Court Can't Appoint Arbitrator Where Parties Fail To Raise Dispute In Time Or Avoid In-House Dispute Resolution Mechanism: Chhattisgarh HC

The observation was made by Justice Arup Kumar Goswami:

"A perusal of Clause 16 of the General Terms and Conditions of the Contract would go to show that if there is a dispute, effort shall be made to resolve the disputes at the company level and for that purpose the contractor should make request in writing to the Engineering-charge for settlement of such disputes/claims within 30 days of arising of the cause of dispute/claim failing which it is indicated that no disputes/claims of the contractor shall be entertained by the company...As recourse was not taken to in-house dispute resolution mechanism by the applicant in terms of Clause 16 of the General Terms and Conditions of the Contract, I am of the opinion that no case is made out for appointment of an arbitrator."

In the present matter, the respondent had floated an e-tender notice for maintenance of 56 units of Miner Quarters near Mangwan Road at Adarsh Nagar Colony of Kusmunda Area under Decent Housing Scheme in which the applicant was a successful bidder. The work was valued at 63,04,770 and then an agreement was also entered into in between the parties. The applicant had completed the work on 26.03.2019, final bill was withheld along with security deposit and additional security deposit.

He wrote number of letters to the respondents requesting them to pay the entire amount, but the same were not responded. A legal notice was issued on 24.08.2021 for an amount of Rs. 8,98,06,430. As no steps were taken by the respondents within a period of 30 days the applicant requested to appoint an Arbitrator.

The respondent replied that he had no claim outstanding against the department for the work and the claim preferred through the bill was in full and final settlement as he had failed to complete the work on time. Hence, this petition.

Applicant argued that he had raised dispute with regard to the grievances and as no steps were taken by the respondents in terms of Clause 16 of the General Terms and Conditions of the Contract, the applicant had no option but to approach this Court for appointment of an Arbitrator.

The respondent submitted that the applicant had not raised any dispute as raised in the letter dated 24.08.2021 in terms of Clause 16 of the General Terms and Conditions of the contract and a belated claim is made after final payment was made on 16.06.2021. Further it was said that though there was no agreement for arbitration in respect of repair and maintenance of 64 units of Miners Quarters at Adarsh Nagar and repair and maintenance of 64 units of Miners Quarters at Vikas Nagar, claims in respect of them were raised in the letter. While accepting payment of fourth and final bill, the applicant had acknowledged that there was no claim outstanding against the department for repair/maintenance of 56 units of Miner Quarters near Mangwan Road at Adarsh Nagar.

Court held that after perusal of the legal notice dated 24.08.21 shows that there is no material on record to show that the applicant had raised any dispute with regard to the claims made therein to the Engineer-in-charge or to any authority at any point of time prior to 24.08.2021.

"No doubt, some letters were written for early payment but claim for interest, etc. was never raised at any point of time prior to issuance of the legal notice. For the first time, such disputes/claims as raised in the legal notice dated 24.08.2021 were raised after fourth and final bill was paid on 16.06.2021. Further more, disputes / claims with regard to repair and maintenance of 64 units of Miners Quarters at Adarsh Nagar and repair and maintenance of 64 units of Miners Quarters at Vikas Nagar for which there was no agreement were also clubbed together," Court said

Accordingly the petition was dismissed.