M/S Popular Construction v ITI Limited, Department of Telecommunication, and Bharat Sanchar Nigam Limited (BSNL)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE ANTONY DOMINIC** ## **THURSDAY, THE 13TH DAY OF DECEMBER 2012/22ND AGRAHAYANA 1934** ## **AR.No. 52 of 2011 ( )** **----------------------------** ## **APPLICANT/PETITIONER** **-----------------------------------** **M/S.POPULAR CONSTRUCTION, 17/470, P.T.BUILDINGS,OPPOSITE POLICE STATION,DOWN HILL, MALAPPURAM, 676 519 REPRESENTED BY ITS MANAGING PARTNER V.ZUBAIR, S/O.VILAN ABDUALLA,CHERUPARAMBIL HOUSE, KODUR.P.O, MANGATTUPULAM, MALAPPURAM-676 504** **BY ADV. SRI.P.M.POULOSE** ## **OPPOSITE PARTIES/RESPONDENTS** **----------------------------------------------------** **1. M/S.ITI LIMITED. ( A GOVERNMENT OF INDIA UNDERTAKING) NETWORK SYSTEM UNIT, ITI BHAVAN, DOORVANINAGAR, BANGALORE-560 016, REPRESENTED BY ITS CHAIRMAN & MANAGING DIRECTOR.** **2. DEPARTMENT OF TELECOMMUNICATION REPRESENTED BY ITS SECRETARY, MINISTRY OF TELECOMMUNICATION, NEW DELHI.** **3. M/S.BHARAT SANCHAR NIGAM LIMITED, (A GOVERNMENT OF INDIA ENTERPRISE)REPRESENTED BY ITS GENERAL MANAGER, OFFICE OF THE GENERAL MANAGER TELECOM, PALAKKAD, KERALA.** **R1 BY ADV. SRI.N.N.SUGUNAPALAN (SR.) R1 BY ADV. SRI.S.SUJIN R2&R3 BY ADV. SRI.MATHEWS K.PHILIP,SC, BSNL** ## **THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON 13-12-2012, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** ## **MJL** ## **AR.No. 52 of 2011 ( )** ## **APPENDIX** ## **PETITIONER'S ANNEXURES:** **ANNEXURE-I: TRUE COPY OF THE LETTER DATED 31.12.2009 ISSUED BY THE IST OPPOSITE PARTY.** **ANNEXURE-II: TRUE COPY OF THE LETTER NO.NSU/CIVIL/BSNL/24-102 DATED 16.2.2009** **ANNEXURE-III: TRUE COPY OF THE LETTER NO.POP/ITI/2009 DATED 20.2.2009 BY THE APPLICANT. ANNEXURE-IV: TRUE COPY OF THE LETTER DATED 25.5.2011 SENT BY THE PETITIONER.** **ANNEXURE-V: TRUE COPY OF THE LETTER NO.REF.NSU/CIVIL/BSNL/24-559 DATED 23.6.2011.** **ANNEXURE-VI: TRUE COPY OF THE CLAUSE 54 OF THE GENERAL CONDITIONS OF CONTRACT.** ## **RESPONDENTS' EXHIBITS:** **EXT. R3 (a) : TRUE COPY OF THE AGREEMENT BETWEEN BHARAT SANCHAR NIGAM LIMITED & ITI** ## **/TRUE COPY/** ## **P A TO JUDGE** **MJL** ## **ANTONY DOMINIC, J** ........................................ A.R.52/2011 .............................................. Dated this the 13[th] day of December, 2012 ## **ORDER** Heard the counsel for the applicant and the learned senior counsel appearing for the 1[st] respondent. 2. Applicant is a partnership firm. On 5.7.2003, 1[st] respondent issued them a work order “for providing external plant U/G cable laying Network under Palakkad SSA Cable laying work at Ottappalam Tele Exchange area”. Accordingly, applicant entered into an agreement with the 1[st] respondent on 30.7.2003. The agreement, a copy of which has been produced along with the memo dated 2.1.2012, _inter alia_ provide for resolution of disputes by arbitration. According to the applicant, they completed the work and submitted their final bill. 3. It is stated that when payments were made, for no reason whatsoever, Rs.4 Lakhs was recovered from **A.R.52/11** 2 the amounts due from them. On enquiry, they came to know that the 1[st] respondent has executed the work on behalf of the 3[rd] respondent and that, as per Circular dated 28.3.2001, the 3[rd] respondent was liable to pay the 1[st] respondent overhead charges on supervision at 9%, and 4% towards store managements. That Circular was modified by Circular dated 21.3.2003 whereby the rates were reduced from 9% to 7.8% and from 4% to 2.9%. Applicant says that when payments were made by the 3[rd] respondent to the 1[st] respondent, on some earlier occasions, ignoring the reduction in rates effected as per Circular dated 21.3.2003, payments were made at the rates as specified in the Circular dated 28.3.2001. It is stated that Rs.4 Lakhs recovered from their final bill by the 3[rd] respondent was to recoup such excess payments made by them to the 1[st] respondent. Applicant says that they submitted letters dated 16.8.2004, 13.12.2005 and 20.4.2009 to various offices of the 1[st] respondent requesting for releasing the withheld amount of Rs.4 Lakhs. As **A.R.52/11** 3 payment was not made, they approached this Court by filing W.P.(C).6488/2009. That writ petition was disposed of directing consideration of their claims and payment of the amounts, if any, due. There upon, they were issued Annexure-I letter dated 31.12.2009 saying that on verification it has been found that they had already submitted a 'No Claim' certificate and therefore no payment is due. 4. That communication was challenged before this Court in W.P.(C).26111/10, which was disposed of relegating the applicant to work out their remedies either before the Civil Court or in Arbitration proceedings. Accordingly, Annexure-IV notice was issued demanding arbitration and that was replied by Annexure-V stating that all payments due under the contract have been paid and that the claim now made is barred by limitation. It is on receipt of this communication, this application has been filed under Section 11(6) of the Arbitration and Conciliation Act seeking appointment of an Arbitrator. **A.R.52/11** 4 5. Counsel for the applicant contended that admittedly, there is an arbitration clause in the agreement dated 30.7.2003 and that as disputes arose between the parties, the matter ought to have been referred for arbitration. He also relied on the Apex Court judgment in **R.L.Kalathia and Company v. State of Gujarat (2011 (2) SCC 400)** to contend that in cases where the claims are admissible and just, 'No Claim' certificate issued by itself will not disentitle the claimant from sustaining his claims. 6. On the other hand, learned senior counsel for the 1[st] respondent, though conceded to the existence of arbitration clause, contended that the claim is barred by limitation. He also contended that in the light of the 'No Claim' certificate, the applicant cannot sustain the claim now made. It was also contended that the claims now made are in relation to 'excepted matters' under the agreement between the parties. **A.R.52/11** 5 7. Thus, there is unanimity that there is an arbitration clause in the agreement that is executed between the parties. Then, the first question is whether the fact that 'No Claim' certificate has been issued by the applicant will deprive him of his right to have arbitration. This very question has been considered by the Apex Court in the judgment cited supra, where it has been held that the fact that such a certificate has been issued by itself will not deprive an applicant of his right to invoke arbitration if he is able to show that his claim is a sustainable one. In the facts of this case, I am satisfied that prima facie, the claim is tenable and in any case, this is a matter which requires evidence and therefore, I feel that it is better to leave it to the Arbitrator to decide that issue also. 8. Insofar as the contention of the respondents that the claim is barred by limitation and that the **A.R.52/11** 6 claims are pertaining to 'excepted matters', are concerned, that also is a disputed question of fact and on account of the dearth of materials, this Court is unable to reach conclusive findings on those issues. 9. At this stage learned senior counsel for the 1[st] respondent raised a contention that in the agreement dated 30.7.2003, a sole arbitrator is to be appointed by the Chairman/Managing Director of the Company. Although such a right has been conferred on the Chairman/Managing Director of the Company, admittedly, he did not exercise that right, even after receipt of notice from the applicant. In such a case, on account of his failure to appoint the Arbitrator within the time as specified in 11(6) of the Act, that right is forfeited and when an application is made to this Court it is for this Court to appoint the Arbitrator. Therefore, I do not find any reason to accept the contention raised. ## **A.R.52/11** 7 10. In such circumstances, I appoint **Sri.K.Sudhakaran, Dist.Judge (Retd.), 'Sreyas', Near Vadakkanthara Temple, Vadakkanthara, Palakkad-678 012** , as sole Arbitrator to arbitrate upon the dispute between the applicant and the 1[st] respondent. Arbitrator will issue notice to the parties and conclude the proceedings as expeditiously as possible. Arbitrator will be free to fix terms in the matter also. Registry will communicate a copy of this order to the Arbitrator for information. ## **Sd/- ANTONY DOMINIC, JUDGE** mrcs /true copy/ sd/- P.A. To Judge