Decided on January 07,1983

C.L.MISRA Respondents


B.N.Kirpal, J. - (1.)IN this appeal the correctness of the order of the learned single Judge, who allowed the respondent application under Section 20 of the INdian Arbitration Act, 1940, is sought to be challenged.
(2.)THE respondent had entered into an agreement dated January 20, 1976 with the appellant for the construction of a building by the name of Nehru Bhawan at Bharatpur. According to the respondent, the said agreement comprised of reciprocal promises to be performed by both the parties.
According to the respondent, the architects of the appellant were required to supply the drawings, etc. which they did not do. According to the respondent, some disputes arose between the parties. The respondent wrote a letter dated April 11, 1977 to the said architects of the appellant. The disputes, which were enumerated in the said letter, which were stated to have arisen between the parties were as follows:

"1. Withholding of payment of the 7th running bill amounting to Rs. 51,440.65 P. 2. Part rate payment and illegal deductions in measurement and amounts of the bills from 3rd to 6th running bills. 3. Settlement of rate prior to execution of extra items which was asked to you to settle the same but you refused to settle before its taking in hand, wrong interpretation of R.C.G. Vault roof by wrongly interpreting and convering the same as Arches. 4. Delay in supplying drawings, details and materials:-Due to your non supply of drawings, details and materials (cement and steel etc.) in time the whole work was to be completed within 8 months has been delayed for a quite long and we have been put to suffer unnecessary losses. We claim damages for the extra time consumed and extra expenses incurred and other damages in the shape of unearned profit etc. suffered by us as mentioned below:- 5. Claim : (1) Rs. 51,440.65- being amount of 7th running .bill (2) Rs. 10,000.00 on account of unmeasured work (after 7th running bill) (3) Rs. 1056.92 interest on delayed payment after certificate of Architects. (4) Rs. 3339.07 interest on account of delay in issuing certificate by Architects upto 9-4-1977. (5) Rs. 2471.98 interest towards unauthorised deductions upto 9-4-77 6. Damages : (1) Rs. 12,24

- Staff salary with effect 9-4-77 @ Rs. 2040.00 P.M. from 10-10-76 to (2) Rs. 6300f- L.S. on account of Labour charges upto 9-4-77 (wastage) (3) Rs. 20,000.00 towards cost of site stores, water tanks and layout hutments etc. (4) Rs. 31OO.00 towards contingencies from 10-10-76 to 9-4-77 (5) Rs. 6000.00 (6) Rs. 56250.00 (7)(1) Rs. 9600.00 (2) Rs. 1320.00 (3) 540.00 (4) Rs. 350.00 towards hire charges of T & P and shuttering materials from 10-10-76 to 9-4-77 @ Rs. 1000.00 per month. towards net profit on unexecuted work at the rate of 15% on Rs. 375.000.00 towards costs of 12 mm to 30 mm stone ballast 6000 eft @ 160 per 1000 cft towards costs of coarse sand-1200 cft @ Rs. 1.10 per cft. towards cost of bricks- 4000 nos. @ 135.00 per 1000. towards Octroi on bricks purchased from UP as agreed by Chairman."

The counsel for the respondent sent a notice dated April 29,1977 to the appellant, through its architects. In the said notice, it was stated that the agreement dated Jan. 20, 1976 contained therein an arbitration clause. Reference was invited to the respondent's earlier letter dated April 11, 1977 wherein disputes were enumerated. It was also mentioned that the termination of the contract by the appellant was wrongful and the respondent had become entitled to recover damages on that account also. The respondent suggested the name of S.G. Pradhan of Pradhan Ghosh & Associates, Chartered Architects as the sole arbitrator in the matter. It was also mentioned that in case the appellant did not concur to the appointment of Pradhan, then the matter should be referred to two arbitrators. Thereafter, the respondent received a letter dated May 25,1977 from the appellant's architects purporting to convey the decision on the claims of the respondent.

The respondent thereafter filed a petition under Section 20 of the Arbitration Act, being suit No. 478 of 1977. The aforesaid facts were reiterated in the petition and it was prayed that the arbitration agreement should be got filed in Court and the disputes mentioned in the aforesaid letters dated April 11, 1977 and April 29, 1977 should be referred to the sole arbitration of S.G. Pradhan.

The appellant herein contested the said suit. In the reply filed it was, inter alia, pleaded that according to article 4 of the Articles of Agreement, the decision of architects with regard to all matters of dispute as to the material, workmanship, etc. and also as to the intended interpretation of The clauses of the agreement was final and binding on both the parties. The claim of the respondent was denied. It was also contended that according to the final certificate issued by the architects on May 25, 1977 the matters in controversy were excepted matters and the decision of architects was final.

The respondent had acted in terms of the aforesaid Clause 37, There was no decision which had been taken by the architects of the appellant which could be regarded as being an excepted matter. The disputes which were sought to be raised between the parties clearly fell within the ambit and scope of the said arbitration clause, and the subsequent letter dated May 25, 1977 which was written by the appellant's architects was clearly an afterthought and an attempt to defeat the move for arbitration which had already been initiated by the respondent. Certain dispute had arisen between the parties and the respondent had taken steps to initiate arbitration proceedings and had nominated his own arbitrator. This right which had been exercised by the respondent could not be nullified by the so-called final decision purported to have been taken by the architects of the appellant vide letter dated May 25, 1977. If final decision had been taken by the architects before demand for arbitration had been raised, that it might have been possible for the appellant to contend that in respect of the excepted matter arbitration was not available. In the present case, however, the architects had refused to take a decision on the matters agitated by the respondent. This being so, the so-called final decision of the architects dated May 25, 1977 taken after the respondent had appointed his arbitrator, is clearly non-est and of no avail and the same cannot be regarded as a decision which can possibly preclude the applicability of the arbitration clause to the disputes already raised.

For the aforesaid reasons, we do not find any force in this appeal. The same is dismissed with costs. Counsel fee Rs. 500.00 .


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