OD-1

IN THE HIGH COURT AT CALCUTTA

Ordinary Original Civil Jurisdiction
ORIGINAL SIDE

AP/535/2022

M/S. B.B.M. ENTERPRISES

Vs
STATE OF WEST BENGAL AND ORS.

BEFORE:
The Hon'ble JUSTICE SABYASACHI BHATTACHARYYA
Date : 27th June, 2024

Appearance:
Mr. Sakya Sen, Adv.
Ms. Nilanjana Adhya, Adv.
…for the petitioner

Mr. Dhruba Ghosh, Sr. Adv.

Mr. Priyankar Saha, Adv.
Mr. Arindam Mandal, Adv.
Mr. Paritosh Sinha, Adv.
Ms. Ajeyaa Choudhury, Adv.
Ms. P. Ghosh, Adv.
…for the State respondents

The Court : Learned Counsel appearing for the petitioner contends in

support of the application under Section 11 of the Arbitration and Conciliation

Act, 1996 that the petitioner did certain work for the respondent authorities. The

work-in-question was completed on July 12, 2000.

Subsequently, a completion certificate was also issued to that effect which

indicated that payment had been made up to the second R/A Bill to the tune of

Rs. 1,30,97,481/-. However, within the contemplation of the agreement between

the parties, in particular Clause 7 thereof, the final bill was to be submitted by

the contractor within a month from the date fixed for completion of the work;
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otherwise, the Engineer-in-Charge’s certificate of the measurement and of the

total amount payable for the work accordingly shall be final and binding on all

parties. It is contended that in view of such provision, unless a final bill was

drawn and/or prepared and also certified by the Engineer-in-Charge, the cause

of action for claiming the final bill amount did not ripen.

In the present case, it is an admitted position that the respondents have

already paid the final value of the work done partially, to the tune of

Rs.1,59,78,404. However, the balance of Rs.24,21,596/- along with the refund of

the security deposit amounting to Rs. 11,44,205/- has not yet been paid to the

petitioner.

Learned Counsel for the petitioner, in support of his contention, cites a co-

ordinate Bench judgment in the matter of M.L. Dalmiya and Co. vs. Union of

India reported at AIR 1963 Cal 277 as well as an unreported judgment of a Co-

ordinate Bench in FMA 1093 of 2013. In the said judgment, the Courts, while

considering a similar situation as the present, took into consideration modalities

of cases relating to work contracts. It was held in M.L. Dalmiya (supra), inter alia,

that in such cases, it is the duty of the Government after doing the work

departmentally to give the contractor a certificate of completion. Till such

certificate is given, the contractor cannot submit his bill and the cause of action

for payment in terms of the contract does not arise. Since the Government did

not intimate its decision in the said case, it was held that the time cannot run

before that date. In the unreported judgment of M/s. Biptrade (supra), in FMA

1093 of 2013, the Court, in similar lines, observed that in course of the
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execution of a works contract or a building contract, continual payments are

made by the employer to the contractor at agreed intervals.

It was further held that till the final bill is prepared and the same is

certified for payment, the question of limitation generally does not arise in a

works contract. As such, in the present case, it is argued that in view of non-

grant of certificate by the engineer, the cause of action did not mature until

recently, when the petitioner claimed such amount but the same was not

disbursed in favour of the petitioner.

Under such circumstances, it is argued, a notice under Section 21 of the

1996 Act was issued on June 2, 2022, thereby setting the ball rolling in respect

of commencement of the arbitration proceeding. However, in view of no

agreement being expressed by the respondents regarding the reference of the

matter to arbitration, the present application has been filed.

Learned senior counsel appearing for the respondent submits that the

application is bad for mis-joinder and non-joinder of parties. It is submitted that

at best, the respondent no. 1 – State and the Superintending Engineer, National

Highway Circle-I could be said to be party to the agreement between the parties.

However, respondent no. 2, the Chief Engineer, P.W.D. and the respondent no.

4, Executive Engineer, National Highway Division No. I, are not relevant parties

at all.

Learned senior counsel also expresses the handicap of the respondents

due to dearth of the relevant documents since the petitioner sat tight over the

matter and only became alive to the purported issues after about 20 years. It is
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submitted that the claim under consideration is ex-facie time-barred and

nothing more than ‘dead wood’.

In support of his argument, learned senior counsel places reliance on

paragraph 9 of the application where the petitioner admits that the work was

completed and the final bill was drawn and/or prepared; yet the same was not

paid. Again, in paragraph no. 15 of the application, the petitioner admits that

the cause of action for the claim arose first on July 30, 2000 when the work was

completed and the final bill prepared but not paid.

In continuance of his arguments, learned senior counsel appearing for the

respondents places reliance on the completion certificate annexed at page 18 of

the petition which clearly denotes that the work was completed as long back as

on July 12, 2000 and payment was duly made.

Learned senior counsel places considerable stress on the payment

certificate issued in favour of the petitioner on September 6, 2001 which is

annexed at page 19 of the application from which it is evident that the payment,

even if in part, was made in terms of the final bill raised by the petitioner. Thus,

it is argued that there is no scope of reference of the matter to arbitration, since

the same pertains to a long-dead claim and should be nipped at the bud.

Upon a careful consideration of the arguments of the parties, it transpires

that the petitioner has stated in paragraph no. 8 of the application that an

amount was paid in part against the “final value of work done”. It is also stated

that the balance amount along with security deposit refund has not yet been

paid by the respondents.

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The said pleading is to be read in conjunction with Annexure C to the

application which collectively annexes a completion certificate and a payment

certificate.

It transpires from the completion certificate at page 18 of the application

that the respondents had admitted that out of the total order value of

Rs.1,84,00,000/-, only a payment up to the second R/A Bill to the tune of

Rs.1,30,97,841/- was made.

Read in such context, there may be an ambiguity in the pleadings made in

the Section 11 application. In paragraph no. 8, which is to be read in

conjunction with paragraph no. 9, the petitioner claims that the part payment

was made against the final value of the work done. However, it is not clarified as

to whether such payment was an accumulation of the different disbursals made

at various points of time against the corresponding R/A Bills, to be adjusted

against the final payment.

In paragraph no. 9, the petitioner states that although the work was

completed and the final bill was drawn and/or prepared, the same was not paid.

The respondents seek to argue that the drawal of the final bill itself would

show that the cause of action of the present claim arose long back, immediately

after the completion of the work, at least on September 6, 2001 on which date a

payment certificate was issued.

However, the ambiguity arises in the context of Clause 7 of the agreement

between the parties. In the final sentence of the said clause, it is provided that

the final bill shall be submitted by the contractor within one month from the
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date fixed for completion of the work. It goes on further to stipulate that even

otherwise (meaning thereby that even if such bill was not drawn) the Engineer-

in-Charge’s certificate of the measurement and of the total amount payable for

the work accordingly shall be final and binding on all parties. It is not admitted

by the petitioner, nor substantiated at this stage by the respondents, that any

such certificate was issued by the engineer concerned, regarding the total

amount payable for the work, in terms of Clause 7.

Insofar as the pleading of the petitioner that a part of the final value of the

work was paid, the same may or may not be linked with a final bill having been

raised and being satisfied.

There is a scope of arguments inasmuch as the said part payments might

have been made against the R/A Bills or otherwise, before the final bill was

raised and certified.

It would be premature at this stage for this Court, sitting in the

jurisdiction under Section 11 of the 1996 Act, to conclusively determine such

issue.

The entire objection as to limitation, however, hinges on the said issue,

since it may very well be argued by the petitioner that until and unless a

certification was made by the concerned engineer to the final bill raised by the

petitioner, the cause of action for the claim made by the petitioner would not

ripen. If such view is ultimately established, then the bar of limitation would be

effaced.
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On the contrary, if it is ultimately proved that the engineer had actually

issued a certificate regarding the total amount payable, in such event, definitely,

the claim might be held to be barred by limitation.

However, it is completely beyond the domain of the Hon’ble Chief Justice

and/or his designate, sitting in jurisdiction under Section 11 of the Arbitration

and Conciliation Act, 1996, to adjudicate even prima facie on the merits of an

arguable issue involved in the matter, which would fall categorically within the

domain of adjudication by the Arbitrator.

All jurisdictional issues, including limitation, it is well settled, are to be

decided by the Arbitrator. Even if there is a shade of doubt as to the issue of

limitation, the Court sitting under Section 11 cannot decide the same

conclusively and the matter has to be relegated to the Arbitrator.

In such view of the matter, taking into consideration all aspects of the lis,

this Court is of the opinion that the objection as to limitation cannot be

conclusively decided ex-facie on the materials available before the Court and/or

pleadings of the parties. Accordingly, the matter is fit to be relegated to

arbitration.

Even otherwise, the scope of the dispute falls within the ambit of the

arbitration clause in the agreement between the parties and the dispute is

otherwise arbitrable in law.

Accordingly, AP 535 of 2022 is allowed, thereby appointing Mr. Om

Narayan Rai, Advocate (Mobile No.: 98749 58601) as the sole Arbitrator to

resolve the disputes between the parties, subject to a declaration being obtained
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under Section 12 of the 1996 Act from the said learned Arbitrator. The

remuneration of the Arbitrator shall be fixed by the Arbitrator in consonance

with the provisions of the 1996 Act read with its Schedules. It is clarified that all

issues are kept open for being adjudicated by the learned Arbitrator and the

merits of none of the issues have been entered into by this Court in any manner

whatsoever.

(SABYASACHI BHATTACHARYYA, J.)

S.Bag/sg/sp/b.pal