Shri Anil Khandelwal vs. The Registrar University Of Delhi

Facts

The appellant, Shri Anil Khandelwal, filed a suit against the respondent, University of Delhi, for recovery of amounts due for construction work awarded in 2008. The contract value was ₹2,26,96,182.55, with a stipulated completion date of 09.02.2010. The work was completed on 30.11.2010. The appellant received payments totaling ₹2,71,19,725/- against bills, including the final bill, with the understanding that additional expenditure would be claimed later. The appellant sent letters on 08.02.2016 and 16.11.2017 for outstanding payments, including under Clause 10C of the General Conditions of Contract (GCC) and for testing charges. After no response, the appellant invoked arbitration on 17.05.2018, listing claims totaling ₹64,09,677.76. A petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, was filed but not pressed, with liberty to file a civil suit. The appellant then filed the suit on 18.02.2019 after pre-institution mediation failed. The Commercial Court dismissed the suit, holding it barred by limitation and not maintainable due to an arbitration agreement.

Held

The High Court held that the Commercial Court's decision to dismiss the suit as not maintainable on the ground of an arbitration agreement was erroneous. It reasoned that Section 8 of the Arbitration and Conciliation Act, 1996, requires an application for reference to arbitration to be made by a party not later than the date of submitting their first statement on the substance of the dispute. Since the respondent had not filed such an application before the Commercial Court, the suit could not be dismissed on this ground. However, the Court found no fault with the Commercial Court's decision to dismiss the suit as barred by limitation. The Court noted that the claims for Labour Escalation, Hiring Charges, Supervision, Watch and Ward, Material Escalation, and loss of material arose prior to or on the completion of the works. These claims were clearly barred by limitation as they were filed beyond three years from the date of completion, the date of the final bill, or the date of receipt of the final bill. The letter dated 08.02.2016, requesting payment for Labour Escalation and testing charges, did not extend the period of limitation for these claims. The Court relied on the Supreme Court's decision in Geo Miller and Company Private Limited v. Chairman, Rajasthan Vidyut Utpadan Nigam Limited, which held that mere correspondence does not extend the time of limitation. Therefore, the appeal was dismissed.

Key Issues

1. Whether the suit filed by the appellant was ex facie barred by limitation, considering the claims made and the relevant clauses of the General Conditions of Contract (GCC)? 2. Whether the suit was maintainable on the ground that the parties had entered into an arbitration agreement? Petitioner's arguments: The appellant contended that the suit was not barred by limitation as the period should be computed from 08.02.2016, when he raised certain bills. He argued that the existence of an arbitration agreement does not preclude the jurisdiction of a civil court, citing Section 8 of the Arbitration and Conciliation Act, 1996, which requires a court to refer parties to arbitration only if an application is made by a party not later than the date of submitting their first statement on the substance of the dispute. The appellant also relied on the liberty granted by this Court in Arb.P.801/2018 to file a civil suit. Respondent's arguments: The respondent argued that the suit was barred by limitation as the cause of action arose on the completion of the work or submission of the final bill, and the claims were raised beyond the three-year period. The respondent also contended that the suit was not maintainable due to the arbitration agreement, as per Clause 25 of the GCC, and that the appellant had invoked arbitration previously.