J.B Goel, J.— On inviting tenders, the work of “construction of Power Tunnel Upstream Package at Chamera H.E” project was awarded by the respondent (for short “NHPC”) to the petitioner and Contract No. NH/Contracts/CC/CH-4.Agreement dated 1.10.1985 was entered into between the parties. The work was completed on 31.1.1994 in the extended period. The case of the petitioner is that after completion of the work, final bill dated 19.4.1994 as provided under Clause 48 of the Agreement claiming a sum of Rs. 35,49,86,215.59 was submitted.

Several letters were sent for making the payment but the payment has not been made. It is alleged that the agreement between the parties contains arbitration agreement in clause No. 55 and the disputes/differences having arisen which are covered by this clause, the same can be resolved through arbitration. Notice dated 7.5.1996 was invoking arbitration clause and reminder dated 14.8.1996 were sent but were not replied. The petitioner also claims entitlement to interest @ 24% per annum amounting to Rs. 15,94,22,850.50. The present petition has been filed under section 11 of the arbitration & conciliation act, 1996 (for short the act) on 21.11.1996 for appointment of an arbitrator by this Court.

A reply has been filed by the respondent alleging that the application is pre-mature and no cause of action has arisen because the final bill was incomplete and not as per the contract, it was also an inflated and unjustified claim without any documents to support the bill. The bill could not be processed for want of relevant information and documents as required under the contract and that the relevant information has not been supplied by the petitioner in spite of demands made, inter alia by means of letters dated 13.4.1994, 23.11.1994, 23.3.1995 and 23.8.1996 The information required and not furnished is also mentioned in para 8 of the reply. A rejoinder has been filed by the petitioner disputing the stand taken by the respondent and asserting that all relevant information was supplied.

Learned counsel for the petitioner has contended that as the claim has not been satisfied in spite of numerous letters, dispute has arisen which is covered by arbitration clause and the demand for appointment of arbitrator as provided under Clause 55 has not been met. As the respondent has not acted in accordance with the arbitration clause, the arbitrator be appointed by this Court; whereas, learned counsel for the respondent has contended that there is no dispute inasmuch as the respondent has not repudiated the claim and in fact so far no occasion has arisen for considering the claim as the claim submitted was not a valid and complete claim in the absence of relevant material, details and supporting documents which have not been supplied in spite of demands made and in these circumstances there is no repudiation and unless there is repudiation or denial, there is no dispute or difference which could be referred to Arbitrator. He has relied upon Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority 1988 (2) SCC 338 and Nanalal M. Varma and Co. Ltd. v. Alexandra Jute Mills Ltd. AIR 1989 Calcutta 6.

In Nanalal M. Varma & Co. Ltd., it was held that it is the settled law that the existence of a dispute covered by the relevant arbitration clause in question is an essential condition and pre-requisite for assumption of jurisdiction by an Arbitrator. A dispute implies an assertion of a right by one party and repudiation thereof by another. Every kind of non-payment of the price stipulated in a contract containing arbitration clause could not be said to be a repudiation giving rise to a dispute and that when there is no repudiation or denial of the liability, the non-payment or default in payment could not give rise to a dispute which could be referred to arbitration. Similarly, in Major (Retd.) Inder Singh Rekhi (supra), it was held that in order to entitle to a reference, there must be an entitlement to money and a dispute or difference in respect of the same. The dispute arises when a claim is asserted by one party and denied by the other on whatever grounds and whether in a particular case a dispute has arisen or not, has to be found out from the facts and circumstances of the case. Thus the legal position is clear that a reference could be made if there is a dispute, i.e, claim made by one party and repudiated or denied by the other. And a reference has to be made in accordance with the provisions of the Agreement between the parties.

As appears from the agreement dated 1.10.1985, contract document, notice inviting tender, letter of acceptance, letter of award, general conditions of contract forms part of the agreement documents. Relevant documents containing relevant information about the information/details/particulars/relevant documents to accompany the final bill to make a valid claim have not been placed on record by either of the parties. Clause 48 relied upon by the petitioner does not contain relevant information. This clause reads as under:—

“CLAUSE 48: PAYMENT OF FINAL BILL

The final bill shall be submitted by the contractor within one month of the date fixed for completion of the work or of the date the certificate of completion furnished by the Engineer-in-Charge. No further claim in this regard unless as specified herein under shall be entertained. Payment shall be made within three months if the amount of the contract plus that of the additional items is upto Rs. 2 lakhs and in 6 months if the same exceeds Rs. 2 lakhs of the submission of such bill. If there shall be any dispute about any item or items of the work then the undisputed item or items only shall be paid within the said period of three months or six months, as the case may be. The contractor shall submit a list of the disputed items within thirty days from the disallowance thereof and if he fails to do so, his claim shall be deemed to have been fully waived and absolutely extinguished.”

It is not disputed by the respondent that the work was completed on 31.1.1994 It is also not disputed that a bill dated 19.4.1994 purporting to be a final bill was submitted (Annexure VI). Along with this final bill, some details of the claims made by the petitioner have been given though perhaps without complete details and supporting material. No other documents appear to have been submitted nor it is shown as to what particulars/details/documents were sent either with the final bill or later on. Mere making a demand of particular amount in the final bill without relevant particulars/details and relevant supporting documents to substantiate the claim and justification thereof may not amount to making a valid claim. It is a common knowledge that in such contract works, payment against running bills are made during the progress of the work and final bill is submitted after the completion of the work. All such relevant material would be required so that such bill could be processed after considering the various details, extent of work, rate, amount itemwise, payments made, extent of material supplied by the owner and account of such materials consumed for the work or otherwise, the details of balance stores, the extent of liability of the Contractor for unaccounted stores or for any other shortcomings that may have been noticed during the progress of the work.

After the work was completed, the respondent in their letter dated 13.4.1994 (Annexure “R” series) had informed the petitioner's Project Manager as under:—

“The work of Power Tunnel-U/S- package and T.R.T works being executed by your company has since been completed. It is requested that the detail of MAS- Account indicating the materials issued by Corporation, consumed in work, materials returned to deptt. and materials lying in your custody may please be prepared and submit to Engineer-In-Charge for veryfication and copy of the same may please be furnished to us immediately. It may please be ensured that materials issued by the Deptt., if consumed on works connected with your Colonies, Offices etc. are shown separately in the statement. Similarly, materials consumed in ancillary and enabling works may also please be mentioned separately so that recovery of the same as per the rates prescribed in the Contract Agreement could be effected. The statement may please be got reconciled with the records available in Dam Circle/TPH Khairi.”

In another letter dated 23.3.1995, respondent again reminded the petitioner to furnish such information with particulars followed by further reminders, inter alia, dated 23.11.1995 and 2.1.1997 The respondent in para 8 in their reply filed in the present petition has also reiterated and complained about non-compliance of this requirement. The petitioner has disputed and denied it. Mere denial without particulars would not be sufficient to rebut the stand taken by the respondent.

However, it is seen from letter dated 23.11.1995 that the petitioner was informed that the requisite information had not been furnished, and it was also pointed out that apart from, the fact that materials/T&P worth Rs. 80,45,000/- reported to be outstanding against them, the petitioner were directed to return the balance material without further delay. It is not shown by the petitioner that this demand has been complied. In another letter dated 5.11.1996 sent by the respondent to the petitioner, however, the petitioner was informed as under:—

“On the basis of records produced during your visit to project in response to our letter dated 7.10.96, we have reconciled/readjusted our final accounts and the final status of recovery outstanding against M/s. CCL is as given below. These figures are inclusive of hirecharges on monthly rental basis.

Power Tunnel Upstream Package: Rs. 4,20,31,606.53 Tail Race Tunnel: Rs. 1,03,51,302.62 Total: Rs. 5,23,82,909.15

This was subject to change, if any noticed later.

In another letter dated 27.12.1996, the respondent further informed the petitioner that the recovery mentioned in letter dated 5.11.1996 is exclusive of the amount to be recovered under clause 49 of the general conditions of the Contract relating to over payments released under Clause 18 of the above said Contract.

And in letter dated 23.8.1996, the respondent had further written to the petitioner as under:—

“Sub: Contract Agreement No. NH/Contract/CC/CH-04.Agreement dated 1.10.1985 for the construetion of Power Tunnel Upstream package at CHEP-Payment of final bill/outstanding dues.

Sir,

This has reference to your letter No. 295(159).TRT/799 dated 7.8.96 regarding the subject mentioned above. The parawise reply is as given below.

1. Though M/s. CCL had completed the work on 31.1.94, the final time extension is still to be granted. Only provisional time extension, upto 31.1.94 have been granted without any prejudice to the rights of Corporation to levy panalty. This was done only to facilitate release of payments under clause 45 of GCC.

2. On scrutiny of final bill submitted by M/s. CCL. It is found that M/s. CCL have not submitted that accountal of departmental materials, TRP items. In the absence of these records, we are not in a position to finalise the bill. Further, the processing of rates for extra/deviated items also was delayed as M/s. CCL did not submit the requesite details in time.

3. Further, attention is also drawn to the fact that M/s. CCL have raised a number of claims, some of which have been rejected and others are pending with Hon'ble Courts/Arbitration/HPC. You would appreciate the fact that the contract cannot be finalised, till the receipt of decision of the concerned authority.

4. These claims were referred to arbitration on the request of the Contractor. Hence, it is the obligation of M/s. CCL to wait for the decision of the Hon'ble Arbitrator/Courts. The final bill under reference includes these claims under the consideration of arbitrators/Courts and hence no dispute have arisen regarding settlement of final bill.

Hence, the request for entering into arbitration regarding settlement of final bill cannot be agreed to. “

From the aforesaid correspondence, it is seen that though the petitioner on its own has not submitted relevant information about the materials supplied, consumed, not consumed and not otherwise accounted for, but this information, may be incomplete, has been collected by the department from its own record and further information as may be required could be gathered from their own records or this part of the claim could be assessed ex parte. The department have assessed other dues due to them from the petitioner as mentioned in letter dated 5.11.1996, obviously from their own records. The letter dated 23.8.1996 shows that the claim has not been processed not only for non-furnishing of information but for other reasons also as stated therein. Claim cannot be kept outstanding for such a long time. It is in the interest of both the parties that the disputed claims are determined at the earliest so that relevant evidence may not be destroyed. This letter dated 23.8.1996 in my view amounts to repudiation and denial of the claim of the petitioner for various reasons mentioned therein and hence disputes and differences have arisen between the parties both about the entitlement of the claim of the petitioner as well as the claim that may be due from the petitioner to the respondent. Clause 55 of the Contract provides that “all questions, disputes or differences in respect of which the decision has not been final and conclusive, arising between the contractor and the Corporation, in relation to or in connection with the contract shall be refered for arbitration in the manner provided and to the sole arbitrator appointed as follows:—

(i) Either of the parties may give to the other notice in writing of the existence of such question, dispute or difference;

(ii) Within 30 days of the receipt of such notice from either party, the Chief Engineer incharge of work at the time of such dispute shall send to the contractor a panel of three persons and thereafter the contractor within 15 days of the receipt of such panel communicate to the Chief Engineer the name of one of the persons from such panel and such a person shall then be appointed as sole arbitrator by the Chief Engineer.

x x x x x x “

It is not disputed that the petitioner had written letters to the respondent raising claims. It is also not disputed that vide letter dated 7.5.1996, the petitioner has invoked the arbitration clause and called upon the respondent to suggest the names of three such persons. No action has been taken by the respondent in this respect. In these circumstances, the only course left is appointment of an arbitrator by this Court under Section 11 of the Act.

This application is accordingly allowed. Mr. Justice J.K Mehra, a retired Judge of this Court is appointed as an arbitrator to decide the disputes and differences arising between the parties out of Contract No. NH/Contracts/CC/CH-4.Agreement dated 1.10.1985 The Arbitrator may fix his fee in consultation with the parties. The arbitrator will make his award within reasonable time of his entering upon the reference.

Intimation be sent to the Arbitrator.