Decided on October 31,2017

Walter Bauag (Il) Respondents


S.C. Gupte, J. - (1.) This Arbitration Petition challenges an award passed by an arbitral tribunal of three arbitrators. The disputes between the parties arise out of the contract of "construction and completion of Bombay Sewage Project, Worli and Bandra outfalls" awarded by the Petitioner herein to the Respondent contractor. The Respondent was the claimant before the arbitral tribunal. By the impugned award dated 6 August 2013, the majority of the arbitrators awarded the Respondent's claim aggregating to INR 20,42,24,167/ and DM 6,71,465/ with interest in the event of failure to pay the sum within twelve weeks and costs of arbitration quantified at Rs. 20 lakhs.
(2.) The contract was awarded by the Petitioner to the Respondent in pursuance of an invitation to tender in the year 1995. The project was with financial assistance from the World Bank, and tenders were invited globally. The contract was awarded to a German Company named Dyckerhoff & Widmann AG ("D&W"). On 2 October 1995, D&W commenced the work. The stipulated date for completion was 15 March 1999. Time was, however, extended by the Petitioner. In the meantime, on 1 January 2000, all its contracts outside Europe were transferred by D&W to its subsidiary, Dywidag International GmbH ("Dywidag"). This transfer was under an agreement titled as "contribution agreement" dated 22 March 2000. On 30 March 2001, the contract work was completed by Dywidag and taken over by the Petitioner. Subsequently, on or about 17 January 2001, D&W merged with Walter BauAG, the present Respondent ("WB"). On or about 27 May 2003, the extended defect liability period ended. On or about 22 July 2003, a draft final bill was submitted by the contractor. By a communication dated 26 September 2003, the Engineer conveyed extension of time without any damages and invited the contractor to give details of compensatory costs. Thereafter, on or about 31 October 2004, the services of the Engineer appointed for the project were terminated by the Petitioner and one of the latter's own employees was appointed as 'Engineer'. The appointment was protested by the contractor in the name of D&W. On or about 4 March 2006, the last of the decisions given by the Engineer was conveyed by the Petitioner to D&W in respect of the Draft Final Bill submitted by/on behalf of D&W on 22 July 2003, communicating inter alia its disagreement with the claims of D&W originally recommended by the Engineer. These particular claims of D&W were thereupon referred to an arbitral tribunal comprising of three arbitrators. The award resulting from the reference was set aside under Section 34 of the Arbitration and Conciliation Act, 1996 by a learned Single Judge of this Court. That order is a subject matter of challenge in a pending appeal. In the meantime, on 24 October, 2009, Dywidag submitted a comprehensive draft final statement in the name of D&W to the Engineer inter alia setting out its claims. Since there was no certificate or payment, on 2 February 2010, it issued a notice of arbitration. The notice was issued by Dywidag, acting on behalf of WB, the legal successor of the original contractor D&W. The present arbitration reference was held in pursuance of this notice, where the impugned award came to be passed. By the time the reference commenced, an Insolvency Administrator had come to be appointed of WB, which had filed for insolvency in 2005. The Insolvency Administrator appointed Dywidag under a power of attorney to represent it in the reference.
(3.) Mr. Setalvad, learned Senior Counsel for the Petitioner, raises the following two main contentions in support of his challenge to the impugned award: (i) Firstly, learned Counsel submits that there is no arbitration agreement between WB, who invoked the arbitration clause and was the claimant before the arbitral tribunal, and the Petitioner, and the tribunal accordingly lacked the jurisdiction to hear the reference and make the award. Learned Counsel submits that though D&W were the original contracting party, there was an assignment of the contract in favour of Dywidag as per the claimant itself; WB, who claims to be the successor of D&W, thus, had no right to invoke the arbitration agreement between the Petitioner and D&W or make any claim thereunder. It is submitted that if the contract had stood assigned to Dywidag, the succession as between D&W and WB does not vest any right under the contract to the latter. It is submitted that the arbitration reference filed by the Insolvency Administrator of WB was accordingly not maintainable. (ii) Secondly, learned Counsel submits that the claims of the Respondent, WB, are all hopelessly timebarred. It is submitted that the 'Takingover Certificate' was issued by the Petitioner on 31 May, 2001, taking over the project with effect from 30 March, 2001; the Defects Liability Certificate, issued on 13 June, 2003, certified the end of Defects Liability Period with effect from 27 May, 2003. In the premises, learned Counsel submits, the Draft Final Statement (which, under the contract, was to be submitted not later than 56 days after the issue of Defects Liability Certificate) having been submitted on 24 October, 2009, and the arbitration notice having been issued in pursuance thereof on 2 February, 2010, the reference is clearly barred by the law of limitation.;

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.