S N MALHOTRA Vs. AIRPORT AUTHORITY OF INDIA

JUDGEMENT

(1.) CHALLENGE raised in this appeal is to the judgment and order of the learned Single Judge dated December 12, 2001 passed in OMP No. 1/2000 and 2/2000.

(2.) AN agreement No. 36/ee (C)/amd-II/t-II/96-97 was entered into between the respondent herein (Airport Authority of India) and the appellant on 18. 09. 1996 pertaining to the work of special repairs to the terminal building at IGI airport, Terminal-II. The amount settled was negotiated at Rs. 9,01,797/- for certain renovations of a particular area in the aforesaid terminal building. The work was to commence on 31. 08. 1996 and it had to be completed on 28. 02. 1997. After the final bill had been prepared, the appellant set up certain claims vide letter dated 30th June, 1998. Disputes arose regarding the aforesaid claims and certain counter-claims were raised by the respondent. By his letter dated 06. 11. 1998, the appellant invoked the arbitration clause and requested for reference of the said disputes to arbitration. Respondent No. 2, Chief Engineer (Retd.), CPWD was appointed as sole arbitrator to decide and make his award regarding the claims raised by the appellant Contractor and the counter-claims by the respondent Airport Authority of India subject, however, to their admissibility under Clause 25 of the aforesaid agreement. The learned arbitrator submitted his award on 30th September, 1999, which was assailed before the learned Single Judge by both the appellant and the respondent by filing petitions under Section 34 of the Arbitration and Conciliation Act, 1996 (for short "the Act" ).

(3.) THE learned Single Judge after noticing that the primary issue involved is as to whether the respondent Airport Authority of India can raise the plea that the arbitrator acted without jurisdiction when such a plea was not taken before the arbitrator, took note of the contention of the appellant that in view of the clear language of Section 16 of the Act, the respondent was now debarred from raising such a plea. After referring to the relevant provisions of the act, however, the learned Single Judge came to the conclusion that the appellant could be permitted to challenge the award and raise the aforesaid plea after the conclusion of the arbitral proceedings and was not debarred from doing so. Having come to the aforesaid conclusion, the learned Single Judge went on to hold that under Clause 25 of the Agreement, which contained the arbitration clause, certain disputes were taken out of the jurisdiction of the arbitrator, as was clear from the use of the opening words of Clause 25: "except where otherwise provided in the contract". In other words, certain disputes were to be treated as excepted matters. The dispute under Clause 2 of the Agreement [which stipulated that time was of the essence of the contract and laid down that the contractor shall pay as compensation an amount equal to 1% or such smaller amount as the Chief Engineer may decide on the amount of the estimated cost of the whole work as shown in the tender for everyday that the work remains uncommenced, or unfinished, after the proper dates], was one such dispute. On this premise, the learned Single Judge held that out of the total amount, the respondent would not be liable to pay a sum of Rs. 34,664/- in OMP No. 1/2000 and for similar reasons would not be liable to pay Rs. 35,159/- in OMP No. 2/2000.