIAC).
7. Before the learned Sole Arbitrator, statement of claim was filed

by the petitioner and statement of defence, along with certain counter
claims, was filed by the respondents. The counter claims were
predicated on an undated ‗receipt-cum-agreement‘, allegedly executed
between the petitioner and the respondents. Respondents 2 and 3
sought to contend that, under the said receipt-cum-agreement, the
petitioner had undertaken to pay an amount of ₹ 1.39 crores to
Respondents 2 and 3, of which the petitioner had paid only ₹ 21 lakhs,
with a balance of ₹ 1.18 crores remaining to be paid. This amount
constituted the substratum of the respondents‘ counter-claims.
8. Before the learned Sole Arbitrator, the petitioner contended

that, as there was no arbitration clause in the aforesaid receipt-cum-
agreement, the learned Sole Arbitrator did not possess the jurisdiction
OMP (T) (COMM.) 32/2020 Page 3 of 12

63
to adjudicate on the counter claims of Respondents 2 and 3. Reliance

was placed, in this context, on Clause 8 of the receipt-cum-agreement,
which envisaged resort to a court of law, by way of a suit for specific
performance, to enforce the covenants thereof.
9. Respondents 2 and 3 have, in their replication to the reply, of

the petitioner, to their counter claims, denied this assertion of the
petitioner.
10. The petitioner moved an application, before the learned Sole

Arbitrator, under Section 16 of the 1996 Act, praying that the counter
claims of Respondents 2 and 3 be dismissed, for want of
maintainability, as the cause, canvassed therein, did not constitute an
arbitrable dispute, amenable to the jurisdiction of the learned Sole
Arbitrator.
11. The said application stands disposed of, by order, dated 15 th

June, 2020, of the learned Sole Arbitrator. To a query as to why the
petitioner has not chosen to challenge the said order under Section 34
of the 1996 Act, if the petitioner is aggrieved thereby, Mr. Kush
submits that, in his opinion, Section 16(5) of the 1996 Act mandated
allowing, by the learned Sole Arbitrator, of his application under
Section 16, prior to the recording of evidence and that, therefore, the
learned Sole Arbitrator was de jure incompetent to adjudicate on the
counter claims of the respondents. For this reason, submits Mr. Kush,
the petitioner chose to move the present petition, for termination of the
mandate of the learned Sole Arbitrator, to adjudicate on the counter
OMP (T) (COMM.) 32/2020 Page 4 of 12

64
claims of the respondents, instead of filing a formal challenge, under

Section 34 of the 1996 Act, to the order dated 15th June, 2020.
12. I am unable to agree with this submission of Mr. Kush. In my

opinion, the order dated 15th June, 2020, being in the nature of an
interim order passed by the learned Sole Arbitrator, was amenable to
challenge under Section 34 of the 1996 Act. Without ventilating such
a challenge, the petitioner could not have preferred the present
petition, for termination of the mandate of the learned Sole Arbitrator.
Such a termination of the mandate of the learned Sole Arbitrator
cannot be directed, even while the order dated 15th June, 2020,
remains undisturbed – and, in fact, unquestioned.
13. Be that as it may, I am of the opinion that the present petition

cannot succeed, even otherwise, as no case is made out, to direct the
learned Sole Arbitrator to take a decision on the application, of the
petitioner under Section 16 of the 1996 Act, at this stage itself,
without deferring the issue for decision after recording of evidence.
The procedure to be followed, in arbitral proceedings, is essentially
the province of the arbitrator, or the arbitral tribunal. Unless the
decision, in that regard, falls foul of any mandatory stipulation,
contained in the 1996 Act, this Court would be loath to interfere, the
autonomy of the arbitral proceedings, and of the arbitrator, being
statutorily pre-eminent.
14. Mr. Kush had sought to submit that Section 16(5) of the 1996
Act stood violated by the decision, of the learned Sole Arbitrator, to
defer the issue of his jurisdiction, to adjudicate on the counter claims
OMP (T) (COMM.) 32/2020 Page 5 of 12

65
of the respondents, to a stage after recording of evidence. I am unable

to agree with this contention, either. Be it noted, Mr. Kush was
candid in admitting that he was not aware of any judicial authority, to
the effect that such an objection had necessarily to be decided before
evidence was recorded.
15. Section 16 of the 1996 Act reads as under :

―16. Competence of arbitral tribunal to rule on its
jurisdiction.—
(1) The arbitral tribunal may rule on its own

jurisdiction, including ruling on any objections with
respect to the existence or validity of the arbitration
agreement, and for that purpose,—
(a) an arbitration clause which forms part of

a contract shall be treated as an agreement
independent of the other terms of the contract;
and
(b) a decision by the arbitral tribunal that the

contract is null and void shall not entail ipso
jure the invalidity of the arbitration clause.
(2) A plea that the arbitral tribunal does not have

jurisdiction shall be raised not later than the
submission of the statement of defence; however, a
party shall not be precluded from raising such a plea
merely because that he has appointed, or participated
in the appointment of, an arbitrator.
(3) A plea that the arbitral tribunal is exceeding the

scope of its authority shall be raised as soon as the
matter alleged to be beyond the scope of its authority is
raised during the arbitral proceedings.
(4) The arbitral tribunal may, in either of the cases

referred to in sub-section (2) or sub-section (3), admit
a later plea if it considers the delay justified.
OMP (T) (COMM.) 32/2020 Page 6 of 12

66
(5) The arbitral tribunal shall decide on a plea

referred to in sub-section (2) or sub-section (3) and,
where the arbitral tribunal takes a decision rejecting
the plea, continue with the arbitral proceedings and
make an arbitral award.
(6) A party aggrieved by such an arbitral award

may make an application for setting aside such an
arbitral award in accordance with section 34.‖
16. I am unable to read sub-section 5 of Section 16 as casting a

mandate, on the arbitrator, or the arbitral tribunal, to decide the
objection, to its/his jurisdiction, to adjudicate on any claim/counter
claim, necessarily before recording of evidence. No doubt, issues of
jurisdiction are, ordinarily, to be addressed at the outset. That,
however, is more a rule of prudence than one of inflexible procedure.
Legally, so long as the said decision is taken prior to the making of the
final arbitral award, in my view, no infraction of Section 16 could be
said to have occurred. Significantly, in case the learned Sole
Arbitrator exercises jurisdiction and adjudicates on the counter claims
of the respondents, and the petitioner is aggrieved thereby, sub-section
(6) of Section 16 specifically envisages the right, of the petitioner, to
pray for setting aside of such an award, in accordance with Section 34
of the 1996 Act.
16. Even on merits, I cannot subscribe to the submission that the

learned Sole Arbitrator was unjustified in deferring the issue of his
jurisdiction, to adjudicate on the counter claims of the respondents, till
the stage of final arguments. A reading of the order, dated 15 th June,
2020, of the learned Sole Arbitrator, reveals that this decision has not
been taken mechanically, without application of mind, but for good
OMP (T) (COMM.) 32/2020 Page 7 of 12

67
and sound reasons. The case of the petitioner, before the learned Sole
Arbitrator, was that the MoU, dated 28th September, 2017, required
Respondents 2 and 3 to hand over, to the petitioner, the entire charge
of operation of ―Firki Bar‖ for a consideration of ₹ 35 lakhs, which,
according to the petitioner, already stood paid. The petitioner‘s
contention was that, on 1st October, 2017, he had taken possession of
the said premises. The dispute related to certain alleged losses,
suffered by the petitioner, on account of non-fulfilment, by the
respondents, of the MoU, dated 28th September, 2017. Respondents 2
and 3 relied, per contra, on the undated receipt-cum-agreement, stated
to have been executed between the petitioner and the respondents
(though Mr. Kush would seek to point out that the said document was
between the petitioner and Respondents 2 and 3). According to
Respondents 2 and 3, this receipt-cum-agreement required the
claimant to pay ₹ 1.39 crores, for the purchase of ―Firki Bar‖, of
which only ₹ 21 lakhs had been paid, with ₹ 1.18 crores remaining
outstanding. It was further alleged, by Respondents 2 and 3, that, as
the petitioner was facing financial difficulties, he had approached the
respondents in September, 2017, for execution of an MoU, so that his
lenders could be satisfied, and that it was for this reason that, in the
said MoU, the sale consideration of ―Firki Bar‖ was reflected as ₹ 35
lakhs. According to Respondents 2 and 3, an amount of ₹ 88 lakhs
remains outstanding from the petitioner.
17. Needless to say, these allegations of Respondents no. 2 and 3

stand controverted, in writing, by the petitioner, before the learned
Sole Arbitrator. The petitioner has sought to contend that the aforesaid
receipt-cum-agreement related to the first floor of House No. 312,
OMP (T) (COMM.) 32/2020 Page 8 of 12
68
Block C-2, Janakpuri, and had nothing to do with ―Firki Bar‖. The
dispute, relating to the aforesaid Janakpuri property, it was further
pleaded, stood settled, between the petitioner and Respondents 2 and
3. In fact, contended the petitioner, the cheque issued by Respondents
2 and 3, consequent to the said settlement, was dishonoured, as a
result of which the petitioner had initiated proceedings, against them,
under Section 138 of the Negotiable Instruments Act, 1881. The
counter claim, as preferred by Respondents 2 and 3 before the learned
Sole Arbitrator, was for recovery of the aforesaid amount of ₹ 88
lakhs, alongwith damages of ₹ 1 crore.
18. Issues were framed, by the learned Sole Arbitrator, Issue No. 11
was framed as under:
―11. Whether the Receipt-cum-Agreement (undated) is for
sale of First Floor of House No. 312, Block C-2, Janakpuri or
for sale of Fikri Bar, subject matter of Memorandum of
Understanding? Onus on parties‖
19. The learned Sole Arbitrator has, after taking stock of the
aforesaid arguments and the controversies that arose as a consequence
thereof, noted that there was no categorical denial of the existence and
execution, either of the MoU dated 28th September, 2017, on which
the petitioner relied, or the undated receipt-cum-agreement, which
constitutes the mainstay of the submissions of Respondents 2 and 3.
Thereafter, paras 12 to 14 of the order, dated 15th June, 2020, of the
learned Sole Arbitrator, read thus :
―12. The parties are still to produce their respective

evidence to prove their respective cases. This Tribunal is of
the view that, at this stage, the rival assertions of both the
parties can't be decided. The controversy whether both the
OMP (T) (COMM.) 32/2020 Page 9 of 12

69
documents i.e. Receipt-cum-Agreement and MOU pertain to

different properties or only to one property i.e. 'Firki Bar' can
be adjudicated only after getting evidence of the parties. It is
pre-mature to brush aside the assertions of the non-applicants.
The burden shall be upon the non-applicants to establish
during trial that both these documents relate to the subject
property. If both the documents pertain to the property in
question as urged by the non-applicants, definitely, the
dispute in the Counter-claim could be within the jurisdiction
of this Tribunal by virtue of arbitration agreement in the
MOU dated 28.09.2017. The issue regarding jurisdiction of
this Tribunal will remain open and both the parties will be at
liberty to address arguments over it at the time of final
disposal after evidence of the parties is obtained.
13. In view of the above discussion, the application of the

claimant is disposed off with liberty to both the parties to
address arguments on the jurisdiction of this Tribunal at the
time of final arguments.
14. Observations in the order shall have no impact on the

merits of the case.‖
20. In my opinion, given the above facts, it cannot be said that the
learned Sole Arbitrator has materially or fundamentally erred, in
deferring the issue, relating to his jurisdiction, to adjudicate on the
counter claims of Respondents 2 and 3, to the stage after recording of
evidence. Given the nature of the controversy, he has deemed it
appropriate to do so, and his autonomy, in that regard, has to be
respected. I cannot agree with Mr. Kush that the learned Sole
Arbitrator has necessarily to be directed, at this stage itself, to
adjudicate on the application, of the petitioner, under Section 17,
without proceeding to record evidence.
21. Mr. Kush submits that his grievance is that, if the learned Sole
Arbitrator does not possess jurisdiction to adjudicate on the counter
OMP (T) (COMM.) 32/2020 Page 10 of 12

70
claims of Respondents 2 and 3, it would be unnecessary for the

petitioner to lead evidence in that regard. That, however, is a call
which is entirely for the petitioner to take. If the petitioner is sanguine
that he is bound to succeed in his submission that the learned Sole
Arbitrator has no jurisdiction to adjudicate on the counter claims of
Respondents 2 and 3, he is free, if he so chooses, not to lead any
evidence in that regard; needless to say, at his own risk. I am unable
to convince myself that, at this stage, any occasion arises, for this
Court to step in and to direct the learned Sole Arbitrator to
mandatorily adjudicate on his jurisdiction, qua the counter claims of
Respondents 2 and 3, before recording of evidence. If, given the
severely disputed factual issues, raised before him, the learned Sole
Arbitrator thought it appropriate to record evidence before
adjudicating on his jurisdiction to decide the counter claims of
Respondents 2 and 3, no such error, as would justify interference by
this Court, can be said to have been committed.
22. Far less, needless to say, does any occasion arise for this Court,
at this stage, to terminate the mandate of the learned Sole Arbitrator.
If the learned Sole Arbitrator is convinced with the merits of the
application of the petitioner, under Section 16 of the 1996 Act, it
would always be open to him, to so hold and, therefore, to reject the
counter claim of the respondents as not maintainable. In case he holds
to the contrary, and the petitioner is aggrieved, it would, equally, be
open to the petitioner to raise the said ground, in his challenge to the
award, under Section 34 of the 1996 Act.
OMP (T) (COMM.) 32/2020 Page 11 of 12

71
23. In my view, the present petition is essentially pre-mature, and

no occasion arises, for this Court to terminate the mandate of the
learned Sole Arbitrator, qua the counter claims of the respondents,
especially as the issue has been kept alive by the learned Sole
Arbitrator, to be decided at a later stage.
24. This petition is, therefore, completely devoid of merits and is

dismissed accordingly, with no orders as to costs.
25. Needless to say, this Court has not opined, one way or the other,
on the jurisdiction, of the learned Sole Arbitrator, to adjudicate on the
counter claims raised, before him, by Respondents 2 and 3, and no
observation, in this order, may be regarded as an expression of
opinion by this Court, even tentative, in that regard.
C. HARI SHANKAR, J.
JULY 20, 2020/kr
OMP (T) (COMM.) 32/2020 Page 12 of 12

Judgments On Limitation On Behalf of Claimant

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Judgments On Limitation On Behalf of Claimant

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BEFORE SHRI O.P.

IN THE MATTER OF ARBITRATION

M/s. TBPR Infra Projects Pvt. Ltd. ... Claimant

M/s. Engineering Projects (India) Ltd. ... Respondents

COMPILATION OF JUDGMENTS ON BEHALF OF CLAIMANT

S.No Particulars Date of Judgment

AIR 2006 SC 2488

AIR 2007 SC 2441

AIR 2008 SC 1363

OMP No. 735/2012 of Hon’ble Delhi High Court.

OMP (T) (Comm.) 32/2020 of Hon’ble Delhi High

IN THE SUPREME COURT OF INDIA

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any denial or repudiation of a claim by a party?

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on the basis of the vacant possession by the defendants.

© Manupatra Information Solutions Pvt. Ltd.

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IN THE SUPREME COURT OF INDIA

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As approved by the tender committee in its meeting held on 12.10.2003 and

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[2002]1SCR728 , appointed the Superintending Engineer as arbitrator by relying on

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© Manupatra Information Solutions Pvt. Ltd.

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IN THE SUPREME COURT OF INDIA

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ascertained sum due or a pending claim, cannot be an acknowledgement for a

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9 Excavation of 10379041.20 10379041.20 0 0

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17. Extra head lead 7(a) 2,61,926.40 28,10,144.0024,50,042.88

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© Manupatra Information Solutions Pvt. Ltd.

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* IN THE HIGH COURT OF DELHI AT NEW DELHI