LexM/S. P. MANOHAR REDDY & BROS. versus MAHARASHTRA KRISHNA VALLEY DEV. CORPN. & ORS.
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[2008] 17 S.C.R. 1217 M/S. P. MANOHAR REDDY & BROS. v. MAHARASHTRA KRISHNA VALLEY DEV. CORPN. & ORS. (Civil Appeal No. 7408-7409 of 2008) DECEMBER 18, 2008 [S.8. SINHA AND CYRIAC JOSEPH, JJ.] Arbitration Act, 1940- ss. 8, 20 and 37(4)-Appointment A B of arbitrator - Works contract - Claim for additional and extra C work - Rejection of claim as also appointment of arbitrator by Government - Trial court appointed arbitrator but High Court set aside the same - Correctness of - Held: Trial court not correct in directing appointment of arbitrator - Arbitration clause could not be invoked having regard to the limited application of clauses 37, 54, 55 of General Conditions of D Contract - Contractor did not raise claim for extra or additional work during the tenure of contract but after its completion and acceptance of final bill - He accepted the final bill without any demur - Contract came to an end and arbitration agreement which was part of it also perished - Jurisdiction of civil court E' could be invoked if disputes arising between parties was one to which arbitration agreement applied - More so, contractor did not seek extension of time uls. 37(4) and in any event no sufficient cause was made out. Respondent-government and the appellant- F contractor entered into a work contract. The General "' Conditions of Contract were specified. Clause 37 imposed an obligation upon the contractor to furnish to j:xecutive Engineer a release of claims against Government arising out of the contract other than the claims_ specified, after completion of the work and prior G t-o payment thereof. The work was completed. Respondent paid the final bill prepared and the appellant accepted the same without any protest. As the appellant was asked to do extra items of work, it raised the claim 1217 H .··,, .. · 1218 SUPREME COURT REPORTS [2008] 17 S.C.R. "A for the same but was rejected.Appellantissued notice·to the Executive Engineer of respondent Corporation. Respondent rejected the claim on the ground that the . stipulated period therefor expired and as such the matter could not be considered for arbitration. Aggrieved, s appellant filed -appeal thereagainst before the Superintending Engineer for arbitration but the same was rejected as the contractor did not submit their claim before expiry of 30 days after the defect liability period nor the arbitrator was appointed.Thereafter, Chief Engineer was issued notice for appointment of sole C arbitrator but was rejected. Appellant filed appHcation u/ s. 8 of the Arbitration Act, 1940 for appointment of . ·Arbitrator. Civil Judge appointed a retired Chief Engineer · ·as Arbitrator with regard to the additional and extra works carried out by appellant. Respondent filed Revision D ··Application which was a.llowed. Review Petition thereagainst was.· also dismissed. Hence the present appeals. Dismissing the appeals, the Court HELD:1.1. As arbitration clause could not be invoked E having regard to the limited application of clauses 37, 54 and 55 of the General Conditions of the Contract, the trial court was not correct in directing appointment of arbitrator. [Para 28] [1237-F] 1.2. The arbitration agreement is contained in a F commercial document. It must be interpreted having regard to the language used in it. A bare perusal of clauses 37, 54 and 55 of the General Conditions of Contract clearly shows that the arbitration agreement entered into by and between the parties is not of wide G amplitude. In a case where arbitration clause is of wide .amplitude, the same may cover also the claims arising during the tenure of contract or thereafter, provided the arbitration clause subsists. Clause 37 imposes an obligation upon the contractor to furnish to the Executive H Engineer a release of claims against the Government ->. P. MANOHAR REDDY & BROS. v. MAHARASHTRA 1219 KRISHNA VALLEY DEV. CORPN. & ORS. arising out of the contract other than the claims A specifically identified, evaluated and expected from the operation of the release by the Contractor only after completion of the work and prior to payment thereof. [Paras 15 and 16] [1230-D-F] 1.3. There is nothing on record to show that any claim B in relation to extra or additional work had been raised by the contractor prior to 27.2.1991 although final measurement had been recorded on 26.11.1990 and the bill was paid in full and final satisfaction on 4.12.1990.
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